SCA/14427/2005 1/57 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 14427 of 2005 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA Sd/- HONOURABLE MS.JUSTICE H.N.DEVANI Sd/- ================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================ LALBHAI TRADING COMPANY THROUGH BK BHATT & 3 - Petitioner(s) Versus UNION OF INDIA & 3 - Respondent(s) ================================================ Appearance : MR RAKESH GUPTA FOR M/S TRIVEDI & GUPTA for Petitioner(s) : 1 - 4. MR JITENDRA MALKAN for Respondent(s) : 1, RULE SERVED for Respondent(s) : 2 - 3. NOTICE UNSERVED for Respondent(s) : 4, ================================================= SCA/14427/2005 2/57 JUDGMENT CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MS.JUSTICE H.N.DEVANI Date : 25/11/2005 CAV JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA) 1 This petition primarily challenges the order in appeal made by the Commissioner of Customs (Appeals) on 6/6/2005 (Annexure-A) under Article 226 of the Constitution of India. The petitioner has prayed for the following reliefs : A) YOUR LORDSHIPS may be pleased to admit and allow the present petition; B) YOUR LORDSHIPS may be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ or order holding and declaring that the impugned order (Annexure-A) is violative of principles of natural justice and are also violative of Articles 14, 19(1)(g); C) YOUR LORDSHIPS may be pleased to issue a writ of mandamus or a writ in the nature SCA/14427/2005 3/57 JUDGMENT of mandamus or any other appropriate writ or order holding and declaring that the impugned notices (Annexure-B) are violative of principles of natural justice and also violative of Articles 14, 19(1) (g) and 300A of the Constitution of India and they are also irrational, oppressive, without application of mind and arbitrary besides being contrary to or in non- compliance of and/or disregard to the provisions under the Customs Act,1962; D) YOUR LORDSHIPS may be pleased to issue a writ of mandamus or certiorari or a writ in the nature of mandamus or certiorari or any other appropriate writ or order quashing and setting aside the impugned order issued on 6/6/1995 in Appeal No. 55/2005 (Annexure A) and the impugned notices (Annexure B colly.) i.e. the notices dated 23.7.2004, 12.8.2004, 21.8.2004, 27.8.2004, 22.9.2004 and 19.11.2004 and also quash the direction to the petitioners to get the alleged dues deposited on priority basis failing which proceedings may be initiated against the noticee; E) Pending hearing and final disposal of SCA/14427/2005 4/57 JUDGMENT present petition, YOUR LORDSHIPS may be pleased to pass appropriate writ, order or direction, as and by way of interim relief, staying the implementation, execution and operation of the impugned order issued on 6.6.2005 in Appeal No.55/2005 (Annexure A) and also of the impugned notices dated 23.7.2004, 12.8.2004, 21.8.2004, 27.8.2004, 22.9.2004 and 19.11.2004 (Annexure B colly) and restraining the respondents their officers and agents from acting on the basis of or in pursuance of the impugned order and/or impugned notices and/or the final assessment order dated 14.5.2001 and from taking any action including any coercive action in any manner whatsoever for recovering the dues of the said importer-owner; F) An ex parte ad interim relief in terms of Para 9(E) above may kindly be granted; G) Any other and further relief/s as may be required in the facts and circumstances of case may also be granted. 2 The petitioner, a partnership firm, at the SCA/14427/2005 5/57 JUDGMENT relevant point of time, was carrying on business of the Custom House Agent and in the course of the said business acted in that capacity for respondent No.4 i.e. M/s.Golden Plastics Company (importer). The said concern i.e. Golden Plastics Company imported certain goods known as HDPE and filed Bill of Entry No.17/95. The importer was permitted to clear goods on provisional basis after provisional assessment was framed. Pending final assessment the importer owner was called upon to submit a bond as per provisions contained in Section 18 of the Customs Act,1962 (the Act) read with rules 2 & 3 of the Customs (Provisional Duty Assessment) Regulations,1963. On 18/2/1995 the said importer owner submitted the bond. The goods were provisionally cleared on 6/6/1995. Thereafter, the Order-in-Original i.e. Final Assessment Order was framed exparte on 14/5/2001 and the importer directed to discharge the liability amounting to Rs.35,09,317/- along SCA/14427/2005 6/57 JUDGMENT with interest thereon. 3 The petitioner was served with notices dated 23/7/2004 and 12/8/2004. The stand of the respondent authority is that the petitioner had acted as a surety and on failure of the importer to discharge the liability, the petitioner must pay up the outstanding dues. The petitioner therefore wrote on 20/8/2004 and 24/8/2004 informing the authorities that it was not having any records with it and requested for the entire correspondence etc. However, the respondent authorities further served notices on 27/8/2004, 22/9/2004 and 19/11/2004 calling upon the petitioner to discharge the liability arising in light of Order-in-Original No.43/AC/ICD/2001 dated 14/5/2001. The petitioner was also informed that in the event of non payment of dues by the importer the petitioner should either recover the amount from the importer or it should itself pay SCA/14427/2005 7/57 JUDGMENT the demanded amount failing which the licence of the petitioner as Custom House Agent would be suspended/revoked. 4 The petitioner therefore approached this Court by way of Special Civil Application No. 36 of 2005 which came to be decided on 1.4.2005. The petition came to be disposed of by a judgment and order dated 1.4.2005 and in paragraph No.5 it was laid down by this Court as under : “5. As can be seen from the facts on record, the petitioner was under a bona fide impression that it was not required to challenge the order dated 14th May 2001 made against and in the name of the importer Company, and it was only when the petitioner company was served with the impugned show cause notices for recovery of the outstanding dues that it became alive to the fact that the importer Company has not challenged the said SCA/14427/2005 8/57 JUDGMENT order. Thereafter, the present petition had been filed. In these circumstances, as the petitioner was under a bona fide impression and was bonafide litigating by way of challenging the impugned show cause notices, it would be in the fitness of things if the petitioner is permitted to avail of an alternative remedy of appeal, subject to the following directions : (i) The petitioner shall prefer the necessary appeal within a period of two weeks from today. (ii) In the event, such an appeal is filed on or before 16th April 2005, the Commissioner (Appeals) shall treat the same as having been filed within the period of limitation and shall decide the same on merits in accordance with law”. 5 The petitioner preferred appeal on 11/4/2005 SCA/14427/2005 9/57 JUDGMENT which came to be registered as Appeal No.55 of 2005 and by impugned order dated 6/6/2005 Commissioner (Appeals) has dismissed the appeal by holding that the petitioner was not an 'aggrieved person' who is statutorily empowered to file an appeal u/s. 128 of the Act. That the liability of the petitioner, if at all there was any, was limited as a surety to the bond. Hence, if at all the appellant was aggrieved, it was against the enforcement of the bond and not against the impugned Order-in-Original. 6 Mr.Rakesh Gupta appearing on behalf of the petitioner submitted that the reliance on the decision of the Apex Court in the case of Northern Plastics Ltd. Vs. Hindustan Photo Films Mfg.Co. Ltd., 1997(91) E.L.T.502 (S.C.) by Commissioner (Appeals) was misplaced. That the said decision in fact was required to be pressed into service to hold that the petitioner was SCA/14427/2005 10/57 JUDGMENT 'person aggrieved'. That in case it was to be held that the petitioner was not affected by Order-in-Original dated 14/5/2001 (Annexure-E) there was no occasion to serve the said order on the petitioner. That by virtue of the liability arising under the said order the petitioner was called upon to discharge the same as per bond invoked against the petitioner as a surety. In the event of the petitioner not being permitted to challenge the Order-in-Original, by way of an appeal, the petitioner was left without any remedy and would sustain an injury because the duty was demanded despite the fact that on merits the order was not justified in law. In support of the submissions made reliance has been placed on decision in case of Gopabandhu Biswal Vs.Krishna Chandra Mohanty, AIR 1998 SC 1872 and in case of Shobha Suresh Jumani, AIR 2001 SC 2288. He has also referred to the meaning of the words 'aggrieved person' as given in BLACK'S LAW SCA/14427/2005 11/57 JUDGMENT DICTIONARY (SIXTH EDITION) as well as K.J.AIYAR'S JUDICIAL DICTIONARY, TWELFTH EDITION. 7 Mr.Jitendra Malkan appearing on behalf of the respondent authorities has supported the order made by Commissioner (Appeals) and submitted that the same was proper, legal and reasoned. That, in fact the petition should not be entertained because on the same subject matter an earlier petition had been filed being Special Civil Application No.36 of 2005 and the impugned notices, which have been challenged, had been considered by the High Court while disposing of the earlier petition vide order dated 1.4.2005. That the petitioner had been called upon to make payment in the capacity as a surety and was legally bound by virtue of the bond executed (Annexure D). 7.1 Alternatively, it was submitted that the SCA/14427/2005 12/57 JUDGMENT order made by Commissioner (Appeals) was an appealable order in terms of Section 129A of the Act, and therefore also the petition was not maintainable. It was further submitted that notices having been issued u/s.142 of the Act were only in recovery proceedings and were not part of adjudication process. Thus, there was no requirement to observe principles of natural justice. Referring to communication dated 27/9/2004 (Annexure K) it was submitted that the petitioner had nowhere disputed its liability as a surety, but had in fact sought time of two to three months for locating the importer and getting the liability discharged. He relied upon paragraph No.9 of the Apex Court decision in case of Northern Plastics Limited (supra). 8 Mr.Gupta, in rejoinder submitted that in the first instance the petitioner disputed having executed any bond as a surety and as could be SCA/14427/2005 13/57 JUDGMENT seen from copy of the bond (Annexure D) the same had been signed by two persons only as witnesses, that the petitioner firm had not executed the bond. He submitted that the original was in possession of the respondent authorities and if necessary, the Court may call upon the respondent authorities to produce the original. 9 At this stage, the matter was kept part- heard on 17/8/2005 and the Counsel for the respondents was directed to produce the original record including the original register. On 18/8/2005 original register was produced and it was found that there were various discrepancies qua the serial numbers and the dates mentioned in the register and those appearing on the original bonds which were produced for perusal and verification. Therefore, the respondent authorities were directed to tender the explanation by way of affidavit of the person SCA/14427/2005 14/57 JUDGMENT concerned i.e. person in charge of maintaining register as to in what circumstances the discrepancies appeared in recording the serial numbers and the dates in the register and on the original bonds. At the request of the Counsel the matter was adjourned to 22/8/2005 to take the explanation on record despite the fact that the hearing was completed. 10 On the said day viz. 22/8/2005 the respondent authorities, through their Counsel, produced one more original register with the explanation that the original register produced on 18/8/2005 pertained to Provisional Assessments and the P.D. Bond register in original was produced on 22/8/2005. On perusal it was found that no discrepancy existed and hence the explanation tendered by the respondent authorities was accepted. SCA/14427/2005 15/57 JUDGMENT 11 It is necessary to record that on 18/8/2005 the respondent sought to tender affidavits of various persons in support of the submission that the P.D. Bond was enforceable against the petitioner. However, the Court declined to take the said affidavits on record in light of the fact that the hearing was over and the matter had been kept part-heard only for the limited purpose of ascertainment of the original record. It is also necessary to note that the respondent authorities had already submitted affidavit-in- reply dated 1/8/2005 and as the pleadings were complete, with the consent of the parties while admitting the petition rule had been made returnable on 17/8/2005 vide order dated 5/8/2005. Accordingly the matter was finally heard on 17/8/2005 and 18/8/2005. 12 As can be seen from the pleadings and the contentions raised at the time of hearing the SCA/14427/2005 16/57 JUDGMENT dispute between the parties centres round the fact as to whether the petitioner had, or had not, executed bond of surety in relation to Bill of Entry No.17/95. The petitioner has also raised the issue as to the validity of the Order-in- Original on merits. However, for the reasons that appear hereinafter, the Court has not found it necessary to enter into any discussions on merits. The principal question which falls for determination is whether the petitioner can be said to be an 'aggrieved person'. 13 The concept of 'aggrieved person' has come up time and again and the legal position may be set out. AGGRIEVED PERSON : LEGAL POSITION. (i) (1975) 2 SCC 702 - Bar Council of Maharashtra Vs. M.V.Dabholkar And others. In a case where a question arose before the Constitutional Bench of the Supreme Court as to SCA/14427/2005 17/57 JUDGMENT whether the Bar Council could be termed to be 'aggrieved person', the following legal principles have been enunciated : “27. The words 'person aggrieved' are found in several statutes. The meaning of the words 'person aggrieved' will have to be ascertained with reference to the purpose and the provisions of the statute. Sometimes, it is said that the words 'person aggrieved' correspond to the requirement of locus standi which arises in relation to judicial remedies. 28. Where a right of appeal to courts against an administrative or judicial decision is created by statute, the right is invariably confined to a person aggrieved or a person who claims to be aggrieved. The meaning of the words 'a person aggrieved' may vary according to the context of the statute. One of the meanings is that a SCA/14427/2005 18/57 JUDGMENT person will be held to be aggrieved by a decision if that decision is materially adverse to him. Normally, one is required to establish that one has been denied or deprived of something to which one is legally entitled in order to make one 'a person aggrieved'. Again a person is aggrieved if a legal burden is imposed on him. The meaning of the words 'a person aggrieved' is sometimes given a restricted meaning in certain statutes which provide remedies for the protection of private legal rights. The restricted meaning requires denial or deprivation of legal rights. A more liberal approach is required in the background of statutes which do not deal with property rights but deal with professional conduct and morality xxxx” (ii) AIR 1976 SC 578 - Jasbhai Motibhai Desai Vs. Roshan Kumar and others. SCA/14427/2005 19/57 JUDGMENT The Apex Court was called upon to decide as to whether Cinema Theater Licence Holder was entitled to invoke certiorari jurisdiction against the competitor who was awarded No Objection Certificate under the relevant rule of the Bombay Cinema Rules,1954. At page 581 in paragraph No.12 it was laid down, “ xxx xxx xxx Who is an 'aggrieved person'? And what are the qualifications requisite for such a status ? The expression 'aggrieved person' denotes an elastic, and, to an extent, an elusive concept. It cannot be confined within the bounds of a rigid exact and comprehensive definition. At best, its features can be described in a broad tentative manner. Its scope and meaning depends on diverse, variable factors such as the content and intent of the statute of which contravention is alleged, the specific circumstances of the case, the nature and extent of the petitioner's interest, and the nature and extent of the SCA/14427/2005 20/57 JUDGMENT prejudice or injury suffered by him. Xxx xxx xxxx” Further at page No.583 in paragraph Nos. 23 to 25 the ratio of English decisions regarding 'locus standi' has been explained thus : “23. In Regina v. Liverpool Corporation , Ex parte Liverpool Taxi Fleet Operators' Association, (1972) 2 Q.B. 299 the City Council in exercise of its powers under the Town Police Clauses Act,1847, limited the number of licenses to be issued for hackney carriages to 300. The Council gave an undertaking to the associations representing the 300 existing license holders not to increase the number of such license holders above 300 for a certain period. The Council, disregarding this undertaking, resolved to increase the number. An Association representing the existing license-holders moved the Queens' Bench for SCA/14427/2005 21/57 JUDGMENT leave to apply for orders of Prohibition, Mandamus and Certiorari. The Division Bench refused. In the Court of Appeal, allowing the Association's appeal, Lord Denning M.R. observed at pp.308,309 : 'The Taxicab Owners' Association come to this Court for relief and I think we should give it to them. The writs of prohibition and certiorari lie on behalf of any person who is a 'person aggrieved' and that includes any person whose interests may be prejudicially affected by what is taking place. It does not include a mere busybody who is interfering in things which do not concern him : but it includes any person who has a genuine grievance because something has been done or may be done which affects him : See Attorney General of the Gambia v. N' Jie, (1961) AC 617 and Maurice v. London County Council, (1964) 2 QB 362, 378. The Taxicab Owners' Association here have certainly a locus standi to apply SCA/14427/2005 22/57 JUDGMENT for relief'. 24. It may be noted that in this case, the whole question turned on the effect in law of the undertaking, and whether the applicants had been treated fairly. 25. Emphasizing the 'very special circumstances' of the case, the court read into the statute, a duty to act fairly in accordance with the principles of natural justice. Thus, a corresponding right to be treated fairly was also imported by implication, in favour of the applicants. Viewed from this standpoint, the applicants had an interest recognised in law, which was adversely affected by the impugned action. They had suffered a wrong as a result of the unfair treatment on the part of the corporation”. At page 584 the following classic excerpt SCA/14427/2005 23/57 JUDGMENT from the observations of James LJ in Re Sidebothem, (1880) 14 Ch D.458 at p.465 has been extracted : “The words 'person aggrieved' do not really mean a man who is disappointed of a benefit which he might have received if some other order had been made. A 'person aggrieved' must be a man who has suffered a legal grievance, a man against whom a decision has been pronounced which has wrongfully deprived him of something or wrongfully refused him something, or wrongfully affected his title to something”. Finally in paragraph No.38 at page 586 the Apex Court has laid down the broad tests in the following words: “38. To distinguish such applicants from 'strangers', among them, some broad tests may be deduced from the conspectus made SCA/14427/2005 24/57 JUDGMENT above. These tests are not absolute and ultimate. Their efficacy varies according to the circumstances of the case, including the statutory context in which the matter falls to be considered. These are : Whether the applicant is a person whose legal right has been infringed ? Has he suffered a legal wrong or injury, in the sense, that his interest, recognised by law, has been prejudicially and directly affected by the act or omission of the authority, complained of ? Is he a person who has suffered a legal grievance, a person 'against whom a decision has been pronounced which has wrongfully deprived him of something or wrongfully refused him something, or wrongfully affected his title to something? Has he a special and substantial grievance of his own beyond some grievance or inconvenience suffered by him in common with the rest of the public ? Was he entitled to object and be heard by the SCA/14427/2005 25/57 JUDGMENT authority before it took the impugned action? If so, was he prejudicially affected in the exercise of that right by the act of usurpation of jurisdiction on the part of the authority? Is the statute, in the context of which the scope of the words 'person aggrieved' is being considered, a social welfare measure designed to lay down ethical or professional standards of conduct for the community ? Or is it a statute dealing with private rights of particular individuals?” (iii) AIR 1998 S.C. 1872 - Gopabandhu Biswal Vs. Krishna Chandra Mohanty and others. In a case under the service law dealing with provisions of Administrative Tribunals Act,1985 as well as Order 47 Rule 1 of the Code of Civil Procedure it was observed in Paragraph No.13 as under : SCA/14427/2005 26/57 JUDGMENT “13. xxx xxx xxxx However, leniently one may construe the term 'party aggrieved', a person not directly affected cannot be so considered. Xxx xxx xxxx Only persons who are directly and immediately affected by the impugned order can be considered as 'parties aggrieved' under Section 22(3)(f) read with Order 47 Rule 1.” (iv) AIR 2001 S.C. 2288 – Shobha Suresh Jumani Vs. Appellate Tribunal , Forfeited Property and Another. In a decision rendered under Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, it was laid down by the Apex Court in paragraph No.5 of the Judgment as under : “5. First we would reiterate that the words 'any aggrieved person' are found in several statutes. However, the meaning of the SCA/14427/2005 27/57 JUDGMENT expression 'aggrieved' may vary according to the context of the enactment in which it appears and all the circumstances xxx xxx” Thereafter, after reproducing the extract from the case of Sidebotham it is stated that : “6. The said passage was referred to and relied upon by this Court in Thammanna v. K. Veera Reddy, (1980) 4 SCC 62 : (AIR 1981 SC 116) and Northern Plastics Ltd. v. Hindustan Photo Films Mfg.Co.Ltd.,(1997) 4 SCC 452”. “9. From the aforesaid scheme of the Act, 'any person aggrieved' by an order of the competent authority would mean person whose property is held to be illegally acquired under the Act and which is to be forfeited or whose legal rights qua the said property are adversely affected. According to Black's SCA/14427/2005 28/57 JUDGMENT Law Dictionary, 'aggrieved party' refers to a party whose personal, pecuniary or property rights have been adversely affected by another person's actions or by a Court's decree or judgment – Also termed party aggrieved; person aggrieved'. Therefore, a relative or associate, who has no interest or rights in such property cannot be held to be a person aggrieved. It is true that wife may be aggrieved because her husband's properties are forfeited. But that would not confer a right to file an appeal against such order. There is no infringement of her legal right. For the purposes of the Act husband and wife are different entities. If the properties standing in the name of relative or associate are forfeited on the ground that smugglers or