2010 (4) TMI 584 - HC - Customs

Auction of unclaimed import consignment of pig bristles - It is the case of the petitioner that petitioner was the highest bidder for the said consignment, and the same being manifest from the final result of the auction notified Petitioner allege that importer colluded with respondents, Container Corporation of India Ltd. (CONCOR) and Custom Authorities and they could not be allowed to withdraw from auction goods which should have been released to them No doubt the petitioner had participated in the auction and was declared as the highest bidder and he has paid a sum of It. 8.00 lacs being 20% of the auction amount, however, in comparison thereto, importer has paid Customs Duty with interest accrued thereon, land retention charges of CONCOR , auction/deauction charges, payment to the Container Corporation, shipping line, besides paying the foreign supplier, totaling approximately Rs. 81.00 lacs - After the embargo was lifted, importer has also submitted the necessary NOCs from the Animal Quarantine and certificates from the Ministry of Agriculture before the No Objection Certificate could be issued by Custom authorities so as to release the consignment in favour of the petitioner. - Original importer had the first right to consignment of pig bristles - The Customs Department has also justified its action on the ground that allowing the original importer would financially benefit the Department. - There is no infirmity with the action taken by respondents Nos. 1, 2 and 4 and consequently no relief can be granted to the petitioner, and I find that the decision taken by the respondents is based on sound and cogent reasons Petition dismissed

Summary

Issues Involved:
1. Issuance of a writ of mandamus for delivery of goods.
2. Issuance of a writ of prohibition against delivering goods to another party.
3. Validity of the auction process.
4. Legitimacy of the original importer's claim to the goods.
5. Applicability of arbitration clause and maintainability of the writ petition.
6. Examination of administrative actions under judicial review.

Detailed Analysis:

1. Issuance of a Writ of Mandamus for Delivery of Goods:
The petitioner sought a writ of mandamus directing respondent No. 2 (Container Corporation of India Ltd.) to hand over the delivery of a consignment of pig bristles. The petitioner argued that they were the highest bidder in an auction and had fulfilled all necessary formalities, including obtaining required certifications from the Animal and Quarantine Departments. The petitioner contended that the goods should be released to them as they had paid the highest bid and submitted all requisite documents.

2. Issuance of a Writ of Prohibition Against Delivering Goods to Another Party:
The petitioner also sought a writ of prohibition to restrain respondent No. 2 from delivering the goods to any other person, particularly respondent No. 3, the original importer. The petitioner argued that the original importer had failed to clear the goods within the stipulated time and had not participated in the auction, thereby forfeiting their right to the goods.

3. Validity of the Auction Process:
The petitioner participated in an auction held by respondent No. 2 and was declared the highest bidder. However, the auction was subject to final clearance from the Customs Department. Respondent No. 2 argued that the auction terms allowed them to withdraw any lot before physical delivery without disclosing reasons. The Customs Department later withdrew the lot from the auction based on a representation from respondent No. 3, who had filed a Bill of Entry and paid the required duties and charges.

4. Legitimacy of the Original Importer's Claim to the Goods:
Respondent No. 3, the original importer, claimed the goods by filing a Bill of Entry and paying customs duties, terminal service charges, and other fees. The Customs Department supported respondent No. 3's claim, stating that the importer had the first right to the goods as they had not been physically delivered to the auction bidder. The Customs Department also justified their decision by highlighting the higher revenue generated from the original importer compared to the auction bid.

5. Applicability of Arbitration Clause and Maintainability of the Writ Petition:
Respondents argued that the writ petition was not maintainable due to an arbitration clause in the auction terms, which required disputes to be resolved through arbitration. The court acknowledged the arbitration clause but decided to address the merits of the case due to the extensive arguments presented.

6. Examination of Administrative Actions Under Judicial Review:
The court examined whether the administrative actions taken by the respondents were arbitrary, capricious, or mala fide. The court applied the Wednesbury Principles to determine if the decision to withdraw the lot from the auction was reasonable. The court found that the Customs Department's decision was based on sound reasons, including higher revenue and compliance with customs regulations, and did not constitute an abuse of power.

Conclusion:
The court dismissed the petition, finding no merit in the petitioner's claims. The court upheld the Customs Department's decision to allow the original importer to clear the goods, as it was based on cogent reasons and higher financial benefits. However, the court imposed costs of Rs. 50,000 on respondent No. 3 for not participating in the auction and causing hardship to the petitioner.