2019 (9) TMI 363 - HC - Customs

Principles of Natural Justice - Revocation of CHA License - imposition of penalty - objection of the petitioner to the impugned proceedings is that the show cause notice was not issued within 90 days of receipt of the offence report and that therefore the limitation prescribed in sub-regulation (1) of Regulation 20 was not adhered to - condition precedent under Regulation 20 (4) for considering the request of the Customs Broker for cross-examination - cross-examination of witnesses - violation of the principles of natural justice. HELD THAT - There are conflicting views of different High Courts with Madras and Delhi being on one side and Bombay and Calcutta being on another side on the question whether the Regulation is mandatory or directory. Therefore it is now necessary to go into the root of the matter. The vexed question as to whether a particular provision in a statute is mandatory or directory has come up time and again before Courts under different circumstances. One of the earliest cases to draw the attention of the Constitution Bench of the Supreme Court was DATTATRAYA MORESHWAR VERSUS STATE OF BOMBAY 1952 (3) TMI 32 - SUPREME COURT . The Court in that case created a dichotomy between (i) the provisions of statutes creating public duties and (ii) those conferring private rights. The provisions of statutes creating public duties were held to be directory and those conferring private rights were considered mandatory - In RAZA BULAND SUGAR CO. LTD. VERSUS MUNICLPAL BOARD RAMPUR 1964 (10) TMI 82 - SUPREME COURT another Constitution Bench of the Supreme Court without referring to the dichotomy created in Dattatreya Moreshwar laid down certain independent tests. The petitioner contended that if the time prescribed by Regulation 20 (7) is not held to be mandatory there can be no check on the power of the authority and they can pass orders at any time they like. In fact he went to the extent of contending that the time limit prescribed in Regulation 20 (7) should be construed to mean the availability of the power only up to a period of time beyond which the authority vested with the power cannot invoke his jurisdiction - We are unable to agree with the second part of the contention. It is only in cases where authorities or quasi-judicial bodies would become functus officio that the second part of the argument of Mr. P. Balaji Varma learned counsel for the petitioner will hold good. To hold that the 1st respondent would loose his authority to pass an order of revocation of licence upon the expiry of the period of licence would be to say that he would become functus officio . That is an extreme proposition. If the tests laid down in Dattatreya Moreshwar which have so far held the field are applied it would be clear (i) that the time limit prescribed in Regulation 20 (7) is for the performance of a public duty and not for the exercise of a private right; (ii) that the consequences of failure to comply with the requirement are not spelt out in Regulation 20(7) (iii) that no prejudicial consequences flow to the aggrieved parties due to the non-adherence to the time limit; and (iii) that the object of the Regulations the nature of the power and the language employed do not give scope to conclude that the time limit prescribed is mandatory - Hence we hold that the time limit prescribed in Regulation 20 (7) is not mandatory but only directory. It is curious that the 1st respondent took refuge under the obligation cast upon him to follow the principles of natural justice for not adhering to the time schedule. But at the same time he rejected the request for cross-examination on the ground that the Regulation prescribes a time limit for passing orders. It was a contradiction in terms. The impugned order is vitiated for non-compliance with the principles of natural justice - petition allowed.

Summary

Issues Involved:
1. Timeliness of the show cause notice.
2. Denial of cross-examination of witnesses.
3. Delay in passing the impugned order.
4. Availability of alternative remedy.

Issue-wise Detailed Analysis:

1. Timeliness of the Show Cause Notice:
The petitioner challenged the revocation of their Customs Broker Licence on the ground that the show cause notice was not issued within the 90-day period prescribed by Regulation 20(1) of the Customs Brokers Licensing Regulation (CBLR), 2013. The offence report dated 24-01-2017 was received by CBS, Mumbai, and forwarded to Hyderabad Commissionerate on 18-08-2017. The show cause notice was issued on 11-10-2017, more than eight months after the offence report. The respondents argued that the offence report was received by the Hyderabad Commissionerate only on 18-08-2017, thus complying with the 90-day limit. The court found this contention to border on disputed facts but accepted the respondents' assertion, thereby rejecting the petitioner’s first objection.

2. Denial of Cross-Examination of Witnesses:
The petitioner argued that their request for cross-examination of witnesses was denied, violating Regulation 20(4) of CBLR, 2013, which entitles a Customs Broker to cross-examine persons examined in support of the grounds forming the basis of the proceedings. The enquiry report relied on statements from witnesses Shri Arjun Pilane and Shri Pramod Bhor, among other evidence. Despite the petitioner’s request, the Enquiry Officer declined the cross-examination citing time constraints under Regulation 20(5). The court found this to be a gross violation of the principles of natural justice, as the Enquiry Officer should have either facilitated the cross-examination or not relied on the witnesses' statements. This failure rendered the impugned order contrary to Regulation 20(4) and principles of natural justice.

3. Delay in Passing the Impugned Order:
The petitioner contended that the impugned order was not passed within ninety days from the date of submission of the enquiry report, violating Regulation 20(7). The enquiry report dated 10-01-2018 was received on 12-01-2018, but the impugned order was passed only on 03-07-2018. The respondents argued that the delay was due to the petitioner’s actions. The court, however, found this explanation unconvincing and noted that the Commissioner should have adhered to the time schedule prescribed in Regulation 20. Nonetheless, the court held that the time limits in Regulation 20(7) are directory, not mandatory, as they pertain to public duties without specified consequences for non-compliance.

4. Availability of Alternative Remedy:
The respondents argued that the writ petition was not maintainable due to the availability of an alternative remedy of appeal to CESTAT under Section 129(A)(1) of the Customs Act, 1962. The court dismissed this preliminary objection, noting that the petitioner’s challenges were based on admitted facts and principles of natural justice, not on disputed facts. Therefore, the petitioner was not required to seek alternative remedies before the Tribunal.

Conclusion:
The court upheld the petitioner’s contention regarding the denial of cross-examination, finding a violation of natural justice principles. Consequently, the impugned order was set aside. The other objections raised by the petitioner were rejected, and the court clarified that the time limits in Regulation 20(7) are directory. The writ petition was allowed, and there were no orders as to costs.