2024 (10) TMI 1472 - HC - Customs

Fraud practised by the defaulter and his brother only to obstruct the government from recovering its legitimate dues - Petitioner s brother was declared a defaulter regarding payment of the customs dues and after receipt of this order, the defaulting brother purported to gift his share to his brother by a registered gift deed - main argument is that the attachment order under the Customs (Attachment of Property of Defaulter for Recovery of Government Dues) Rules, 1995 (said Rules) was made only on 26 June 2013; therefore, there was nothing wrong with the registered gift deed dated 6 May 2006 HELD THAT - The fact that the gift deed was executed soon after the original order was made declaring the Petitioner s brother a defaulter is not a circumstance that can be lightly ignored. The defaulting brother has purported to transfer 50% of his share to the Petitioner. This is a case where an apparent attempt was made by the defaulting brother and the present Petitioner to obstruct the recovery of legitimate dues. The Petitioner's conduct has not been above board. The vital document, the order dated 30 November 2005, was not enclosed along with the Petition. In fact, it was suppressed. This document was extremely vital to test the Petitioner s case, yet it was suppressed. Further, on the transaction, at least a very strong prima facie case is made out that the Petitioner and his brother executed the sale deed dated 6 May 2006 after it was clear the brother would have to pay the government dues, if necessary, through the sale of the said flat. This transaction was entered into solely to obstruct such sale and, consequently, the recovery of legitimate government dues. Such a Petitioner does not deserve any assistance from the Writ Court exercising equitable and extraordinary jurisdiction under Article 226 of the Constitution. It is well settled that the equitable and extraordinary jurisdiction of this Court is not to be exercised merely upon the Petitioner making out some legal point. This jurisdiction is essentially discretionary, and the Petitioner s conduct is a factor for considering the exercise of discretion. The Affidavit also refers to the registered gift deed and all clauses there stating that from the date of execution of the gift deed, the donee, i.e., Petitioner herein, shall pay other legitimate government and society dues . In this case, though interim relief was explicitly denied long ago, we are surprised that the respondents took no action to recover dues. We dismiss this Petition at Rs 25,000/-. The petitioner should pay the cost to the Maharashtra State Legal Services Authority within four weeks from today.

Summary

Issues:
- Petitioner seeking assistance from Writ Court for a potentially fraudulent case involving a gift deed to evade customs dues recovery.
- Validity of the registered gift deed dated 6 May 2006 in light of the attachment order under Customs Rules.
- Whether the Petitioner, acting as a proxy for the defaulter brother, should receive assistance under Article 226 of the Constitution.
- Comparison with a similar case where the Court denied extraordinary jurisdiction under Article 226.
- Suppression of vital documents by the Petitioner and the questionable conduct in executing the sale deed.
- Affidavit filed by Deputy Commissioner of Customs highlighting the removal of the attachment order and non-cooperation in valuation.

Analysis:
1. The Petitioner sought Writ Court's assistance in a potentially fraudulent case involving a gift deed to evade customs dues recovery. The Court noted the similarity with a prior decision and emphasized the importance of not obstructing legitimate dues recovery by resorting to extraordinary jurisdiction under Article 226.

2. The main contention revolved around the validity of the registered gift deed dated 6 May 2006 concerning a property share transfer. The Court highlighted the timing of the deed in relation to the attachment order under Customs Rules, suggesting a deliberate attempt to impede dues recovery.

3. The Court deliberated on whether the Petitioner, acting as a proxy for the defaulter brother, should be entitled to assistance under Article 226. It was established that the Petitioner's conduct, especially the suppression of vital documents, did not warrant such equitable relief.

4. Drawing parallels with a similar case, the Court referenced a judgment where extraordinary jurisdiction under Article 226 was denied, emphasizing that such disputes should be resolved through civil remedies rather than the Writ Court.

5. The Court criticized the Petitioner's conduct, highlighting the suppression of crucial documents and the questionable transaction timing, indicating an intention to obstruct dues recovery. This conduct played a significant role in the Court's decision to dismiss the Petition.

6. The Deputy Commissioner of Customs filed an Affidavit detailing non-cooperation in valuation and the removal of the attachment order, suggesting collusion between the Petitioner and the defaulter brother. The Court expressed surprise at the lack of action by the respondents in recovering the dues, despite denying interim relief.

7. Ultimately, the Court dismissed the Petition and imposed costs on the Petitioner due to the conduct and circumstances surrounding the case, emphasizing that equitable jurisdiction should not be exercised solely based on legal arguments but also considering the Petitioner's behavior and intentions.