2009 (8) TMI 80 - HC - Customs

Recovery of personal penalty Encashment of bank guarantee - According to the petitioners, they executed the bond in view of the decision of this Court that they would not be liable for payment of penalty which may be imposed on a member of crew (in this case Second Officer Mr. Aleksandr) for his illegal acts made without the knowledge or connivance of the owner or the Master of the ship. The decision of this Court was rendered in the year 1986 and has been accepted by the Customs Authorities and has not been appealed against. Relying on that decision and believing that the bond would not be enforced against them for recovery of any penalty imposed not on them but a crew member, they executed the bond. In view of this, the respondents are not entitled to recover the amount of penalty imposed on the Second Officer Mr. Aleksandr from the petitioners on the basis of a bond Held that - the petitioners are entitled to the refund of the money so deposited together with interest, if any, accrued if the money has been invested

Summary

Issues:
Petition seeking injunction against penalty recovery from vessel's Second Officer, Bond requirement for release of vessel, Liability of petitioners for penalty on Second Officer, Enforcement of bond against petitioners for penalty on crew member.

Analysis:
1. The petitioners sought an injunction to prevent the recovery of a penalty imposed on the Second Officer of a vessel and to stop the encashment of a bank guarantee. The vessel was detained after contraband material was found on board. The petitioners argued they should not be liable for penalties imposed on crew members. The Collector's order stated that the Second Officer alone was liable for the penalty, absolving the owner and Master of the vessel.

2. The respondents contended that the petitioners were bound by a bond to pay fines or penalties imposed on them or any crew member. The bond was considered an independent contract with Customs Authorities. However, the petitioners argued that the bond was obtained under duress, and they should not be held responsible for penalties on crew members, citing a previous court decision.

3. Referring to a prior case, the court highlighted that if contraband goods were brought on board without the owner or Master's knowledge, the owners should not be held liable for penalties on crew members. The petitioners relied on this decision, stating they executed the bond believing they would not be responsible for penalties on crew members.

4. The court found in favor of the petitioners, stating that the respondents could not recover the penalty from them based on the bond. The petitioners were entitled to a refund of the deposited amount in lieu of the bank guarantee. The Rule was made absolute, and the refund was ordered upon production of a certified copy of the judgment.