1991 (12) TMI 145 - AT - Customs

Summary

Issues Involved:
1. Validity of the suspension order under Regulation 21(2) of the Custom House Agents Licensing Regulations (CHALR), 1984.
2. Requirement of prior notice and hearing under the principles of natural justice.
3. Adequacy of reasons provided in the suspension order.
4. Necessity of immediate action as per Regulation 21(2).

Issue-Wise Detailed Analysis:

1. Validity of the Suspension Order Under Regulation 21(2) of CHALR, 1984:
The appeal was against the suspension of the Custom House Agent (CHA) Licence under Regulation 21(2) of CHALR, 1984, due to an enquiry under Regulation 21(1) read with Regulation 23 being contemplated. The suspension was based on allegations of active connivance in undervaluation and fraudulent clearance of goods. The order was challenged on multiple grounds, including the lack of prior notice and hearing, and whether the circumstances justified immediate action.

2. Requirement of Prior Notice and Hearing Under the Principles of Natural Justice:
The appellant argued that the suspension order should have been preceded by a show cause notice and an opportunity for hearing, in accordance with the principles of natural justice, specifically citing the rule of audi alteram partem. The appellant referenced various Supreme Court judgments to support this contention. However, the respondent countered that Regulation 21(2) does not require prior notice or hearing, supported by a Calcutta High Court decision in the case of Collector of Customs v. Jeena & Co. The tribunal agreed with the respondent, stating that Regulation 21(2) is an exception to the general rule and does not necessitate prior notice or hearing.

3. Adequacy of Reasons Provided in the Suspension Order:
The appellant contended that the suspension order was a nullity as it did not provide adequate reasons. The respondent argued that the reasons were succinctly stated, citing the gravity of the allegations and the contemplation of an enquiry. The tribunal agreed with the respondent that the reasons, though brief, were provided and were sufficient to justify the suspension.

4. Necessity of Immediate Action as Per Regulation 21(2):
The appellant argued that the suspension order did not satisfy the conditions of Regulation 21(2), which requires immediate action in appropriate cases where an enquiry is pending or contemplated. The appellant highlighted that the show cause notice was issued months before the suspension, indicating no immediate action was necessary. The tribunal agreed with the appellant, noting that the material facts were available to the department long before the suspension order was issued. The tribunal held that the suspension order was based on stale material and did not justify immediate action, thus quashing the order.

Separate Judgments:
P.C. Jain, Member (T):
The tribunal found that the suspension order did not meet the requirement of immediate action as stipulated in Regulation 21(2). The material facts were available to the department long before the suspension order, making the order unsustainable.

G.P. Agarwal, Member:
While agreeing with the decision, G.P. Agarwal emphasized that the principles of natural justice can be excluded where prompt action is required. However, he noted that the suspension order did not provide adequate reasons for immediate action and was based on stale material. The unexplained delay in issuing the suspension order further vitiated it, leading to the conclusion that the order was a colorable exercise of power.

Conclusion:
The tribunal quashed the suspension order, finding that it did not meet the requirements of Regulation 21(2) of CHALR, 1984, as it was based on stale material and lacked immediate necessity. The appeal was allowed.