Gujarat High Court
Rajendra vs Union on 17 November, 2011
Author: Akil Kureshi
Bench: Akil Kureshi
Gujarat High Court Case Information System
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SCA/12517/2011 9/ 9 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No. 12517 of 2011
For
Approval and Signature:
HONOURABLE
MR.JUSTICE AKIL KURESHI
&
HONOURABLE
MS JUSTICE SONIA GOKANI
=========================================================
1
Whether Reporters of Local Papers may be allowed to see the judgment ?
2To be referred to the Reporter or not ?
3Whether their Lordships wish to see the fair copy of the judgment ?
4Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?
5Whether it is to be circulated to the civil judge ?
========================================================= RAJENDRA PUROHIT - Petitioner(s) Versus UNION OF INDIA & 1 - Respondent(s) ========================================================= Appearance :
MR HASIT DILIP DAVE for Petitioner(s) : 1, MR PS CHAMPANERI for Respondent(s) : 1 -
2. ========================================================= CORAM :
HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MS JUSTICE SONIA GOKANI th October 2011 CAV JUDGMENT (Per : HONOURABLE Ms. JUSTICE SONIA GOKANI) Challenge in this writ petition is to the order of the respondent no.2 dated 1st June 2011 whereby, it has prohibited the petitioner from working as CHA agent at Pipavav Port. Following are the brief facts of the present petition preferred under Articles 226 & 227 of the Constitution of India.
Petitioner is a registered Customs House Agent to work as Customs House Act ["CHA" for short] at Customs House, Kandla & Mundra under regulation 9(2) of the Customs House Agent Licensing Regulations, 2004 [to be hereinafter referred as, "the regulations"]; on the basis of license granted by the parent CHA, being the Commissioner of Customs, Jaipur.
Pursuant to some DRI investigations on various parties; including one Messrs. Dadi Impex Private Limited, Mumbai - an Exporter, who was allegedly found in attempting illegal exportation of Muriate of Potash [MOP], which is a restricted commodity for export in terms of Foreign Trade Policy 2009-2014, in the guise of free flow salt. On seizure of such consignments, a show cause notice was issued on several parties; including the present petitioner, for attempting to illegally export the restricted commodity. It had been alleged, in the said notice, that two of the employees of the present petitioner [a partnership firm] were allegedly involved in illegally exporting MOP and in purported exercise of power under Regulation 21 of the Regulations, the Commissioner of Customs, Kandla has prohibited the petitioner to transact its business as Custom House Agent at Kandla and MP & SEZ, Mundra with immediate effect, with a further direction to immediately surrender all cards issued to the CHA, their Directors, employees, etc., to the CHA Section of the Custom House, Kandla.
Aggrieved by the said order, the petitioner preferred an appeal before the Customs, Excise & Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad ["CESTAT"
for short] and urged for early hearing of the same - considering the closure of its business at both the Custom Stations. When the matter was taken up on 11th August 2011, the CESTAT ordered that it had no authority to interfere with the order of prohibition passed by the Commissioner of Customs, Kandla in asmuch as this was an administrative order issued by the Commissioner against the CHA and there being no provision of appeal against such a prohibition, the appeal was found not maintainable. The said order of CESTAT dated 18th August 2011 has aggrieved the petitioner, and therefore, on various grounds raised in the present petition, the impugned order of prohibition made by the Commissioner of Customs is challenged..
On issuance of the notice to the otherside, affidavit-in-reply is submitted, wherein, it is admitted that in exercise of power conferred on the Commissioner of Customs, the order of prohibition has been passed, on being satisfied that the petitioner has violated the provisions of CHALR, 2004 and for having failed to fulfill the obligation under Regulation 13 and other regulations. It is also further contended that the subjective satisfaction of the Commissioner is based on the objective facts which resulted into passing the prohibition order dated 1st June 2011. The allegation made is to the effect that the petitioner was found involved in sub-letting his CHA license to one Mr. Kamal Inderraj Gurnani in contravention of the provisions of the Regulations. When the Directorate of Revenue Intelligence booked a case of attempt to export MOP in guise of free-flow salt against an exporter-M/s. Dadi Impex Private Limited, Mumbai, the investigation revealed that one Shri Anand Prakash Choudhari asked Shri Kamal Gurnani to arrange and handle the work pertaining to transportation of stuffing; central excise formalities and customs clearance in respect of illegal exportation of MOP from Mundra. Shri Gurnani is not having CHA license but contacted the employee of the present petitioner through one Shri Brijesh Advani. The two of the employees of the present petitioner at Gandhidham office viz., Shri Mahesh Tank and Shri Sandip Solanki were issued the cards and their involvement made it possible this illegal export. IT is also alleged that without contacting any person from M/s. Dadi Impex Private Limited; without obtaining any authorization of the said company, the work was attended to. This was in clear violation of Regulations 12, 13, 19 (8), etc. It is further contended that the CHA is to exercise such supervision to ensure proper conduct of business in CHA and any act or omission would hold the employer responsible since this conduct was in the course of their employment.
Affidavit-in-rejoinder is also preferred insisting therein that this order has been passed in complete contravention of the provisions of natural justice. It is also further urged therein that any illegal act of the employees cannot bind the CHA and as such prohibition results into serious civil consequences and directly affects his right of livelihood, non granting of hearing is fatal.
Counsel for the petitioner Mr. Hasit D. Dave urged this Court that when there is no material to implead the present petitioner with the alleged misdeeds of its employees, any act of Commissioner directly affecting his right of livelihood must be held as illegal and contrary to the principles of natural justice. He further urged the Court that the impugned order has been passed without availing any opportunity of hearing. Almost four months have passed and there is no sign of any proceedings under Regulation 22, and moreover, such an order of prohibition, since does not permit per-decisional hearing or post decisional hearing, considering the entire gamut of facts in the instant case, the same be quashed; as urged for. Counsel further urged the Court that as already four months have passed, there is no point of requesting the Court for post-decisional hearing as no fruitful purpose is likely to be served.
As against that, learned counsel for the respondent made his submission reiterating the contentions raised in the affidavit-in-rely and urged this Court that the petitioner, since is prima facie, involved in the large scale illegality of exporting the material which is strictly prohibited, on exercising the powers given to the Commissioner, if such a decision of prohibiting him from working as CHA at some of the stations has been taken, it does not affect his right as sought to be made out, as he continues to operate from other stations, nor do regulation permit any hearing either at pre-decisional or post-decisional stage. Learned counsel further urged the Court that principal is liable under Regulation 19 (8) as well as under Regulation 13 for the acts of his employees.
During the course of hearing, without adverting to the rival contentions, learned counsel for the petitioner was asked whether the petitioner would prefer a post decisional hearing before the Commissioner of Customs to which there was a denial stating that no such hearing is desired by the petitioner. Instead, the petitioner desired this court to go into details of facts unearth by the Directorate of Revenue Intelligence.
Mention is necessary at this stage that without going into the larger question of scope of Regulation 21 and whether hearing is contemplated either at the pre-decisional or post-decisional stage in the Regulation, in light of the discussion to be followed hereinafter, this petition is being decided.
In this premise, when the entire scheme of regulations is examined, it clearly gets revealed that Regulation 13 read with Regulation 19 (8) would make it obligatory on the part of the CHA to be responsible for the action of its employees. Regulation 12 provides that CHA license is not transferable and Regulation 19 (8) prescribes that CHA should exercise such control/supervision as may be necessary to ensure proper conduct of such employees in transaction of business as CHA and he be held responsible for all acts or omissions of his employees in regard to their employment. Regulation 20 envisages revocation of licence of Customs House Agent on his failure to comply with any of the regulations as also on account of any misconduct on his part if during pendency of proceedings under Regulation 22, Commissioner of Customs deems it so imminent to warrant immediate action.
Prima facie, what emerges is that the petitioner who was working as CHA at Kandla Port and at M.P SEZ, Mundra was registered with Kandla Commissionerate under Regulation 9 (2). Pursuant to the investigation of DRI, it was revealed that there was a sub-letting of his CHA license to one Shri Kamal I.Gurnani and this was done in contravention of the provisions of Regulations, on the basis of investigation made by Directorate of Revenue Intelligence. The case is also booked for attempt to export MOP under the guise of free flow salt since MOP being a restricted commodity under the Foreign Trade Policy. Two of his employees are found allegedly involved in making use of his license which allegedly had been sub-let unauthorizedly and illegally. In this premise, it is not for the petitioner to say that he cannot be held liable for the alleged illegal act of his employees who were acting in the course of their employment. As can be noted, prima facie, the petitioner as CHA failed to supervise the action of his employees, neither any contact was made with M/s. Dadi nor was authorization obtained from it. CHA when engages the employees for conducting his business, he acts through him and when alleged illegalities committed are in the course of employment and while discharging its function as CHA, he cannot disassociate himself from those acts, when not having fulfilled his part of obligation. We would resist from opining further on the alleged involvement of the employees of the petitioner or on the responsibility of the petitioner as a CHA in such circumstances, in the present petition as there is already a case booked by DRI and it is a matter yet to be adjudicated upon in a completely separate proceeding and any conclusion or findings in that respect may prejudice the case of the petitioner.
It would be sufficient to hold at this stage that the petitioner cannot insist on this Court to be converted into a fact finding authority and adjudicate on his innocence at the stage when already the competent authorities are pursuing those matters independently under the provisions of law. The issue before this Court is limited to the order of prohibition passed by the Commissioner of Customs under Regulation 21. As the post decisional hearing afforded to the petitioner is not acceptable; as mentioned hereinabove, the only question requiring indulgence is whether order of prohibition is based on no materials. Considering entire gamut of facts and overall circumstances as well as details of the case filed by DRI, we are of the opinion that neither the order of CESTAT of not entertaining the appeal of the petitioner warrants any interference nor could we accede to the request of the petitioner to quash the order of prohibition passed by the Commissioner of Customs.
The decision sought to be relied upon by the learned counsel is of Babaji Shivram Clearing & Carriers Pvt. Limited v. Union of India, reported in [(2011) 269 ELT 222], wherein, the Bombay High Court was dealing with the matter relating to suspension of the license of CHA which was suspended under Regulation 20 (2) of the Regulations and post-decisional hearing was given as well. The suspension order was since passed belatedly, the Court had not sustained it. It also found no order in post decisional proceedings for nearly 3 weeks.
Yet another decision of the Bombay High Court, reported in [(2011) 263 ELT 353 in case of C.C [Customs] v. S.S Clearing & Fowarding Agency Pvt. Limited pertains to clearance of goods in absence of authorization in favour of CHA and the Bombay High Court held that the CHA ought not to have acted without authorization but the Customs Officer also was duty bound to check the authorization in favour of the CHA before allowing him to act as CHA for the importer. Therefore, it was not the CHA alone who could be blamed and punished. Court found contributory default of both, CHA and that of the Officer. This was of course decided when licence was cancelled holding punishment disproportionate to the charges levelled.
Whether in the instant case absence of authorization from the Exporter could hold the CHA alone responsible or not shall be decided at an appropriate stage by the concerned authorities as proceedings under Regulation 22 are yet to be undertaken. This issue for present is not at large before this Court, and therefore, this authority shall not help the cause of the petitioner.
Rest of the judgments pressed into service are that of CESTAT and they are delivered in connection with the cases which pertain to Regulations 20 & 22 of the CHALR 2004. The issue before this Court is with regard to prohibition under Regulation 21. The CESTAT, West Zonal Bench in (2005) 185 ELT p-81 has addressed the issue which concerns Regulation 21, where the Tribunal did not find any material on record for initiating prohibition order and therefore, in absence of any violation on the part of CHA, it did not uphold such an order.
At the cost of reiteration, it is to be noted that as already mentioned hereinabove that there appears to be a prima facie case as could be made out indicating direct involvement of both the employees of the petitioner in exporting restricted commodity and consequently that of petitioner in violating regulations, as discussed. In such circumstances, it is not possible to hold that such an order of prohibition is based without any substantiating material. Petition, therefore, deserves no meritorious consideration. However, as a parting note, the respondents are directed to complete the proceedings pending under Regulation 22 without further loss of time.
In light of the discussions held above, petition is dismissed, with no order as to costs.
{Akil Kureshi, J.} {Ms. Sonia Gokani, J.} Prakash* Top