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High Court Of Delhi
L.P.DESAI - Appellant
Versus
UNION OF INDIA - Respondent
CIV.WRIT 3448 of 1999
Decided On : 07/07/2003
Held:
Section 4L of the Imports & Exports (Control) Act, 1947 stipulates that no order of adjudication or confiscation or imposition of a penalty can be made unless a written notice is given to the owner of the goods, materials, conveyance or animal, or other person concerned. Assuming that the petitioner being a director of the company was covered under the expression "other person concerned", it was imperative thai a notice in writing in terms of Section 4-L of the said Act ought to have been issued to him. Admittedly, no separate notice other than the show cause notice which was issued to the company has been issued to the petitioner or indeed to any other of the directors. The company has paid the total customs duty of Rs. 3,78,97,499/- as was demanded by the respondents.
If the grounds on which an adjudicating authority is seeking to impose a penalty on a person are themselves vague, then such person would be unable to reply to the same and a notice containing such vague grounds would be an illusory notice and would be void. The whole purpose behind the issuance of a notice is to inform the person concerned of the grounds on which it is proposed to impose a penalty. Unless this information is clearly conveyed to the person concerned, he would not be in a position of making a proper representation against the proposed imposition of penalty. This, ipso facto, would amount to a denial of an opportunity of making a representation. Hence, such a notice would be improper and illegal and any adjudication order following such notice would be bad in law.
Since no notice at all was issued to the petitioner, which was a mandatory requirement under Section 4L of the said Act, the present case is one of violation of principles of natural justice and, thereforee, the question of prejudice caused ivould not at all arise. As the petitioner had no notice, obviously he had no opportunity nor zvas He gran ted any hearing.
No notice to the petitioner was issued by the respondents. That being the case, there was a clear violation of the mandatory statutory provision contained in Section 4L of the said Act. That apart, there was a violation of the principles of natural justice.
When the notice itself was not issued to the petitioner, no opportunity was granted to him and consequently, he was not heard, the adjudication order imposing a penalty on the petitioner would be illegal and would be liable to be set aside.
The mere fact that he filed an appeal and was heard in the appeal would not alter the situation. The proceedings against him were void ab initio. Had the petitioner been issued a notice in terms of Section 4L of the said Act, he could have represented against the imposition of such penalty. He could have placed on record various facts and circumstances to show that no offence was committed by the company and that even if such offence was committed by the company, he had no hand in it. All these circumstances, if he were able to establish them, would have absolved him of the liability of penalty which he now bears like a garroter round his neck. So, even if the question of prejudice were to be taken up, it, would be clear that the order in original as well as the Appellate Order imposing a penalty on the petitioner could not be sustained.
( 1 ) THE petitioner, Sh. L. P. Desai, was a director in Shri Ambuja Petrochemicals Ltd. (hereinafter referred to as the said company ). The said company had applied for and was granted licence by Respondent No. 4 under the Duty Exemption Scheme whereunder it was permitted to import orthoxylene against the obligation to export pthalic anhydride.
( 2 ) ORTHOXYLENE was imported by the said company and it used the same in the manufacture of pthalic anhydride. It is alleged that due to circumstances and reasons beyond its control, the said company could not meet its export obligations in respect of pthalic anhydride, as a result of which a show cause notice was issued to the said company on 07. 11. 1994 which culminated in the Order-in-Original dated 27. 07. 1995/07. 08. 1995 passed by the Additional Director General (Foreign Trade), New Delhi. By virtue of this Order, the Additional Director General (Foreign Trade), inter-alia, imposed a penalty of Rs 1. 25 crores on, inter-alia, the petitioner being a director of the said company. Being aggrieved by this Order, an appeal was preferred and the same was dismissed by the impugned Appellate Order dated 13. 08. 1997 passed by the Appellate Committee (Cell), Ministry of Commerce, Government of India.
( 3 ) THE short point that arises for consideration in this Petition is this:-
WHETHER a penalty could at all have been imposed on the petitioner when no show cause notice was issued to him inasmuch as the show cause notice dated 07. 11. 1994 was addressed only to the company?it is an admitted position that the said show cause notice was only addressed to the company and no separate show cause notice was either addressed to or served upon the petitioner. The only references to the directors were in paras 4 and 7 of the said show cause notice which, to the extent relevant, are set out hereunder:-
"4. I, therefore, in exercise of the power vested in me under section 4-K of the Imports and Exports (Control) Act, 1947 and Clause 8 of the Imports (Control) Order, 1995 require you to show cause under section 4-L of the above Act and under Clause 10 (1) of the said Order, within 30 days from the date of receipt of this notice as to why penalty be not imposed on you and your proprietary/partner directors under section 4-I (1) (a) of the said Act. . . . " (underlining added)
"you are also advised to bring the contents of this show cause notice individually to all your partners/directors who should be asked to forward their written submissions separately if they so desire, regarding the alleged contravention of the above action is also proposed to be taken against you. "it is apparent that the show cause notice was directed to the company and not to the individual directors. It is also clear that indirectly and, if I may say so, casually the company was advised to bring the contents of the show cause notice individually to the notice of the directors. No specific acts of omission or commission were attributed to the directors including the petitioner.
( 4 ) IN this context, it would now be relevant to note the provisions of Section 4-L of the Imports and Exports (Control) Act, 1947 (hereinafter referred to as "the said Act") which reads as under:-
"4l. Giving of opportunity to the owner of goods, etc.--No order of adjudication of confiscation or imposing a penalty shall be made unless the owner of the goods, materials, conveyance or animal, or other person concerned, is given a notice in writing-- (i) informing him of the grounds on which it is proposed to confiscate such goods, materials, conveyance or animal or to impose a penalty. (ii) giving him a reasonable opportunity of making a representation in writing within such reasonable time as may be specified in the notice against the confiscation or imposition of penalty mentioned therein, and, if he so desires of being heard in the matter. "
( 5 ) A reading of the aforesaid section clearly shows that it stipulates that no order o
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