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1972 Supreme(Cal) 11
HIGH COURT OF CALCUTTA
A. K. Sinha
PRADEEP AND CO. - Appellant
Versus
COLLECTOR OF CUSTOMS - Respondent
Matter 781 Of 1970
Decided On : JANUARY 10, 1972
The Customs Authorities are under a mandatory duty to serve a show cause notice upon the owner of the goods or the person affected before passing an order of confiscation or imposition of penalty under the Customs Act, 1962.
Headnote:
CUSTOMS ACT, 1962 - SECTION 115(2), 124 - CONFISCATION OF MOTOR VEHICLE - NOTICE TO SHOW CAUSE - WAIVER - ESTOPPEL - DELAY - VALIDITY OF ADJUDICATION PROCEEDING AND ORDER - WRIT PETITION - QUASHING OF ORDERS.
Fact of the Case:
The petitioner, claiming ownership of a motor vehicle under a hire purchase agreement, filed a suit for a declaration of ownership and recovery of possession. During the pendency of the suit, the Customs Authorities seized the vehicle for carrying smuggled goods and initiated adjudication proceedings. The petitioner was not served with a show cause notice under Section 124 of the Customs Act, 1962, and the Customs Authorities passed an order imposing a fine and confiscating the vehicle. The petitioner challenged the validity of the adjudication proceeding and the impugned orders by filing a writ petition.
Finding of the Court:
The Court held that the Customs Authorities failed to comply with the mandatory provisions of Section 124 of the Customs Act, 1962, by not serving a show cause notice upon the petitioner before passing the order of confiscation and penalty. The Court further held that the petitioner's knowledge of the adjudication proceedings and his failure to participate therein did not amount to a waiver of his right to be served with a show cause notice or estop him from challenging the validity of the impugned orders. The Court also found that the delay in filing the writ petition was not unreasonable, considering the petitioner's efforts to obtain the release of the vehicle through correspondence with the Customs Authorities.
Issues: 1. Whether the Customs Authorities were required to serve a show cause notice upon the petitioner under Section 124 of the Customs Act, 1962, before passing the order of confiscation and penalty. 2. Whether the petitioner's knowledge of the adjudication proceedings and his failure to participate therein amounted to a waiver of his right to be served with a show cause notice or estopped him from challenging the validity of the impugned orders. 3. Whether the delay in filing the writ petition was unreasonable.
Ratio Decidendi: 1. The Court held that Section 124 of the Customs Act, 1962, imposes a mandatory duty upon the Customs Authorities to serve a show cause notice upon the owner of the goods or the person affected before passing an order of confiscation or imposition of penalty. The Court relied on the principle that a statutory duty cannot be avoided by setting up a plea of estoppel. 2. The Court held that the petitioner's knowledge of the adjudication proceedings and his failure to participate therein did not amount to a waiver of his right to be served with a show cause notice or estop him from challenging the validity of the impugned orders. The Court explained that waiver requires an intentional relinquishment of a known right, which was not present in this case. The Court also held that estoppel could not be invoked because the Customs Authorities were not misled by any declaration, act, or omission of the petitioner. 3. The Court held that the delay in filing the writ petition was not unreasonable, considering the petitioner's efforts to obtain the release of the vehicle through correspondence with the Customs Authorities.
Final Decision: The Court quashed the impugned adjudication proceeding and orders passed by the Customs Authorities. The Court directed the Customs Authorities to start proceedings afresh and to act in accordance with law.
( 1 ) THIS Rule is obtained by the petitioner for quashing an order imposing penalty and confiscation of a motor car under the Customs Act, 1962 (referred to herein as the Act ).
( 2 ) THE petitioner who claims to be the owner of a motor vehicle (Ambassador car) registration No. W. B. F. 8610 under a hire purchase agreement of June 16, 1968 (sic) agreed to let on hire to the respondent No. 5 on payment of certain monthly instalments with option to the hirer to purchase the car in instalments of a total sum of Rs. 15,000/- with a condition inter alia to terminate the agreement and to recover possession of the car in case of default in payment of instalment. On or about April 9, 1967, this car was seized for carrying smuggled goods containing about 98 Kgs. of Cinnamon at Barasat. Ultimately, an adjudication proceeding was started by the Customs Authorities.
( 3 ) ON or about 4th April'. 1969, the petitioner filed a suit No. 818 of 1969 in the Original Side of this Court for a declaration that he was owner of the car and for recovery of possession, -- alternatively for a decree of Rupees 15,000/- being the market value of the car against respondents Nos. 5 and 6. In this suit a Receiver was appointed but upon the application of the petitioner a further order was made on May 15, 1970 which inter alia authorised the Receiver to take possession of the car only if the Customs should release it. It is alleged that although the Customs Authorities were not parties in this suit, they were duly intimated by the petitioner and they also took inspection through their Solicitors of records. Thus in spite of having knowledge that the petitioner was the owner of the car the authorities without giving any notice to the petitioner completed the adjudication proceeding and passed an order on August 18, 1970, imposing a fine of Rs. 4,000/-and also confiscated the car with an option to the owner to redeem it on payment of fine of Rs. 4,000/- within a month from the date of the order. That is how, in short, the petitioner felt aggrieved and obtained the present Rule.
( 4 ) QUITE a large number of grounds were taken but the main grievance of the petitioner is that the impugned order was without jurisdiction and invalid as the Customs Authorities failed to give opportunity of hearing to the petitioner as the owner on issuing a show cause notice as required under Section 124 of the Act The case of the Customs Authorities as appears from paragraph 3 (b) of the Affidavit affirmed on 12th May, 1971. by one Kamakhya Ranlan Ghosh substantially is that "since 25th March, 1969, the petitioner admittedly was aware of the fact that the said car was seized by the Customs Authorities and adjudication proceedings in respect thereof were pending under the provisions of the Customs Act. 1962. In spite of said facts, the petitioner neither claimed ownership of the car before the Customs Authorities nor appeared in the said adjudication proceedings; on the contrary the petitioner was all along aware that the respondent No. 5, Ashim Kumar Dutta, claimed to be owner of the said car before the Customs Authorities and allowed the said proceedings to continue against the said respondent No. 5 as the owner of the said car. In the premises aforesaid, the petitioner is estopped from claiming ownership of the said car or to challenge the said adjudication proceedings or the order made therein on the basis thereof". In paragraph 4 of the affidavit petitioner's reply to these allegations in his affidavit Is that 'save and except what are stated in various paragraphs of the main petition affirmed on 24th December. 1970, I deny the allegations contained therein. ' But the petitioner's own statement in paragraph 12 of the writ Petition is that on or about 25th March, 1970, the Collector of Customs and Central Excise of West Bengal or their agents took inspection of the orders dated September 23, and 30, 1969, It seems, therefore. clear that the petitioner had k
