2019 (1) TMI 736 - HC - Customs

Principles of natural justice - suspension of CHA License - invocation of Regulation 11(2) of HCCAR, 2009 - whether an immediate action is necessary to suspend the license, pending enquiry? - Held that - Perusal of the Regulation 11(2) of HCCAR, 2009, would show that the Commissioner of Customs is empowered to suspend the approval granted to Customs Cargo Services Provider in appropriate cases where immediate action is necessary, pending enquiry or where the enquiry is contemplated - it is evident that action under Regulation 11(2) can be taken only when the Commissioner of Customs is of the view that immediate action is necessary for suspending the license. Needless to say that such consideration must explicitly available in the order of suspension. It is relevant to note that Regulation 11(1) empowers the very same Commissioner to suspend or revoke the license and the procedure to be followed for suspension or revocation of the license is contemplated under Regulation 12. Perusal of the Regulation 12 would show that before doing so, the licensee should be put on notice and he must be heard. However, Regulation 11(2) can be invoked for suspending the license only when the Commissioner of Customs feels and comes to a conclusion that immediate action is necessary to suspend the license. Perusal of the impugned order in this writ petition would show that no such consideration was made by the Commissioner of Customs except extracting Regulation 11(2) and stating that an enquiry is contemplated in this case and that allowing the petitioner to continue for work will seriously jeopardize the Customs duties and security of Cargo. The respondent has not stated any other reason anywhere as to why an immediate action is required in this case - This Court has considered the similar provision made under Regulation 21(2) of the Customs House Agent License Regulation in 1994 (11) TMI 244 - MADRAS HIGH COURT 1994 (11) TMI 244 - MADRAS HIGH COURT , where it was held that In the absence of any indication that there was application of mind by the Collector on the aspect as to whether immediate action was necessary, in my opinion, the impugned order cannot be sustained. Thus, the present impugned order passed under Regulation 11(2) without there being any finding as to why immediate action is necessary to suspend the license, cannot be sustained even though the respondent is entitled to proceed against the petitioner under 11(1) after issuing notice to them - petition allowed - decided in favor of petitioner.

Summary

Issues Involved:
1. Legality of the suspension order issued under Regulation 11(2) of Handling of Cargo in Customs Areas Regulations, 2009.
2. Compliance with principles of natural justice.
3. Necessity and immediacy of the suspension action.
4. Petitioner's responsibilities and alleged violations under the Customs Act, 1962 and Handling of Cargo in Customs Areas Regulations, 2009.

Issue-wise Detailed Analysis:

1. Legality of the Suspension Order:
The petitioner challenged the suspension order dated 13.12.2018 issued under Regulation 11(2) of Handling of Cargo in Customs Areas Regulations, 2009 (HCCAR). The petitioner argued that the suspension was issued without prior notice and hearing, violating the principles of natural justice. The respondent justified the suspension citing serious lapses by the petitioner in handling a container with misdeclared cargo and subsequent theft due to a forged gate pass. The court examined Regulation 11(2), which allows suspension where immediate action is necessary, pending or contemplating an enquiry. The court emphasized that such immediate necessity must be explicitly stated in the suspension order, which was lacking in this case.

2. Compliance with Principles of Natural Justice:
The petitioner contended that the suspension order was issued without notice and hearing, thus violating natural justice principles. The respondent argued that immediate action was warranted due to the petitioner's failure to safeguard the cargo. The court noted that Regulation 11(2) permits suspension without notice only when immediate action is necessary. The court found that the impugned order did not provide specific reasons for the immediate necessity, thereby failing to comply with the requirement of natural justice.

3. Necessity and Immediacy of the Suspension Action:
The court scrutinized whether the suspension was justified under the "immediate action" clause of Regulation 11(2). The court highlighted that the suspension under Regulation 11(2) is preventive, not punitive, and must be based on the principle that "prevention is better than cure." The court found that the respondent did not demonstrate the necessity for immediate action in the suspension order. The court referenced past judgments, including East West Freight Carriers (P) Ltd. vs. Collector of Customs, Madras, and N.C. Singha & Sons v. Union of India, which stressed the need for explicit reasoning for immediate action in suspension orders.

4. Petitioner's Responsibilities and Alleged Violations:
The respondent accused the petitioner of failing to discharge duties as a Customs Cargo Service Provider, citing violations under Section 45(2)(b) of the Customs Act, 1962, and various regulations of HCCAR, 2009. The court acknowledged these allegations but focused on the procedural aspect of the suspension under Regulation 11(2). The court noted that the respondent could proceed under Regulation 11(1) for suspension or revocation after issuing notice and conducting an enquiry, which was not precluded by this judgment.

Conclusion:
The court allowed the writ petition, setting aside the impugned suspension order due to the lack of explicit reasoning for immediate action under Regulation 11(2). The court clarified that the respondent could still take action under Regulation 11(1) after following due process. The court did not delve into the merits of the allegations against the petitioner, as the primary issue was the procedural validity of the suspension under Regulation 11(2).