Calcutta High Court (Appellete Side)
Freight & Travel Pvt. Ltd.) & Anr vs The Principal Commissioner Of Customs ... on 30 August, 2016
Author: Dipankar Datta
Bench: Dipankar Datta
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
APPELLATE SIDE
PRESENT : Hon'ble Justice Dipankar Datta
W.P. No. 14810(W) of 2016
M/s. Asian Freight (unit of Esan
Freight & Travel Pvt. Ltd.) & anr.
vs.
The Principal Commissioner of Customs (Airport &
Administration), Customs House & anr.
For the petitioners : Mr. S. B. Saraf, Advocate,
Mr. K. K. Maiti, Advocate,
Mr. Arijit Chakraborty, Advocate,
Mr. Prabir Bera, Advocate,
Mr. Debaditya Banerjee, Advocate.
For the respondents : Mr. Somnath Ganguli, Advocate,
Mr. Bhaskar Prasad Banerjee, Advocate.
Hearing concluded on : August 24, 2016 Judgment on : August 30, 2016
1. The first petitioner is a customs broker, governed by the provisions of the Customs Broker Licensing Regulations, 2013 (hereafter the 2013 Regulations) framed in exercise of power conferred by sub-section (2) of section 146 of the Customs Act, 1962. The second petitioner is a director of the first petitioner.
2. This writ petition dated August 3, 2016 is directed against an order dated May 31, 2016, passed by the Principal Commissioner of Customs (A & A), Custom House, Kolkata, the first respondent, confirming suspension of license of the first petitioner in terms of regulation 19(2) of the 2013 Regulations and a show cause notice dated July 18, 2016 calling upon the first petitioner to explain as to why the license issued to it under regulation 9(1) of Customs House Agents Licensing Regulations, 2004 (hereafter the 2004 Regulations) shall not be revoked and security deposit forfeited under regulation 18 of the 2013 Regulations.
3. It is noticed that the order dated May 31, 2016 was preceded by an order dated May 3, 2016 passed by the first respondent, whereby the license issued in favour of the first petitioner was suspended with immediate effect and until further orders under regulation 19(1) of the 2013 Regulations and an opportunity was given to the first petitioner or to its authorized representative to appear for a post-decisional hearing on May 18, 2016. Such order is also under challenge in this writ petition.
4. It would appear on perusal of the two orders dated May 3, 2016 and May 31, 2016 as well as the show cause notice dated July 18, 2016 that there had been an alleged nefarious attempt to smuggle a consignment of high valued mis- declared goods from Singapore to India in the guise of Nepal import transit consignment by a Customs Transit Declaration (hereafter CTD) filed at Kolkata port and such consignment was covered by a CTD filed by the first petitioner, who was none other than the representative of the declared Nepal based importer. There was an intelligence report suggesting that though the consignment was destined to Nepal, the mis-declared goods were likely to be diverted to India.
5. It also appears from the writ petition that a prior show cause notice dated December 24, 2012 had been issued to the first petitioner under section 124 of the Customs Act by the Additional Director General of the Directorate of Revenue Intelligence (hereafter the DRI), in response whereto a reply dated January 23, 2015 was submitted by the first petitioner. Ultimately, the Commissioner of Customs (Port) by an order bearing No. KOL/CUS/COMMISSIONER/PORT/42/2016 dated April 19, 2016, inter alia, imposed penalty of Rs.50,00,000.00 under section 112 (a) of the Customs Act on the first petitioner. Feeling aggrieved thereby, the first petitioner has preferred an appeal before the Customs, Excise and Service Tax Appellate Tribunal (hereafter the CESTAT) on July 11, 2016, which is pending.
6. It is this order dated April 19, 2016 that has been considered to be an offence report by the first respondent while proceeding against the petitioners.
7. In terms of regulation 19(1) of the 2013 Regulations, a power of suspending a license has been conferred on the principal commissioner or commissioner of customs, in appropriate cases where immediate action is necessary in connection with a pending or contemplated enquiry. Sub-regulation (2) mandates the principal commissioner or commissioner, whoever suspends a license under sub- regulation (1), to give an opportunity of hearing to the customs broker whose license is suspended within 15 days from the date of such suspension and to pass such order as he deems fit either revoking the suspension or continuing it, as the case may be, within a further period of 15 days of the date of hearing granted to the customs broker. The proviso to sub-regulation (2) ordains that should the suspension be directed to be continued, further procedure thereafter shall be as provided in regulation 20.
8. After the license of the first petitioner was suspended by the order dated May 3, 2016, representatives of the petitioners appeared before the first respondent on May 18, 2016 and urged various points in support of their contention that the order of suspension itself deserves to be revoked. One of such grounds has been reiterated before this Bench by Mr. Saraf, learned advocate for the petitioners with sufficient force.
9. According to Mr. Saraf, the incident of alleged offence culminated in the order of penalty dated April 19, 2016 under section 112 of the Customs Act. Before such order, the license of the first petitioner was renewed on January 12, 2016, and no adverse report in regard to functioning of the first petitioner as a customs broker was also received. There was absolutely no warrant for ordering suspension of the license and that it was not an appropriate case where immediate action in the nature of an interim suspension was called for. In such circumstances, the first respondent really acted in excess of jurisdiction by confirming the order of suspension.
10.In support of the submission that immediacy of action is the sine qua non for ordering suspension, Mr. Saraf placed reliance on the Division Bench decision of this Court reported in 1998 (104) E.L.T. 11 (Cal.) [N.C. Singha & Sons v. Union of India] whereby the order of suspension was interdicted and set aside on the ground that neither did it spell out that any immediate action is required to be taken in the matter nor did the order on its face indicate that such action was indeed warranted.
11.Reliance was also placed by Mr. Saraf on the decision of a coordinate Bench reported in 2010 (257) E.L.T. 20 (Cal.) [Rubee Air Freight Ltd. v. C.C. (Airport & Administration), Kolkata], wherein considering the nature of allegations that were levelled, the Bench was of the prima facie view that immediate suspension was not warranted leading to grant of interim order as prayed for.
12.It was next contended by Mr. Saraf that several decisions having a bearing on the question of suspension of license had been placed before the first respondent for his consideration, but unfortunately none was considered. Relying on the Division Bench decision of this Court reported in 2016 (332) E.L.T. 470 (Cal.) (Artee Overseas Pvt. Ltd. v. Union of India), he contended that the first respondent was under an obligation to consider the decisions that were placed and to disclose why the ratio thereof did not apply to the facts and circumstances before him. Such failure amounts to violation of the principles of natural justice and, therefore, a remand may be directed so that the grievance of the first petitioner could be meaningfully considered.
13.Initiation of proceedings under regulation 20 of the 2013 Regulations was also challenged by Mr. Saraf by contending that the same are without jurisdiction.
14.Regulation 20(1), it was submitted, authorizes the principal commissioner or the commissioner to issue a notice in writing to the customs broker within a period of ninety days from the date of receipt of an offence report stating the grounds on which it is proposed to revoke the license or impose penalty, requiring the said customs broker to submit within thirty days to such deputy or assistant commissioner of customs, nominated by the principal commissioner or commissioner, as the case may be, a written statement of defence and also to specify therein as to whether the customs broker desires to be heard in person.
15.Mr. Saraf contended that the challenge to the revocation proceedings having been initiated without jurisdiction, is based on a proper construction of such sub- regulation. Referring to the order confirming suspension dated May 31, 2016, it was pointed out that the offence report was received admittedly by the first respondent on April 19, 2016 and the impugned show cause notice dated July 18, 2016 was dispatched on July 20, 2016, which is beyond the period prescribed by sub-regulation (1).
16.Inviting the attention of the Bench to the supplementary affidavit filed by the petitioners, Mr. Saraf contended that the show cause notice dated July 18, 2016 was received by the petitioners on July 21, 2016. It has been his contention that the show cause notice having been dispatched beyond ninety days from the date of receipt of offence report on April 19, 2016, the first respondent ceased to have the jurisdiction to initiate revocation proceedings.
17.For the proposition that proceedings are required to be initiated within ninety days from the date of receipt of offence report failing which the proceedings would be non est, Mr. Saraf placed reliance on three decisions of the Madras High Court reported in (i) 2014 (309) E.L.T. 433 (Mad.) [A. M. Ahamed & Co. v. Commissioner of Customs (Imports), Chennai], (ii) 2016 (332) E.L.T. 300 (Mad.) [Masterstroke Freight Forwarders P. Ltd. v. C.C. (I) Chennai-I, and (iii) 2016 (334) E.L.T. 289 (Mad.) [Saro International Freight System v. Commr. of Cus., Chennai-VIII]. According to him, all these decisions relate to action taken under the 2004 Regulations or the 2016 Regulations and have a direct bearing on the point raised by the petitioners. In all such decisions proceedings for revocation of license not having been initiated within ninety days were set aside, and he has accordingly prayed for similar relief.
18.Reliance was also placed by Mr. Saraf on Division Bench decisions of this Court reported in (i) 1997 (91) E.L.T. 51 (Cal.) [Union of India v. Kanti Tarafdar] and (ii) 1999 (113) E.L.T. 57 (Cal.) [Rajesh Kumar Jain v. Union of India], on the procedure for effecting service of notice to show cause on the noticee having regard to the provisions of section 153 of the Customs Act, 1962.
19.Relying on a Division Bench decision of this Court reported in 2006 (3) CHN 655 [Md. Yeasin v. State of West Bengal], Mr. Saraf contended that should the Bench be disinclined to interfere with the revocation proceedings, the order of suspension ought to be set aside having regard to the fact that revocation proceedings were not initiated within ninety days of receipt of the offence report.
20.Answering the contentions raised by Mr. Saraf, Mr. Ganguly, learned advocate for the respondents contended that absolutely no case for interference has been set up by the petitioners. First, he objected to the maintainability of the writ petition before this Court on the ground of an appellate remedy being available to the petitioners before the CESTAT against an order confirming the suspension dated May 3, 2016. To rebut the contention of Mr. Saraf that the CESTAT is not functional, cause lists of the CESTAT dated August 9 and 10, 2016 were produced by Mr. Ganguly to support his contention that the CESTAT is functional.
21. Secondly, it was submitted that the orders dated May 3, 2016 and May 31, 2016 passed by the first respondent would clearly reveal that the offence report was received in the later part of April, 2016 and immediately thereafter, action was initiated by the first respondent to suspend the license of the petitioner. It was urged that prior to receipt of the offence report, issuance of a suspension order would have been improper and also, could have given rise to a challenge on the ground that the order of suspension had been passed without any material before the first respondent.
22. Thirdly, it was contended that a writ petition is ordinarily not maintainable against a show cause notice and, therefore, the petitioners ought to be left free to raise whatever points they might raise in their defence to such notice before the first respondent.
23. Finally, it was contended that the proceedings for revocation of licence do not suffer from any jurisdictional error. Relying on the affidavit of the first respondent, it was contended that although the offence report had been received by the Central Receiving Section, Correspondence Department of the first respondent on April 19, 2016, such offence report was actually placed before the first respondent on April 22, 2016, consequent whereupon the file was started for proceeding in the matter in accordance with law. It is claimed in such affidavit that constructive knowledge of the first respondent in relation to the offence report was from April 22, 2016 and not prior thereto and, therefore, issuance of the show cause notice on July 18, 2016 for being dispatched by post cannot be held to be a vitiating factor so as to warrant the show cause notice to be interdicted and the revocation proceedings nipped in the bud.
24. Mr. Ganguly, accordingly, prayed for dismissal of the writ petition.
25. In reply, Mr. Saraf contended that the CESTAT is not available on a regular basis and, therefore, having regard to the grave uncertainty associated with regular sitting of the CESTAT, the Bench may decide the contentious issues on merits. Answering the other contentions raised by Mr. Ganguly, Mr. Saraf reiterated the submissions that have been noticed above.
26. Having heard learned advocates for the parties, this Bench is of the considered view that the following points emerge for decision:
(i) Whether the petitioners ought to be relegated to the CESTAT for challenging the order dated May 31, 2016 confirming the order of suspension dated May 3, 2016?
ii) Should the first point be answered in the negative, does the order of suspension dated May 3, 2016 and the subsequent order dated May 31, 2016 confirming such suspension, warrant interference?
iii) Whether, on facts and in the circumstances, the noticee should be allowed to challenge the show cause notice dated July 18, 2016 in writ proceedings?
iv) Whether, initiation of action for revocation of license against the petitioners by notice dated July 18, 2016 is valid in law, having regard to the provisions of regulation 20 (1) of the 2013 Regulations?
(v) Whether on the authority of the decision in Md. Yeasin (supra), the petitioners are entitled to any relief?
27. Each point is now proposed to be considered one after the other.
Point - (i)
28.Although the cause lists of the CESTAT for August 9 and 10, 2016 were produced by Mr. Ganguly, he admitted that one of the two members comprising the Bench is an outstation member and, therefore, the Bench is not regularly available.
29.In that view of the matter, an efficacious, alternative and speedy remedy to the petitioners cannot be said to be available and, therefore, this Bench would proceed to consider the other points on merits overruling the objection of Mr. Ganguly.
30. This point is answered accordingly.
Point - (ii)
31. It is not in dispute that the incident forming the bedrock of action initiated against the petitioners by the respondents (suspension of the license and revocation proceedings) occurred sometime in July, 2014. Although in paragraph 34 of the writ petition it has been pleaded that the first respondent did not mention the date of receipt of the offence report in the show cause notice dated July 18, 2016, Mr. Saraf has himself shown from the order dated May 31, 2016 that the date of receipt of offence report by the first respondent is available in paragraph 32 (xii) thereof. For the purpose of a decision on this point, this Bench shall proceed on the assumption that April 19, 2016 was the date of derivation of knowledge of an offence having been committed, inter alia, by the petitioners, warranting action under regulation 19 of the 2013 Regulations.
32. The power to suspend a customs broker's license under sub-regulation (1) of regulation 19 can be exercised by the principal commissioner or the commissioner of customs, as the case may be, in appropriate cases calling for immediate action where an inquiry against such broker is pending or contemplated. The first and foremost requirement for suspending a license is, therefore, an inquiry, which is either pending or is contemplated. Once such condition is satisfied, the further condition is that of an immediate action being necessary in appropriate cases. The word 'inquiry' has not been defined in the 2013 Regulations. Such word is also not defined in the Customs Act. In the absence of any definition of the word 'inquiry', one has to read the provisions of the 2013 Regulations in between lines to ascertain its appropriate meaning. Regulation 18 lists 6 (six) situations, which would essentially necessitate an inquiry to unravel whether a case exists or not for revocation of license as well as order for forfeiting part or whole of security or imposing a penalty not in excess of the specified amount on a customs broker. A reading of the order dated May 3, 2016 passed by the first respondent would reveal the following observations:
"M/s. Asian Freight, unit of Esan Freight & Travel Pvt. Ltd. (CHA) being the agent of the declared Nepal based importer M/s Jaleshwor Traders, Koteshwor-35, Kathmandu, Nepal filed Customs Transit Declaration in prescribed format in CTD (Import) No. S 51/4841/R/14A dated 10-07-2014 declaring the description of goods in Container No. OOLU 8352725(40') as "Electronic & Mix goods" viz. Cooker 1.5 & 2.2 Ltr, Tyre Liquid 1.0 Ltr. With corresponding Invoices, packing list issued by supplier M/s. Oqality Export House Pte. Ltd., 77, High Street Plaza, Singapore. In the Bill of Lading No. OOLU 2548834830 as well as the CTD No. S51/4841/R/14A dated 10-07- 2014 the goods were also mentioned as 545 Cartons of Electronic & Mix goods and the total CIF value was mentioned as Rs. 7,18,916/- Usually, as per the agreed Memorandum to the Protocol to the Treaty between India and Nepal, transportation of the containerized cargo, are allowed clearance by Customs Officer without examination, unless there are valid reasons t do otherwise. Based on the intelligence, the container under dispute was examined in presence of the Importer's agent, i.e. CHA M/s. Asian Freight, unit of Esan Freight & Travel Pvt. Ltd. resulted in recovery of huge quantity of explicitly mis-declared goods namely, Sony Bravia LED TV 24 inch, premium foreign liquor like Chivas Regal Scotch Whisky, Glenfiddch 2 years Single Malt Scotch Whisky and DJARUM BLACK Cloves Cigarettes."
33. The seized goods, having estimated market value of Rs. 5.5 crore, appeared to be liable for confiscation under sections 111(l), 111(m) & 111(n) of the Customs Act and that the first petitioner, being the declared importer's agent, had filed the CTD (Import) with the customs authority with signatures of its director on the prescribed declarations in a mechanical manner, without observing the basic principle of representing its client based in Nepal. Such order also records the acceptance of the fact by a director of the first petitioner that it had undertaken the job of handling import consignment of M/s Jaleshwor Traders for the first time but appeared not to have discharged their basic responsibilities by failing to comply with the provisions of the 2013 Regulations. Considering that an inquiry ought to be made in the manner prescribed by regulation 20 for the first petitioner's failure to comply with the provisions of the 2013 Regulations, the first respondent was of the further view that continuation of business transaction by the first petitioner would be prejudicial to the interest of the revenue and immediate action under regulation 19(1) of the 2013 Regulations is warranted to prevent further misuse of the customs broker license resulting in the order dated May 3, 2016 seeing the light of the day. It is no doubt true that after the DRI on July 11, 2014 detected the offence committed by the Nepalese importer, for whom the first petitioner acted as a customs broker, sufficient time had elapsed and in the meanwhile, the license was also renewed but that does not detract from the fact of receipt of the offence report by the first respondent on April 19, 2016, and initiation of action for suspending the license, for the reasons mentioned in his order, immediately thereafter within 2 (two) weeks.
34.Having regard to the materials disclosed by the first respondent, it is not a case where no reasons have been disclosed why immediate action was not required or warranted. The nature of the order dated May 3, 2016 together with the observations contained therein provide sufficient grounds for this Bench to distinguish the Division Bench decision in N. C. Singha (supra), where interdiction was made on the ground mentioned in paragraph 6 of the decision, noted above, regarding lack of reasons why immediate action was warranted. The decision in Rubee Air Freight (supra), apart from being an interim order, is also one which ought to be confined to the facts before the Bench as would appear from paragraphs 7 to 15 thereof.
35. There cannot be any dispute with regard to the law laid down in the decision in Artee Overseas (supra). However, insofar as remand prayed for by Mr. Saraf on the basis thereof is concerned, this Bench is inclined to follow the view of the Supreme Court expressed in its decision reported in (2004) 4 SCC 281 (Escorts Farms Ltd. v. Commissioner, Kumaon Division) reading:
"Rules of natural justice are to be followed for doing substantial justice and not for completing a mere ritual of hearing without possibility of any change in the decision of the case on merits"
36. Although the first respondent may not have disclosed in the order impugned why the decisions placed before him were not applicable, mere omission to do so cannot be held fatal. The reasons furnished by the first respondent for confirming the order of suspension are sound and justify acceptance.
37. For the reasons aforesaid, this Bench answers the point by holding that the action taken by the first respondent under regulation 19 of the 2013 Regulations is unexceptionable and no interference is called for.
Point - (iii)
38. It is true, as contended by Mr. Ganguly, that interference at the show cause stage should be few and far between and that the noticee ought to be relegated to the authority issuing the notice to decide whatever objections the noticee might have had. However, in a given case, where the High Court is satisfied that a show cause notice is totally non est in the eye of law for absolute want of jurisdiction of the authority to even investigate into facts, entertainment of a writ petition in this behalf may not be imprudent. Since Mr. Saraf has alleged that the first respondent did not have the jurisdiction to initiate recovery proceedings beyond the time specified in regulation 20(1), this Bench proposes to consider such contention next.
39. This point is, accordingly, answered by overruling the objection of Mr. Ganguly.
Point - (iv)
40. The reported decisions of the Madras High Court cited by Mr. Saraf do advance his cause. However, both on facts as well as in law, this Bench is persuaded to take a different view of the matter.
41. It is settled by a catena of decisions rendered by the Supreme Court, while considering varying statutes, that when a public functionary is required by a statute to do or perform a certain thing or activity within a specified time, the same is ordinarily directory; however, if the consequence for inaction on the part of the statutory authority within such specified time is expressly provided in the statute, it must be held to be imperative. Reference may be made in this connection to the decisions reported in (2007) 8 SCC 705 (Indore Vikas Pradhikaran v. Pure Industrial Coke & Chemicals Limited), (2006) 5 SCC 702 (Kuldeep Singh v. Govt. of NCT of Delhi), (2005) 6 SCC 776 (Punjab State Electricity Board Ltd. v. Zora Singh), (2003) 8 SCC 498 (P.T. Rajan v. T.P.M. Sahir), (2003) 3 SCC 433 (Balwant Singh v. Anand Kumar Sharma), (2003) 2 SCC 577 (Nasiruddin v. Sita Ram Agarwal), (2003) 2 SCC 111 [Bhavnagar University v. Palitana Sugar Mill (P) Ltd.], (1984) 2 SCC 486 (Dalchand v. Municipal Corporation, Bhopal), and AIR 1968 SC 224 (Remington Rand of India Ltd. v. Workmen).
42. A passage from the decision in Dalchand (supra) [the Bench comprised of one learned judge, at it appears from the report] is very instructive, reading as follows:
"1. *** There are no ready tests or invariable formulae to determine whether a provision is mandatory or directory. The broad purpose of the statute is important. The object of the particular provision must be considered. The link between the two is most important. The weighing of the consequence of holding a provision to be mandatory or directory is vital and, more often than not, determinative of the very question whether the provision is mandatory or directory. Where the design of the statute is the avoidance or prevention of public mischief, but the enforcement of a particular provision literally to its letter will tend to defeat that design, the provision must be held to be directory, so that proof of prejudice in addition to non- compliance of the provision is necessary to invalidate the act complained of. It is well to remember that quite often many rules, though couched in language which appears to be imperative, are no more than mere instructions to those entrusted with the task of discharging statutory duties for public benefit. The negligence of those to whom public duties are entrusted cannot by statutory interpretation be allowed to promote public mischief and cause public inconvenience and defeat the main object of the statute. It is as well to realise that every prescription of a period within which an act must be done, is not the prescription of a period of limitation with painful consequences if the act is not done within that period. ***"
43. Looking to the object of the statute in question (the 2013 Regulations read with the Customs Act) and its broad purpose, and on weighing the consequence that would ensue if the time-limit in regulation 20(1) for issuance of show notice were held mandatory instead of holding it to be directory, it is well-nigh difficult to conclude that unless revocation proceedings are initiated within ninety days of receipt of an offence report, the principal commissioner or the commissioner of customs, as the case may be, would stand denuded of the power to proceed in that direction. This Bench is of the opinion that the time-limit that has been prescribed serves a dual purpose. First, it acts as a check on the public functionary vested with the power to initiate revocation proceedings not to keep the issue pending ad infinitum; if proceedings are not initiated within the stipulated time, that might expose such functionary empowered to initiate proceedings to disciplinary action. On the other hand, initiation of proceedings within ninety days or immediately thereafter is intended to guarantee protection to a customs broker of not being proceeded against on the basis of stale charges. But to hold that in every case where revocation proceedings are not initiated within the time-limit in regulation 20(1) a customs broker may get away, is too far-fetched a construction and is unacceptable. What is important is that regulation 20 does not provide for any consequence, should proceedings be not initiated within ninety days of receipt of an offence report. One may in this connection note section 110(2) of the Customs Act ordaining that where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized. It is axiomatic that upon a failure to give notice as contemplated in section 124(a) within six months of seizure, the consequence would follow i.e. the seized goods have to be returned. If any authority is required on the point, reference may usefully be made to the decision reported in 100 C.W.N. 429 (India Sales International v. Collector of Customs). Similar such consequence being clearly absent in regulation 20(1), the time-limit has to be construed as directory and not mandatory.
44. It is now time to consider the three Madras High Court decisions. In A.M. Ahamed (supra), regulation 22 of the 2004 Regulations was under consideration. Finding that separate time frames were provided in the various sub-regulations of regulation 22 to regulate the proceedings from its commencement till its conclusion, the learned Judge was of the view that the show cause notice ought to have been issued within ninety days. Significantly, in paragraph 25 of the decision it is recorded that the respondents did neither contend that the time limit of ninety days was directory and not mandatory, nor that the time limit need not be strictly adhered to. Considering all such aspects, the learned Judge upheld the contention raised and set aside the impugned notice.
45. Masterstroke Freight (supra) and Saro International Freight System (supra) were decided by the same learned Judge. The former decision was followed in the latter. With respect, the learned Judge appears to have taken a too narrow legalistic view on the basis of certain decisions of the Supreme Court laying down the law that when a statute requires a thing to be done in a particular manner, it must be performed in such a manner or not at all. The learned Judge also construed 'shall' in regulation 20(1) as mandatory and not directory.
46. The learned Judge in Masterstroke Freight (supra) and Saro International Freight System (supra) further expressed the view that if timely action is not taken under regulation 20, that "would also pave way for inaction by the officials breeding corruption". Yes, indeed, but viewed from a different angle one cannot ignore the ground realities. If an unscrupulous broker commits an act that makes it liable to be proceeded against under regulation 18 read with regulation 20, it may well get away by adopting illegal means. All officers are not honest and if too strict a view is taken on the aspect of time-limit mentioned in regulation 20(1), the same instead of suppressing the mischief would have the potential of promoting illegal activities. This Bench is persuaded to take this view bearing in mind the illuminating observations in Dalchand (supra).
47. Interestingly, the decision of the Supreme Court reported in AIR 1980 SC 303 (Sharif-ud-din v. Abdul Gani Lone) was noticed by the learned Judge while authoring both the decisions and a passage therefrom is found to be quoted in the same. The last sentence from the quoted passage is relevant and reads thus:
"Whenever a statute prescribes that a particular act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to a specific consequence, it would be difficult to hold that the requirement is not mandatory and the specified consequence should not follow."
48. The learned Judge also quoted a paragraph from a decision of the Madras High Court itself reported in 2015 (318) E.L.T. 83 (Mad.) (Hyundai Motors India Ltd. v. Union of India), wherein the learned Judge observed:
"Another simple test to determine whether a time limit stipulated in a rule is directory or mandatory, is to see whether there is any indication in the Ruke itself about the consequences of non compliance with the same. If a statutory provision contains a prescription and also stipulates the consequences of non compliance with the condition, it would normally be taken to be mandatory. If the consequences of non compliance are not indicated, then, the provision has to be seen only as directory."
49. What follows from the above is that a consequence of not doing a particular act, if provided in the statute, would in most cases be determinative. Viewed in the light thereof, the relevant regulation (regulation 20) not providing for any consequence that might necessarily follow in favour of a customs broker should any of the acts envisaged therein be not performed within the specific time frame provided therefor, has to be construed as directory.
50. The same view appears to have been taken in the Division Bench decision of this Court in Md. Yeasin (supra), relied on by Mr. Saraf. Clause 21 of the West Bengal Public Distribution System (Maintenace and Control) Order, 2003 requiring completion of proceedings within three months from date of service of notice asking for explanation from the delinquent dealer, was held not to be mandatory on a survey of various authorities by Hon'ble Asok Kumar Ganguly, J. (as His Lordship then was) speaking for the Division Bench. Paragraph 25 of the decision being important, is reproduced below:
"25. But the provision is silent as to what will happen if the proceedings are not completed within a period of 3 months. It is well-settled that where a statute provides for consequences for non-compliance with a time-limit, in such cases it has been held that the time fixed is mandatory in character. The relevant provision of Clause 21 does not disclose any such intention. This is a feature which inclines the Court to hold the time of 3 months is not mandatory."
51. This Bench thus doubts as to whether the three decisions of the Madras High Court relied on by Mr. Saraf lay down correct law, and holds the time limit in regulation 20(1) as not mandatory, and that any proceeding for revocation of a customs broker's license beyond ninety days of receipt of offence report would not per se stand invalidated by mere reason of such belated initiation.
52. The legal position apart, this Bench is also of the considered view upon consideration of the factual aspect that the proceedings have in fact been initiated within ninety days of receipt of the offence report by the first respondent.
53. The offence report was received by the correspondence department of the first respondent on April 19, 2016 and it took a couple of days' time to reach the first respondent's office. In fact, the report was received by him on April 22, 2016. The impugned notice to show cause in connection with revocation proceedings was issued on July 18, 2016, dispatched on July 20, 2016 and received by the petitioner on July 21, 2016. Mr. Saraf has contended, relying on the decisions in Kanti Tarafdar (supra) and Rajesh Kumar Jain (supra) that it is not enough for the notice to be issued within ninety days, but it must reach the noticee, also within ninety days. Alternatively, it has been contended that the notice must be tendered for service or dispatched by post within ninety days, as ordained by section 153 of the Customs Act.
54. The contents of the affidavit of the first respondent have not been disputed by Mr. Saraf, except for inviting the notice of the Bench to some slipshod drafting of a part of paragraph 4 thereof. However, that the first respondent received the offence report on April 22, 2016 is amply proved from the annexures to such affidavit. It is well known that in Government offices, very often a file moves at a snail's pace while passing through various tables. It is, therefore, not difficult to think of circumstances disabling transmission of the offence report to the first respondent on the same date it was received by the correspondence department. Regulation 20(1) has to be reasonably construed and so construed, the time-limit of ninety days must be held to commence from the date the offence report reaches the principal commissioner or the commissioner of customs, as the case may be, authorized to issue show cause notice.
55. In view of the foregoing discussion, this point is answered against the petitioners. Point - (v)
56. In Md. Yeasin (supra), the concerned ration dealer's license was suspended on January 19, 2005. In the meanwhile, however, proceedings were initiated under clause 21 of the relevant control order by issuance of show cause notice dated November 23, 2004, but the same were not concluded within the time-limit of three months from date of service of notice. In paragraph 40 it was observed that "suspension of the dealer causes great inconvenience and hardship as the dealer is thrown out of business without any subsistence during the suspension period", so "the period of 3 months should be considered as mandatory so far as the continuance of suspension in connection with the proceeding is concerned". Ultimately, it was held that "suspension of the dealer in connection with such proceedings must come to an end after a period of 3 months if within that period the proceedings are not completed".
57. It would appear from sub-regulation (1) of regulation 20 that after a show cause notice is issued thereunder, the customs broker proceeded against would have to be given thirty days to submit its written statement of defence. An enquiry would follow, and the enquiry officer is required under sub-regulation (5) to submit his report after complying with basically the rules of natural justice and fair play, within ninety days of issuance of the show cause notice under sub-regulation (1). Sub-regulation (6) ordains that the customs broker has to be given at least thirty days to respond to the report of enquiry. A period of ninety days from date of submission of enquiry report is stipulated in sub-regulation (7) for a final order of the nature mentioned therein to be passed by the principal commissioner or the commissioner, as the case may be.
58. The first petitioner is yet to respond to the show cause notice. In fact, its interest was protected by an interim order passed by this Bench on August 12, 2016. The time to complete the proceedings is still few months away. The reasoning on which suspension was directed to be revoked in Md. Yeasin (supra) is not available to be adopted here, in view of the distinct facts and circumstances. If at all the proceedings for revocation are not completed within the time limit stipulated in sub-regulation (7) of regulation 20, the petitioners may approach the Court afresh for revocation of the order of suspension dated May 31, 2016. But for the present, they are not entitled to the relief of revocation of the order of suspension.
59. This point too is answered against the petitioners.
60. The writ petition stands dismissed, without costs. Interim order stands vacated. The petitioners are given fifteen days to respond to the show cause notice dated July 18, 2016, whereafter proceedings may be continued in accordance with law. Urgent photostat certified copy of this judgment and order, if applied for, shall be furnished to the applicant at an early date.
(DIPANKAR DATTA, J.)