1 mpt IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.7192 OF 2009 A.S. Vasan & Sons (Bombay) A Partnership firm, through its partner Mr.C.R. Unnikrishnan having office at 610, Arenja Corner, Sector 17, Vashi, Navi Mumbai 400 705. .. Petitioner versus 1. The Union of India Through Central Govt.Advocates Dedicated Legal Cell, New Customs House, Ballard Estate, Mumbai 400 001. 2. Commissioner of Customs(G), CHA Section (P & E), New Customs House, Ballard Estate,Mumbai-38. .. Respondents. ... Mr. S.U. Kamdar, Sr. Counsel with Mr.H.K. Sudhakar i/b M/s.Khaitan & Co. for the petitioner. Mr. P.S. Jetly with Mr.H.K. Vardhan for respondents. 2 CORAM : F. I. REBELLO AND D.G. KARNIK, JJ DATED : 9th September 2009 ORAL JUDGMENT (Per D.G.Karnik, J) 1. Rule. By consent, heard forthwith. 2. By this petition, the petitioner challenges the order dated 20th May 2009 passed by the Commissioner of Customs (General) cancelling the Custom House Agent (CHA) licence and further directing that since the licence was pending renewal when the order was passed, the revocation would be applicable as and when the licence became operational on account of the renewal. The petitioner also challenges the order dated 6th July 2009 passed by the Commissioner of Customs (General) rejecting the application of the petitioner for renewal of the CHA licence. 3. The petition was heard by us yesterday i.e. 8th September 2009. We were of the view prima facie that the action of the respondent no.2 in rejecting the application of the petitioner for renewal of the licence and for cancellation of the licence, was too harsh and disproportionate to the alleged misconduct of the use of old visiting card. We 3 adjourned the matter for a day to enable the respondent to inform us whether there was any record of previous misconduct, misdemeanour, or any adverse entry in the last more than 20 years during which the petitioner was carrying on the business as CHS licencee. Today, the learned counsel for the respondent informed us that there was no record of any past misconduct or misdemeanour or adverse remark in the case of the petitioner. We have heard the counsel again today and are of the view that the impugned orders need to be set aside for the reasons set out hereunder. 4. The petitioner is carrying on business and acting as licenced Customs House Agent (CHA) in pursuance of CHA licence no.11/483 dated 5th August 1983. For a period of 20 years, till May 2003, there are no allegations of any irregularities committed by the petitioner. In May 2003, investigations were commenced by Department of Revenue Intelligence (DRI) in respect of certain exports carried out by four exporters whose consignments were handled by Mr.C.R. Unnikrishnan, partner of the petitioner. The charge against the four exporters was that they had overvalued certain exports for making an inflated DEPB claim. In the inquiry against the four exporters notice was also issued to Mr.Unnikrishnan on or about 25th July 2003 to show 4 cause why his CHA licence should not be made inoperative on the ground of fraud in those exports. On 25th May 2005, the Commissioner of Customs passed an order making the CHA licence of the petitioner inoperative. That order was challenged by Mr.Unnikrishnan by filing Writ Petition No.3465 of 2005 in this court. The Writ Petition was allowed and the order was set aside by this court on the ground that it was passed without giving opportunity of hearing to Mr.Unnikrishnan. This court remanded the matter back to the Commissioner for fresh decision after giving opportunity of hearing to Mr.Unnikrishnan. After remand, the respondent no.2 again passed an order dated 6th July 2009 and refused the petitioner’s application for renewal of the CHA licence. That order is impugned in this petition. In the mean while, respondent no.2 also gave hearing to the petitioner on a show cause notice issued to it for revocation of the licence and by an order dated 20th May 2009 revoked the licence of the petitioner and with effect from the date which it was renewed. That order is also impugned by the petitioner by this petition. 5. We have perused the impugned orders. Firstly, the respondent no.2 has held that even after the CHA licence of the petitioner had come to an end on account of non renewal, petitioner was falsely 5 representing to be a CHA agent. Secondly, respondent relied upon the statements of Mr.C.R. Unnikrishnan, partner of the petitioner firm recorded u/s.108 of the Customs Act 1962 and came to the conclusion that the misconduct of Mr.Unnikrishnan was proved on the basis of the said statement. He further relied upon the fact that penalty of Rs.15 lakhs was imposed on Mr.Unnikrishnan in the co-lateral proceedings which were taken against the four exporters who had fraudulently and in collusion with Mr.Unnikrishnan had overvalued the exports. 6. As regards the first ground in paragraph no.13 of the order dated 20th May 2009, the respondent has observed that at the time of hearing, Mr.Unnikrishnan gave visiting cards (proposed for noting the persons or seeking entry) into the customs area for hearing of the petitioner firm showing that it was a Custom House Agent. The petitioner firm was thus representing that it possessed a CHA licence even after the CHA licence had expired and not renewed. The explanation by Mr.Unnikrishnan that the visiting cards were printed two years ago when the CHA licence was still valid and he had simply used the same card without any intention of making any false representation was not accepted by respondent no.2. In our opinion, the explanation offered by Mr.Unnikrishnan was a plausible 6 explanation and there was no material on record, that for except giving of the visiting card to the respondent no.2 himself at the time of hearing that the petitioner was using the visiting cards anywhere else and/or misrepresenting that they were still possessing CHA licence. In in our view, giving of the visiting card to respondent no.2 was even assuming if amounted to misconduct was too insignificant a thing warranting cancellation of the licence or its refusal of its renewal. 8. As regards the second ground, it may be noted that the statement allegedly recorded under section 108 of the Customs Act was retracted by Mr.Unnikrishnan. Furthermore, the order imposing the fine of Rs.15 lakhs on Mr.Unnikrishnan by the adjudicating authority on which reliance has been placed in the impugned orders was set aside by the CESTAT by its decision rendered in Commissioner of Customs vs. R.K. Tommer and other connected matters reported in 2008 (228) ELT 232. Mr.Unnikrishnan was exonerated of all charges against by the CESTAT. In our opinion, therefore, the Commissioner erred in relying upon the order of the adjudicating authority which had been set aside and has ceased to exist by reason of the order of the CESTAT. 7 9. Learned counsel for the respondents however submitted that respondents have filed a special leave petition in the Supreme Court against the order of the CESTAT and the Special Leave Petition is still pending. The order of the CESTAT has therefore not attained finality and therefore, respondents were justified in overlooking the order of that Tribunal. Per Contra, learned counsel for the respondents handed in a print out of the Supreme Court site showing that the Special leave petition though filed more than a year ago has still not been admitted and is under objection. He submitted that the respondents themselves have not removed the objections and by their inaction they cannot deprive the petitioner of his fundamental right to carry on the business on the assumption that the order of the CESTAT has not become final. It is true that Special Leave Petition has been filed against the order of the CESTAT. However, Special Leave Petition has not yet been admitted and has not even been placed for hearing on account of own default of the respondents and they cannot take advantage of their on default. Secondly, as on today, the order of the adjudicating authority imposing a penalty on Mr. Unnikrishnan has been set aside and in the circumstances, the respondents cannot rely upon the order which has been set aside by the CESTAT and which has not been reversed and/or stayed by the Hon’ble Supreme Court. Needless to say that if the 8 Supreme Court stays or sets aside the order of the CESTAT, it would be open to the respondents to take out appropriate action against the petitioner after giving it an opportunity of hearing. As on the date of the impugned order, respondents clearly erred in relying upon the order which had been set aside and ceased to exist. Both the grounds on which the impugned orders have been passed therefore do not stand scrutiny. The impugned orders are therefore set aside and rule is made absolute in terms of prayer clause (a). 10. We clarify that in the event the order of the CESTAT is set aside, modified or stayed by the Supreme Court it would be open to the respondents to take appropriate action in accordance with law after giving opportunity of hearing to the petitioner. (D.G. KARNIK, J) (F.I. REBELLO, J)