TMI Blog1982 (2) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... of the petitioner-bank. Three other bills for the balance amounts were discounted through the United Commercial Bank, Singapore. The shipment of the goods being on the basis of documents on presentation, the five bills along with other documents were sent for collection through the Lakshmi Commercial Bank Ltd., Madras, as instructed by the fourth respondent. The fourth respondent, for reasons best known to it, failed and neglected to make the necessary payment and take delivery of the goods and the petitioner-bank was instructed by its branch at Singapore as well as the United Commercial Bank, Singapore, to take delivery of the documents relating to the said five shipments and to clear and store the consignments after completing the necessary customs formalities. Since the import licence was in the name of the fourth respondent and as the fourth respondent appeared to have already filed a bill of entry with the customs authorities through its clearing agents, the petitioner-bank was unable to clear the said five consignments. 4.Further, the fourth respondent had abandoned the goods. Therefore the petitioner-bank respresented to the Collector of Customs in writing on 5th July, 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id goods and had issued a notice calling upon the petitioner-bank to pay the demurrage charges and costs within ten days of the receipt of the said notice, as otherwise the goods would be sold by public auction on 28th August, 1980. The fourth respondent wrote letters on 31st July, 1980, and 1st August, 1980, to the Customs Department and the Madras Port Trust that it has no intention of clearing the goods and that the documents have been handed back to the petitioner-bank. 7.Under the Bills of Lading Act and the other provisions of law as well as the usage and custom in the trade, the goods vest with the Bank as soon as the documents are drawn to the order of the shipper and endorsed in favour of the petitioner-bank for collection after presentation to the importer. At least the bank becomes a pledgee of the goods which are held as a security by the bank for reimbursement of the moneys which it had paid to the shipper on his presenting the documents, such as bills of lading, etc., for shipment of the goods under the c.i.f. contracts. According to the usage and custom, the bank pays a huge amount, retains the interest and control over the goods till the money is paid by the impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the principles of natural justice as also of the mandatory provisions of Section 124 of the Customs Act. The petitioner-bank is the person who is personally affected and aggrieved by the adjudication order of the first respondent. As stated above, neither the exporter nor the importer has any interest in the matter, in so far as the third respondent had received the money from the petitioner-bank and the United Commercial Bank, viz., the value of the goods on endorsing the documents in favour of the petitioner-bank. In so far as the importer, the fourth respondent is concerned, it has, by its attitude, wilfully abandoned its right over the goods and had in fact intimated the customs authorities and the Port Trust by its letters dated 31st July, 1980 and 1st August, 1980, that it has abandoned the goods. As such the person who really is interested in the goods can only be the petitioner-bank. Therefore, any order passed in the adjudication proceedings really affects only the petitioner-bank especially when the petitioner is put to additional financial burden by way of redemption fine as well as personal penalty of Rs. 16,26,000 and Rs. 2,71,000 respectively aggregating to Rs. 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first respondent of the justice involved in this case. At least the first respondent should have taken into consideration the representations made by the petitioner-bank as early as 15th July, 1980, bringing to the notice of the first respondent the facts and circumstances of the case and justifying the claim of the bank to clear the goods after complying with the customs formalities. Since the Collector has not applied his mind to the said vital facts and circumstances of this case, in spite of the materials being made available to him and/or brought to his notice, as stated above the Collector of Customs has committed a grave error of law and jurisdiction which has resulted in manifest injustice to the petitioner-bank. As such the order is perverse and cannot be sustained in law. 8.The Collector of Customs, after admitting the facts, says as follows in his counter affidavit : The petitioner's contention is that the goods were shipped on board within the validity period of the licence is not correct. The two bills UBP. 115/80 and UBP. 116/80 for American Dollars 1,29,567.60 and 2,68,928.10 purported to have been discounted by the Singapore Branch of the petitioner-bank is not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk, instead of fighting for the goods which have been illicitly imported into India on false bills of lading, should have collected its finance from the third respondent. It is strange that the petitioner-bank is admitting not to recover from its constituent at Singapore, for whom the bills had been discounted, and debit its accounts. It is not the case of the petitioner-bank that it finances the fourth respondent. In fact, it is doubtful whether the bank is a bona fide holder of the documents. It must have made enquiry to find out whether the bills of lading were true or genuine and whether the ships called at the port on 7th February, 1980, if the loading was real. It is denied that the petitioner-bank is a bona fide holder of the document. It would appear to be a fighting battle for the third respondent, an alien company in Singapore. 11.It is not correct to state that it should be deemed to be an importer for the purpose of the Customs Act. The contentions of the petitioner-bank would amount to saying that the customs department should allow the bank not to do banking business but to import and deal in goods which are contrary to the Import (Control) Order. 12.An owner is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thorised importation knowingly. From the facts on record it is quite clear that the importers were not aware of the delay in shipment, and they have nothing to do with the ante dating of the bill of lading. There is, therefore, nothing to penalise them under Section 112 on account of the delayed shipment. The Collector's orders penalising them are not, therefore, sustainable. Accordingly, the orders of penalty on the appellants are set aside and the appeals to that extent are allowed." 14.Under these circumstances, the contention of Shri G. Ramaswami, the learned counsel for the petitioner-bank, is that in law, since the bank is the owner, more so when the fourth respondent had stated that it is not any longer claiming the goods in view of the fact that the bank is the holder of the documents of title, the sale proceeds, after deducting the redemption fine and the charges due to the Port Trust, should be paid over to the petitioner. The petitioner is not interested in the adjudication proceedings, though the ground that was raised in the writ petition is to the effect that adjudication should take place after notice to the petitioner. The order of release of the goods, on payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On 31st July, 1980, it wrote to the Assistant Collector of Customs as follows : "Dear Sir, Sub : Import of RBD Palm Oil per 'ENFIELD' G.M.1. No. 224/80 Line Nos. 4, 13 and 14, dated 1-4-1980. 2.Import of RBD Palm Oil per 'DECCAN PIONEER' G.M. No. 254/80 Line Nos. 42 and 43, dated 5-5-1980. In respect of the goods mentioned above we understand from your show cause notice that the goods have not been shipped within the validity period of the licence for which we (have) already given a reply on 20-6-1980 and 1-7-1980. Please refer to our letters dated 22-4-1980, 2-5-1980 and 23-5 -1980. We state that we are not liable for any default on the part of the supplier. It now transpired that the documents have been handed over to the Indian Overseas Bank by the Lakshmi Commercial Bank Ltd., under instructions from the suppliers M/s. Patel Holdings Pvt. Ltd., Singapore. We are, therefore unable to get the documents to clear the goods. The goods were sent on D/P terms. As the contractual obligation regarding despatch of the goods within the validity period of licence were not apparently fulfilled we did not effect the payment. Consequently we could not clear the goods. Now that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of which is enclosed, with a copy of letter from Madras Port Trust, dated 15-7-1980 also our reply on them dated 1-8-1980. We also enclose herewith a copy of letter from the steamer agents dated 25-7-1980 and our reply dated 1-8-1980. We have also written to the clearing agents, M/s. South India Shipping Services, dated 1-8-1980 in this regard. Photostat copies of the correspondence are enclosed herewith. We are doing this to bring to your kind notice the urgent necessity of taking immediate steps since you are in possession of the documents at the instructions of the foreign bankers of M/s. Patel Holding Pvt. Ltd., Singapore. Thanking you, Yours faithfully, For HYDER ENTERPRISES Sd/- Manager. 19.However, in an adjudication dated 8th August, 1980, the Collector of Customs, the first respondent, passed an order (already extracted while narrating the facts) confiscating the goods, with an option to the fourth respondent to clear the goods within three months on payment of a fine and personal penalty imposed in the order. 20.The order of imposition of personal penalty of Rs. 1,60,000 has been successfully appealed against and the relevant portion of the appellate o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edure under Section 124 is with reference to the goods. This is very important for the purpose of this case. The word "owner" used in Section 124 would definitely take within it the petitioner-bank. It is not denied before me by the Customs department that the petitioner-bank is holding the relevant documents. Either by the application of the Sale of Goods Act or the Bill of Lading Act, it is the bank which is the title holder. Where, therefore, when the first respondent, by his order dated 6th August, 1980, in adjudicating the nature of the import, gave an option to the fourth respondent to redeem under Section 125 of the Customs Act, the adjudication was with reference to the goods. Section 125 of the Customs Act reads as below : "125.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 an option to pay in lieu of confiscation such fine as the said officer thinks fit : ...................." 23.Here again, the "owner" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Even otherwise, if the law is that once an adjudication takes place with reference to the goods as has been done by the first respondent under his order dated 6th August, 1980, there cannot be a further adjudication in relation to the same goods. 27.Accordingly, the writ petition will stand allowed and a command will issue to the first respondent to pay over the sale proceeds of 1,219.23 metric tonnes of palm oil, now in the hands of the Customs department, to the petitioner-bank, after deduction of (1) the redemption fine of Rs. 9,60,000 as ordered by the first respondent in his order dated 6th August, 1980, (2) all the dues to the Port Trust, the second respondent, including the demurrage charges, and (3) all duties by way of customs duty and other charges that are legally leviable by the Customs department. 28.I make it clear that inasmuch as the Central Board of Excise and Customs, by its order, dated 4th December, 1980, has held that the fourth respondent is not in any way connected with the illegal importation, there will be no endorsement on its licence concerning this importation. 29. The Customs department will have every right to issue notice to the petitioner-ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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