MOHAN LAL PANDIT v. COLLECTOR OF CUSTOMS — 1994 DIGILAW 344 (CAL)

RUMA PAL, J. ( 1 ) THE petitioner who has been carrying on the business is a Customs House Clearing Agent being licensed to do so issued under the Customs House Agents Licensing Regulations, 1984 (referred to as the Regulations) has challenged the revocation of his Licence by the Collector of Customs. The impugned order is dated 19-8-1994 and has been issued under the Regulations 21 (b) (c) read with Regulation 23 (7) of the Regulations for violation of Regulations 14 (d), (e), (1) and 28 (7) by the petitioner. ( 2 ) THE ground for challenge is that the impugned order has been passed in violation of the principles of natural justice and Regulation 23. ( 3 ) THE incident in respect of which the petitioner's Licence has been revoked took place in February, 1994. The allegation of the Customs Authorities is that the petitioner in conspiracy with the exporter had attempted to illegally export rough sandalwood by misdeclaring the same to be "machine finished knife handles made of sandalwood" and "refuse for joss sticks". It is not necessary to consider the facts in detail in this application in so far as they relate to the merits of the allegations in this petition. Suffice it to say that the consignment was seized after examination on 25-02-1994. After an enquiry on 17-5-1994 a Memo was issued by the Collector of Customs alleging that on the basis of enquiry conducted and statements from various persons it was revealed that the petitioner and his employees had failed to discharge their responsibility/obligations cast on them by Regulation 14 of the Regulations amounting to gross misconduct within the meaning of that Regulation. An enquiry against the Firm M/s. Shaikh and Pandit and of which the petitioner claims to be the proprietor, Tushar Pandit and S. K. Jha being contemplated the Collector in exercise of powers vested on him under Regulation 21 (2) of the Regulations ordered the suspension of the petitioner's Licence with immediate effect. It was also recorded that it was an appropriate case where immediate action was necessary. ( 4 ) THE petitioner sought to exonerate himself from all liability as alleged in the suspension memo by three separate letters dated 23-5-1994, 30-5-1994 and 14-6-1994. It was also recorded that it was an appropriate case where immediate action was necessary. ( 4 ) THE petitioner sought to exonerate himself from all liability as alleged in the suspension memo by three separate letters dated 23-5-1994, 30-5-1994 and 14-6-1994. ( 5 ) ON 1st July, 1994 the petitioner moved a writ application (hereafter referred to as the First Writ Application) challenging the order of suspension dated 17-5-1994. The writ application was heard and disposed of by an Order dated 01-7-1994 by T. Chatterjee, J. by directing the Customs Authorities to complete the proceedings and pass a final order within six weeks from the date of the order without granting any adjournment on any ground whatsoever after giving the petitioner reasonable opportunity of hearing and after passing a reasoned order. No appeal was preferred by either party from this order. ( 6 ) ON 20-7-1994, a Show Cause Notice was issued by the Collector of Customs, the language whereof was substantially similar to the Memo dated 17-5-1994. In addition it was stated that -"the investigation revealed that M/s. Shaikh and Pandit is directly involved in clandestine attempt to export Sandal Wood consignments out of India in collusion with the above-mentioned exporters violating the provisions of Customs Act, 1962 read with Import-Export Policy 1992-97, rendering them liable for action in terms of provisions of Regulation 14 (d), (e) and (1) of the Customs House Agents Licensing Regulations, 1984. "it was, also alleged that M/s. Shaikh and Pandit have"failed to exercise such supervision as may be necessary to ensure the proper conduct of their employees S/shri Tushar Pandit and Surya Kanta Jha in the transaction of business as an agent renders them liable for responsible for all acts and omissions of their employees in terms of provisions of Regulation 20 (7) of the Customs House Agent Licensing Regulations, 1984 also. " ( 7 ) THE show cause notice also intimated the petitioner that the explanation should be submitted to Shri B. K. Saha, Asstt. Collector of Customs, who had been appointed as Enquiry Officer. The petitioner was also required to state specifically whether he wished to be heard in person. ( 8 ) ON 21-7-1994 the petitioner submitted a detailed answer to the allegations contained in the show cause notice. Collector of Customs, who had been appointed as Enquiry Officer. The petitioner was also required to state specifically whether he wished to be heard in person. ( 8 ) ON 21-7-1994 the petitioner submitted a detailed answer to the allegations contained in the show cause notice. In the concluding portion of the answer, the petitioner said :"in your Show Cause you have stated that various persons were examined and statements recorded, but you have not supplied copies of statements of said various persons on which you relied upon with the show cause and they are put to strict proof thereof. We reserve our right to deal with the same. However, denying the veracity of purported statements of various persons we reply to the Show Cause without prejudice to our contentions. " ( 9 ) ON 28-7-1994, the Enquiry Officer issued a notice fixing the date of hearing on 02-8-1994. The petitioner Tushar Pandit, Chief Executive of M/s. Shaikh and Pandit and S. K. Jha Dock Sircar of M/s. Shaikh and Pandit were all examined. The evidence adduced by each of the three persons was recorded by the Enquiry Officer. The statement of each of these three persons was checked by them and found to be correct. Each statement contained an endorsement to this effect as well as the signature of the person concerned which was countersigned by the Enquiry Officer. ( 10 ) ON 12-8-1994 the matter was mentioned before the Court by the Customs Authorities for extension of the period for completing the proceedings. Such extension was granted for a further period of ten days by T. Chatterjee, J. On 16-8-1994, the Enquiry Officer submitted his report to the Collector. The Enquiry Officer found the petitioner responsible for mis-declaration and participation in smuggling out rough sandalwood rendering him liable for action under the provisions of Regulations. ( 11 ) THE Report of the Enquiry Officer was forwarded to the petitioner under cover of the Collector's letter dated 17-8-1994. The petitioner was asked to appear before the Collector for personal hearing on 19-8-1994 in reply to the Show Cause Notice as well as enquiry report. On 19-8-1994 the hearing was held by the Collector. The petitioner submitted a written submission both in respect of the Show Cause Notice as well as in respect of the Enquiry Report. The petitioner was asked to appear before the Collector for personal hearing on 19-8-1994 in reply to the Show Cause Notice as well as enquiry report. On 19-8-1994 the hearing was held by the Collector. The petitioner submitted a written submission both in respect of the Show Cause Notice as well as in respect of the Enquiry Report. In the written submission made at the personal hearing it was stated by the petitioner that the Enquiry Officer had not conducted any enquiry on his own. It was also alleged that the Enquiry Officer has"not provided Clearing Agent with any of the purported voluntary statements given by Clearing Agent and their employees as well as the importers and different persons of the Stevedores - Statements given to someone other than enquiry officer. "the impugned order was passed by the Collector on the same date. The Collector rejected the submission of the petitioner relating to non-furnishing of statements by saying that neither the petitioner nor his employees had mentioned anything regarding supplying of copies of the statements of the various persons which were relied upon in connection with the Show Cause Notice before the Enquiry Officer. ( 12 ) THE petitioner has submitted that the enquiry report was prepared in violation of the Regulations and in violation of principles of natural justice. It is said that apart from the Enquiry Officer who had relied upon the statements of persons who were neither examined in the petitioner's presence and whose statements could not be tested by way of cross-examination, the Collector himself relied upon the statements of various persons for the purpose of holding the petitioner guilty of the allegations made in the show cause notice. ( 13 ) THE petitioner has also submitted that not only was the impugned order liable to be set aside but that the suspension order dated 17-5-1994 would have to fall along with the impugned order as it must be taken to have come to an end with the passing of the impugned final order of revocation. Reliance has been placed on the decision of the Supreme Court in H. L. Mehra v. Union of India : in this connection. Reliance has been placed on the decision of the Supreme Court in H. L. Mehra v. Union of India : in this connection. ( 14 ) THE respondents have submitted that the writ petition should not be entertained as the petitioner had an alternative remedy by way of an appeal under the Act before the Customs, Central Excise and Gold (Control) Appellate Tribunal under Section 129b of the Customs Act, 1962. On the merits the respondents have submitted that the peitioner had not in fact, made any grievance regarding the non-supply of documents in the course of the hearing before the Enquiry Officer. It is also submitted that in the event, the impugned order was set aside by the Court, the respondents should be given the liberty of concluding the procedings in such a manner and within such time as the Court may direct and that the suspension order should continue until the passing of the final order. ( 15 ) AS far as the preliminary objection raised by the respondents is conerned, the existence of an alternative remedy does not debar the Court from entertaining the Writ application under Article 226. This principle is well recognised. It is also well settled that when an order is challenged on the ground that it has been passed in violation of the principles of natural justice the Court will normally not deny the petitioner relief under Article 226 (See : State of Uttar Pradesh v. Md. Nooh: A. I. R. 1958 SC 86 ). The preliminary objection of the respondent is therefore, unacceptable and rejected. ( 16 ) ON the question of natural justice, the law as it now stands requires a person affected by any State action to be given an opportunity of being heard unless there is an express statutory exclusion of such requirement. In this case, far from exlcuding the principles of natural justice Regulation 23 recognises and requires compliance with the principles of natural justice. Regulation 23 deals with the procedure for inter alia revoking a licence. In so far as it is material this regulation provides :"23. In this case, far from exlcuding the principles of natural justice Regulation 23 recognises and requires compliance with the principles of natural justice. Regulation 23 deals with the procedure for inter alia revoking a licence. In so far as it is material this regulation provides :"23. Procedure for suspending or revoking licence under Regulation 21.- (1) The Collector shall issue a notice in writing to the Customs House Agent stating the grounds on which it is proposed to suspend or revoke the licence and requiring the said agent to submit within such time as may be specified in the notice not being less than forty-five days, to the Assistant Collector of Customs nominated by him, a written statement of defence and also to specify in the said statement whether the Customs House Agent desires to be heard in person by the said Assistant Collector of Customs. (2) On receipt of the written statement from the Customs House Agent, or where no such statement has been received within the time limit specified in the notice referred to in sub-regulation (1), the Assistant Collector of Customs may inquire into such of the grounds as are not admitted. (3) The Assistant Collector of Customs shall, in the course of inquiry, consider such documentary evidence and take such oral evidence as may be relevant or material to the inquiry in regard to the grounds forming the basis of the proceedings and he may also put any question to any person tendering evidence for or against the Customs House Agent, for the purpose of ascertaining the correct position. (4) The Customs House Agent shall be entitled to cross-examine the persons examined in support of the grounds forming the basis of the proceedings and where the Assistatnt Collector of Customs declines to examine any person on the grounds that his evidecne is not relevant or material, he shall record his reasons in writing for so doing. (5) At the conclusion of the aforesaid inquiry the Assistant Collector of Customs shall prepare a report of the enquiry recording his findings. (5) At the conclusion of the aforesaid inquiry the Assistant Collector of Customs shall prepare a report of the enquiry recording his findings. (6) The Collector of Customs shall furnish to the Customs House Agent a copy of the report of the Assistant Collector of Customs and shall require the Customs House Agent to submit within the specified period not being less than sixty days any representation that he may wish to make against the findings of the Assistant Collector of Customs. (7) The Collector shall after considering the report of the inquiry, and the representation thereon, if any, made by the Customs House Agent pass such orders as he deems fit. (8) Any Customs House Agent aggrieved by any decision or order passed under Regulation 21 or sub-regulation (7) of Regulation 23, may appeal under Section 129a of the Customs Act, 1962, to the Customs and Central Excise and Gold (Control) Appellate Tribunal established under Section 129 (1) of Customs Act, 1962. " ( 17 ) IN his inquiry report the Inquiry Officer has in fact, relied upon the records and statements of the stevedores and others without giving the petitioner an opportunity of cross-examining such persons. It is true in the statement of the petitioner as recorded by the Inquiry Officer, there does not appear to be any demand for cross-examination of any person. But in the reply to the show-cause notice the petitioner had put the persons who had made the statements to strict proof. This can only mean the requirement of establishing the statement by being subjected to cross-examination. Furthermore, the petitioner could not have anticipated that in arriving at his decision the Assistant Collector would rely upon such statements against the petitioner. ( 18 ) BESIDES, before the Collector, the petitioner had made his grievance clear. The Collector could have at this stage rejected that part of the enquiry report pertaining to the statements of persons who had not been called for cross-examination. Not only did the Collector not do so but he himself relied upon the voluntary statement of the employees of the Stevedores, Steamer Agents and others to hold the petitioner guilty. Apart from Regulations 23 (3) and (4), the Collector was bound at least to make available copies of these statements to the petitioner before relying upon them. Not only did the Collector not do so but he himself relied upon the voluntary statement of the employees of the Stevedores, Steamer Agents and others to hold the petitioner guilty. Apart from Regulations 23 (3) and (4), the Collector was bound at least to make available copies of these statements to the petitioner before relying upon them. Therefore neither the enquiry report nor the order dated 19th August, 1994 can be sustained. ( 19 ) THE question then is as to whether the suspension memo dated 17th May, 1994 survives. ( 20 ) THE case of H. L. Mehra (supra) cited by the petitioner related to disciplinary proceedings against a Government servant. The Government servant had been suspended from service on the ground that a case in respect of a criminal offence was under investigation. The investigation was completed and sanction to prosecute the Government servant was granted. The prosecution was in respect of four charges. The employee was acquitted of the first and fourth charges. The third was not directed against the petitioner. Only the second charge survived. This related to four instances of abuse by the employee of his position. During the pendency of the criminal case, disciplinary proceedings were initiated against the petitioner. The charges in the disciplinary proceedings were also four. Of these four charges only one related to one of the instances mentioned in the second charge in the criminal proceedings of abuse of position. The Criminal Court held that three instances of abuse of position by the employee were proved and one was not. This one instance was the basis of the disciplinary proceedings. The appellant preferred an appeal from the conviction which was ultimately heard by the Supreme Court. While the appeal from the conviction in the criminal case was pending on the basis of the conviction the employee was dismissed from service. But the Supreme Court set aside the conviction. The order of dismissal being based on the conviction could not be sustained and was set aside by the President who issued an order directing that the disciplinary enquiry should be continued under Sub-rule 5 (b) of Rule 10 of the Central Civil Services (Classification, Control and Appeal) Rules and also directed that the suspension should continue until the termination of such proceedings. ( 21 ) THE employee challenged this order and the continuation of his suspension under Article 226 of the Constitution. It was this challenge which was considered by the Supreme Court. The Supreme Court formulated the issue as follows:"the only question debated before us was and this raised a rather serious controversy - whether the third part of the impugned order was valid : Was it competent to the President, in the circumstances of the case, to continue the suspension of the appellant under Sub-rule (5) (b) of Rule 10 of the CCS (CCA) Rules, 1965? Even if it was not, could this part of the impugned order be sustained under any other provision of Rule 10 of the CCS (CCA) Rules, 1965 ?"in paragraph 7 of the report the Supreme Court has said :"let us first examine the question on principle. When an order of suspension is made against a Government servant pending an enquiry into his conduct, the relationship of master and servant does not come to an end. Now, when an order of dismissal is passed, the vinculum juris between the Government and the servant is dissolved; the relationship of the master and servant between them is extinguished. Then the order of suspension must a fortiori come to an end. But what happens when the order of dismissal is subsequently set aside? Does that revive the order of suspension? We do not think so. Once the suspension has come to an end by an order of dismissal, which was effective when made, it cannot be revived by mere subsequent setting aside of the order of dismissal in the absence of a statutory provision or rule to that effect. " (Emphasis mine ). ( 22 ) IN my view the decision is distinguishable and does not apply to this case. ( 23 ) THE first distinguishing factor in that case is that it related to a situation where the order of dismissal was not passed because a disciplinary enquiry was pending but because a criminal case was pending investigation. That criminal case ended ultimately in an acquittal. The basis for the order of suspension went. ( 23 ) THE first distinguishing factor in that case is that it related to a situation where the order of dismissal was not passed because a disciplinary enquiry was pending but because a criminal case was pending investigation. That criminal case ended ultimately in an acquittal. The basis for the order of suspension went. In paragraph 8 of the Judgment at page 1289 the Supreme Court noted :"the enquiry revived and continued under the second part of the impugned order was, therefore, clearly not an enquiry on the allegations on which the penalty of dismissal was originally imposed on the appellant. " ( 24 ) THE second and obvious difference is the fact that the Supreme Court was considering suspension of a Government servant where a question of status would be involved, This is not so in the case before me. ( 25 ) THE third and most vital distinguishing factor is that the final order of dismissal passed on the basis of the conviction was effective when made. In this case however there is no effective order at all. The only ground on which the impugned order and Enquiry Report are being set aside is the non-compliance of the principles of natural justice. It cannot be disputed that such a Report and order are nullities. ( 26 ) IN holding that the order of the Collector and the inquiry reports were nullities it is, as if there were no effective Inquiry report nor an effective order of dismissal. ( 27 ) THE petitioner however has relied upon the earlier case of Om Prakash Gupta v. State of Uttar Pradesh : to contend that the Supreme Court had expressly negatived this argument. That case also related to disciplinary proceedings against a Government servant. Pending the disciplinary proceedings the order of suspension had been passed and the disciplinary proceedings ended with the order of dismissal. The employee challenged the order of dismissal as illegal by way of a suit. The suit was decreed. No doubt it was argued on behalf of the respondents that the enquiry could only end with a valid order which would replace the order of suspension and that as the order of dismissal had been set aside on the ground of illegality, the order of dismissal should be regarded as a nullity and non-existent in the eye of law. No doubt it was argued on behalf of the respondents that the enquiry could only end with a valid order which would replace the order of suspension and that as the order of dismissal had been set aside on the ground of illegality, the order of dismissal should be regarded as a nullity and non-existent in the eye of law. But the Supreme Court did not in fact, consider what would be the position if the final order of dismissal were in fact a nullity. What the Supreme Court held was :"the order of suspension made against the appellant was clearly one made pending an inquiry. It certainly was not a penalty imposed after an enquiry. As the result of the inquiry an order of dismissal by way of penalty had been passed against the appellant. With that order, the order of suspension lapsed. The order of dismissal replaced the order of supension which then ceased to exist. That clearly was the position between the Government of the United Provinces and the appellant. The subsequent declaration by Civil Court that the order of dismissal was illegal could not revive an order of suspension which did not exist. " ( 28 ) THIS case does not assist the petitioner. First it is not clear on what ground the order of dismissal had been set aside in the suit. ( 29 ) SECONDLY, both the decisions of the Supreme Court proceed on the basis that the orders of dismissal brought to an end of relationship between master and servant. If the order is a nullity, it is well settled that it could not affect any rights of the petitioner at all. [see: Serajuddin and Co. v. State of Orissa: 78 CWN 61 : A. I. R. (1974) Cal. 296 DB]. ( 30 ) THIRDLY, it does not appear that the enquiry proceedings were in fact, revived against the employee in Om Prakash Gupta's case. ( 31 ) IN this case the petitioner has not sought for the setting aside of the show cause notice nor has it been argued that the proceedings must be initiated de novo. That being so, the basis of the suspension order, namely, the pendency of proceedings, survives. ( 32 ) FOR the reasons aforesaid I am of the view that the suspension order already passed continued to be operative in the circumstances of the case. That being so, the basis of the suspension order, namely, the pendency of proceedings, survives. ( 32 ) FOR the reasons aforesaid I am of the view that the suspension order already passed continued to be operative in the circumstances of the case. ( 33 ) THIS writ application is accordingly disposed of by setting aside and quashing the enquiry report dated 16th August, 1994 as well as the order dated 19th August 1994. It is clarified that by so setting aside the impugned order and report the enquiry proceeding revive from the stage of the hearing before the Enquiry Officer. The Enquiry Officer may hold the inquiry and must supply copies of all documents as may be required by the petitioner and produce persons for cross-examination on whose evidence the Enquiry Officer may seek to rely. The Enquiry Officer will also give the petitioner an opportunity of cross-examining any witness if he so desires. It is also made clear that the Collector will not also rely upon any material which may have been collected behind the back of the petitioner without furnishing the same to the petitioner. ( 34 ) THE proceedings must be completed within four weeks from the date of communication of this order. The suspension order will also continue for a period of four weeks. In the facts of this case, there will be no order as to costs.