1989 (3) TMI 139 - HC - Customs

Issues Involved:
1. Examination and discovery of hashish in the consignment.
2. Investigation and findings regarding the involvement of M/s. Jeena & Co.
3. Suspension of M/s. Jeena & Co.'s Customs House Agent Licence.
4. Legal principles regarding interim suspension and natural justice.
5. Challenge to the vires of Regulation 21(2) of the Customs House Agents Licensing Regulation, 1984.
6. Judicial review of the Collector of Customs' order.

Issue-wise Detailed Analysis:

1. Examination and Discovery of Hashish in the Consignment:
On 21st August 1986, M/s. Jeena & Co., a Customs House Agent, filed a shipping bill for 38 packages of tourist purchases. Upon examination, it was found that the packages contained hashish (charas) cleverly wrapped to avoid detection. The total amount of hashish was 193 kg net, with an international value of approximately rupees one crore fifteen lacs. The consignee, J. Sale, was not present during the examination.

2. Investigation and Findings Regarding the Involvement of M/s. Jeena & Co.:
The investigation revealed several discrepancies and violations by M/s. Jeena & Co.:
- The officers of M/s. Jeena & Co. did not inspect J. Sale's passport nor obtained a letter of authority from him.
- Documents were seized from M/s. Jeena & Co.'s office, including a rubber stamp of M/s. Doona & Co. of Srinagar.
- A certificate of origin was improperly prepared and signed by a transport contractor.
- The investigation indicated that M/s. Jeena & Co. acted in contravention of the Customs Agents Licence and Regulation of 1984 and appeared to have aided in the illegal exportation of prohibited goods, violating the Narcotic Drugs & Psychotropic Substances Act, 1985, and the Customs Act.

3. Suspension of M/s. Jeena & Co.'s Customs House Agent Licence:
On 26th August 1986, the Collector of Customs issued an order suspending M/s. Jeena & Co.'s licence with immediate effect. The order cited the seizure of hashish and the company's failure to comply with regulatory requirements, including the lack of a letter of authorization and failure to verify the customer's address. The suspension was an interim measure pending a full enquiry.

4. Legal Principles Regarding Interim Suspension and Natural Justice:
The court examined whether the interim suspension violated principles of natural justice, specifically the audi alterem partem rule. It was argued that the suspension was necessary due to the serious nature of the allegations and the need for immediate action. The court referenced the Supreme Court's decision in Vice-Chancellor v. Dushinant Kumar Rampal, which supported interim suspension in emergencies.

5. Challenge to the Vires of Regulation 21(2) of the Customs House Agents Licensing Regulation, 1984:
The petitioner challenged the constitutionality of Regulation 21(2), which allows for immediate suspension of a licence. The trial court did not strike down the regulation, and the appellate court did not consider the vires issue as it was not appealed. The court noted that Regulation 21(2) grants wide discretionary power to the Collector of Customs to suspend a licence when immediate action is necessary, provided the reasons are recorded in the order.

6. Judicial Review of the Collector of Customs' Order:
The court found that the Collector of Customs' order was not arbitrary or capricious and was based on sufficient grounds. The order was a speaking order, disclosing the reasons for the suspension. The court distinguished the case from Commissioner of Police v. Gobordhan Das Bhanji, noting that the grounds for suspension were adequately stated in the order itself.

Conclusion:
The appellate court set aside the trial court's judgment, upholding the Collector of Customs' order of suspension. The appeal was allowed, and the stay was refused. The court emphasized that the interim suspension was justified given the serious nature of the allegations and the need for immediate action.

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