2015 (3) TMI 819 - HC - Customs

Suspension of license - prohibition of the operation of the custom broker licence issued to the petitioner - Held that - when the regulation is silent with regard to compliance, principles of natural justice have to be read into. However, it has also been observed that, in the matter of paramount emergent situation, particularly in public interest, it may not always be necessary to grant pre-decisional hearing with regard to the proceedings under Regulation No. 21 and that such action however has to be restricted to be in operation for a limited period, to safe guard the interest of the parties concerned. It is also made a mention that, a pre-decisional hearing must be the rule and its dispensation is an exception. The scope of the provision was considered by a Single Bench of the Calcutta High Court as well. Considering the facts of the particular case involved therein, it was observed that the impugned order was passed without affording an opportunity of hearing, as the allegation indicated in the impugned order did not reveal that it was so emergent and exceptional, and whether where the order of prohibition was inevitable. Course pursued by the respondent is not liable to be branded as arbitrary or illegal. However, it is to be made clear that operation of the said order has to be limited for a definite period, in view of the observations of Apex Court 1981 (1) TMI 250 - SUPREME COURT OF INDIA and the Division Bench of the Mumbai High Court 2013 (6) TMI 272 - BOMBAY HIGH COURT as mentioned already. - The petitioner is set at liberty to file objection, if any, also producing copy of the relevant documents within two weeks and the matter shall be finalized, taking appropriate steps and pass necessary orders in tune with relevant provisions of law, after hearing, within one month thereafter. The right of the petitioner to continue to operate will depend upon the orders to be passed by the respondent. It is made clear that the petitioner will be at liberty to challenge the order to be passed by the respondent, in accordance with law, if it goes detrimental to the rights and interests of the petitioner. - Decided against Petitioner.

Issues Involved:
1. Correctness and sustainability of Ext.P10 order.
2. Violation of principles of natural justice.
3. Authority and scope of Regulation 23 under Customs Brokers Licensing Regulations, 2013.
4. Necessity of pre-decisional hearing.
5. Distinction between suspension and prohibition under the regulations.
6. Compliance with natural justice in urgent actions.
7. Limitation of the prohibition order's duration.

Issue-wise Analysis:

1. Correctness and Sustainability of Ext.P10 Order:
The judgment addresses the challenge against Ext.P10 order, which prohibited the petitioner from operating as a customs broker at Cochin. The primary contention was the order's correctness and sustainability under Regulation 23 of the Customs Brokers Licensing Regulations, 2013.

2. Violation of Principles of Natural Justice:
The petitioner argued that Ext.P10 violated fundamental principles of natural justice, particularly 'audi alteram partem', as no opportunity for a hearing was provided before issuing the order. The petitioner emphasized that they were authorized to operate based on Ext.P1 license and had been conducting business lawfully.

3. Authority and Scope of Regulation 23:
The respondent invoked Regulation 23 to issue Ext.P10, which allows the Commissioner of Customs to prohibit a customs broker from operating if they fail to fulfill obligations under Regulation 11. The court examined the scope of this regulation, noting that it starts with a 'non-obstante clause', indicating no requirement for prior notice.

4. Necessity of Pre-decisional Hearing:
The court discussed the necessity of a pre-decisional hearing, referencing the Apex Court's judgment in Swadeshi Cotton Mills Vs. Union of India, which highlighted that where statutes are silent, principles of natural justice must be read into the provisions. The court acknowledged that while urgent action might not always require a pre-decisional hearing, such actions should be for a limited period.

5. Distinction Between Suspension and Prohibition:
The judgment clarified the distinction between 'suspension of license' under Regulation 19 and 'prohibition' under Regulation 23. Suspension involves immediate action with subsequent hearing, whereas prohibition under Regulation 23 does not specifically require a prior hearing but must be limited in duration.

6. Compliance with Natural Justice in Urgent Actions:
The court noted that even in urgent actions, principles of natural justice should be upheld to the extent possible. It referenced judgments from the Bombay High Court and the Calcutta High Court, which emphasized balancing fairness to the customs broker with the need for immediate action in public interest.

7. Limitation of the Prohibition Order's Duration:
The court concluded that while the respondent's action was not arbitrary or illegal, the prohibition order should be limited in duration. The court restricted the operation of Ext.P10 to six weeks, allowing the petitioner to file objections and relevant documents within two weeks. The respondent was directed to finalize the matter within one month after hearing the petitioner.

Conclusion:
The judgment upheld the respondent's authority to issue Ext.P10 under Regulation 23 but emphasized the necessity of limiting the prohibition order's duration to safeguard the petitioner's rights. The petitioner was granted the opportunity to challenge any subsequent orders if detrimental to their interests.

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