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Judgment
D.G. Karnik, J.—By this petition, the petitioners seek an order of injunction restraining the respondents from recovering the penalty from them of Rs.5,00,000/imposed on the Second Officer of the Russian Vessel M.V. Yelena Stasova (for short �the vessel�) and/or by encashing the bank guarantee and other incidental reliefs.
The petitioners are the agents of the said vessel which entered the Port of Bombay on 3rd February 1991. On the basis of intelligence received, on 9th February 1991 the Directorate of Revenue Intelligence, Bombay Zonal Unit rummaged the vessel at 3, Indira Docks, Bombay and found on board contraband material, namely 25 Silver bars and 25 small white silver bars. The vessel was detained and the petitioners were called upon to furnish a bond with bank guarantee in the sum of Rs.62,00,000/for release of the vessel as per the draft of the format provided by the Directorate. The petitioners contended that they were not obliged to furnish a bond or a bank guarantee in the form furnished by the Directorate and, in any event were not required to furnish a bond for recovery of the penalty, if any, which may be imposed on any officers of the ship. The respondents, however, insisted that the vessel will not be allowed to sail from the Bombay Port unless the bank guarantee was furnished and, therefore, the petitioners were constrained to furnish a bank guarantee of Rs. 62,00,000/. A show cause notice on 29th May 1991 to the petitioners, the Master of the vessel, the vessel�s agent in Singapore and Mr. Yogorov Aleksandr, the Second Officer who was alleged to have put the silver bars on board, to show cause why the vessel should not be confiscated u/s 115(2) of the Customs Act, 1962 (for short �the Act�) and why the contraband silver bars be not confiscated u/s 111(d) of the Act. After the usual hearing, by an order dated 15th July 1992 the Collector of Customs ordered confiscation of the contraband silver bars and imposed a personal penalty of Rs. 5,00,000/on Mr. Aleksandr, the Second Officer u/s 112(1)(i) of the Act. The Collector, however, held that the vessel was not liable for confiscation u/s 115 of the Act and ordered its release to the owners, i.e. principles of the petitioners. The Collector also did not impose any penalty on the Master of the vessel or the petitioners. As the vessel had sailed along with the Second Officer Mr. Aleksandr, the attempt to recover penalty of Rs. 5,00,000/from him has failed. The Customs Authority, however, sought to recover the penalty by encashment of the bank guarantee given by the petitioners for release of the said vessel. The petitioners have approached this Court for injuncting the respondents from encashing the bank guarantee for recovery from them of the penalty imposed on the Second Officer and also for return of the bank guarantee duly cancelled.
The Collector by his order dated 15th July 1992 has held that the contraband silver bars were loaded onto the vessel by Mr. Aleksandr without the knowledge and consent of the owner or the Master of the ship. It is for this reason that the Collector did not impose a penalty of confiscation of the vessel and did not impose any fine on the owner or the Master of the ship. The Collector has further held that the goods were loaded by the Second Officer Mr. Aleksandr without the knowledge, consent or connivance of the owner or the Master of the ship and he alone was liable to pay the penalty. It is therefore clear that under the order of the Collector, the penalty imposed on the Second Officer Mr. Aleksandr cannot be recovered from the owner or the Master of the ship. Consequently, the petitioner, who is an agent of the owner, is also not liable to pay the penalty imposed on the Second Officer.
Learned Counsel for the respondents however submitted that the respondents were entitled to recover the penalty from the petitioners on the basis of the bond given by them for release of the ship. Reliance is placed on Clause (e) of the bond which reads as under:
(e) The Obligor (i.e. the petitioner) shall pay the fine, penalty and/or other incidental charges, if any, imposed on and/or due from them or any crew member under the order in adjudication passed by the said Collector of Customs in the subject proceedings.
Counsel for the respondents submitted that the bond was an independent contract entered into by the petitioners with the Customs Authorities and they are liable under the bond to pay the penalty.
Per contra, learned Counsel for the petitioners submitted that the bond was obtained from the petitioners under pressure and coercion by detaining the vessel. The petitioners were required to give a bank guarantee for the release of the vessel only for securing payment of any fine imposed on the vessel or at the most on the owner or the Master of the ship. They were not liable to give bond for payment of any fine or penalty that might be imposed on any crew member for any illegal and clandestine act under the Customs Act. However, the bond was forcibly taken under threat of detaining the vessel and not releasing it. In the circumstances, the counsel submitted that the bond could not be enforced against the petitioners for recovery of penalty imposed not on them but on Mr. Aleksandr, the Second Officer. In support, the counsel referred to and relied upon a decision of this Court in Hong Kong Island Shipping Co. Ltd. Vs. Additional Collector of Customs (Preventive) Bombay and others, .
In Hongkong Island Shipping Co. Ltd. (supra), the contravening goods were found in a cupboard in the ship. The adjudicating authority did not disbelieve the words of the Captain of the ship that they were kept there without his knowledge. The Customs Authorities insisted on a similar bond to be obtained from the ship owners undertaking the liability to pay the fine or the penalty imposed or due from any crew member after the order of adjudication. This Court held that though the Customs Authorities had secured the bond of the ship owners, it would not be appropriate to provide for recovery from the owners of fine or penalty imposed on any crew member under the adjudication proceedings if the contraband articles were brought on the ship without the knowledge or connivance of owner or the Master of the ship in spite of reasonable precaution taken by them. In our view, in the present case, without going into the contention of the petitioners that the bond was obtained from them by force for securing the liability for payment of penalty, if any, imposed on the crew member for bringing in the goods without the knowledge and connivance of the Master or owner of the ship, the petition would have to be allowed following the decision of this Court in the case of Hongkong Island Shipping Co. Ltd. (supra). According to the petitioners, they executed the bond in view of the decision of this Court that they would not be liable for payment of penalty which may be imposed on a member of crew (in this case Second Officer Mr. Aleksandr) for his illegal acts made without the knowledge or connivance of the owner or the Master of the ship. The decision of this Court was rendered in the year 1986 and has been accepted by the Customs Authorities and has not been appealed against. Relying on that decision and believing that the bond would not be enforced against them for recovery of any penalty imposed not on them but a crew member, they executed the bond. In view of this, the respondents are not entitled to recover the amount of penalty imposed on the Second Officer Mr. Aleksandr from the petitioners on the basis of a bond.
In view of what is stated above, the petition succeeds. We are informed that in lieu of extension of bank guarantee the amount thereof has been deposited in this Court and the bank guarantee was released. If so, the petitioners are entitled to the refund of the money so deposited together with interest, if any, accrued if the money has been invested.
For these reasons, the Rule is made absolute to the extent indicated above. The amount shall be refunded to the petitioners on production of a certified copy of this order.