2010 (1) TMI 427 - HC - Customs

Question of facts- The petitioner who is an auction purchaser has sought quashing of the entire auction for the lot numbers 39 and 59 comprising 5 containers of HMS scrap held on 15.6.2005 and consequently refund of a sum of Rs.19,17,760/- alongwith interest and Rs.2,20,814/- along with interest on account of penalty and ground rent charges till 31st March, 2006 and another amount of Rs.2,70,000/- paid by petitioner to the transporters whose trucks are lying at the bonded area since 3rd April, 2006. Held that- writ jurisdiction not exercised in present case to adjudicate question of fact and disputed question of law dependent on question of facts.

Issues Involved:
1. Validity of auction process and disclosure of material details.
2. Petitioner's entitlement to a refund and waiver of charges.
3. Jurisdiction of the High Court under Article 226 for contractual disputes.

Issue-wise Detailed Analysis:

1. Validity of Auction Process and Disclosure of Material Details:

The petitioner, an auction purchaser, sought to quash the auction for lot numbers 39 and 59, claiming misrepresentation regarding the weight of the HMS scrap in the containers. The auction notice did not specify the reserve price, weight, or quantity. The petitioner contended that during the auction, it was orally declared that lot number 39 contained 4 containers and lot number 59 contained one container, each with approximately 19 tonnes of HMS scrap. However, upon delivery, the weight was significantly less than represented, leading to a dispute over the auction's validity. The petitioner argued that the respondents should have disclosed the weight as per customs regulations and circulars, which were not adhered to, thus misleading the petitioner.

2. Petitioner's Entitlement to a Refund and Waiver of Charges:

The petitioner sought a refund of Rs.19,17,760/- along with interest, and Rs.2,20,814/- as penalty and ground rent charges, plus Rs.2,70,000/- paid to transporters. The petitioner claimed that due to the respondents' failure to deliver the goods as represented, he suffered financial losses and additional charges. The respondents countered that the auction was conducted on an "As is where is" basis, and the petitioner had inspected the goods and accepted the terms. They argued that the petitioner was trying to wriggle out of the contract due to market conditions and not due to any fault in the auction process. The respondents also noted that they had granted a partial waiver of ground rent and penal interest as a goodwill gesture.

3. Jurisdiction of the High Court under Article 226 for Contractual Disputes:

The respondents argued that the petitioner could not invoke the writ jurisdiction under Article 226 of the Constitution for altering the terms of a contract or seeking cancellation and damages. They contended that the disputes involved complex factual questions that required detailed evidence, which was not suitable for adjudication under writ jurisdiction. The court agreed, emphasizing that while the High Court has jurisdiction under Article 226 to try issues of fact and law, it should not be used to resolve complex contractual disputes that require extensive evidence. The court cited several precedents, including ABL International Ltd. vs. Export Credit Guarantee Corporation of India and Ors., and State of Bihar vs. Jain Plastic and Chemicals Ltd., to support this position.

Conclusion:

The court declined to exercise its jurisdiction under Article 226, noting that the disputes involved substantial questions of fact that required detailed evidence. The petitioner's claims were dismissed, and the court suggested that the parties resolve their disputes through appropriate forums. The court emphasized that writ jurisdiction is not intended to facilitate avoidance of contractual obligations voluntarily incurred and that such disputes should be resolved through civil suits where evidence can be thoroughly examined.

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