1991 (6) TMI 126 - HC - Customs

Summary

Issues Involved:
1. Deregistration of the appellants by the third respondent (TEXPROCIL).
2. Alleged breach of Clause 33 of the Texprocil Standard Contract by the appellants.
3. Material alterations in the standard contract form.
4. Expression of regret and remorse by the appellants.
5. Justification of the penalty imposed on the appellants.

Detailed Analysis:

1. Deregistration of the Appellants by the Third Respondent (TEXPROCIL):
The appellants, a private limited company and its shareholder/director, were deregistered by TEXPROCIL, the third respondent, based on a show cause notice dated 4-3-1977. The deregistration was initially ordered on 2nd May 1977 and confirmed on 9th January 1978. The appellate authority later allowed the appeals and remanded the matter back to TEXPROCIL for rehearing, leading to a lenient deregistration period from 2nd May 1977 to 1st January 1978. The appellants' subsequent appeal against this lenient order was dismissed on 17th January 1981.

2. Alleged Breach of Clause 33 of the Texprocil Standard Contract by the Appellants:
The show cause notice alleged that the appellants breached Clause 33, which prohibits amendments to the contract terms unless mutually agreed upon and countersigned, and mandates conformity with the Texprocil Standard Contract No. 1. The breach was based on a contract dated 18-10-1975 with M/s. Kedarnath Kishanchand Pvt. Ltd., which materially differed from the standard contract form. The appellants were found to have acted in breach of the declarations and undertakings given to TEXPROCIL.

3. Material Alterations in the Standard Contract Form:
The learned Single Judge meticulously examined the alterations made by the appellants to the standard contract form and found them to be sweeping and material. These alterations included changes to clauses related to delivery obligations, inspection rights, force majeure conditions, and additional clauses favoring the appellants. The alterations were deemed deliberate and misleading, as they were reprinted to appear as the standard contract form, thus misleading the counterparties.

4. Expression of Regret and Remorse by the Appellants:
The appellants expressed regret and remorse in a letter dated 25th January 1980, requesting leniency and a fresh chance to prove themselves. The third respondent, influenced by this expression, took a lenient view and limited the deregistration period. However, the appellants' subsequent challenge to this lenient order was deemed unjustified by the learned Single Judge.

5. Justification of the Penalty Imposed on the Appellants:
The learned Single Judge upheld the penalty imposed by TEXPROCIL, finding it extremely lenient given the material breaches committed by the appellants. The Judge noted that the appellants' litigation post the lenient order was unjustified and that the findings of material alterations and breach of Clause 33 were fully substantiated. The appeal was dismissed, and the appellants were ordered to pay costs to the respondents.

Conclusion:
The High Court dismissed the appeal, confirming the findings of material breach of Clause 33 and the leniency of the penalty imposed. The appellants' conduct, including their expressed regret and subsequent unjustified litigation, was critically noted, and the costs of the appeal were awarded to the respondents.