2013 (11) TMI 1000 - HC - Customs

Recovery of sums due to Government u/s 142 of Customs Act, 1962 - attachment and taking possession of property - Duty drawback payments received by forged declarations and documents - Assessee voluntarily surrendered various movable and immovable properties including the flat in question towards the recovery of the dues - the predecessor-in-interest of the First Petitioner informed the Assistant Commissioner of Customs of the flat having been taken on leave and licence - Predecessor-in-interest of the First Petitioner called upon to vacate the premises Held that - Neither the provisions of Section 142 of the Customs Act, 1962 nor the provisions of the Rules framed thereunder provide for the vesting of the property without encumbrance - There is no provision under which any encumbrance in respect of the property is to get divested - On the contrary, it is evident from Rule 23(1) that what is vested in the purchaser is the right, title and interest of the defaulter in the property. Authenticity of the leave and licence agreement - Licensor failed to refund the security deposit Whether the Licensee was entitled to continue use of the Premises till the refund was made without being liable to pay any compensation Held that - It would not be appropriate to exercise the jurisdiction under Article 226 of the Constitution to enquire into a wholly disputed question in regard to the authenticity of the purported leave and licence agreement - The discrepancies to which a reference has been made earlier only indicate to the Court that in a matter which involves a dispute in regard to the authenticity of the document, it would not be appropriate for this Court under Article 226 to determine whether the document which is produced on the record is infact genuine. Petitioners are in use and occupation of the residential flat - As the material on the record would indicate, the use and occupation of the Petitioners as been to the knowledge of the Customs Authorities right at least from July, 1998 - It has not been necessary for the Court to consider the legitimacy of the attachment notice that was levied by the Customs Authorities - it is a matter of some significance that the Seventh Respondent as the owner of the residential flat has consciously refrained from challenging the attachment notice that was levied by the Customs Authorities the challenge cannot be entertained at the behest of the Petitioners, particularly when the licence agreement upon which the Petitioners rely is a wholly disputed document - Order set aside but the Department is given liberty to seek possession of the premises by taking recourse to due process of law Decided in favour of Petitioner.

Issues Involved:
1. Validity of the order of attachment dated 19 June 1998.
2. Entitlement of the Petitioners to use and occupy the residential flat until the security deposit is refunded with interest.
3. Authenticity and genuineness of the leave and licence agreement.
4. Due process of law in dispossessing the Petitioners from the property.
5. Legitimacy of the attachment notice levied by the Customs Authorities.

Issue-wise Detailed Analysis:

1. Validity of the Order of Attachment Dated 19 June 1998:
The Petitioners contended that the order of attachment is a nullity and without jurisdiction, arguing that the flat belongs to the Seventh Respondent, a company, which was not a defaulter. The Customs Authorities, however, contended that N.K. Bangard, who admitted to fraudulent activities, voluntarily surrendered the flat during adjudication proceedings. The court noted that the Seventh Respondent, as the owner, did not challenge the attachment notice, and thus declined to entertain the challenge at the behest of the Petitioners.

2. Entitlement to Use and Occupy the Flat:
The Petitioners argued that they are entitled to occupy the flat until the security deposit is refunded with interest, citing a Division Bench judgment. The court observed that the Petitioners have been in use and occupation of the flat since at least July 1998 and have paid licence fees to the Customs Authorities until March 2012. The court directed that the Petitioners shall not be deprived of the flat's use and occupation unless the Customs Authorities take recourse to due process of law.

3. Authenticity and Genuineness of the Leave and Licence Agreement:
The Customs Authorities challenged the authenticity of the leave and licence agreement, noting discrepancies in the documents provided by the Petitioners. The court found that the discrepancies and the lack of an original agreement indicated that it would be inappropriate to determine the document's authenticity under Article 226 of the Constitution.

4. Due Process of Law in Dispossessing the Petitioners:
The court emphasized that the Petitioners' dispossession from the property must follow due process of law. The Customs Authorities had made a statement before the court in an earlier writ petition that dispossession would occur only after following due process. The court found that merely addressing letters to vacate the premises did not constitute due process of law. The Deputy Commissioner of Customs had not exercised any statutory power enabling an eviction order.

5. Legitimacy of the Attachment Notice:
The court did not find it necessary to consider the legitimacy of the attachment notice, particularly since the Seventh Respondent did not challenge it and the licence agreement was disputed. The court declined to undertake this exercise at the Petitioners' behest.

Conclusion:
The court quashed and set aside the order dated 10 August 2012 by the Deputy Commissioner of Customs that called upon the Petitioners to vacate the premises. The Customs Authorities were granted liberty to seek possession through due process of law. The court also clarified that the order would not interdict the sale of the residential flat by the Customs Authorities, subject to the stated conditions. The rule was made absolute with no order as to costs.

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