2021 Supreme(SC) 288

SUPREME COURT OF INDIA
A.M. Khanwilkar, Dinesh Maheshwari, Krishna Murari, JJ.
UNION OF INDIA AND OTHERS – APPELLANTS
VERSUS
M/S. RAJ GROW IMPEX LLP AND OTHERS — RESPONDENTS
Civil Appeal No(s). 2217-2218 of 2021 (Arising out of SLP(C) Nos. 14633-14634 of 2020) with Civil Appeal No. 2219 of 2021 @ SLP(C) No. 1037 of 2021
Decided on : 17-06-2021

IMPORTANT POINTS
(1) Personal interests of importers who made improper imports are pitted against interests of national economy and more particularly, interests of farmers. Imposition of penalty on such importers is warranted. No leniency in name of equity can be claimed by these importers.
(2) A holder of public office, when exercising discretion conferred by statute, has to ensure that such exercise is in furtherance of accomplishment of purpose underlying conferment of such power.
(3) Injunction – In matters of grant of interim relief, satisfaction of Court only about existence of prima facie case in favour of suitor is not enough.

Headnote:

(A) Customs Act, 1962 – Sections 125(1) and 129D read with Sections 3 and 11 – Foreign Trade (Development and Regulation) Act, 1992 – Sections 3 and 9A – Constitution of India – Article 226 – Direction for release of imported goods – Even while High Court was right in questioning fact that Commissioner chose to pass order when matter was sub judice, High Court missed out relevant feature that importers had preferred writ petitions essentially to pre-empt any further proceedings by statutory authority concerned under Customs Act – Invocation of writ jurisdiction by importers was itself questionable – When matter was left for decision by Commissioner (Appeals), there was neither any occasion nor any justification for High Court to pass order for release of goods for reason that any order for release of goods was to render material part of matter a fait accompli – This could not have been done – Other overriding factors like interest of domestic agriculture market economy as also findings and observations of this Court in Agricas (2020 SCC OnLine SC 675) totally escaped attention of High Court – Impugned order having been passed while ignoring relevant considerations, cannot be approved – While entertaining second writ petition, High Court seems to have also omitted to consider that said writ petition was filed against order-in-appeal passed by Appellate Authority and alternative remedy of regular statutory appeal to CESTAT was available to importer – On consideration of relevant facts and circumstances in their correct perspective, High Court would not have entertained writ petitions so filed in these matters – Impugned orders remain unsustainable and are required to be set aside. (Paras 54.4, 57, 59, 60.2 and 61)

(B) Foreign Trade (Development and Regulation) Act, 1992 – Sections 3 and 9A – Customs Act, 1962 – Sections 125(1) and 129D read with Sections 3 and 11 – Constitution of India – Article 226 – Direction for release of imported goods – Only particular restricted quantity of commodities covered by notifications dated 29.03.2019 could have been imported, like those upto 1.5 lakh MTs; and that too, under a licence – Applicant has no vested right to have export or import licence and granting of licence depends upon policy prevalent on the date – Granting licence to import is not a matter of formality and authorities have to satisfy themselves that application satisfies all requirements of scheme and applicable laws – Any import within cap (like that of 1.5 lakh MTs) under a licence is import of restricted goods but, every import of goods in excess of cap so provided by notifications, is not that of restricted goods but is clearly an import of prohibited goods – Goods in question, having been imported in contravention of notifications dated 29.03.2019 and trade notice dated 16.04.2019; and being of import beyond permissible quantity and without licence, are ‘prohibited goods’ for the purpose of Customs Act – Once it is clear that goods in question are improperly imported and fall in category of ‘prohibited goods’, provisions contained in Chapter XIV of Customs Act, 1962 come into operation and subject goods are liable to confiscation apart from other consequences – Orders-in-original dated 28.08.2020 cannot be said to have been passed in a proper exercise of discretion – Appellate Authority, on other hand, has stated various reasons as to why option of absolute confiscation was the only proper exercise of discretion in present matter – Personal interests of importers who made improper imports are pitted against interests of national economy and more particularly, interests of farmers – Imports in question suffer from vices of breach of law as also lack of bona fide and only proper exercise of discretion would be of absolute confiscation and ensuring that these tainted goods do not enter Indian markets – Imposition of penalty on such importers is warranted – No leniency in name of equity can be claimed by these importers – Impugned order set aside – Appeals allowed with cost of Rs.2,00,000/-. (Paras 66.1, 66.2, 68, 69, 80, 82, 86.1, 97 and 99)

(C) Administrative Law – Discretion – Exercise of – Parameters – Exercise of discretion is essentially discernment of what is right and proper and such discernment is critical and cautious judgment of what is correct and proper by differentiating between shadow and substance as also between equity and pretence – A holder of public office, when exercising discretion conferred by statute, has to ensure that such exercise is in furtherance of accomplishment of purpose underlying conferment of such power – Requirements of reasonableness, rationality, impartiality, fairness and equity are inherent in any exercise of discretion – Such an exercise can never be according to private opinion – Discretion has to be exercised judiciously and for that matter, all facts and all relevant surrounding factors as also implication of exercise of discretion either way have to be properly weighed and a balanced decision is required to be taken – Statutory authority cannot be directed to exercise its discretion in a particular manner. (Paras 71, 71.1 and 72)

(D) Equity – Riders – Once Court has reached to conclusion that a particular action is wanting in bona fide, perpetrator cannot claim any relief in equity in relation to same action – Absence of bona fide in a claimant and his claim of equity remain incompatible and cannot stand together. (Pars 86.1)

(E) Injunction – Grant of Interim Relief – In matters of grant of interim relief, satisfaction of Court only about existence of prima facie case in favour of suitor is not enough – Other elements i.e., balance of convenience and likelihood of irreparable injury, are not of empty formality and carry their own relevance; and while exercising its discretion in matter of interim relief and adopting a particular course, Court needs to weigh risk of injustice, if ultimately decision of main matter runs counter to course being adopted at the time of granting or refusing interim relief. (Pars 92)

Facts of the case:

In this set of appeals, the Union of India and the authorities related with customs have questioned orders dated 15.10.2020 and 05.01.2021, passed by the High Court of Judicature at Bombay in Writ Petition (L) Nos. 3502-3503 of 2020 and Writ Petition (ST) No. 24 of 2021 respectively1. The appellants are essentially aggrieved of the directions issued by the High Court for compliance of the orders-in-original dated 28.08.2020 passed by the Additional Commissioner of Customs, Group-I, Mumbai and consequently, for release of the goods imported by the private respondents though the goods in question are, according to the appellants, liable to absolute confiscation. Genesis of the present litigation lies in the notifications issued by Central Government under the Foreign Trade (Development and Regulation) Act, 1992 as also consequential trade notices issued by Directorate General of Foreign Trade3, making provisions for restricting the import of certain beans, peas and pulses.

Findings of Court:

Matters relating to the interveners shall also be governed by findings of this judgment and appropriate orders in their regard shall be passed by the authorities/Courts, wherever their matters relating to subject goods are pending but, their options of further appeal, only in relation to the quantum of amount payable, including that of penalty, is left open.

Result : Appeals allowed with costs.