1969 (7) TMI 31 - HC - Customs

Issues Involved:
1. Ownership of the vehicle under a hire-purchase agreement.
2. Confiscation of the vehicle under Section 115(2) of the Customs Act, 1962.
3. Application of Section 125(1) of the Customs Act, 1962.
4. Requirement to give an option to pay a fine in lieu of confiscation.
5. Involvement of the Central Government in the proceedings.

Detailed Analysis:

1. Ownership of the Vehicle Under a Hire-Purchase Agreement:
The petitioner argued that they were the owner of the vehicle under the hire-purchase agreement since the respondent had not exercised the option to purchase the car and had not paid the full amount due under the agreement. The petitioner relied on the decision in Holby v. Matthews & Ors., (1895) A.C. 471 to support their claim of ownership. The respondent countered that the petitioner was merely a financier and not the owner, citing a decision reported in A.I.R. (1967) Cal. 256, which held that ownership vests in the hirer under a hire-purchase agreement.

2. Confiscation of the Vehicle Under Section 115(2) of the Customs Act, 1962:
The Customs Authorities confiscated the vehicle on the grounds that it was used for smuggling goods to Pakistan. The petitioner contended that they had no knowledge of the car being used for illegal activities and were only financiers. The Customs Authorities held that the drivers failed to prove that the cars were used without their knowledge or connivance and that they had taken all necessary precautions against such use.

3. Application of Section 125(1) of the Customs Act, 1962:
The petitioner argued that under Section 125(1), they should have been given the option to pay a fine in lieu of confiscation since the car was not sought to be exported and fell under the category of "any other goods." The respondent argued that Section 125(1) did not apply to conveyances used in smuggling, as special provisions for confiscation of conveyances were made under Section 115.

4. Requirement to Give an Option to Pay a Fine in Lieu of Confiscation:
The petitioner contended that under the proviso to Section 115(2), they should have been given the option to pay a fine in lieu of confiscation. The respondent argued that the proviso did not apply as the car was not used for hire under a permit or license from the appropriate authorities under the Motor Vehicles Act. The court held that there was nothing in the proviso to indicate that the hire contemplated only vehicles with a permit or license and that the respondent had concluded the car was used for hire based on the drivers' statements.

5. Involvement of the Central Government in the Proceedings:
The court noted that under Section 126 of the Act, an order of confiscation vests the goods in the Central Government. Since the Central Government was not made a party in the proceedings, any order quashing the confiscation would be infructuous. The court held that without hearing the Central Government, an order divesting it of title to the vehicle could not be made. The petitioner's failure to implead the Central Government was fatal to their application.

Conclusion:
The court dismissed the petition on the grounds that the Central Government, in whom the title to the vehicle had vested, was not made a party to the proceedings. The court also held that Section 115 of the Act was a self-contained comprehensive code for the confiscation of conveyances, and Section 125(1) could not be invoked to challenge the order of confiscation. The petitioner's contention that they were the owner of the vehicle was not accepted, and the order of confiscation was upheld. The application was rejected, and the Rule was discharged with no order as to costs.

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