Mrs. Dina Baldev Pathak vs The Collector of Customs

K.K. Desai, J.—This is a petition under art. 226 of the Constitution challenging the act of respondent No. 2, being Rummaging Inspector of Customs, of seizure of a Buick motor car of the ownership of the petitioner. Incidentally, certain orders passed by the Additional Collector of Customs and Assistant Collector of Customs have been argued to be invalid on behalf of the petitioner as also the respondents. The relevant facts are as follows:--

A Buick (Sedan) 1959 Model two-door convertible car was landed at the Port of Bombay on September 22, 1959, by S.S. "Exchequer". It was sought to be cleared without payment of duty and without an I.T.C. licence under cover of Garnet De Passages En Douane No. 593820 by one V.V. Purie and one Mauji as agents of one Mons. Andre Bensimon. The clearance was not allowed to be permitted. Bensimon arrived in India on October 8, 1959. Purie, Mauji and Bensimon were called upon to show cause why the Buick car should not be confiscated under s. 167(8) of the Sea Customs Act read with s. 3(2) of the Imports and Exports (Control) Act, 1947. All the above parties appear to have bad a hearing and showed cause.

Before the matter of the above investigation and inquiry was completed, by his order dated November 9, 1960, S. Sarkar, being an Assistant Collector of Customs made a finding in respect of the above Buick car as also diverse other goods, that evidence had not been produced to the Customs House to show that the goods had been imported in accordance with the Import Control Regulations. He accordingly held that the goods were liable to be confiscated and passed orders confiscating all the goods, including the Buick car, under s. 167(8) of the Sea Customs Act read with s. 3(2) of the Imports and Exports (Control) Act, 1947. He also imposed fines in respect of each item of the goods ordered to be confiscated. The fine that he imposed under s. 183 of the Sea Customs Act in respect of the Buick ear was a sum of Rs. 8,000. A copy of the above order of the Assistant Collector of Customs is annexed as exh. 1 to the affidavit in reply of A. Athaide, respondent No. 2, dated January 21, 1961. As appears from the last but one paragraph of his order, the Assistant; Collector also stated that the Customs House had no objection under s. 89 of the Sea Customs Act to the removal and clearance of the goods from the port and to an auction sale of each item of the goods mentioned in his order being held under s. 64-A of the Bombay Port Trust Act. The conditions that he attached to the sale were that the Port Trust authorities must guarantee payment of custom duty chargeable and the fine imposed by the order itself. On November 10, 1960, the trustees of the Port of Bombay under the provisions of ss. 64 and 64-A of the Bombay Port Trust Act got sold by auction amongst other goods the above Buick car. An advertisement of the auction sale had been published in the newspapers prior to the above auction. The petitioner purchased the Buick ear at the price of Rs. 71,000 and in accordance with the terms paid 33-1/3 per cent. being Rs. 24,000 to the auctioneers on the date of the sale. On November 16, 1960, the petitioner having paid the balance of the price of Rs. 47,000, was given delivery and possession and the petitioner then garaged the Buick car with certain third parties being her agents.

On November 26, 1960, respondent No. 2 seized the Buick car. The respondents'' case is that the car was seized under the powers available under s. 178 of the Sea Customs Act. The respondents'' case is that in ignorance of the above order of the Assistant Collector dated November 9, 1960, by his order dated November 15, 1960, the Additional Collector of Customs made his findings and orders in the matter of adjudication and inquiry that was proceeding against Purie. Mauji and Bensimon. He accordingly made another order of confiscation of the Buick car under s. 167(8) of the Sea Customs Act read with s. 3(2) of the Imports and Exports (Control) Act, 1947. The respondents'' case is that having regard to and in consequence of the order of confiscation dated November 15, 1960, and by reason of the powers to be found in s. 178 of the Sea Customs Act, respondent No. 2 had authority and right to seize the Buick car as he did.

The petitioner has challenged the above seizure of the Buick car by respondent No. 2 on several grounds. The petitioner contends that the Buick car was seized without affording to the petitioner the reasons for such seizure in accordance with the provisions of s. 181 of the Sea Customs Act. The petitioner''s case is that non-compliance with the provisions of s. 181 invalidates the act of seizure altogether and the detention of the car is accordingly illegal. The petitioner further contends that, as is admitted by the respondents, in fact the Assistant Collector of Customs was present at the auction sale and the auction was held not only under the order dated November 9, 1960, but also with complete knowledge and consent of the Customs authorities. The petitioner was, having regard to the above order dated November 9, 1960, and the presence of the Assistant Collector of Customs at the auction, led to believe that there was no question of the goods continuing to be offending goods and that accordingly all contentions regarding the goods being offending goods must be held to have been waived on behalf of the Union of India. The petitioner has also challenged the order dated November 15, 1960, made by the Additional Collector of Customs. The petitioner came to know of the existence of that order only as a result of the statements made in the affidavit in reply. The petitioner''s case is that having regard to the first order of confiscation dated November 9, 1960, it was not permissible for the Additional Collector of Customs to make a second order of confiscation in respect of the same goods and the second order accordingly must be held to be invalid.

As regards the further order of the Additional Collector of Customs dated December 20, 1960, whereby the Additional Collector of Customs in (exercise of powers of) revision under s. 190-A purported to cancel the order of the Assistant Collector of Customs dated November 9, 1960, the petitioner contends that the order in question was made without giving any notice to the petitioner. In the matter of making that order, the Additional Collector of Customs failed to comply with the provisions of s. 190-A of the Sea Customs Act. He also was guilty of violation of principles of natural justice, inasmuch as he failed to afford any opportunity of a hearing or to give any notice of the proposed order to the petitioner.

The respondents have by their affidavit in reply and in Court before me made the following contentions:--

The Assistant Collector had no jurisdiction to make the order dated January 9, 1960, as in the matter of the Buick car the Additional Collector was seized of the enquiry for decision of the question of the goods being offending goods and imposition of penalty and fine under s. 167(8). The respondents contend that the Assistant Collector adjudicated the matter of the goods being offending goods without giving notice to Purie and Mauji and Bensimon. The Assistant Collector made his order in ignorance of the proceedings which were initiated and being continued by the Additional Collector of Customs. The respondents, therefore, contend that the order of the Assistant Collector must be treated as not existing. If that contention is not accepted, the respondents contend that by reason of the order of the Collector dated December 31, 1960, the order of the Assistant Collector must be treated as having been cancelled retrospectively and as not existing so as to afford any protection to the petitioner. The respondents also further contend that the petition is premature. The respondents contend that the order of the Additional Collector dated November 15, is a binding order of confiscation.

Now, in connection with the arguments advanced on behalf of the parties, it is first necessary to notice certain provisions of the Sea Customs Act and the Bombay Port Trust Act and also that both the parties have proceeded on the footing that the Buick car in question had been imported into India contrary to and in breach of the provisions of the Imports and Exports (Control) Act and Imports Control Order. In connection with the illegal import of the Buick car, it is obvious that pending investigation and enquiry, the Customs authority seized and detained the car. The detention and seizure must be obviously under the provisions of ss. 19, 19-A and 178 of the Sea Customs Act. Provision is made under ss. 19-A and 178 of the Sea Customs Act for authorising the officers of Customs to detain and seize anything "liable to confiscation" under the Sea Customs Act. Under the Imports and Exports (Control) Act, all goods which are imported contrary to the provisions of that Act are liable to be proceeded with as if the import was prohibited under s. 19 of the Sea Customs Act. Under s. 179 of the Sea Customs Act, all goods detained and seized pending adjudication and confiscation thereof are to be kept with and are kept in custody of the customs officer authorised to receive such goods. In this connection, it is also necessary to notice that in respect of all goods imported, it is necessary for the importer to apply to the Customs House for clearance of the goods for home consumption. Under the provisions of ss. 81 to 88 of the Sea Customs Act, a clear scheme is provided as to the goods being continued in custody and possession of the Customs pending their clearance for home consumption. By reason of the scheme of s. 89, the imported goods cannot be cleared for home consumption until an order for clearance is made by the Customs House. Under the scheme of s. 88, all uncleared goods can he sold by public auction by the Customs House and in connection with the goods sold, under that section, from the sale proceeds customs duties leviable can be recovered. All amounts payable to the Government can be recovered and the balance is payable to the owner of the goods. In this connection, it is necessary to bear in mind that for maintenance of Ports of Calcutta and Bombay a slightly different scheme from that mentioned in the provisions of ss. 81 to 88 is evolved. The scheme for the Port of Bombay is contained in the Bombay Port Trust Act, 1879. Under that scheme, in connection with the goods detained by the Customs and not cleared, the rates and wharf charges are recoverable by the Port authorities. Right is conferred under ss. 64 and 64-A of the Bombay Port Trust Act for auction sale by the Port Authorities of the goods of import for recovery of the rates not paid and when the goods are not cleared within the period mentioned in the provisions of those sections. The Port authorities have a lien for the charges on the goods. The lien, however, is subject to the lien for freight, etc., of ship owners as also the right of the Government for all moneys payable to Government as appears from s. 51 of the Act. The sale proceeds of goods sold under ss. 64 and 64-A are directed under s. 65 to be used first for payment of the ship owners'' freight, etc., and moneys payable to Government, and then towards expenses of sale and thirdly towards the rates and expenses of the import and the surplus is directed to be paid over to the owner of the goods. The scheme in ss. 64, 64-A and 65 is similar to the scheme in s. 88 of the Sea Customs Act. The sections are complementary of each other. Having regard to the rights of the Customs for collecting customs duty and for enforcing the administration of sea customs, including enforcement of prohibition and restrictions on imports under s. 19 of the Sea Customs Act and also Imports and Exports (Control) Act and Import (Control) Order, obviously, it was necessary to provide that the rights of the Customs must always be paramount. It was, accordingly, provided by s. 69 of the Bombay Port Trust Act as follows:--

Nothing in this Act shall be deemed to affect-

(a) the right of the Central Government to collect customs duty....;

(b) any power or authority vested in the Customs authorities under any law for the time being in force for the administration of sea-customs.

Having regard to the above scheme of the above two Acts, in all cases where goods are seized and detained and not allowed to be cleared by Customs, it is impossible for the Port authorities to hold auction sales under the provisions of s. 64 or s. 64-A until after requisite orders and directions are given by the Customs authorities.

Apparently, in respect of the 125 items of different goods as mentioned in the particulars at the foot of the order of the Assistant Collector of Customs dated November 9, 1960, auction sale thereof by the Port authorities under the provisions of ss. 64 and 64-A of the Bombay Port Trust Act was desired. It was impossible for the Port authorities to sell these goods until after the requisite orders and directions were given by the Customs authorities. It is accordingly that the Assistant Collector of Customs made his order dated November 9, 1960. The clear effect of the findings in that order is that the goods mentioned in the order were ordered to be confiscated because they were offending goods, i.e. goods which were imported into India in breach of the provisions of the Imports and Exports (Control) Act, 1947. The goods were confiscated under s. 167(8) of the Sea Customs Act. As I have already mentioned, admittedly, the goods in this case were offending goods and were imported in breach of the provisions of the Imports and Exports (Control) Act, 1947. In connection with such goods, it is apparent that the Assistant Collector of Customs had under the scheme of the Sea Customs Act as contained in ss. 167 to 191 jurisdiction to make the order of confiscation as he in fact did. The further effect of his order was that upon the sale of these goods by the Port Trust authorities through their auctioneers the Customs had no objection to the clearance of the goods from the Port. The order was accordingly a clearance order as required under s. 89 of the Sea Customs Act. The order also is a permission to the Port Trust authorities to sell off the goods subject to the payment of the customs duty chargeable and the fine imposed.

The result of the above order of confiscation, according to the scheme of s. 184 of the Sea Customs Act, was that the above Buick car immediately as a consequence of the order dated November 9, 1960, became vested in the Government. Under that section, the officer adjudging confiscation (the Assistant Collector of Customs) became bound to take and hold possession of the thing confiscated. Under that section, it would be the duty of all Police Officers, on the requisition of such officer, to assist him in taking and holding such possession. The effect of the provisions of s. 184 must be that upon confiscation and vesting of the goods in the Government, the goods must cease to be offending goods. The goods can be subsequent to the order of confiscation dealt with by the officer adjudging confiscation in such manner as is appropriate. The offence and infirmity involved in the import of such goods would not, subsequent to such order of confiscation, in any manner affect or attach to the goods. In other words, the goods would be available to be dealt with in the market by the Government or by its consent as if the same were not offending goods. As that is the true effect of s. 184, it is clear to me that at the date of the sale of the Buick car to the petitioner in the auction sale held on November 10, 1960, the goods were not offending goods and were free from the defect that had attached to the goods by reason of their illegal import.

According to a printed circular containing general conditions of sale as published by the auctioneers Messrs. Shankar Ramchandra & Bros as from the time of the sale thereof the auctioned goods lie at the sole risk and responsibility of the purchaser in all respects. The effect of that general condition, in my view, is that though time is permitted for payment of the balance of price, the goods in all respects are of the purchaser as from the date of the sale. This circular has been tendered on behalf of the respondents at the hearing. It contains about 19 printed terms of general conditions of sale. The print does not show that the circular or these general conditions of sale were in existence at the date of the auction of the Buick car. It is not possible to proceed to decide this petition on the footing that all the general conditions of sale as mentioned in the print were prevalent in November 1960 or binding on the petitioner. From the allegations as appearing in the petition, it is clear that the petitioner paid complete price of Rs. 71,000 to the auctioneers on November 16, 1960, and received delivery of the car. The petitioner as owner was in possession of the car at the date of seizure thereof on November 20, 1960.

The question is whether by reason of the second order of confiscation made by the Additional Collector of Customs on November 15, 1960, it was permissible for respondent No. 2 to seize the car from the petitioner under s. 178 of the Sea Customs Act. As I have already discussed above, the Buick car was, pending adjudication of confiscation, detained under the provisions of ss. 19-A and 178 and was in legal possession of the Customs House between September 22, 1959, and, November 9, 1960, when the order of the Assistant Collector was passed. Thereafter the goods were sold without being the offending goods. The sale was in accordance with the directions contained in the order dated November 9, 1960, and the provisions of s. 88 of the Sea Customs Act and ss. 64 and 64-A of the Bombay Port Trust Act. The sale was in the presence and with knowledge and consent of the Assistant Collector of Customs. In the first place, it is apparent that in connection with the goods which had been already vested in the Government under the scheme of s. 184 on November 9, 1960, in consequence of the order of the Assistant Collector of that date, it was not permissible and in any event not necessary for the Additional Collector of Customs to make the second order of confiscation dated November 15, 1960. Under the circumstances as above which had arisen in favour of the petitioner that order must be held to be not binding on the petitioner.

As the goods were not liable to be confiscated once again, in any event, it was not permissible for respondent No. 2 to proceed to seize the goods under s. 178 under which he purported to act. Section 178 provides as follows:--

Anything liable to confiscation under this Act may be seized....

Now, it appears to me that the clear meaning of the above phrase is that the action of seizure under that section must precede the order of adjudication of confiscation. The above being the true effect of the section, it is not permissible to seize any goods already ordered to be confiscated under that section.

Even if the view which I have taken as above is incorrect, it is clear that after the petitioner had become the purchaser of the goods (car) on November 10, 1960, it was not permissible for the Additional Collector of Customs to make an order of confiscation in respect of the Buick car so as to bind the petitioner without giving appropriate notice to the petitioner and without giving a hearing to the petitioner. On that ground also, it must be held that the order of confiscation dated November 15, 1960, does not bind the petitioner.

The further question to be decided relates to the order dated December 31, 1960, made by the Collector of Customs. A copy of that order is annexed as exh. 3 to the affidavit in reply of A. Athaide dated January 21, 1961. The order is stated to have been made under the revisional powers as contained in s. 190-A of the Sea Customs Act. The finding that is made in the order is that the Collector of Customs was not satisfied about the correctness of the order passed by the Assistant Collector of Customs on November 9, 1960, only as regards the amount of fine imposed by him. The finding is that the fine appeared to be inadequate looking to the gravity of the offence. For that sole ground the Collector of Customs exercised his powers under s. 190-A of the Sea Customs Act and directed that the order of the Assistant Collector (dated November 9, 1960), in so far as it related to the above car, be set aside and should stand vacated so as to have no effect whatsoever. He also ordered further re-adjudication of the case according to law.

Before referring to the provisions of s. 190-A, it is relevant to point out that this petition was presented on December 20, 1960. Notice of the petition and of the contents thereof was admittedly with the Collector of Customs before this revisional order was made. Obviously, it was apparent to the Collector on reading the petition that the order of the Assistant Collector dated November 9, 1960, was such that it was not permissible for respondent No. 2 to seize the car as he had done. To bring about a situation whereby the petitioner''s claim must be defeated the Collector of Customs thought fit to act in the manner appearing in the order dated December 31, 1960.

The proviso to sub-s. (1) of s. 190-A runs as follows:

Provided that no order prejudicial to any person shall be passed under this section unless such person has been given a reasonable opportunity of making a representation against the proposed order.

I have already pointed out all the circumstances in which the Collector of Customs made the order dated December 31, 1960. I cannot understand how having had the notice of this petition and having read the contents of the petition, it did not strike the Collector that the only person who was being prejudiced by the revisional order was the petitioner and no one else. The petitioner had claimed to be the owner of the car and had challenged the act of seizure of the car. All the rights of the petitioner flowed from the auction sale held on November 10, 1960, in consequence of the order dated November 9, 1960, which was being set aside by the Collector. Admittedly, the Collector failed to give any notice as compulsorily required under the provisions which I have quoted above. Having regard to that failure of the Collector, it is clear to me that the Collector proceeded to make his revisional order dated December 31, 1960, illegally and in violation of the provisions of s. 190-A. The Collector having failed to give any notice and any hearing to the petitioner, proceeded to make the order in violation of principles of natural justice. The order dated December 31, 1960, is, accordingly, invalid and not binding on the petitioner. Under the circumstances, that order cannot afford any ground of defence to the respondents.

In this connection, it is also necessary to mention that where auction sales are held under the provisions of s. 88 of the Sea Customs Act and ss. 64 and 64-A of the Bombay Port Trust Act with the consent of the Customs authorities and after confiscation of goods, it would be a highly improper thing for any Customs authority to revise the order of confiscation. It would be again further inappropriate that such action should be taken solely with a view to nullify the effect of the sale and to deprive the purchaser of possession of the goods purchased.

I must record that the arguments advanced on behalf of the petitioner were not on the same lines as discussed by me above. Mr. Patel relied upon the provisions of s. 207 of the Sea Customs Act and contended that the section when read with the provisions of ss. 64 and 64-A of the Bombay Port Trust Act must lead to the conclusion that once an auction sale is held under the Bombay Port Trust Act and delivery of the goods is effected to purchaser, the property in the goods passes to the purchaser free from any infirmity that attached to the goods. He also contended that as the sale of the Buick ear was held with concurrence and knowledge of the Assistant Collector of Customs, it was no longer open for the Customs to exercise powers of seizure vested under the Sea Customs Act. Now, it is unnecessary for me to consider in detail these contentions, as I have, for the reasons mentioned above, already found that the seizure of the Buick car was invalid.

The other contentions as contained in the petition are also unnecessary to be decided as I am in favour of the petitioner on the main ground above stated.

The respondent''s contention that the Assistant Collector had no jurisdiction, because the Additional Collector was seized of the matter of inquiry and investigation of the illegal import of the Buick ear, is without any substance. The source of jurisdiction of the Assistant Collector to make the order dated November 9, 1960, is in the provisions of the Sea Customs Act and the notifications and directions issued thereunder. Because the Additional Collector was seized of the matter, the above, provisions whereunder the Assistant Collector had jurisdiction do not stand nullified. Even in the revisional order of the Collector dated December 31, 1960, the above ground is not referred to as invalidating the order of the Assistant Collector. The above point might have been raised on behalf of Bensimon. But, prima facie, it is not open to the respondents to raise that contention. This is so because, admittedly, the Buick ear had been imported in violation of the Imports and Exports (Control) Act. For the very same reason, the contention that the order of the Assistant Collector is invalid as he had not given notice to Purie, Mauji and Bensimon, must be negatived. I negative the contention of the respondents that the order of the Assistant Collector must be treated as not existing. I also negative the contention of the respondents that the order of the Collector dated December 31, 1960, is binding on the petitioner. In the result, the respondents are directed to return and restore to the petitioner the Buick (Sedan) car 1959 Model mentioned in the petition forthwith. The respondents will pay costs of the petitioner.