Delhi High Court
Ajanta Arts vs Union Of India on 16 April, 2010
Author: G. S. Sistani
IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment dated 16.4.2010
+ WP(C)No.4552/2008
# M/S AJANTA ARTS COMPANY ..... Petitioner
Through : Mr. C. Hari Shankar and Mr. Tushar Kr.,
Advs.
versus
UNION OF INDIA & ORS. ..... Respondents
Through : Mr. Satish Aggarwala, Adv. for
respondents no.1 and 4.
Mr. D.D. Singh, Adv. for respondent no.2.
Mr. M.Devnath, Adv. for respondent no.3
CORAM:
HON'BLE MR. JUSTICE G.S. SISTANI
1. Whether reporters of local papers may be allowed to see the
Judgment ?
2. To be referred to the Reporter or not?
3. Whether the Judgment should be reported in the Digest?
G.S. SISTANI, J. (ORAL)
1. The present petition has been filed under Article 226 of the
Constitution of India for issuance of a writ of mandamus directing
respondent no.2 (Container Corporation of India Ltd.) to hand over
the delivery of a consignment of Pig Bristles (imported in Container
No. HDMU 2368478 (LOT No. - 106)) to the petitioner as well as a
writ of prohibition, restraining respondent no.2 from handing over
the delivery of the said goods to any other person.
2. The facts leading to the filing of this writ petition are that a
consignment of „pig bristles‟ arrived at Inland Container Depot (ICD),
Tuglakhabad on 11.08.07, in Container No. HDMU 2368478. Learned
counsel for the petitioner submits that under Section 46 of the
Customs Act, 1962 (hereinafter referred to as "the Customs Act")
the importer of any goods is required to file a Bill of Entry and
present it to the officer concerned in the prescribed format. Once
such Bill of Entry is filed, if the goods are imported, and duty
payable has been paid thereon, clearance may be given thereof
under Section 47 of the Customs Act.
3. Learned counsel for the petitioner submits that, no Bill of Entry
(hereinafter referred to as "B/E") was filed in respect of the said
consignment of „pig bristles‟ that had arrived in the Container No.
HDMU 2368478, by any person, neither was the said consignment
claimed by any importer and it remained un-cleared in the
warehouse of respondent no.2, who was the custodian of the said
goods. It is submitted that Section 48 of the Customs Act deals with
procedure in cases where goods are not cleared from the warehouse
or transit within 30 days after they are unloaded. Section 48 reads
as under:
"Procedure in case of goods not cleared, warehoused, or
transhipped within [thirty days] after unloading. - If any
goods brought into India from a place outside India are not
cleared for home consumption or warehoused or
transhipped within [thirty days] from the date of the
unloading thereof at a customs station or within such further
time as the proper officer may allow or if the title to any
imported goods is relinquished, such goods may, after
notice to the importer and with the permission of the proper
officer be sold by the person having the custody thereof :
Provided that -
(a) animals, perishable goods and hazardous goods, may,
with the permission of the proper officer, be sold at any
time;
(b) *****"
4. Section 150 of the Customs Act deals with the procedure for sale of
goods, the same reads as under:
"Procedure for sale of goods and application of sale
proceeds. - (1) Where any goods not being confiscated
goods are to be sold under any provisions of this Act, they
shall, after notice to the owner thereof, be sold by public
auction or by tender or with the consent of the owner in any
other manner.
(2) The proceeds of any such sale shall be applied -
(a) firstly to the payment of the expenses of the sale,
(b) next to the payment of the freight and other charges, if
any, payable in respect of the goods sold, to the carrier, if
notice of such charges has been given to the person having
custody of the goods,
(c) next to the payment of the duty, if any, on the goods
sold,
(d) next to the payment of the charges in respect of the
goods sold due to the person having the custody of the
goods,
(e) next to the payment of any amount due from the owner
of the goods to the Central Government under the
provisions of this Act or any other law relating to customs,
and the balance, if any, shall be paid to the owner of the
goods."
5. Counsel for the petitioner submits that respondent no.2 auctioned
several consignments lying uncleared with it, to tender-cum-online
auction sale, which included the goods under consignment of „pig
bristles‟ imported under container No. HDMU 2368478 as described
in the notice of auction as "General Cargo". The terms and
conditions of the auction were contained in the Notice issued by
respondent no.2 in this regard.
6. It is the case of the petitioner that petitioner had offered a tender
amount of Rs.41,42,435 for the consignment of „pig bristles‟ which
had arrived in container No. HDMU 2368478, in response to the
above auction notice issued by respondent no.2, a part of tender
money was paid by the petitioner along with the tender itself. As the
petitioner was the highest bidder for the said consignment, and the
same being manifest from the final result of the auction notified by
respondent no.2 on 10.4.08 which specifically approved the
petitioner‟s bid, the petitioner applied for further necessary
clearance, as per Circular No.13/2007-Cus dated 02.03.07 issued by
the Central Board of Excise and Customs (hereinafter referred to as
"CBEC") and the same required that all consignments of live stock
products be cleared by the Animal and Quarantine Departments.
Learned counsel for the petitioner submits that vide letter dated
25.04.2008, the sample was forwarded by respondent no.2 to the
Animal and Quarantine Departments and a bare reading of the said
letter itself discloses that respondent no.4 had acknowledged the
fact that the goods even on that date stood sold to the petitioner.
7. It is submitted by the counsel for the petitioner that even otherwise,
in accordance with the Bill of Entry Regulations, a consolidated Bill
of Entry prepared by respondent no.2 and submitted to Customs
Authorities, by virtue of Regulation 3 the said Bill of Entry filed by
the custodian of the goods was deemed to be a Bill of Entry filed
under Section 46(1) of the Customs Act.
8. It is the case of the petitioner that on 29.05.2008, respondent no.3,
the original importer of the goods, illegally filed a Bill of Entry for
clearance, for home consumption in respect of the goods imported
in container No. HDMU 2368478. As Bill of Entry in respect of the
goods imported vide consignment No. HDMU 2368478, has already
been filed by respondent no.2 as per Section 46 of the Customs Act,
there is no question of any Bill of Entry being filed by any other
party in respect of the same goods, and any such Bill of Entry filed
by respondent no.3 would be null and void.
9. It is contended by counsel for the petitioner that it is undisputed that
respondent no. 3 was given a notice regarding the auction of the
said consignment of „pig bristles‟ and despite notice having been
served, the petitioner decided not to participate in the auction.
Learned counsel for the petitioner submits that the petitioner has
not only participated in the auction but has been officially declared
as the highest bidder. The petitioner has also paid the requisite
payment as stipulated in the terms and conditions relating thereto,
and after having secured the necessary certification in accordance
with Circular No.13/2007 dated 02.03.07 issued by the CBEC,
petitioner is entitled as of right to the delivery of the goods imported
under Consignment No. HDMU 2368478, LOT No. 106. It is further
submitted that on 11.06.08 and 13.06.08, the petitioner had also
addressed a representation to respondent no. 4, inter alia stating
that petitioner was entitled to the delivery of the goods, however no
response was received from the department.
10. It is further contended by counsel for the petitioner that the title in
the goods in question has already passed to the petitioner. The
petitioner‟s bid has been finally accepted and the petitioner has also
submitted the requisite certification, as required vide Circular
No.13/2007 issued by the CBEC. Thus counsel contends that it is not
open to any of the respondents to take a stand that the final
confirmation is yet to take place. Once the payment has been made
by the petitioner and the requisite certificates produced, the
petitioner is entitled to receive the goods released in its favour. The
only exercise remaining to be carried out was the grant of the final
confirmation by the custom authorities and the payment of the
balance amount by the petitioner thereafter, which petitioner
undertakes to pay. It is next submitted by counsel for the petitioner
that the petitioner cannot be divested of its right to the possession
and delivery of the goods in issue. It is submitted that ex facie, the
filing of the „Bill of Entry‟ by respondent no.3 is not bonafide,
especially keeping in view the period of almost one year which has
elapsed between the arrival of goods and the filing of the Bill of
Entry. Counsel for the petitioner submits that it appears that officials
of respondents no.2 and 4 are permitting such belated filing of the
Bill of Entry to suit their own ends. Learned counsel for the petitioner
submits that it is not permissible, in the present circumstances, for
respondents no.2 and 4 to even delay the delivery let alone deny
the delivery of the goods to the petitioner for which the petitioner
has submitted the highest bid and fulfilled all requisite formalities.
11. While opposing the present petition, learned counsel for
respondent no. 2 submits at the outset that the present petition is
not maintainable since it involves disputed question of facts which
cannot be adjudicated upon by this Court exercising its jurisdiction
under Article 226 of the Constitution of India and thus the petition is
liable to be dismissed with costs.
12. Learned counsel for respondent no. 2 submits that even
otherwise, there is no merit in the case of the petitioner, as the
original importer-respondent no.3 had approached the Custom
Authority for release of the Cargo/consignment and the Custom
Authority had allowed respondent no.3 to file its Bill of Entry on
29.05.2008 to facilitate the clearance of the same. Respondent no.3
was allowed to submit his Bill of Entry on the basis of the policy of
the Government to encourage importers and to safeguards their
interest by allowing the said cargo to be lifted by the importer
himself, instead of it being sold in auction to a third party to the
detriment of the importer, in case the importer is ready and willing
to pay the Customs Duty, terminal service charges and other
miscellaneous charges. Learned counsel submits that the importer
has a right in law to file a Bill of Entry in case the consignment has
not been sold and goods physically not handed over to the bidder,
subject to the importer paying the various dues and custom duties
as contemplated under the law. It is submitted that in this case, the
importer-respondent no.3, has paid Rs.2,29,000.00 as ground rent
and Rs.28,500/- as terminal service charges as on 17.06.2008. In
addition, respondent no.3 has also paid Customs Duty on the
consignment. The consignment being in possession of respondent
no. 2 and the importer-respondent no.3 having deposited the ground
rent, terminal service charges customs duty and also having
deposited Rs.4,14,243.00 on 18.06.2008 i.e. auction expenses which
are 10% of the auction bid amount as contemplated by the circular
issued by respondent no.3 vide notification bearing
no.CON/CT/2/V12AUCTION/2005/17 dated 20.09.2005, the said
respondent no. 3 therefore became entitled to the delivery of the
said consignment of pig bristles. Counsel for respondent no. 2 has
denied that the petitioner has addressed any representation dated
11.6.2008 and 13.6.2008 to respondent no.4.
13. It is further submitted by learned counsel for respondent no. 2
that moreover as per Clause 3 (ix) of the terms and conditions of the
tender-cum-online-auction sale, respondent has the discretion to
withdraw from the sale, a lot or part thereof at any time before the
goods are actually, physically delivered out of the campus and
without disclosing any reasons for such withdrawal. Learned counsel
for respondent no. 2 submits that respondent no.4 vide letter dated
13.06.08 withdrew the lot of „pig bristles‟ in question, in accordance
with Clause 3 (ix) of the terms and conditions of the auction and in
view of the said withdrawal, respondent no. 2 could not have given
delivery of the shipment to the bidder/petitioner inasmuch as the
instructions of the Customs Authorities are binding on respondent
no.2. Therefore, the petitioner lost its right to take delivery of the
lot/consignment in question.
14. Learned counsel for respondent no. 2 has further vehemently
submitted that even otherwise, mere confirmation of a bid does not
cloth the petitioner with the title of the consignment, till the physical
possession of the consignment is handed over to the bidder i.e. the
present petitioner in the case. It is submitted that the petitioner has
not even exhausted the alternative remedies as provided for within
the meaning of Clause 12 of the terms and conditions of the tender-
cum-online auction sale and that the present petition is premature
since no cause of action has arisen in favour of the petitioner
inasmuch as the petitioner has no lien on the said consignment.
15. Learned counsel for respondent no.3 submits that, the writ
petition filed by the petitioner is not maintainable as per the terms
and conditions agreed upon between the petitioner and respondent
no.4, at the time of the tender-cum-auction sale, inasmuch as, any
dispute that arises under the contract has to be placed before an
arbitrator. In other words, if the petitioner is aggrieved by any clause
of the contract entered with respondent no.4, the petitioner being
bound by the contract cannot ignore the arbitration clause. In
support of this contention, learned counsel relies upon Prasanna
Kumar & Others Vs. The Deputy Commissioner, reported at
2006 (203) ELT 375, more particularly paras 7 and 8, which are
reproduced below:-
"7. The learned counsel further submitted that though
the impugned order refers to condition No.11 of the
general conditions of sale, which reads as follows:
"Any lot or part thereof may be withdrawn from the
sale at any time before it is actually physically
delivered out of the campus without disclosing the
reasons for such withdrawal. However, if any payment
has been made it would be refunded without any
interest", that will not entitle the respondents to
refrain from disclosing the reasons for such
withdrawal.
8. I am unable to accept the said contention of the
learned counsel for the petitioner. The impugned
order cannot be said to be arbitrary or opposed to the
principles of natural justice. It is categorically stated in
condition No.11 that any lot or part thereof may be
withdrawn from the sale at any time before it is
actually physically delivered out of the campus
without disclosing the reasons for such withdrawal. It
is not the case of the petitioner that the goods were
actually physically delivered out of the campus.
Further, the petitioner has been advised to approach
Sanco CFS to get the amount paid by him refunded,
which is strictly in accordance with the above said
condition. The petitioner may not be put to any
financial loss. The petitioner had taken part in the E-
Auction only after fully knowing about the general
conditions of sale including condition No.11 of the
general conditions of sale. Having accepted the
conditions of sale and having taken part in the E
Auction, accepting to abide by the general conditions
of sale, it is not open to the petitioner to question the
right of the respondents to withdraw the auctioned
goods from the sale. In the impugned order, it is
clearly stated that due to administrative reasons, the
auctioned goods have been withdrawn from the sale.
Condition No.11, as extracted above, clearly shows
that the respondents are entitled to withdraw the
auctioned goods from sale without disclosing the
reasons for such withdrawal."
16. Learned counsel for respondent no.3 further submits that the
petitioner has not presented the correct factual position before this
court. Learned counsel submits that correct facts of the case are
that respondent no.3 entered into a sales contract with M/s CHONG
QING SHENGCHENG ANIMAL BY-PRODUCTS (hereinafter referred to
as "M/s CHONG QING") for a consignment of „white boiled bristles‟
with certain specifications. Accordingly, the sales invoice and a Bill
of Lading was drawn. M/s CHONG QING confirmed the receipt of an
advance payment of US $ 2000 from respondent no.3 and in
pursuance of the said agreement, respondent no.3 received pig
bristles from M/s CHONG QING in the month of August, 2007. The
consignment consisting of pig bristles arrived at ICD, Tughlakabad,
New Delhi in August 2007 in container No.HDMU 2368478. Prior to
the arrival of the container in June, 2007, and 1.8.2007, the import
of pig bristles was prohibited as per Notification dated 2.2.2007 of
the Department of Animal Husbandry as well as the Government of
India, Ministry of Commerce, further vide Notification dated
13.3.2007 issued a similar notification prohibiting the entry of live
pig and pig meat products. Learned counsel for respondent no.3
further submits that, however, there was an embargo on the import
of processed pig bristles which embargo was removed only in
November, 2007 and notified on 23.5.2008, subject to a No
Objection Certificate being granted by the Department of Animal
Husbandry as well as the Quarantine Department.
17. Mr. M.P. Devnath, learned counsel for respondent no.3, submits
that Department of Animal Husbandry has been issuing notifications
from time to time starting from 2.2.2007; June, 2007; and August,
2007, onwards. Simultaneously, Ministry of Commerce has also been
issuing the notification Codes. As per the notification issued,
originally the prohibition for import was with respect to live pig and
pig meat. Subsequently in June, 2007, pig bristles were included. By
a subsequent notification issued in November, 2007, pig bristles
were excluded from the order of prohibition subject to the condition
that they would require a passage by the Department of Animal
Husbandry as also by the Quarantine Department. Counsel further
submits that in view of the above notifications, the consignment
could not be cleared on arrival and remained with the Customs. The
notification of November, 2007, would not have been applicable to
the consignment, in question, as the import, had been carried out
earlier. Meanwhile, the Custom authorities initiated auction
proceedings under Section 48 of the Act. Counsel for respondent
no.3 also submits that the auction per se is bad in law and the goods
could not have been auctioned nor auction proceedings could have
been initiated as per the Customs Manual read with CBEC
clarifications as the prohibited goods can only be absolutely
confiscated and thereafter would either have been re-exported or
destroyed. Counsel for respondent no.3 next submits that in similar
circumstances a letter was addressed to M/s Seiko Bristle
Corporation, by the Ministry of Agriculture, a copy of which has been
placed on record, wherein the Regional Officer, Department of
Animal Husbandry, had informed the Assistant Commissioner,
Customs, that the products may either be deported back to the port
of origin or destroyed at the owners cost.
18. Counsel for respondent no.3 submits that when the auction was
initiated in March, 2008, respondent no.3 did not participate
because Sh. Deepak Gaba, the concerned person, was unwell for a
long time and even otherwise respondent no.3 was under the
impression that the goods could not have been auctioned being
prohibited goods. It is next contended by counsel for respondent
no.3 that it is only by a notification dated 23.5.2008 that the earlier
notification was amended and the terms thereof relaxed by allowing
import of pig bristles subject to clearance by Quarantine and goods
free from any virus infection by the Animal Husbandry Department,
subject to the condition that the relaxation would follow for imports
made post 5.6.2007 but prior to 11.11.2007 in a situation where
either advance payment has been made, LC opened and shipment is
prior to 5.6.2007. Despite the fact that prohibited goods could not
have been put to auction the same were auctioned in March, 2008,
through the instrumentality of the Container Corporation of India,
subject to the condition of final approval of the Custom of the
auction proceedings. The consignment was put to auction and a bid
for Rs.41.0 lakhs was made inclusive of Custom Duty of Rs.19.66
lakhs, Rs.3.37 lakhs payable to respondent no.2 and de-auction
charges of Rs.4.00 lakhs. Counsel for respondent no.3 further
submits that keeping the aforesaid calculations in mind, respondent
no.3 would only receive approximately Rs.14.00 lakhs. Counsel for
respondent no.3 also submits that petitioner has only deposited a
sum of Rs.8.00 lakhs and the balance payment has to be made only
after the Custom Authorities finally approve the auction and allow
the clearance.
19. It has been strongly urged by learned counsel for respondent no.3
that the goods could have not been auctioned being prohibited
goods, however, due to prevalent situation of Bird Flu, etc., after the
auction, a condition was put for seeking clearance from the Animal
Husbandry Department, Ministry of Agriculture and Quarantine
Department. Learned counsel for respondent no.3 submits that if the
goods could be released to the petitioner based on this criteria, then
respondent no.3, who was original importer, could also have cleared
the goods unaffected by the notifications. Subsequently, in the end
of May, 2008, the Certification was given by the Ministry of
Agriculture as also by the Wildlife Authorities with regard to
consignment. More so when the certificate was issued, the
notification had already come into effect on 23.5.2008 providing
relaxation to consignments paid for and imported by respondent
no.3. Consequently, Custom Authorities did not approve the delivery
of auction to the petitioner as the consignment had been paid for
and imported by respondent no.3 from China and due to intervening
spread of Bird Flu, the consignment could not be cleared either by
respondent no.3 or by the auction purchasers. The Custom
Authorities took into consideration the fact that the advance
payment had been made by respondent no.3 to the seller,
respondent no.3 would be covered by notification dated 23.5.2008,
and took a conscious decision in the interest of justice, equity and
fair play in favour of respondent no.3, the original importer, by
permitting him to file Bill of Entry and allowing clearance of goods.
Counsel for respondent no.3 further submits that respondent no.3
has paid Custom Duty of Rs.19.66 lakhs with interest accrued
thereon; the land retention charges of CONCOR, respondent no.2, of
Rs.3.37 lakhs; paid auction / de-auction charges of Rs.4.00 lakhs to
the Container Corporation, as also Rs.1.77 lakhs to the Shipping
Line, besides roughly Rs.52.00 lakhs to the foreign supplier, totaling
approximately Rs.81.00 lakhs, as against which the petitioner has
only paid a sum of Rs.8.00 lakhs i.e. the 20% of the auction amount.
Counsel for respondent no.3 also submits that respondent no.3, the
original owner of the Cargo, had never abandoned or relinquished
title of the goods, which could only have been acquired after the
Ministry of Agriculture took a conscious decision that imports which
had been made after 5.6.2007 should also be entitled to be cleared
subject to the conditions.
20. Counsel for respondent no.3 has relied upon Clause 3.0 (ix) of the
Terms of Auction, in support of his plea that the Custom
Department, respondent no.4, was well within their right to withdraw
any lot or part thereof from the sale at any time before actual
delivery. Clause 3.0 (ix) of the Terms of Auction which is reproduced
below:
3.0 CONDITIONS OF SALE.
ix) Any lot or part thereof may be withdrawn from the
sale at any time before it is actually physically
delivered out of the campus without disclosing the
reasons for such withdrawal. However, if any payment
has been made it would be refunded without interest.
21. Learned counsel for respondent no.3 has also relied upon Clause
12.0 of the conditions of auction, in support of his contention, that
the present petition would not be maintainable as dispute between
the parties are to be resolved through Arbitration. Clause 12.0 reads
as under:
12.0 DISPUTES
i) In case of any dispute, the same shall be
referred to a single arbitrator, to be appointed by the
Container Corporation of India Ltd. and the Arbitration
proceedings would be governed by „Arbitration and
Conciliation Act‟ 1996.
ii) The fees and expenses towards arbitration
proceedings shall be shared, equally, by the parties to
the dispute and shall be paid in advance to the
auctioner. The jurisdiction for appealing against the
award in a court, or any other proceedings under the
Arbitration Act, shall be that of courts in Delhi / New
Delhi only.
22. Learned counsel for the respondents has relied upon B. Prasanna
Kumar and others Vs. Deputy Commissioner of Customs,
Chennai, W.P.No.6379/2006, and more particularly paras 16 and
17, wherein in similar circumstances the Court had dismissed the
writ petition, as disputes had to be resolved through Arbitration.
Paras 16 and 17 read as under:
16. When condition No.28 of the general conditions
of auction provides for arbitration, the petitioner
is bound by the same and the petitioner cannot
ignore the arbitration clause and approach this
Court under Article 226 of the Constitution of
India.
17. It is settled law that if a right has been claimed
in terms of the contract, such a right cannot be
enforced in a writ petition filed under Article 226
of the Constitution of India. In other words, the
extraordinary remedy cannot be invoked for the
enforcement of contractual obligations, since
the same can be resorted to on the basis of the
agreement executed between the parties, i.e. by
invoking the arbitration clause. It is also a
settled law that a party to a contract is bound by
the arbitration clause contained in the contract
and he has to seek for arbitration in terms of the
stipulations contained in the agreement. Hence,
having agreed to abide by the conditions
contained in general conditions of the auction,
which contain as above said an arbitration
clause in condition No.28, the petitioner cannot
invoke the writ jurisdiction of this Court.
23. Learned counsel for respondents no.1 and 4 while supporting the
case argued by counsel for respondents no.2 and 3 submits that the
case of the petitioner is devoid of any merit.
24. Learned counsel for respondent no.4 submits that in the auction
held on 26/27.03.2008 (as per the petitioner it was held on
27/28.03.2008), the consignment comprising of pig bristles in
container No.HDMU 2368478, was sold at the highest bid price of
Rs.41,42,435/- to the petitioner. Samples were drawn and sent to
the wild life as well as to the quarantine department for obtaining
the requisite No Objection Certificate (NOC). The test reports from
both the departments were received and both had given the NOC.
The NOC dated 29.05.08 issued by the Animal Quarantine and
Certification Service, Ministry of Agriculture, Government of India,
was submitted to the respondent no. 4 on 30.05.08 (as per the
petitioner the correct date is 29.05.08) by CONCOR (respondent no.
2).
25. However, counsel for respondents no.1 and 4, submits that before
the NOC could be issued so as to release the consignment to the
petitioner, a representation dated 02.06.08 was received from the
importer (respondent no.3) as it had filed the Bill of Entry No.698971
dated 29.05.08 and it had sought permission for clearance of goods.
And in view of the Departmental Circular bearing No.50/2005 dated
01.12.05, which lays down the procedure for disposal of
unclaimed/uncleared cargo and wherein it is clearly mentioned that
the reserve price and bids would have to be first approved by the
customs authority and that it is mandatory on the part of the bidder
participating in the auction to seek confirmation from the Customs,
therefore in the present scenario, the Department (respondent no.
4) vide letter dated 09.04.08 specifically directed CONCOR
(respondent no. 2) to stop the delivery of the consignment of pig
bristles with immediate effect. Vide letter dated 13.06.08, the
Department further directed CONCOR that respondent no.3, being
the original importer, had the first right to the consignment of pig
bristles and thus the consignment was asked to be withdrawn from
the auction held on 27/28.3.08. Learned counsel further submits that
merely because respondent no.3 has filed a delayed Bill of Entry, the
same does not imply that it had thereby relinquished its title to the
goods. It is further pointed out that pig bristles, subject matter of the
case herein, were a prohibited item, which prohibition was lifted only
on 23.05.08, subject to the fulfillment of certain conditions. The
Ministry of Agriculture, Government of India, had vide notification
dated 23.05.08 published in the Gazette on 26.05.08, allowed
clearances of imported processed bristles subject to fulfillment of
conditions laid down therein. Thus, all the importers who had
imported these goods were not able to get clearances and it is quite
probable that respondent no.3 was unable to get his goods cleared
from the Department, at an earlier point of time. Mr. Aggarwal
submits that even otherwise, the Department is getting a higher
revenue from respondent no.3 than it will be getting through the
auction. Accordingly for cogent reasons, the Department gave a No
Objection Certificate to respondent no.3 vide letter dated 13.06.08.
It is submitted that the importer has the legitimate right to the
goods till the time the goods are lying with the custodian and that
the petitioner‟s claim on the consignment of Pig Bristles (imported in
Container No. HDMU 2368478 (LOT No. - 106)), is null and void.
26. In the rejoinder filed by the petitioner to the counter affidavit of
respondent no.1 and 4, it has been stated that the reliance placed
upon by respondent no.1 and 4 on circular no.50/2005 in support of
the contention that the goods can be withdrawn from the auction, is
entirely misplaced. It is contended that the said circular is totally
inapplicable in the facts of the present case as the said circular
clearly states that the liberalised procedure would not apply to
goods which have been lying uncleared for a period of less than one
year from the date of their import. Even assuming, without
admitting the fact that the said circular is applicable, the said
circular supports the case of the petitioner by clearly stating that the
customs shall not withdraw any consignment at the last moment
from the auction except with the written approval of the
Commissioner of Customs. Such a procedure has been prescribed to
prohibit unreasonable withdrawing of any consignment. It is further
stated that respondent no.3 had failed to exercise its right during
the period the goods were lying with the custodian i.e. within thirty
days after the date of unloading. Now after a considerable lapse of
time, when the petitioner has obtained the necessary documents,
required for the sale of goods, the claim of respondent no.3 to the
goods is clearly impermissible.
27. I have heard learned counsel for the parties and given my
thoughtful consideration to the matter. The basic facts are not in
dispute that respondent no.3 entered into a sales contract with M/s
CHONG QING SHENGCHENG ANIMAL BY-PRODUCTS for a
consignment of white boiled bristles in April, 2007. A copy of sales
invoice has been placed on record. Respondent no.3 also made an
advance payment of US $2000 to the seller. The consignment of pig
bristles arrived at ICD, Tughlakabad, New Delhi, in August, 2007 in
Container No.HDMU 2368478. As the consignment remained
uncleared, the same was put to auction on 27/28.3.2008. The final
result of the auction held on 27/28.3.2008 was declared on
10.4.2008 and petitioner was declared as the successful bidder. In
the final list it was mentioned that the Lot was subject to Customs
clearance.
28. A preliminary objection has been raised by counsel for the
respondents with regard to maintainability of the writ petition on the
ground that there is an arbitration clause, which binds the petitioner
and respondent no.4. Copy of the terms and conditions of auction
have been placed on record. Clause 12.0 of the conditions of auction
has been reproduced above. Counsel for respondent no.3 has placed
reliance on B. Prasanna Kumar and others Vs. Deputy
Commissioner of Customs, Chennai, W.P.No.6379/2006, and
more particularly paras 16 and 17, which are reproduced above,
wherein a Single Judge of the Madras High Court has held that
parties are bound by the terms of the Contract. I see no reason to
take a different view than the view taken by the Madras High Court
in the case of B. Prasanna Kumar and Others (supra). However,
taking into consideration that the matter has been heard at length
on merits, I consider it appropriate to decide the matter on merits as
well.
29. At this stage, it would be useful to recall that under Article 226 of
the Constitution of India, while exercising the power of judicial
review, the High Court does not sit as a Court of appeal and it is not
to examine the merits of the decision but only the decision making
process. The Court must take into account whether a public
authority has exercised its jurisdiction in a malafide manner and
ensure that the administrative authority has followed the norms and
standards of procedure laid down. Courts must examine and protect
individuals against arbitrary action even in contractual matters and
the decision taken by the authority is to be examined on the basis of
the Wednesbury‟s Principle of reasonableness. Further it can be
safely said that the practice of judicial review of administrative
action, ordinarily, constitutes the exception and not the rule. Unless
a decision is coloured in mala fide exercise of discretionary power or
is demonstrably capricious or arbitrary and not informed by any
reason or otherwise purports to create an unreasonable
classification, Courts should restrain from finding too many
loopholes therein.
30. The exceptional circumstances warranting the application of
judicial review in administrative matters were for the first time
postulated by Lord Greene in Associated Provincial Picture
Houses Ltd. Vs. Wednesbury Corporation, famously
remembered as "the Wednesbury Case". In the said case, the
plaintiffs, who were the proprietors of a cinematograph theatre, had
been granted license by the defendants, the Wednesbury
Corporation, to operate their theatre on the condition that children
under the age of fifteen would not be allowed entry into the theatre
on Sundays. Counsel for the plaintiffs argued that the Wednesbury
Corporation was not entitled to impose any such condition. It was
further argued that if at all the Wednesbury Corporation was entitled
to a condition prohibiting the admission of children, it should have
limited it to cases where the children were not accompanied by their
(1948) 1 KB 223
parents or a guardian or some adult. The thrust of the plaintiff's
argument thus was that the condition put by the defendants
restricting the access of children below fifteen to the theatre on
Sundays was unreasonable, and that, in consequence, it was ultra
vires the power of the Wednesbury Corporation. Dismissing the
claim of the plaintiffs, Lord Greene unequivocally opined that the
Court could not intervene to overturn the decision of a local
authority (the Wednesbury Corporation) simply because the Court
disagreed with it. It was observed that to have the right to
intervene, the Court would have to form the conclusion that:
(i) the corporation, in making that decision, took into
account factors that ought not to have been taken into
account, or
(ii) the corporation failed to take into account factors that
ought to have been taken into account, or
(iii) the decision was so unreasonable that no reasonable
person would ever consider imposing it.
31. The aforesaid exceptional circumstances, as envisaged by Lord
Greene in the Wednesbury Case, were crystallised by Lord Diplock in
Council of Civil Service Unions and Others Vs. Minister for
the Civil Service ("the GCHQ case)2, under the following heads:
i. Illegality;
ii. Irrationality; and
iii. Procedural Impropriety
32. The aforementioned principles, famously reckoned as the
Wednesbury Principles, have stood the test of time by their
(1984) 3 All ER 935
consistent and extensive application by courts in reviewing
administrative policies and decisions.
33. Applying the settled position of law to the facts of the present
case, it is the case of the petitioner that there was collusion between
CONCOR and respondent no.3 to defeat the legitimate right of the
petitioner. It is submitted that Respondent no.3 never cleared the
goods at the first instance and, therefore, the goods were put to
auction. It is further contended that Respondent no.3 did not
participate in the auction and since the petitioner was the highest
bidder, initial payment having been deposited by the petitioner and
besides having submitted the requisite certificates from the
Quarantine and Wildlife Authority, procured on 11.4.2008 and
25.4.2008, the goods, in question, should have been released to the
petitioner. It has been contended by counsel for the petitioner that
the goods could not have been withdrawn by CONCOR or the
Customs Authorities as there was no justification for the same.
Neither any instruction for withdrawal has been placed on record.
34. The question which thus arises for my consideration is whether
the respondents no.1 and 4 could withdraw the goods after the
petitioner was declared the highest bidder? And if yes, whether the
same were withdrawn for cogent reasons or the action was arbitrary,
whimsical and malafide with a view to cause prejudice to the rights
of the petitioner.
35. Learned counsel for the respondents has justified withdrawal of
the goods from the auction and submitted that while the petitioner
had participated in the auction and was also declared successful,
being the highest bidder, this by itself cannot be a ground to hand
over the goods to the petitioner as the goods had not been cleared
by the Customs. As per Clause 3.0 (ix) of the tender-cum-online
auction sale, any lot or part thereof may be withdrawn from the sale
at any time before it is actually physically delivered, without
assigning any reasons. The said Clause 3.0 (ix) of the tender-cum-
online auction sale is reproduced as under:
3.0 CONDITIONS OF SALE.
ix) Any lot or part thereof may be withdrawn from the
sale at any time before it is actually physically delivered out
of the campus without disclosing the reasons for such
withdrawal. However, if any payment has been made it
would be refunded without interest.
36. Further as per Clause 4.0 of the tender-cum-online auction sale,
the pre-results of successful bidder/tenderer is to be displayed,
however, the final result is to be declared after clearance from the
customs. Clause 4.0 of the tender-cum-online auction sale, reads as
under:
"4.0 OPENING OF SEALED TENDER AND DECLARATION OF
AUCTION RESULTS
The sealed tenders shall be opened at respective
ICD‟s from 11:30 hrs. on 29.03.2008 in presence of
the Tenderers / highest bidders of online auction who
wish to be present at the time of opening. The pre-
results of successful bidder / tenderer will be
displayed on the website www.matexnet.com on
13.02.2008 or later and the final result will be
declared after clearance from Customs of respective
ICDs. The results will be displayed in the following
manner.
CODE STATUS
OK Accepted Bid.
STA Subject to approval / Provisional
acceptance
However, final confirmation of Bid acceptance will be
done only after clearance by Customs.
The CMD /EMD in respect of the rejected lots will be
returned to the bidders immediately by returning the
draft or by issuance of cheque.
37. Taking into consideration that the petitioner was aware of the
terms and conditions of the tender and he participated in the tender
with open eyes and also reading of the Terms and Conditions of the
tender would show that the respondent would be well within its right
to withdraw a lot or any part thereof at any time before it is actually
physically delivered out of the campus without disclosing the
reasons for such withdrawal.
38. I further find that Lot no.106 was withdrawn by respondent no.2,
CONCOR, based on the communication dated 13.6.2008 received on
16.6.2008 from the Assistant Commissioner (Customs).
39. It has been strongly urged before this Court by learned counsel for
the respondents that Lot no. 106 was withdrawn by the Customs
Department before the No Objection Certificate could be issued in
favour of the petitioner for release of goods on account of the fact
that a representation dated 2.6.2008 was received from the
importer, respondent no.3, as they had filed the Bill of Entry
no.698971 dated 29.5.2008. The importer of goods, respondent
no.3, also informed the Customs Authorities that it had deposited
the duty of Rs.19,66,448/- along with interest of Rs.5,657/- vide
Challan No.160 dated 11.6.2008 and sought No Objection Certificate
to get their consignment cleared.
40. Learned counsel for the Customs Department has further justified
its action, inter alia, on the ground that the Department is getting a
much higher revenue, which it would have got by way of auction as
the total duty payable by the custodian comes to Rs.10,99,570/-
only. Counsel for the Customs Department has relied upon a
Departmental Circular No.50/2005 dated 1.12.2005, which lays
down procedure for disposal of unclaimed/uncleared cargo, wherein
it has been clearly mentioned that reserve price and bids would be
approved by the Customs and goods can be withdrawn from the
auction on the written approval by the Commissioner of Customs.
Mr. Aggarwala, counsel for the Customs Department, contends that
respondent no.3, being the importer, had the first right to clear the
goods. Therefore, vide letter dated 9.4.2008, the Department had
directed CONCOR that delivery of goods be stopped with immediate
effect and further vide letter dated 13.6.2008 Customs Department
further directed CONCOR that respondent no.3 being the importer,
he had the first right to clear the goods. The Customs Department
also took into consideration that the importer had filed the Bill of
Entry after delay but mere delay by itself does not mean that he had
relinquished the title of the goods. Considering that the importer has
a much larger financial stake in the goods, in question, and further
at the time when the goods were imported, "Processed Pig Bristles"
were a prohibited item and at that stage in any case the goods could
not have been released in faovur of the respondent no.3 and the
prohibition was lifted subject to fulfillment of certain conditions only
on 23.5.2008, concomitantly, respondent no.3 had the first right.
41. The respondents no.1 and 4 as well as no.2 have given detailed
reasons as to why the shipment Lot no. 106, subject matter of the
writ petition, has been withdrawn from the auction. Respondent no.2
had amply made it clear to the petitioner at the very outset that the
auction held in March, 2008, was subject to final clearance by the
Customs Authorities. As per letter dated 10.4.2008, no final
clearance was ever accorded to the auction purchaser, however, on
the contrary the Customs Authorities issued letters dated 12.6.2008
and 13.6.2008 that the Customs had no objection if the goods were
released to the importer, respondent no.3, and vide letter dated
13.6.2008 respondent no.2 was directed to withdraw Lot No. 106
from the auction. Letters dated 12.6.2008 and 13.6.2008 read as
under:
" OFFICE OF THE COMMISSIONER OF CUSTOMS
ICD, TKD, NEW DELHI
(DISPOSAL)
C.No.VIII(ICD)6/TKD/Disp./01/08/Pt.8751 Dated
12.06.2008
To
The Chief Manager,
CONCOR,
ICD, TKD,
New Delhi.
Sir,
Subject:- Lot No.106 - Auction held on
27/28.03.2008 - reg.
It is to inform your that M/s Shine Enterprises have
filed B/E No.698971 dated 29.05.2008 to clear their
consignment of „Bristles‟ and have deposited duty of
Rs.19,66,448/- along with interest of Rs.5,657/- vide
TR-6 Challan No.160 dated 11.06.2008. They have
requested to give NOC for the release of their
consignment and willing to comply with all the
remaining formalities for clearance of their goods.
This office has no objection if the goods
contained in container No.HDMU 2368478 are
released to the importer M/s Shine Enterprises.
Yours faithfully,
ASSISTANT COMMISSIONER (Disp.)
Copy to: M/s Shine Enterprises, C-27, Double Story,
Ramesh Nagar, New Delhi-15 to complete
the formalities of clearance of their goods
vide B/E No.698971 dated 29.05.2008.
ASSISTANT COMMISSIONER (Disp.)"
"OFFICE OF THE COMMISSIONER OF CUSTOMS
ICD, TKD, NEW DELHI
C.No.VIII(ICD)6/TKD/1/Disp./08/Pt.8925_026 Dated
13.06.2008
To
The Chief Manager,
CONCOR,
ICD, TKD,
New Delhi.
Sir,
Subject:- Lot No.106 - Auction held on
27/28.03.2008 - reg.
This is in continuation to this office letter
of even No.8750 dated 13.06.2008 wherein
permission to the importer M/s Shine
Enterprises to clear his consignment as they
have the first right to clear their goods. The
party have already field the Bill of Entry
No.698971 dated 29.05.2008 and have paid duty
on the same and willing to comply with the
formalities of clearance.
Thus in view of the above you are, hereby,
directed to withdraw the lot No.106 from the
auction held on 27/28.03.2008.
Yours faithfully,
ASSISTANT COMMISSIONER (Disp.)
Copy to: The Deputy Commissioner of Customs
(Import-Shed), ICD, TKD, New Delhi
for information please.
ASSISTANT COMMISSIONER (Disp.)"
42. A reading of Clause 3.0 (ix) of the terms of auction as well as the
communication dated 10.4.2008, copy of which has been filed by
the petitioner, makes it abundantly clear that the goods could only
be cleared, subject to Customs clearance, and the goods could be
withdrawn at any time before they were actually physically delivered
out of the campus. While, it is not in dispute that respondent no.3,
importer, did not participate in the auction but respondent no.3
could not have filed the Bill of Entry on the arrival of the goods in
view of the fact that the import of „pig bristles‟ was prohibited as per
the notification dated 2.2.2007 issued by the Department of Animal
Husbandry, as also the notification dated 13.4.2007, which embargo
was removed in November, 2007 and duly notified on 23.5.2008,
subject to furnishing of a No Objection Certificate from the
Department of Animal Husbandry and also from the Quarantine
Department. No doubt the petitioner had participated in the auction
and was declared as the highest bidder and he has paid a sum of
Rs.8.00 lacs being 20% of the auction amount, however, in
comparison thereto, respondent no.3 has paid Customs Duty of
Rs.19.66 lacs with interest accrued thereon, land retention charges
of CONCOR to the tune of Rs.3.37 lacs, auction/deauction charges of
Rs.4.00 lacs to the Container Corporation, as also Rs.1.77 lacs to the
shipping line, besides paying the foreign supplier approximately
Rs.52 lacs, totaling approximately Rs.81.00 lacs. After the embargo
was lifted, respondent no.3 has also submitted the necessary NOCs
from the Animal Quarantine and certificates from the Ministry of
Agriculture before the No Objection Certificate could be issued by
respondent no.4 so as to release the consignment in favour of the
petitioner. Respondent no.3 also made a representation dated
2.6.2008 and also filed the Bill of Entry dated 29.5.2008 and sought
permission for clearance of goods. Relying on Circular no.50/2005
dated 1.12.2005, which lays down the procedure for disposal of
unclaimed/uncleared cargo wherein it has been mentioned that
reserved price and bids would first have to be approved by the
Custom Authorities, Respondent no.4 vide letter dated 9.4.2008
specifically directed CONCOR to stop delivery of the consignment of
pig bristles and by a subsequent letter dated 13.6.2008 respondent
no.4 further informed CONCOR that respondent no.3 being the
original importer had the first right to consignment of pig bristles
and directed the consignment to be withdrawn. The Customs
Department has also justified its action on the ground that allowing
the original importer would financially benefit the Department. In
view of what has been stated above, I am satisfied that there is no
infirmity with the action taken by respondents no.1, 2 and 4 and
consequently no relief can be granted to the petitioner, and I find
that the decision taken by the respondents is based on sound and
cogent reasons and does not amount to colourable exercise of the
power vested in them. However, I am not satisfied with the
explanation rendered by counsel for respondent no.3 as to why
respondent no.3 did not participate in the auction nor took steps to
bring to the notice of respondents no.1, 2 and 4 that goods could not
have been auctioned as they were banned items and that due to the
embargo, respondent no.3 also could not have filed the bill of entry
and eventually the auction was conducted. Accordingly, in the
interest of justice, respondent no.3 is liable to pay costs to the
petitioner to the tune of Rs. 50,000/- (fifty thousand) for the
hardship caused to the petitioner.
43. Petition stands dismissed.
G.S. SISTANI, J.
APRIL 16, 2010
'msr‟
