TMI Blog2019 (1) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... confidence even in the one subjected to that investigation. Here that is lacking. I entirely leave aside the Company s version. Even going by the Airport Authority s version, the allegations of bias, predetermination, and prejudice are writ large. When a person alleges bad faith he must implead the persons facing that allegation as a party to the proceedings. It is to enable him to answer the charge. Courts have to be slow in drawing conclusions for upholding the allegations of bad faith. Only where the facts lead to inevitable inferences supporting the charge of bad faith should the courts record a finding on that count. But before that, it must also hear the affected person. The investigation that has so far taken place need not be scuttled. But from now on wards, until the inquiry or investigation concludes, the Chief Commissioner of Customs will entrust the matter to some other official than Mr. Sumit Kumar, the Commissioner of Customs. The Customs Department is directed to allow forthwith the Company to carry on its business operations, of course under the strict supervision of the departmental officials, as the Chief Commissioner of Customs deems proper - Then, in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shops, among other places, in Trivandrum International Airport. The Company contracted with Airport Authority of India ( AAI ) to develop, operate, and maintain duty-free outlets at the Trivandrum International Airport. 3. After the initial tender in December 2015, the Company was given the Letter of Intent on 06.01.2016. Because of the litigation initiated by the previous licensee, the Company, however, could commence its operation only in September 2017. Thus, it has run the duty-free shop in the Airport since then-till recently. 4. In fact, from September to December 2017, the Company ran the duty-free shop, it seems, without an incident. Then, in December, acting on what appears to be an anonymous complaint, the Commissioner of Customs (Preventive), the sixth respondent, (shown eo nominee) began to enquire into the Company s alleged irregularities. As part of his enquiry, the Commissioner, in April 2018, summoned the Company s manager. How the enquiry was conducted or being conducted and how judicial directives were given to preserve fairness in the enquiry and to prevent physical abuse if any, are not, I reckon, germane right now. 5. Pending inquiry, the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abhu v. Additional Sales Tax Officer (1985) 59 STC 33, C. Vibin P.V., v. State of Kerala AIR 2013 Kerala 67. 9. About the Ext.P21 order passed by the Chief Commissioner, Sri Prasannen argues that he is eminently empowered to pass that order. As for the Chief Commissioner s source of power, he draws my attention to Section 5 of the Act. According to him the refusal of the Commissioner and others to abide by the Ext.P21 is sheer insubordination. He also asserts that Section 58B of the Act only deals with the suspension of warehouse licence; it does not, then, affect the Duty-Free Shop. Besides, Sri Prasannen has elaborated on the alleged manhandling of the Company s personnel and also misinformation the Commissioner has allegedly indulged in with frequent press briefings and complaints to every investigating agency across the country. He relies on Texaco, Inc., v. Federal Trade Commission.[4] 10. Sri Prasannen has contended that the Company s staff have entirely cooperated with the Customs officials, but certain officials, arrayed eo nominee, have been endlessly harassing them; he cites, as a case in point, the incident involving Mr. Madan, its stores manager, who was allegedly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty already surrendered. Thus, Sri Natraj justifies the suspension of the petitioner's license. For this, he relies on Section 58A and Section 58B. 14. One contention the Company raised was that it had no opportunity of defending itself before the sixth respondent passed the impugned order. To meet that contention, Sri Natraj submits that suspension is only an interim measure and it calls for no opportunity of hearing. To drive home his point, he relies on Bahadursinh Lakhubhai Gohil v. Jagdishbhai M. Kamalia (2004) 2 SCC 65 and South Central Railway v. G. Ratnam (2007(8) SCC 212. 15. Ext.P19 is the order the Chief Commissioner of Customs passed directing the officials to reopen the duty-free shop complex. As the authorities did not implement that, the learned ASG asserts that, under the scheme of the Act the Chief Commissioner is not an appellate authority to interfere with the impugned order. In that context, he draws my attention to Section 5 of the Act. 16. Both the respondents 5 and 6 faced the allegations of mala fides. To meet that allegation, Sri Natraj asserts that an allegation of mala fides required objectives to be fulfilled: specific pleading and particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Customs authorities recorded in the CC cameras. Thus, he refers to Ext.P10 and presses that evidently the sixth respondent's subordinate officials used physical force against the Company's employees. 20. Sri Santharam further submits that the officials of the Airport Authority have all along co-operated with the Customs Department every time they were summoned. The officials of the Airport Authority appeared before the authorities, produced the records and faced the enquiry. Despite all these, the respondent authorities, especially, the sixth respondent has been acting highhandedly and harassing the airport authority's employees with no justification. Sri Santharam stresses that the entire investigation the Customs Department has undertaken involves no element of criminality and all the allegations if proved would stand answered with the payment of requisite penalty. At this juncture, the learned ASG, as retorted, submits that both the Customs Department and the airport authority are the establishments of Union of India, they cannot work at cross purposes nor can they stand before the court on its own foot. According to him, the Ministry of Law Ministerial A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th respondents respectively: the Commissioner of Customs (Preventive) and the Superintendent of Customs. The ninth respondent is the Superintendent (Bond), the 11th respondent is the Deputy Commissioner of Customs, and the 12th respondent is the Station House Officer. II. The Background: 23. The Company secured the Ext.P5 special warehouse license from the Customs Department. With that, it has operated the warehouse as well as the Duty-Free Shop. As per the arrangement with Airport Authority, the Company must pay to it a minimum annual guaranteed amount of US 23,50,400 (around INR 1.50 crores per month) as royalty. 24. About its conduct, now being investigated, the Company supplies justification. In December 2017, the Company noticed a thirdparty s unauthorised use of its data, including the digital records of the documents required to be submitted to the Customs Department and other authorities. On 16.12.2018, it lodged a complaint before the Namakkal Police Station: Crime No.24 of 2017. Through a letter, dt.19.12.2017, it informed of this development to the Superintendent (Bond), the ninth respondent. In the meanwhile, the Commissioner received an anonymous compla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agencies: the Director, Serious Fraud Investigation Office, New Delhi, CBI, ED., to name a few. ( a) Earlier Writ Petition: 29. With Madhan s episode, the Company complained to this Court about the official excesses in the name of investigation. On 16.01.2018 this Court in W.P.(C) No. 1641 of 2018 permitted the Company to have a lawyer when its employees would be interrogated by the Customs officials. Then on many dates, in fixed succession, the Customs officials summoned the Company's employees and, it seems, recorded their statements. The Company accuses the Commissioner of mala fide conduct; so it has, in this writ petition, brought him on record eo nomine, too. ( b) Interim Order in this Writ Petition: 30. First, in this writ petition, this Court granted a detailed interim order; it suspended the Exts.P18 P19 orders and asked the Customs Department to allow the Company to operate the Duty-Free Shop. On appeal, in W.A. No.1278 of 2018, a learned Division Bench has remanded the matter for an early disposal. The Duty-Free Shop, thus, remains closed. In this context, the Airport Authority bemoans the loss to the exchequer and the inconvenience the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods imported duty-free in a place other than the special warehouse; the Company has violated the license conditions. (ii) The Company has failed to submit mandatory monthly documents as stipulated in the notifications. (iii) The Company has failed to maintain documents in digital form. And also failed to submit documents on time, on etude that its computer systems were hacked. But M/s. C-Dac Trivandrum has later falsified that plea. (iv) The Company has illegally removed goods from the bonded warehouse without the knowledge of the Bond Officer and other concerned Customs officials. (v) The Company has tampered with the Board register. (vi) The Company has also tampered with the release application forms. IV. The Statutory Scheme: 34. Section 2(1) of the Customs Act defines the adjudicating authority as any authority competent to pass any order or decision under this Act. It of course excludes the Board, the Commissioner (Appeals), and the Appellate Tribunal. Section 5 of the Act broadly sets out the powers of the Customs officers. The officers exercise their powers subject to the limitations the Board may impose. Subsection (2) mandates that an officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has undertaken to determine the allegations against the Company. Third, about the alleged excesses of the Department authorities, even a criminal case is pending. On the other hand, about the Company s alleged malpractices, the Department seems to have alerted the central investigative agencies. The departmental propriety of ring the alarm bells even before the officials could complete the investigation, though, is not the issue here. 40. Then, it follows that all my observations relate to only one issue: Should the warehouse and the duty-free shops in the International Airport remain closed until the departmental investigation or inquiry concludes? 41. That said, I acknowledge that adjudication is not an inert intellectual exercise, undertaken in emotionally sterile atmosphere. Indeed, such an adjudication is an ideal, mostly-if not impossibly- unattainable, for the courts, too, deal with the lives and their miseries, with the laws and their complexities, with the powers and their perversities. So all the observations are prima facie, and are meant only to dispose of the issues on hand, unaffecting the substantive rights of either party. ( a) Alternative Remedy: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olated; or (iii) when the impugned proceedings are ultra vires. 45. First, the adjudication in this Writ Petition is on remand from the appellate forum: the Division Bench. It has been pending for a while. Second, what constraints the Court under Article 226 of the Constitution is the Self-Imposed restriction, not Other-Imposed restriction. Putting this self-imposed restriction into a precedential straight-jacket is a paradox, a contradiction in terms. Judicial Review is the basic feature of the Constitution and stands conferred on the High Court, on a par with the Supreme Court-and on a wider-scale, at that. Efficacy is one element that weighs with the Court to decide on this eversimmering issue. Indeed, many are these self-imposed restrictions, the disputed question of fact being one; equally numerous are the exceptions, the public interest being one. 46. Duty-Free Shop is one of the chief attractions of the International Airport. In any public-law dispensation, public interest is paramount. Let us see what the Airport Authority-a governmental agency as the Customs Department is a Governmental Department-to say on this. ( b) Natural Justice, Prima Facie Case, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the behest or on the suggestion of a person who has no statutory role to play, the same would be ultra vires. In G. Ratnam, the Supreme Court reiterated the doctrine of substantial compliance. It has examined what follows on someone s breaching procedure. If the provision is not mandatory, the allegation violation has to be examined from the stand point of substantial compliance. In other words, the order passed in violation of a procedural mandate can be set aside only if the violation has occasioned prejudice to a party. 52. Raj Kumar Shivhare has dealt with the principle of forum non conveniens and the territorial jurisdiction involving the Union Government. 53 In W.N. Chadha the Supreme Court has discouraged the courts making sweeping or conclusionary remarks at the threshold stage, say, of investigation. Courts observations should prejudice neither party. A writ petition lies only when a party s right is infringed. A mere show cause, for instance, infringes the rights of none. In this context, Kunisetty Satyanarayana, observes that a High Court should not ordinarily exercise its discretionary jurisdiction under Article 226 to quash a show cause notice. But it also hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of law, where he can always collaterally challenge the order or directive and justify his disobedience, it is a sure prescription for administrative chaos, if not collapse. I reckon, at least to the extent of the Duty Free Shops the Ext.P21 binds the authorities. ( d) The Incompatible Insinuation: 58. The Department has levelled grave allegations against the Company and its employees. They were made at the threshold, more as assumptions-however compelling they may have been-than as objective observations based on any concrete material. My examining these allegations may sound paradoxical to the above prefatory statement. But the allegations compel a comment or two because abuse of power and bad faith, too, are in issue. The officials complained to every imaginable investigating agency, besides holding press meets using every conceivable excuse. 59. As the Department suspected the Company's conduct, its officials claim to have alerted the Central Investigation Agencies, such as CBI. From the extract it is clear that the Department hurls a specific allegation against the Company: it secured the passport details of nearly 13,000 international passengers for div ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted party, presents a different picture. Not to be forgotten, the Airport Authority is as much a Governmental agency as the Customs is a Governmental Department. 62. I reckon this is the core of the investigation, and the investigation seems to be in the throes of getting completed. So it is inadvisable for the Court to express any opinion-leave alone rule-on that issue. 63. To summarize the Company's alleged shortcomings, we may list out the Department's allegations: (i) By storing the goods imported duty-free in a place other than the special warehouse; the Company has violated the license conditions. (ii) The Company has failed to submit mandatory monthly documents as stipulated in the notifications. (iii) The Company has failed to maintain documents in digital form. And also failed to submit documents on time, on etude that its computer systems were hacked. But M/s. C-Dac Trivandrum has later falsified that plea. (iv) The Company has illegally removed goods from the bonded warehouse without the knowledge of the Bond Officer and other concerned Customs officials. (v) The Company has tampered with the Board register. (vi) The Company has also tamp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nformation the Department passed on to the Central Investigation Agencies, the Department raises a curious plea. It first asserts that it has complained to the authorities concerned about the Company s illegal and unlawful activities, including those which could cause a national security threat. But it wonders how that confidential letter reached the Company s hands. Then it concludes that the Company s securing that confidential letter clearly shows that the petitioner is stealing information from Central Government Agencies which are established to look into such fraudulent Companies that cause serious national security threat and cause huge loss to the Government exchequer. 68. In paragraph 39 of the counter affidavit, the Department does admit that only after the initiation of the investigation against them on 21.12.2017 that they have started filing the mandatory documents with the Customs Department. ( j) Assault, Harassment, and Counter Assertion: 69. Sumit Kumar and Vivek Vasudevan Nair, the sixth and the seventh respondents respectively, faced grave allegations. They are accused of brutally assaulting the Company s Location Manager. To refute this cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, it pleads: Mr. Vivek V., who is the Superintendent of Customs, the 7th respondent, being an accused in Crime No. 2248 of 2017 registered by Valiyathura Police Station in connection with the manhandling case was actually removed from the investigation pursuant to my representation Exhibit-R4(l) and accordingly on 09.05.2018 one Mr. Santhosh Kumar was given charge and conducted the enquiry on 09.05.2018 and also subsequently on 18.05.2018, which is evident from Exhibit-R4(i). 72. In fact, the Airport Authority s allegations are disturbing, casting a shadow on the investigative impartiality and the departmental detachment. Neither seems to be present. It has tellingly placed on record a few more allegations of harassment: During the enquiry, I am intimated that Mr. Vivek V., Superintendent of Customs (Preventive) has threatened the officer of being arrested and asked him who is his local advocate and what is the name and mobile number of his wife, his residential address and land marks etc. His attempt was to fish out the evidence by harassing the officer. The enquiry was actually over around 9.10. pm on that day. On the basis of the intimation given by me to the AAI Couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was let go only late at night. 75. In that context, the Court on 18th September 2018 observed: Informed of that incident, that day, as I recollect, I expressed my displeasure at the Customs Department s inexplicable attitude; especially of the investigating officer s. I advised him to adhere to the rule of law. As the investigating officer was here in Kochi, he could have avoided the summoned officer s waiting fruitlessly at his office. But that was not to be. Despite the Court s advice, the investigating officer seems to have remained recalcitrant and persisted with his supercilious approach of letting people wait, for he commanded their presence. Hardly a democratic gesture. . . . Today too, the learned Central Government Counsel has assured me that the Department will not proceed further. About the specific allegation the airport authority makes-that its official was detained on the last occasion till 9 pm-the learned Central Government Counsel submits that he has no information about that. Already the writ petition seriously alleges-only alleges, though-of physical brutality and abuse of power. Again another avoidable incident of a futile summons and abuse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usion. Indeed, investigation is a matter of integrity and it must inspire confidence even in the one subjected to that investigation. Here that is lacking. I entirely leave aside the Company s version. Even going by the Airport Authority s version, the allegations of bias, predetermination, and prejudice are writ large. ( II) Mala Fides or Bad Faith: 80. Mala fides means want of good faith, personal bias, grudge, oblique or improper motive or ulterior purpose. The administrative action, observed the Supreme Court in P.P. Sharma, must be said to be done in good faith, if it is in fact done honestly, whether it is done negligently or not. Determining a plea of bad faith involves two questions: (i) whether there is a personal bias or an oblique motive; and (ii) whether the administrative action is contrary to the objects, requirements and conditions of a valid exercise of administrative power. 81. The Court has further observed that the action taken must, therefore, be proved to have been made in bad faith based on irrelevant considerations. Mere assertion or a vague or bald statement is not enough. Public administration cannot be carried on in a spirit of judicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without authority from a Magistrate and that power of the police to investigate cannot be interfered with by exercising power under the inherent power of the High Court. The power under Section 482 of the Code can be exercised by the High Court in relation to a matter pending before a criminal court or where a power is exercised by the Court under the Code of Criminal Procedure. The Court further held that the High Court cannot issue directions to investigate the case from a particular angle or by a particular agency. 86. Pertinent is the observation in Divine Retreat Centere that the High Court in exercise of its inherent jurisdiction cannot change the investigating officer in the midstream and appoint any agency of its own choice to investigate into a crime on whatsoever basis and more particularly based on complaints or anonymous petitions addressed to a named Judge. Indeed, it goes on to lay down that it is altogether a different matter that the High Court in exercise of its power under Article 226 of the Constitution of India can always issue appropriate directions at the instance of an aggrieved person if it is convinced that the power of investigation has been exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the charge. Courts have to be slow in drawing conclusions for upholding the allegations of bad faith. Only where the facts lead to inevitable inferences supporting the charge of bad faith should the courts record a finding on that count. But before that, it must also hear the affected person. ( l2) Bias: 92. Bias is a preconceived opinion, or a predisposition, or predetermination to decide a case or an issue in a particular manner. It must be to such an extent that it closes the mind to any conviction . It is, in fact, a condition of mind, which sways judgments and renders the judge unable to exercise impartiality in a particular case, holds the Supreme Court in Shivananda Pathak. Of course, in this case, the Court has dealt with a new species of bias: the judicial obstinacy. Shivananda Pathak says that a court can discover bias by evaluating the facts and circumstances of a case or by applying the tests of real likelihood of bias or reasonable suspicion of bias . 93. Regina v. Secretary of State for Trade needs the facts set out in brief. The first applicant, P, was the controller and managing director of the second applicant Company, K.D.S.B. Ltd., registe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direction. That pull results out of partiality or prejudice. Predetermination results in a decision before the event actually happens. Mala fides or bad faith is a much stronger expression. It is dishonesty of belief or purpose. Balck s Law Dictionary (9th Edn.) quotes from Restatement of Contracts (1981) and says that a complete catalogue of types of bad faith is impossible, but the following types are among those which have been recognized in judicial decisions: evasion of the spirit of bargain, lack of diligence and slacking off, wilful rendering of imperfect performance, abuse of a power to specify terms, and interference with or failure to cooperate in the other party s performance. True, that listing out is contract-law specific. 97. So every act tainted with bias need not transform into an act of bad faith. Bad faith is malice in fact, but bias can be malice in law. Shorn of motives, an official may doggedly pursue a cause with predetermination that crime should have zero tolerance. But most he fails to see the line between what is perceptual and what is factual. That is the problem. For him, an allegation is an affirmation. Thus, at this stage, I am prepared to believe t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tial by way of answer. This is precisely the situation in which we find ourselves in the present case. 101. But because of the finding above that it is only a case of bias rather than bad faith, I refrain from drawing an adverse inference against the 6th and 7th respondents for their not filing the counter affidavits, at an appropriate stage of the proceedings. ( n) Interim Suspension-is its infliction inevitable? 102. Granted, under Section 2(1) of the Act, the Principal Commissioner could be treated as the adjudicating authority . Under Section 58A of the Act, he is the licensing authority. And Section 58B of the Act deals with cancellation of licence. Under subsection (2), he can suspend operation of the warehouse during the pendency of an enquiry under sub-section (1). Indeed, the statutory position is indisputable. 103. But the question is, could the Department have done without suspending the licence? Possessing power does not justify using it-always. Possessing is a matter of statute, but its use is a matter of discretion. And that discretion must be animated by reason and justification. The investigation, it seems, began in December 2017, and license ..... X X X X Extracts X X X X X X X X Extracts X X X X
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