2006 (4) TMI 150 - HC - Customs

Summary

Issues Involved:
1. Whether the title of goods passed to the petitioner upon payment.
2. Whether the impugned order violated principles of natural justice.
3. Whether the respondents' action was arbitrary and in violation of Article 14 of the Constitution.
4. Whether the petitioner can bypass the arbitration clause and seek remedy under Article 226 of the Constitution.

Detailed Analysis:

1. Whether the title of goods passed to the petitioner upon payment:
The petitioner argued that since he had paid the entire sale consideration and other statutory dues, the title of the goods had passed to him. However, the court noted that according to Condition No. 11 of the general conditions of sale, any lot could be withdrawn from the sale before it was physically delivered out of the campus without disclosing reasons. The court found that the goods were not physically delivered to the petitioner, and hence the title had not passed to him.

2. Whether the impugned order violated principles of natural justice:
The petitioner contended that the impugned order was a non-speaking order and was passed unilaterally without affording an opportunity of hearing, thus violating the principles of natural justice. The court, however, found that Condition No. 11 explicitly allowed the withdrawal of goods from sale without disclosing reasons, and the petitioner had accepted this condition by participating in the auction. Therefore, the court held that the order did not violate principles of natural justice.

3. Whether the respondents' action was arbitrary and in violation of Article 14 of the Constitution:
The petitioner relied on the Supreme Court decision in Union of India v. Dinesh Engineering Corporation to argue that the respondents' action was arbitrary. The court distinguished the facts of the present case from those in the cited decision, noting that there was no rival claimant and no evidence of discrimination or arbitrary rejection to favor another bidder. The court concluded that invoking Condition No. 11 was not arbitrary and did not violate Article 14.

4. Whether the petitioner can bypass the arbitration clause and seek remedy under Article 226 of the Constitution:
The court emphasized that the auction sale was a contractual matter governed by the terms of the contract, including an arbitration clause (Condition No. 28). Citing precedents, the court held that contractual disputes should be resolved through arbitration as stipulated in the contract and not through a writ petition under Article 226. The court reiterated that the extraordinary remedy under Article 226 cannot be invoked to enforce contractual obligations when an effective alternative remedy, such as arbitration, is available.

Conclusion:
The court dismissed the writ petition, stating that the petitioner could not bypass the arbitration clause and seek remedy under Article 226 of the Constitution. The petitioner was advised to resolve the dispute through arbitration as provided in the general conditions of the auction sale. The court found no violation of principles of natural justice or Article 14 and upheld the respondents' right to withdraw the auctioned goods as per the agreed terms.