UNION OF INDIA & ORS. versus M/S. RAJ GROW IMPEX LLP & ORS.
[2021] 12 S.C.R. 371, Supreme Court of India, 2021
Outcome: Appeal(s) allowed (Granted)
Segment: Facts
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67.3. In the case of Brooks International (supra), the market
value of goods under export was found to be less than the amount of
drawback claimed. The question was whether such goods could be
confiscated for violation of the provisions of the Customs Act? While
considering the import of the definition of “prohibited goods” in Section
2(33) and of Section 11 of the Customs Act, this Court referred to the
following exposition in the case of Om Prakash Bhatia (supra): -
“10. From the aforesaid definition, it can be stated that: (a) if
there is any prohibition of import or export of goods under the Act
or any other law for the time being in force, it would be considered
to be prohibited goods; and (b) this would not include any such
goods in respect of which the conditions, subject to which the
goods are imported or exported, have been complied with. This
would mean that if the conditions prescribed for import or export
of goods are not complied with, it would be considered to be
prohibited goods. This would also be clear from Section 11 which
empowers the Central Government to prohibit either ‘absolutely’
or ‘subject to such conditions’ to be fulfilled before or after
clearance, as may be specified in the notification, the import or
export of the goods of any specified description. The notification
can be issued for the purposes specified in sub-section (2). Hence,
prohibition of importation or exportation could be
subject
to certain prescribed conditions to be fulfilled before or
after clearance of goods. If conditions are not fulfilled, it
may amount to prohibited goods….”
(emphasis in bold supplied)
67.4. Learned counsel for the importers have strongly relied upon
a 3-Judge Bench decision of this Court in Atul Automations (supra) to
submit that therein, the goods imported without authorisation were held
to be ‘restricted’ goods; and the same principle applies to the subject
goods when they have been imported without import licence and hence,
they cannot be taken as prohibited goods. The submissions have been
countered by the ASG that the said decision related to the matter under
the FTDR Act and different facts and different regulations concerning
the goods were involved therein.
67.4.1. In the case of Atul Automations (supra), the goods
imported without authorisation were found to be not ‘prohibited’ but
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‘restricted’ items for import and the orders for their release with payment
of fine in lieu of confiscation were approved. However, a close look at
the factual aspects puts it beyond the pale of doubt that therein, this
Court has neither laid down the law that in every case of import without
authorisation, the goods are to be treated as restricted and not prohibited
nor that the goods so imported without authorisation are always to be
released on payment of redemption fine.
67.4.2. The factual aspect of Atul Automations (supra) makes it
clear that the imported Multi-Function Devices, Photocopiers and Printers
(MFDs) involved in that case were restricted items, importable against
authorisation under Clause 2.31 of the Foreign Trade Policy. Thus, the
MFDs were found to be restricted items for import and not prohibited
items. That had not been the case where import was restricted in terms
of quantity in the manner that the goods were importable only up to a
particular extent of quantity and that too against a licence. It was also
found therein that the Central Government had permitted the import of
used MFDs having utility for at least five years, keeping in mind that
they were not being manufactured in the country.
67.4.3. The present case is of an entirely different restriction
where import of the referred peas/pulses has been restricted to a particular
quantity and could be made only against a licence. The letter and spirit
of this restriction, as
expounded by this Court earlier, is that, any import
beyond the specified quantity is clearly impermissible and is prohibited.
This Court has highlighted the adverse impact of excessive quantity of
imports of these commodities on the agricultural market economy in the
case of Agricas (supra) whereas, it had not been the case in Atul
Automations (supra) that the import was otherwise likely to affect the
domestic market economy. In contrast to the case of Atul Automations,
where the goods were permitted to be imported (albeit with authorisation)
for the reason that they were not manufactured in the country, in the
present case, the underlying feature for restricting the imports by quantum
has been the availability of excessive stocks and adverse impact on the
price obtainable by the farmers of the country. The decision in Atul
Automations (supra), by no stretch of imagination, could be considered
having any application to the present case.
68. Thus, we have no hesitation in holding that the goods in
question, having been imported in contravention of the notifications dated
29.03.2019 and trade notice dated 16.04.2019; and being of import beyond
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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the permissible quantity and without licence, are ‘prohibited goods’ for
the purpose of the Customs Act18.
68.1. The unnecessary and baseless arguments raised on behalf
of the importers that the goods in question are of ‘restricted’ category,
with reference to the expression ‘restricted’ having been used for the
purpose of the notifications in question or with reference to the general
answers given by DGFT or other provisions of FTDR Act are, therefore,
rejected. The goods in question fall in the category of ‘prohibited goods’.
Whether the goods in question are liable to absolute
confiscation?
69. Once it is clear that the goods in question are improperly
imported and fall in the category of ‘prohibited goods’, the provisions
contained in Chapter XIV of the Customs Act, 1962 come into operation
and the subject goods are liable to confiscation apart from other
consequences. Having regard to the contentions urged and the
background features of these appeals, the root question is as to how the
goods in question are to be dealt with under Section 125 of the Customs
Act? The relevant part of Section 125 of the Customs Act reads as
under: -
Section 125(1) of the Customs Act, 1962
“125. Option to pay fine in lieu of confiscation.—(1)
Whenever confiscation of any goods is authorised by this Act, the
officer adjudging it may, in the case of any goods, the importation
or exportation whereof is prohibited under this Act or
under any
other law for the time being in force, and shall, in the case of any
other goods, give to the owner of the goods or, where such owner
is not known, the person from whose possession or custody such
goods have been seized, an option to pay in lieu of confiscation
such fine as the said officer thinks fit:
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xxx”
69.1. A bare reading of the provision aforesaid makes it evident
that a clear distinction is made between ‘prohibited goods’ and ‘other
goods’. As has rightly been pointed out, the latter part of Section 125
18  In the passing, we may observe that even in the orders-in-original dated 28.08.2020
by the Adjudicating Authority, it was clearly held that the goods in question were
prohibited goods (vide the findings reproduced hereinbefore in paragraph 22.2).
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obligates the release of confiscated goods (i.e., other than prohibited
goods) against redemption fine but, the earlier part of this provision makes
no such compulsion as regards the prohibited goods; and it is left to the
discretion of the Adjudicating Authority that it may give an option for
payment of fine in lieu of confiscation. It is innate in this provision that if
the Adjudicating Authority does not choose to give such an option, the
result would be of absolute confiscation. The Adjudicating Authority in
the present matters had given such an option of payment of fine in lieu
of confiscation with imposition of penalty whereas the Appellate Authority
has found faults in such exercise of discretion and has ordered absolute
confiscation with enhancement of the amount of penalty. This takes us
to the principles to be applied for exercise of the discretion so available
in the first part of Section 125(1) of the Customs Act.
70. The principles relating to the exercise of discretion by an
authority are expounded in various decisions cited by the parties. We
may take note of the relevant expositions as follows:
70.1. In the case of Sant Raj (supra), referred to and relied upon
by both the sides, this Court dealt with the matter as regards the discretion
of Labour Court to award compensation in lieu of reinstatement and
observed as under: -
“4…..Whenever, it is said that something has to be done
within the discretion of the authority then that something
has
to be done according to the rules of reason and justice
and not according to private opinion, according to law and
not humor. It is to be not arbitrary, vague and fanciful but legal
and regular and it must be exercised within the limit to which an
honest man to the discharge of his office ought to find himself…..
Discretion means sound discretion guided by law. It must be
governed by rule, not by humor, it must not be arbitrary, vague
and fanciful…..”
(emphasis in bold supplied)
70.2. In the case of Reliance Airport Developers (supra), this
Court, with reference to various pronouncements pertaining to the legal
connotations of ‘discretion’ and governing principles for exercise of
discretion observed, inter alia, as under: -
“30. Discretion, in general, is the discernment of what is right and
proper. It denotes knowledge and prudence, that discernment
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which enables a person to judge critically of what is correct and
proper united with caution; nice discernment, and judgment directed
by circumspection: deliberate judgment; soundness of judgment;
a science or understanding to discern between falsity and truth,
between wrong and right, between shadow and substance,
between equity and colourable glosses and pretences, and not to
do according to the will and private affections of persons.”
70.3. In the case of U.P. State Road Transport Corporation
(supra), while dealing with the case of non-exercise of discretion by the
authority, this Court expounded on the contours of discretion as also on
limitations on the powers of the Courts when the matter is of the discretion
of the competent authority, in the following terms: -
“12. The High Court was equally in error in directing the Corporation
to offer alternative job to drivers who are found to be medically
unfit before dispensing with their services. The court cannot
dictate the decision of the statutory authority that ought to
be made in the exercise of discretion in a given case. The
court cannot direct the statutory authority to exercise the
discretion in a particular manner not expressly required by
law.The court could only command the statutory authority by a
writ of mandamus to perform its duty by exercising the discretion
according to law. Whether alternative job is to be offered or not is
a matter left to the
discretion of the competent authority of the
Corporation and the Corporation has to exercise the discretion in
individual cases. The court cannot command the Corporation to
exercise discretion in a particular manner and in favour of a
particular person. That would be beyond the jurisdiction of the
court.
13. In the instant case, the Corporation has denied itself the
discretion to offer an alternative job which the regulation requires
it to exercise in individual cases of retrenchment. ……It may be
stated that the statutory discretion cannot be fettered by self-
created rules or policy. Although it is open to an authority to which
discretion has been entrusted to lay down the norms or rules to
regulate exercise of discretion it cannot, however, deny itself the
discretion which the statute requires it to exercise in individual
cases. ……
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“15.……Every discretion conferred by statute on a holder
of public office must be exercised in furtherance of
accomplishment of purpose of the power. The purpose of
discretionary decision making under Regulation 17(3) was intended
to rehabilitate the disabled drivers to the extent possible and within
the abovesaid constraints. The Corporation therefore, cannot act
mechanically. The discretion should not be exercised
according to whim, caprice or ritual. The discretion should be
exercised reasonably and rationally. It should be exercised faithfully
and impartially. There should be proper value judgment with
fairness and equity…..”
(emphasis in bold supplied)
70.4. In the case of Glaxo Smith Kline (supra), this Court
expounded on the principles that the Constitutional Courts, even in
exercise of their wide jurisdictions, cannot disregard the substantive
provisions of statute while observing, inter alia, as under: -
“12. Indubitably, the powers of the High Court under Article 226
of the Constitution are wide, but certainly not wider than the plenary
powers bestowed on this Court under Article 142 of the
Constitution. Article 142 is a conglomeration and repository of the
entire judicial powers under the Constitution, to do complete justice
to the parties.
Even while exercising that power, this Court is required to bear in
mind the legislative intent and not to render the statutory provision
otiose.”
71. Thus, when it comes to discretion, the exercise thereof
has to
be guided by law; has to be according to the rules of reason and justice;
and has to be based on the relevant considerations. The exercise of
discretion is essentially the discernment of what is right and proper; and
such discernment is the critical and cautious judgment of what is correct
and proper by differentiating between shadow and substance as also
between equity and pretence. A holder of public office, when exercising
discretion conferred by the statute, has to ensure that such exercise is in
furtherance of accomplishment of the purpose underlying conferment
of such power. The requirements of reasonableness, rationality,
impartiality, fairness and equity are inherent in any exercise of discretion;
such an exercise can never be according to the private opinion.
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
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71.1. It is hardly of any debate that discretion has to be exercised
judiciously and, for that matter, all the facts and all the relevant surrounding
factors as also the implication of exercise of discretion either way have
to be properly weighed and a balanced decision is required to be taken.
72. It is true that the statutory authority cannot be directed to
exercise its discretion in a particular manner but, as noticed in the present
case, the exercise of discretion by the Adjudicating Authority has been
questioned on various grounds and the Appellate Authority has, in fact,
set aside the orders-in-original whereby the Adjudicating Authority had
exercised the discretion to release the goods with redemption fine and
penalty. Having found that the goods in question fall in the category of
‘prohibited goods’ coupled with the relevant background aspects, including
the reasons behind issuance of the notifications in question and the findings
of this Court in Agricas (supra), the question is as to whether the exercise
of discretion by the Adjudicating Authority in these matters, giving option
of payment of fine in lieu of confiscation, could be approved?
73. As regards the question at hand, we may usefully take note of
the relevant decisions cited by learned counsel for the parties. However,
it may be observed that the decision of the Punjab and Haryana High
Court in Horizon Ferro Alloys (supra), dealing with a
particular class
of goods that were ‘restricted’ and not ‘prohibited’, needs no elaboration.
74. On behalf of the appellants, the learned ASG has relied upon
the decision in the case of Garg Woollen Mills to support the contention
that the subject goods deserve to be confiscated absolutely. In that case,
the Additional Collector of Customs had directed confiscation of goods
when it was found that there had been an attempt of fraudulently
importing huge quantity of raw material in the name of non-existent
units; and serviceable garments were concealed against mutilated
garments. That being a case where fraud was involved, the order of
absolute confiscation was not interfered with. This Court, inter alia,
observed and held as under: -
“5. Another contention that was urged by Shri Mahabir Singh
was that the Additional Collector, as also the Tribunal, have failed
to take into consideration the provisions contained in Section 125
of the Act which prescribes that whenever confiscation of any
goods is authorised by the Act, the officer adjudging it may, in the
case of any goods, the importation or exportation whereof is
prohibited under the Act or under any other law for the time being
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in force, and shall, in the case of any other goods, give to the
owner of the goods or, where such owner is not known, the person
from whose possession or custody such goods have been seized,
an option to pay in lieu of confiscation such fine as the said officer
thinks fit. We do not find any merit in this contention of Mr Mahabir
Singh. Under Section 125 a discretion has been conferred on the
officer to give the option to pay fine in lieu of confiscation in
cases of goods, the importation or exportation whereof is prohibited
under the Act or under any other law for the time being in force
but in respect of other goods the officer is obliged to give such an
option. In the present case, having regard to the facts and
circumstances in which the goods were said to be imported and
the patent fraud committed in importing the goods, the Additional
Collector has found that the goods had been imported in violation
of the provisions of the Import (Control) Order, 1955 read with
Section 3(1) of the Import and Export (Control) Act, 1947. In the
circumstances he considered it appropriate to direct absolute
confiscation of the goods which indicates that he did not consider
it a fit case for exercise of his discretion to give an option to pay
the redemption fine under Section 125 of the Act. The Tribunal
also felt that since this was a case in which fraud was
involved, the order of the Additional Collector directing
absolute confiscation of the goods did not call for
any
interference. We do not find any reason to take a different
view.”
(emphasis in bold supplied)
75. The learned ASG has also referred to the decision in the case
of Shri Amman Dhall Mills (supra) where the Kerala High Court has
dealt with the imports made in violation of the subsequent notifications
concerning the same commodities as are involved in the present case.
Therein, on 22.04.2020, the importer applied for issuance of license for
import of 200 MTs of green peas but, before actual grant of license to
import, filed a bill of entry dated 23.06.2020 for clearance of goods
declared as Canadian Green Peas. As per declaration in the bill of entry,
the quantity declared was 210 MTs with declared assessable value of
Rs. 79,28,444/-. The Commissioner of Customs, Kochi, by his order
dated 16.10.2020, made on the request of the importer for release of
goods, noted that DGFT notification dated 18.12.2019 had revised the
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policy for import of peas; further policy conditions as regards minimum
import price and annual fiscal quota of Rs. 1.5 lakh MTs were
incorporated and the imports were permitted through Calcutta seaport.
The importer, who had imported the subject goods after the issue of
notifications dated 18.12.2019 and 28.03.2020, filed a writ petition in the
High Court seeking provisional release of the subject goods but this prayer
for provisional release was declined. The importer filed an intra-court
appeal that was also dismissed. However, the High Court desired that
the customs authorities proceed with the adjudication proceedings
expeditiously. The Commissioner of Customs, in his order dated
16.10.2020, while considering the request of importer for provisional
release, referred to three conditions in the notification dated 18.12.2019
as modified in the notification dated 28.03.2020; and ordered absolute
confiscation of the goods for contravention of the provisions of Section
111(d) of the Customs Act read with Section 3(3) of the FTDR Act; and
imposed a penalty of Rs. 4 lakhs. The importer challenged the order of
Commissioner before the Appellate Tribunal. The Appellate Tribunal
observed that the subject goods, having been imported in violation of the
conditions of EXIM Policy, acquired the nature of prohibited goods in
terms of Section 2(33) of the Customs Act and were liable to confiscation
in terms of Section 111(d).
Thereafter, the Tribunal formulated the
question as to whether the Adjudicating Authority had an option to allow
such goods to be redeemed on payment of fine in lieu of confiscation.
After referring to the judgment of this Court in the case of Atul
Automations (supra) and the order passed by the Bombay High Court
in the case of M/s. Harihar Collections (impugned herein), the Tribunal
directed redemption of impugned goods on payment of Rs. 12 lakhs as
fine and confirmed the penalty of Rs. 4 lakhs imposed by the
Commissioner.
75.1. In cross-appeals by the importer and by the revenue, the
Kerala High Court consciously took note of the decision of this Court in
Agricas (supra) and also the fact that the order so passed by the Bombay
High Court in the case of M/s. Harihar Collections had been stayed by
this Court in the present appeals. Thereafter, the High Court proceeded
to disapprove the order passed by the Appellate Tribunal for release of
goods, with the following amongst other findings and observations: -
“25. We hasten to add, that if in every case goods are
released on payment of redemption fine, by the primary or
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appellate Tribunal, then such decisions are unsustainable
in law and judicial review. In our considered view, exercise
of power and discretion under Section 125 of Customs Act
1962, are specific and generally governed by the applicable
policy, notification etc. Notification dated 18.4.2019 stipulates
restriction on import of a quantity of 1.5 lakh MT only; stipulates
minimum import price of Rs. 200/- and above CIF per kg and the
import is allowed through Calcutta Sea Port only. These are the
conditions which the licensee for import of the goods is expected
to conform. The primary authority has noted that by keeping in
view the stand taken by the Union of India before the Supreme
Court in Agricas LLPcase; the available stock position of green
peas is treated as surplus, and declined release and ordered
confiscation. The further import according to Customs
Commissioner is not needed or alternatively detrimental to the
interest of farmers. He has further noted that in his order dated
16.10.2020 that the importer does not conform to any of the
conditions applicable for import of green peas. In our considered
view the exercise of above discretion by Customs Commissioner
is the question for consideration before the Appellate Tribunal.
The Appellate Tribunal on the contrary, as already noted,
considered matters not completely germane for appreciating the
mode and manner of exercise of authority by the Commissioner
of customs, but, however, recorded that the
subject goods can be
treated as restricted goods and can be released on payment of
redemption fine. …. The Tribunal fell in clear error of law. By
holding that release of goods is the only option to Customs
Commissioner in the case on hand the language of Section 125 of
Customs Act is fully liberalised. The reasoning of Tribunal is
adopted both by other primary authority/Appellate Tribunal, then
Exim policy, notifications are defeated and opens floodgates of
the import Green Peas, and such contingencies are commented
by Supreme Court in Agricas Case. We are of the view that the
consideration of Appellate Tribunal in the case on hand is illegal,
ignored relevant notifications, the mandate of FTDR Act and
Customs Act 1962.”
(emphasis in bold supplied)
76. On the other hand, the importers have placed heavy reliance
upon the decision in the case of Hargovind Das K. Joshi (supra).
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Therein, a consignment of zip fasteners imported by the appellants was
ordered for absolute confiscation by the Additional Collector of Customs
and a penalty was also imposed. The order was confirmed by the
Appellate Tribunal. In appeal to this Court, three questions were raised
by the appellants, namely, on validity of the order confiscating the goods;
on validity of the orders imposing penalty; and failure on the part of the
customs authority to give an option to them for redeeming the goods on
payment of fine in lieu of confiscation. This Court rejected the first two
contentions after finding that the order directing confiscation was
unassailable in facts or in law and that the order levying penalty was
also justified. However, this Court found substance in the third part of
the submissions because the Collector of Customs had passed the order
for absolute confiscation without giving the appellants an option to redeem
the goods on payment of fine. This Court observed that the said
Adjudicating Authority, undoubtedly, had the discretion to give an option
of payment of fine in lieu of confiscation but omitted to consider such a
discretion available with him. In the given circumstances, this Court
remitted the matter to the Adjudicating Authority to the limited extent as
to whether or not to give an option to the importers to redeem the
confiscated goods on payment of fine. In that regard, this Court left it
open for
the officer concerned to take a decision one way or the other in
accordance with law, while observing in the last that the officer concerned
will take into consideration all the relevant circumstances including the
submission on behalf of the importers that the free import of the goods in
question had also been allowed, of whatever worth that was.
76.1. From the decision in Hargovind Das K. Joshi (supra), it is
not borne out as to what was the reason for which the goods (zip fasteners)
became subject to confiscation and it appears that at a later point of
time, free import of the item had also been allowed. Be that as it may,
what this Court found therein was that the Adjudicating Authority omitted
to take into consideration one part of the discretion available for him i.e.,
of giving an option for redemption with payment of fine in lieu of
confiscation and for that reason alone, the matter was remitted. The
said decision cannot be read as an authority for the proposition that in
every case of confiscation, invariably, the discretion has to be exercised
by the Adjudicating Authority to give an option for redemption by payment
of fine. In our view, the said decision does not make out any case in
favour of the importers.
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76.2. In fact, the observations made in Hargovind Das K. Joshi
(supra) rather operate against the orders-in-original in the present appeals
because therein, the Adjudicating Authority, after finding the goods liable
to confiscation, straightaway proceeded as if the option for payment of
fine in lieu of confiscation has to be given and did not consider the other
part of discretion available with him that the goods could also be
confiscated absolutely.
77. Thus, for what has been noticed above, the Kerala High Court
has approved absolute confiscation of similar goods while following the
decision of this Court in Agricas (supra) and after finding unsustainable
the order of Tribunal for release of goods. In the case of Garg Woollen
Mills (supra), this Court approved absolute confiscation when fraud was
involved. In Hargovind Das K. Joshi (supra), when one part of discretion
of Section 125(1) of the Customs Act was not taken into account, this
Court remitted the matter for proper exercise of discretion.
78. It is true that, ordinarily, when a statutory authority is invested
with discretion, the same deserves to be left for exercise by that authority
but the significant factors in the present case are that the Adjudicating
Authority had exercised the discretion in a particular manner without
regard to the other alternative available; and the Appellate Authority has
found such exercise of discretion by the Adjudicating Authority wholly
unjustified. In the given
circumstances, even the course adopted in the
case of Hargovind Das K. Joshi (of remitting the matter for
consideration of omitted part of discretion) cannot be adopted in the
present appeals; and it becomes inevitable that a final decision is taken
herein as to how the subject goods are to be dealt with under Section
125 of the Customs Act.
79. As noticed, the exercise of discretion is a critical and solemn
exercise, to be undertaken rationally and cautiously and has to be guided
by law; has to be according to the rules of reason and justice; and has to
be based on relevant considerations. The quest has to be to find what is
proper. Moreover, an authority acting under the Customs Act, when
exercising discretion conferred by Section 125 thereof, has to ensure
that such exercise is in furtherance of accomplishment of the purpose
underlying conferment of such power. The purpose behind leaving such
discretion with the Adjudicating Authority in relation to prohibited goods
is, obviously, to ensure that all the pros and cons shall be weighed before
taking a final decision for release or absolute confiscation of goods.
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80. For what has been observed hereinabove, it is but evident that
the orders-in-original dated 28.08.2020 cannot be said to have been
passed in a proper exercise of discretion. The Adjudicating Authority did
not even pause to consider if the other alternative of absolute confiscation
was available to it in its discretion as per the first part of Section 125(1)
of the Customs Act and proceeded as if it has to give the option of
payment of fine in lieu of confiscation. Such exercise of discretion by
the Adjudicating Authority was more of assumptive and ritualistic nature
rather than of a conscious as also cautious adherence to the applicable
principles. The Appellate Authority, on the other hand, has stated various
reasons as to why the option of absolute confiscation was the only proper
exercise of discretion in the present matter. We find the reasons assigned
by the Appellate Authority, particularly in paragraph 54.3 of the order-
in-appeal dated 24.12.2020 (reproduced in point ‘c’ of paragraph 38.2
hereinabove) to be fully in accord with the principles of exercise of
discretion, as indicated hereinabove and in view of the facts and peculiar
circumstances of this case.
81. It needs hardly any elaboration to find that the prohibition
involved in the present matters, of not allowing the imports of the
commodities in question beyond a particular quantity, was not a prohibition
simpliciter. It was provided with
reference to the requirements of
balancing the interests of the farmers on the one hand and the importers
on the other. Any inflow of these prohibited goods in the domestic market
is going to have a serious impact on the market economy of the country.
The cascading effect of such improper imports in the previous year
under the cover of interim orders was amply noticed by this Court in
Agricas (supra). This Court also held that the imports were not bona
fide and were made by the importers only for their personal gains.
82. The sum and substance of the matter is that as regards the
imports in question, the personal interests of the importers who made
improper imports are pitted against the interests of national economy
and more particularly, the interests of farmers. This factor alone is
sufficient to find the direction in which discretion ought to be exercised
in these matters. When personal business interests of importers clash
with public interest, the former has to, obviously, give way to the latter.
Further, not a lengthy discussion is required to say that, if excessive
improperly imported peas/pulses are allowed to enter the country’s
market, the entire purpose of the notifications would be defeated. The
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discretion in the cases of present nature, involving far-reaching impact
on national economy, cannot be exercised only with reference to the
hardship suggested by the importers, who had made such improper imports
only for personal gains. The imports in question suffer from the vices of
breach of law as also lack of bona fide and the only proper exercise of
discretion would be of absolute confiscation and ensuring that these
tainted goods do not enter Indian markets. Imposition of penalty on such
importers; and rather heavier penalty on those who have been able to
get some part of goods released is, obviously, warranted.
83. Before closing on this part of discussion, we may also refer to
a decision of Bombay High Court in the case of Finesse Creation Inc.
(supra), cited on behalf of one of the importers. In that case, the declared
value of goods imported by the assessee in respect of 13 consignments
over a period of about three years was rejected and the Commissioner
ordered re-assessment of the value of goods; and after re-determination,
differential duty was confirmed under Section 28(2) of the Customs Act
with recovery of interest under Section 28AB thereof. Moreover, the
imported goods were confiscated and redemption fine under Section
125 of the Customs Act was also imposed in lieu of confiscation. While
confirming the differential duty and consequent penalty and interest,
CESTAT quashed the imposition of redemption fine because the goods
were not
available for confiscation. In that context, the High Court said
that the concept of redemption fine would arise in the event the goods
were available and were to be redeemed; and if the goods were not
available, there was no question of redemption of goods. The said decision
cannot be pressed into service in the present case merely because the
said importer M/s. Harihar Collections has been able to obtain release
of all the goods after passing of the order-in-original of the Adjudicating
Authority dated 28.08.2020 when the same was under challenge. The
present one is not a case where the subject goods were not available on
the day of passing of the order by the Adjudicating Authority.
84. Hence, on the facts and in the circumstances of the present
case as noticed and dilated hereinabove, the discretion could only be for
absolute confiscation with levy of penalty. At the most, an option for re-
export could be given to the importers and that too, on payment of
redemption fine and upon discharging other statutory obligations. This
option we had already left open in the order dated 18.03.2021, passed
during the hearing of these matters.
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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85. For what we have observed hereinabove, the orders-in-original
dated 28.08.2020 cannot be approved. As a necessary corollary, the
orders-in-appeal dated 24.12.2020 deserve to be approved. However,
before final conclusion in that regard, a few more aspects need to be
dealt with.
Invocation of equity by the importers
86. Various submissions invoking equity have been made on behalf
of the importers while submitting that they have already suffered huge
losses and that even re-export of subject goods is not a feasible option.
86.1. In regard to the submissions invoking equity, noticeable it is
that various such features of equity were taken into consideration by the
Adjudicating Authority, in the orders-in-original dated 28.08.2020 and by
the High Court, in the impugned order dated 15.10.2020 while directing
release of goods. We have already disapproved the orders so passed by
the Adjudicating Authority and the High Court. Therefore, no leniency in
the name of equity can be claimed by these importers. In fact, any
invocation of equity in these matters is even otherwise ruled out in view
of specific rejection of the claim of bona fide imports by this Court in
Agricas (supra). Once this Court has reached to the conclusion that a
particular action is wanting in bona fide, the perpetrator cannot claim
any relief in equity in relation to the same action. Absence of bona fide
in a claimant and his claim of equity remain
incompatible and cannot
stand together.
86.2. The overt suggestions on behalf of the interveners that
demand and supply of pulses is dynamic and not static in nature have
only been noted to be rejected. In our view, meeting with the requirements
of demand and supply is essentially a matter for policy decision of the
Government. No equity could be claimed with such submissions by the
importers. Similarly, if, for whatever reason, any consignment of the
subject goods has been released, such release had not been in accord
with law and no equity could be claimed on that basis.
86.3. Therefore, all the submissions seeking relief in equity are
required to be, and are, rejected.
Prayer for keeping issues open for statutory appeal
87. We have also pondered over the prayer for keeping the
opportunity of further statutory appeal to CESTAT open for the importers.
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Though in ordinary circumstances, such a prayer might have been of no
difficulty but, we are of the view that having regard to the background
and the relevant circumstances, any liberty for further rounds of litigation,
at least in relation to the respondents before us, is not called for; and the
matters ought to be given a finality.
88. As regards the importer M/s. Raj Grow Impex, as noticed, the
order-in-appeal was consciously challenged by it by way of a fresh writ
petition in the High Court despite being aware of the availability of
statutory remedy of appeal before CESTAT. No cogent and plausible
reason is forthcoming as to why it had chosen to avoid the regular remedy
of appeal except that it had the keen desire to get the remaining goods
(under seven bills of entry) released after it had obtained release of
goods under three bills of entry; and in that attempt, filed a fresh writ
petition challenging the order-in-appeal and also filed a contempt petition
in the High Court.
88.1. So far as the question of release of goods is concerned, the
matter stands concluded once we have found that the goods covered by
the notifications in question and by the judgment of this Court in Agricas
(supra) are liable to absolute confiscation. Therefore, any prayer for
release of any of such goods becomes redundant and cannot be granted
by any authority or Court. Of course, it is true that the Appellate Authority
has enhanced penalty from Rs. 1.485 crores to Rs. 5
crores but, the fact
that this importer had taken release of the goods covered by three bills
of entry and that aspect of the matter was required to taken as fait
accompli by the Appellate Authority, in our view, effectively operates
against any claim for reduction of the amount of penalty. Putting it
differently, once we have approved the order-in-appeal, any attempt for
further appeal by this importer shall remain an exercise in futility.
89. So far as the other importer M/s. Harihar Collections is
concerned, it had obtained release of goods covered by all its eight bills
of entry and, therefore, the matter was taken as fait accompli by the
Appellate Authority with appropriation of redemption fine and
enhancement of penalty. As noticed, this importer has even attempted to
argue before us against redemption fine with the submissions that the
goods were not available for confiscation. Neither the redemption fine
nor even the enhancement of penalty from Rs. 2.34 crores to Rs. 10
crores could fully set off the damage caused by the actions of this
importer. Needless to repeat that with our approval of the order-in-appeal,
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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any attempt for further appeal by this importer shall also remain an exercise
in futility.
90. In view of above, we find no reason to allow any prayer for
filing appeal against the orders-in-appeal dated 24.12.2020.
Incidentally: principles relating to the grant or refusal of
interim relief
91. While closing on these matters, we are constrained to observe
that the root cause of the present controversy had not been that much in
the notifications in question as it had been in the interim orders passed
by the High Court of Rajasthan, Bench at Jaipur. It needs hardly any
elaboration that only under the cover of such interim orders that the
importers ventured into the import transactions which resulted in excessive
quantities of peas/pulses than those permitted by the notifications reaching
the Indian ports. As has been noticed in the present cases, some of the
goods so imported got released and the Commissioner (Appeals) had to
take that aspect as fait accompli. For what has been held by this Court
in Agricas (supra), and further for what has been held in this judgment,
the goods in question were not to mingle in the Indian market. Such
mingling, obviously, has an adverse impact on the agricultural market
economy and defeats the policy of the Government of India. This state
of affairs was an avoidable one; and would have been avoided if, before
passing interim orders, the respective Courts would have paused to
consider
the implications and impact of such interim orders, which were,
for all practical purposes, going to operate as mandatory injunction,
whereby the appellants were bound to allow the goods to reach the
Indian ports, even if the notifications were prohibiting any such import.
91.1. Having regard to the scenario that has unfolded in the present
cases, we are impelled to re-state that even though granting of an interim
relief is a matter of discretion, such a discretion needs to be exercised
judiciously and with due regard to the relevant factors.
92. In addition to the general principles for exercise of discretion,
as discussed hereinbefore, a few features specific to the matters of
interim relief need special mention. It is rather elementary that in the
matters of grant of interim relief, satisfaction of the Court only about
existence of prima facie case in favour of the suitor is not enough. The
other elements i.e., balance of convenience and likelihood of irreparable
injury, are not of empty formality and carry their own relevance; and
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while exercising its discretion in the matter of interim relief and adopting
a particular course, the Court needs to weigh the risk of injustice, if
ultimately the decision of main matter runs counter to the course being
adopted at the time of granting or refusing the interim relief. We may
usefully refer to the relevant principle stated in the decision of Chancery
Division in Films Rover International Ltd. and Ors. v. Cannon Film
Sales Ltd.:[1986] 3 All ER 772 as under: -
“….The principal dilemma about the grant of interlocutory
injunctions, whether prohibitory or mandatory, is that there is by
definition a risk that the court may make the “wrong” decision, in
the sense of granting an injunction to a party who fails to establish
his right at the trial (or would fail if there was a trial) or
alternatively, in failing to grant an injunction to a party who succeeds
(or would succeed) at trial. A fundamental principle is therefore
that the court should take whichever course appears to carry
the lower risk of injustice if it should turn out to have been
“wrong” in the sense I have described. The guidelines for the
grant of both kinds of interlocutory injunctions are derived from
this principle.”
(emphasis in bold supplied)
92.1. While referring to various expositions in the said decision,
this Court, in the case of Dorab Cawasji Warden v. Coomi Sorab
Warden and Ors.: (1990) 2 SCC 117 observed as under: -
“16. The relief of interlocutory mandatory injunctions
are thus
granted generally to preserve or restore the status quo of the last
non-contested status which preceded the pending controversy until
the final hearing when full relief may be granted or to compel the
undoing of those acts that have been illegally done or the restoration
of that which was wrongfully taken from the party complaining.
But since the granting of such an injunction to a party who
fails or would fail to establish his right at the trial may cause
great injustice or irreparable harm to the party against whom
it was granted or alternatively not granting of it to a party
who succeeds or would succeed may equally cause great
injustice or irreparable harm, courts have evolved certain
guidelines. Generally stated these guidelines are:
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
ORS. [DINESH MAHESHWARI, J.]
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(1) The plaintiff has a strong case for trial. That is, it shall be of a
higher standard than a prima facie case that is normally required
for a prohibitory injunction.
(2) It is necessary to prevent irreparable or serious injury which
normally cannot be compensated in terms of money.
(3) The balance of convenience is in favour of the one seeking
such relief.
17. Being essentially an equitable relief the grant or refusal of an
interlocutory mandatory injunction shall ultimately rest in the sound
judicial discretion of the court to be exercised in the light of the
facts and circumstances in each case. Though the above guidelines
are neither exhaustive nor complete or absolute rules, and there
may be exceptional circumstances needing action, applying them
as prerequisite for the grant or refusal of such injunctions would
be a sound exercise of a judicial discretion.”
(emphasis in bold supplied)
93. In keeping with the principles aforesaid, one of the simple
questions to be adverted to at the threshold stage in the present cases
was, as to whether the importers (writ petitioners) were likely to suffer
irreparable injury in case the interim relief was denied and they were to
ultimately succeed in the writ petitions. A direct answer to this question
would have made it clear that their injury, if at all, would have been of
some amount of loss of profit, which could always be measured in
monetary terms and, usually, cannot
be regarded as an irreparable one.
Another simple but pertinent question would have been concerning the
element of balance of convenience; and a simple answer to the same
would have further shown that the inconvenience which the importers
were going to suffer because of the notifications in question was far
lesser than the inconvenience which the appellants were going to suffer
(with ultimate impact on national interest) in case operation of the
notifications was stayed and thereby, the markets of India were allowed
to be flooded with excessive quantity of the said imported peas/pulses.
94. In fact, the repercussion of the stay orders passed in the earlier
years were duly noticed by this Court in Agricas (supra); and
unfortunately, more or less same adverse consequences had been
hovering over the markets because of the imports made under the cover
of the interim orders passed in relation to the notifications dated
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29.03.2019. This, in our view, was not likely to happen if the material
factors relating to balance of convenience and irreparable injury were
taken into account while dealing with the prayers for interim relief in the
writ petitions. As noticed, this Court had, in unequivocal terms, declared
in Agricas (supra), that the importers cannot be said to be under any
bona fide belief in effecting the imports under the cover of interim
orders; and they would face the consequences in law. It gets, perforce,
reiterated that all this was avoidable if the implications were taken into
account before granting any interim relief in these matters.
95. We need not expand the comments in regard to the matters
relating to the grant or refusal of interim relief and would close this
discussion while reiterating the principles noticed above.
Summation
96. For what has been discussed hereinabove, these appeals
deserve to be allowed and, while setting aside the orders passed by the
High Court and approving the orders-in-appeal, the goods in question
are to be held liable to absolute confiscation but with a relaxation of
allowing re-export, on payment of the necessary redemption fine and
subject to the importer discharging other statutory obligations. The
respondent-importers being responsible for the improper imports as also
for the present litigation, apart from other consequences, also deserve to
be saddled with heavier costs.
Conclusions and directions
97. Accordingly, and
in view of the above:
(a) these appeals are allowed;
(b) the impugned order dated 15.10.2020 (read with modification
order dated 09.12.2020), as passed by the High Court in Writ
Petition (L) Nos. 3502-3503 of 2020, is set aside and the writ
petitions so filed by the respondent-importers are dismissed;
(c) the impugned interim order dated 05.01.2021, as passed by
the High Court in Writ Petition (ST) No. 24 of 2021 is also set
aside and the said writ petition shall be governed by this judgment;
(d) the orders-in-appeal dated 24.12.2020, as passed by the
Appellate Authority in the respective appeals, are approved and
consequently, the orders-in-original dated 28.08.2020 in the
respective cases of the respondent-importers stand quashed;
UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP &
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(e) the orders-in-appeal having been approved by this Court, the
questions of release of goods as also the quantum of penalty stand
concluded with this judgment and hence, the prayer for keeping
open the option of further statutory appeal stands rejected; and
(f) the subject goods are held liable to absolute confiscation but, in
continuity with the order dated 18.03.2021 in these appeals, it is
provided that if the importer concerned opts for re-export, within
another period of two weeks from today, such a prayer for re-
export may be granted by the authorities after recovery of the
necessary redemption fine and subject to the importer discharging
other statutory obligations. If no such option is exercised within
two weeks from today, the goods shall stand confiscated absolutely.
98. The matters relating to the interveners shall also be governed
by the findings of this judgment and appropriate orders in their regard
shall be passed by the authorities/Courts, wherever their matters relating
to the subject goods are pending but, their options of further appeal, only
in relation to the quantum of amount payable, including that of penalty, is
left open.
99. The respondent-importers shall pay costs of this litigation to
the appellants, quantified at Rs. 2,00,000/- (Rupees two lakhs) each.
100. All pending applications stand disposed of.
Bibhuti Bhushan Bose
Appeals allowed.