Krishna and Co. vs Commissioner of Cus.

T.S. Sivagnanam, J.

In W.P. No. 2987 of 2010, the petitioner has challenged the order passed by the second respondent dated 9-9-2009 and 12-12-2009 and the consequential proceedings of the first respondent dated 29-12-2009. By the proceedings dated 9-9-2009, the following direction was issued by the District Collector, Nagapattinam to the Executive Engineer, PWD (WRO), Cauvery Basin Division (East), Mayiladuthurai:--

"Following the above said reference, the site where the river sand flying in bulk inside the Karaikkal Port area was inspected by the Assistant Director (Mines) Nagapattinam, on 24-8-2009 and 3-9-2009. Site inspection of the Assistant Director (Mines), Nagapattinam, revealed that the unshipped cargo of river sand of about 250 Mts. are lying in bulk in the open wharf area of Karaikkal Port as reported by the Deputy Commissioner of Customs, Nagapattinam. The river sand has to be removed from the port area since it is causing health hazard and damaging further. Therefore it has been proposed to handover the river sand to you for disposal the river sand seized under 21(4) of Mines and Minerals (Development and Regulation) Act, 1957."

The petitioner has challenged the order raising several contentions, primarily, stating that they have purchased sand from Karaikal and the District Collector could not have issued such a direction.

Earlier the petitioner filed W.P. No. 12301 of 2009, wherein, the petitioner sought for issuance of writ of Certiorarified Mandamus, wherein, seeking to quash the order of the second respondent dated 30-6-2009 and to direct the respondents 1 and 2 therein to forthwith issue necessary Sail Order to Vessel, m.v. ASEAN EXPRESS to leave Karaikal Port to the Republic of Maldives with a cargo of 3,750 MT of River sand. In this W.P. No. 12301 of 2009, the petitioner has challenged the order passed by the second respondent viz., the Deputy Commissioner of Customs, Nagapattinam. By the said proceedings, the second respondent has cancelled the LEO granted to the petitioner, thereby, the petitioner was prevented from exporting the river sand to Maldives.

The learned Single Judge of this Court passed an order of interim direction in M.P. No. 3 of 2009 in W.P. 12301 of 2009, by order dated 7-7-2009, by which, the petitioner was directed to furnish Bank Guarantee for the value of the entire sand, which has been loaded in the vessel and direction was issued to the 1st and 2nd respondents to issue necessary sail order to the Vessel to leave Karaikal Port to the Republic of Maldives subject to furnishing Bank Guarantee. As against the said interim direction, the District Collector, Nagapattinam filed Writ Appeal No. 955 of 2009 and the Honourable First Bench of this Court, by order dated 13-7-2009 made a slight modification to the interim direction issued by the learned Single Judge, which is to the following effect:--

"In view of this undertaking, in the facts and circumstances of the case, we ace leaving the interim order passed by the learned single Judge undisturbed. We also clarify that though the learned single Judge has said that the first respondent has to give a Bank Guarantee for the value of the said quantity of the river sand, after hearing all the counsel, we specify the amount for which such bank guarantee has to be furnished as Rs. 16,00,000/- (Rupees sixteen lakhs only). The bank guarantee will be of a nationalised bank or a scheduled bank, which will be kept alive throughout the pendency of the proceedings. The bank guarantee would clearly state that in the event the writ petition is dismissed, the State Government will be entitled to encash it with interest."

The petitioner has complied with the order and direction issued by the Honourable Division Bench referred supra and has furnished Bank Guarantee for Rs. 16,00,000/- and the Bank Guarantee is kept valid till date and the export of quantity of 3,750 MT of river sand has already been completed. Now, the balance quantity of sand is now lying in the Port premises for which a direction was issued by the District Collector, Nagapattinam to the Executive Engineer, PWD (WRO), Cauvery Basin Division (East) Mayiladuthurai to sell the sand which was challenged by the petitioner in W.P. No. 2987 of 2010.

Since the export has already been completed pursuant to the order passed by the Division Bench referred supra, the challenge to the proceedings of the Deputy Commissioner of Customs dated 30-6-2009 in W.P. 12301 of 2009 has become academic and therefore, there is no necessity to pass any orders in W.P. 12301 of 2009 since the export has already been completed subject to certain conditions, which was not questioned by the Customs Department.

Therefore, in the light of the subsequent developments and taking note of the order passed by the Honourable Division Bench, no further order is required to be passed in W.P. 12301 of 2009 and therefore, the same is closed.

Insofar as W.P. No. 2987 of 2010, the challenge is to the order passed by the District Collector, Nagapattinam to sell the unshipped quantity of 250 MT of River sand, which is lying in Karaikal Port area. In my view, the conclusion of the District Collector, Nagapattinam that the sand could not have been quarried at Karaikal, since there is no river sand quarry in Karaikal could not have been arrived at without adjudicating the matter. Further the petitioner''s case is that he purchased the sand from traders in Karaikal. Therefore, if the second respondent viz., District Collector is of opinion that the sand, which was sought to be exported and presently lying in Karaikal Port premises has been quarried elsewhere other than Karaikal, that should have been ascertained after proper adjudication into the matter for which purpose, the petitioner should have been afforded an opportunity. This procedure having not been followed, the prima facie conclusion arrived at by the District Collector, which has resulted in the passing of the impugned order dated 9-9-2009 and the consequential orders dated 12-12-2009 and 29-12-2009 have to be faulted. However, in order to safeguard the interest of Revenue, this Court is inclined to issue the following directions without setting aside the impugned proceedings.

Accordingly, W.P. No. 2987 of 2010 is disposed of (i) by directing the Executive Engineer, PWD (WRO), Cauvery Basin Division (East) Mayiladuthurai to sell the quantity of sand lying in open wharf of Karaikal Port by calling for public auction and such sale should be effective within the State of Tamil Nadu and such sale should not be for the purpose of export or for the purpose of taking the sand to any other State other than State of Tamil Nadu;

"(ii) It is also open to the petitioner to participate in such public auction;

(iii) On receiving the bid amount, the amount realised shall be retained by the District collector in an interest bearing account.

(iv) The District Collector, Nagapattinam shall issue show cause notice to the petitioner clearly setting out allegations against the petitioner, which has necessitated the passing of impugned order dated 9-9-2009.

(v) on receipt of show cause notice, the petitioner is directed to submit his reply and thereafter, the District Collector shall afford an opportunity of personal hearing to the petitioner and after hearing the petitioner, the District Collector shall pass orders on merits and in accordance with law.

(vi) Till the above proceedings are concluded, the petitioner shall keep the Bank Guarantee which has been furnished for a sum of Rs. 16,00,000/- alive and the amount of sale proceeds realised from the sale of sand shall be retained till orders are passed by the District Collector, Nagapattinam in an interest bearing account.

(vii) It is made clear that the District Collector shall decide the matter uninfluenced by the order made by this Court."

In the result, W.P. No. 12301 of 2009 is closed; W.P. No. 2987 of 2010 is disposed of with the above directions. No costs. Connected MPs are closed.