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TMI Blog2010 (4) TMI 584X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 - 4552 of 2008 - - - Dated:- 16-4-2010 - G.S. Sistani, J. REPRESENTED BY: S/Shri C. Hari Shankar and Tushar Kumar, Advocates, for the Petitioner. S/Shri Satish Aggarwala, D.D. Singh and M.P. Devnath, Advocates, for the Respondent. [Judgment (Oral)]. - The present petition has been filed under Article 226 of the Constitution of India for issuance of a writ of mandamus directing respondent No. 2 (Container Corporation of India Ltd.) to hand over the delivery of a consignment of Pig Bristles (imported in Container No. HDMU 2368478 (LOT No. -106) to the petitioner as well as a writ of prohi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion or by tender or with the consent of the owner in any other manner, (2) The proceeds of any such sale shall be applied - (a) firstly to the payment of the expenses of the sale, (b) next to the payment of the freight and other charges, if any, payable in respect of the goods sold, to the carrier, if notice of such charges has been given to the person having custody of the goods, (c) next to the payment of the duty, if any, on the goods sold, (d) next to the payment of the charges in respect of the goods sold due to the person having the custody of the goods, (e) next to the payment of any amount due from the owner of the goods to the Central Government under the provisions of this Act or any other law relating to customs, and the balance, if any, shall be paid to the owner of the goods." 5. Counsel for the petitioner submits that respondent No. 2 auctioned several consignments lying uncleared with it, to tender-cum-online auction sale, Which included the goods under consignment of 'pig bristles' imported under container No. HDMU 2368478 as described in the notice of auction as "General Cargo". The terms and conditions of the auction were contained in the Notice iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice having been served, the petitioner decided not to participate in the auction. Learned counsel for the petitioner submits that the petitioner has not only participated in the auction but has been officially declared as the highest bidder. The petitioner has also paid the requisite payment as stipulated in the terms and conditions relating thereto, and after having secured the necessary certification in accordance with Circular No. 13/2007 dated 2-3-07 issued by the CBEC, petitioner is entitled as of right to the delivery of the goods imported under Consignment No. HDMU 2368478, LOT No. 106. It is further submitted that on 11-6-08 and 13-6-08, the petitioner had also addressed a representation to respondent No. 4, inter alia stating that petitioner was entitled to the delivery of the goods, however no response was received from the department. 10. It is further contended by counsel for the petitioner that the title in the goods in question has already passed to the petitioner. The petitioner's bid has been finally accepted and the petitioner has also submitted the requisite certification, as required vide Circular No. 13/2007 issued by the CBEC. Thus counsel contends that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of the importer, in case the importer is ready and willing to pay the Customs Duty, terminal service charges and other miscellaneous charges. Learned counsel submits that the importer has a right in law to file a Bill of Entry in case the consignment has not been sold and goods physically not handed over to the bidder, subject to the importer paying the various dues and custom duties as contemplated under the law. It is submitted that in this case, the importer-respondent No. 3, has paid Rs. 2,29,000.00 as ground rent and Rs. 28,5001- as terminal service charges as on 17-6-2008. In addition, respondent No. 3 has also paid Customs Duty on the consignment. The consignment being in possession of respondent No. 2 and the importer-respondent No. 3 having deposited the ground rent, terminal service charges customs duty and also having deposited Rs. 4,14,243.00 on 18-6-2008 i.e. auction expenses which are 10% of the auction bid amount as contemplated by the circular issued by respondent No. 3 vide notification bearing no. CON/CT/2/V12AUCTION/ 2005 / 17, dated 20-9-2005, the said respondent No. 3 therefore became entitled to the delivery of the said consignment of pig bristles. Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .T. 375 (Mad.), more particularly paras 7 and 8, which are reproduced below "7. The learned counsel further submitted that though the impugned order refers to condition No. 11 of the general conditions of sale, which reads as follows: "Any lot or part thereof may be withdrawn from the sale at any time before it is actually physically delivered out of the campus without disclosing the reasons for such withdrawal. However, if any payment has been made it would be refunded without any interest", that will not entitle the respondents to refrain from disclosing the reasons for such withdrawal. 8. I am unable to accept the said contention of the learned counsel for the petitioner. The impugned order cannot be said to be arbitrary or opposed to the principles of natural justice. It is categorically stated in condition No. 11 that any lot or part thereof may be withdrawn from the sale at any time before it is actually physically delivered out of the campus without disclosing the reasons for such withdrawal. It is not the case of the petitioner that the goods were actually physically delivered out of the campus. Further, the petitioner has been advised to approach Sanco CFS to get the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntine Department. 17. Mr. M.P. Devnath, learned counsel for respondent No. 3, submits that Department of Animal Husbandry has been issuing notifications from time time starting from 2-2-2007; June, 2007; and August, 2007, onwards. Simultaneously, Ministry of Commerce has also been issuing the notification Codes. As per the notification issued, originally the prohibition for import was with respect live pig and pig meat. Subsequently in June, 2007, pig bristles were included. By a subsequent notification issued in November, 2007, pig bristles were excluded from the order of prohibition subject to the condition that they would require a passage by the Department of Animal Husbandry as also by the Quarantine Department. Counsel further submits that in view of the above notifications, the consignment could not be cleared on arrival and remained with the Customs. The notification of November, 2007, would not have been applicable to the consignment, in question, as the import, had been carried out earlier. Meanwhile, the Custom authorities initiated auction proceedings under Section 48 of the Act. Counsel for respondent No. 3 also submits that the auction per se is bad in law and the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the clearance. 19. It has been strongly urged by learned counsel for respondent No. 3 that the goods could have not been auctioned being prohibited goods, however, due to prevalent situation of Bird Flu, etc., after the auction, a condition was put I for seeking clearance from the Animal Husbandry Department, Ministry of Agriculture and Quarantine Department. Learned counsel for respondent No. 3 submits that if the goods could be released to the petitioner based on this criteria then respondent No. 3, who was original importer, could also have cleared the goods unaffected by the notifications. Subsequently, in the end of May, 2008, the Certification was given by the Ministry of Agriculture as also by the Wildlife Authorities with regard to consignment. More so when the certificate was issued, the notification had already come into effect on 23-5-2008 providing relaxation to consignments paid for and imported by respondent No. 3. Consequently, Custom Authorities did not approve the delivery of auction to the petitioner as the consignment had been paid for and imported by respondent No. 3 from China and due to intervening spread of Bird Flu, the consignment could not be cleared e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the Container Corporation of India Ltd. and the Arbitration proceedings would be governed by 'Arbitration and Conciliation Act' 1996, (ii) The fees and expenses towards arbitration proceedings shall be shared, equally, by the parties to the dispute and shall be paid in advance to the auctioner. The jurisdiction for appealing against the award in a court, or any other proceedings under the Arbitration Act, shall be that of courts in Delhi / New Delhi only." 22. Learned counsel for the respondents has relied upon B. Prasanna Kumar and Others v. Deputy Commissioner of Customs, Chennai, W.P. No. 6379/2006 [2006 (203) E.L.T. 375 (Mad.)], and more particularly paras 16 and 17, wherein in similar circumstances the Court had dismissed the writ petition, as disputes had to be resolved through Arbitration. Paras 16 and 17 read as under: "16. When condition No. 28 of the general conditions of auction provides for arbitration, the petitioner is bound by the same and the petitioner cannot ignore the arbitration clause and approach this Court under Article 226 of the Constitution of India. 17. It is settled law that if a right has been claimed in terms of the con tract, such a rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bidder participating in the auction to seek confirmation from the Customs, therefore in the present scenario, the Department (respondent No. 4) vide letter dated 9-4-08 specifically directed CONCOR (respondent No. 2) to stop the delivery of the consignment of pig bristles with immediate effect. Vide letter dated 13-6-08, the Department further directed CONCOR that respondent No. 3, being the original importer, had the first right to the consignment of pig bristles and thus the consignment was asked to be withdrawn from the auction held on 2 Learned counsel further submits that merely because respondent No. 3 has filed a delayed Bill of Entry, the same does not imply that it had thereby relinquished its title to the goods. It is further pointed out that pig bristles, subject matter of the case herein, were a prohibited item, which prohibition was lifted only on 23-5-08, subject to the fulfillment of certain conditions The Ministry of Agriculture, Government of India had vide notification dated 23-5-08 published in the Gazette on 26-5-08 allowed clearances of imported processed bristles subject to fulfillment of conditions laid down therein Thus all the importers who had imported the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voice has been placed on record Respondent No 3 also made an advance payment of US $ 2000 to the seller The consignment of pig bristles arrived ICD, Tughiakabad New Delhi, in August 2007 m Container No HDMU 2368478 As the consignment remained uncleared the same was put to auction on 27/28-3-2008. The final result of the auction held on 27/28-3-2008 was declared on 10-4-2008 and petitioner was declared as the successful bidder In the final list it was mentioned that the Lot was subject to Customs clearance. 28. A preliminary objection has been raised by counsel for the respondents with regard to maintainability of the writ petition on the ground that there is an arbitration clause, which binds the petitioner and respondent No. 4. Copy of the terms and conditions of auction have been placed on record. Clause 12.0 of the conditions of auction has been reproduced above. Counsel for respondent No.3 has placed reliance on B. Prasanna Kumar and Others v. Deputy Commissioner of Customs, Chennai, W.P.No. 6379/2006 [2006(203) E.L.T. 375 (Mad.)] and more particularly paras 16 and 17, which are reproduced above, wherein a Single Judge of the Madras High Court has held that parties are bound ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome adult. The thrust of the plaintiff's argument thus was that the condition put by the defendants restricting the access of children below fifteen to the theatre on Sundays was unreasonable, and that, in consequence, it was ultra vires the power of the Wednesbury Corporation. Dismissing the claim of the plaintiffs, Lord Greene unequivocally opined that the Court could not intervene to overturn the decision of a local authority (the Wednesbury Corporation) simply because the Court disagreed with it. It was observed that to have the right to intervene, the Court would have to form the conclusion that: (i) the corporation, in making that decision, took into account factors that ought not to have been taken into account, or (ii) the corporation failed to take into account factors that ought to have been taken into account, or (iii) the decision was so unreasonable that no reasonable person would ever consider imposing it. 31. The aforesaid exceptional circumstances, as envisaged by Lord Greene in the Wednesbury Case, were crystallised by Lord Diplock in Council of Civil Service Unions and Others v. Minister for the Civil Service ("the GCHQ case) 11984 (3) All. ER 9351 under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before it is actually physically delivered out of the campus without disclosing the reasons for such withdrawal. However, if any payment has been made it would be refunded without interest." 36. Further as per Clause 4.0 of the tender-cum-online auction sale, the pre-results of successful bidder/tenderer is to be displayed, however, the final result is to be declared after clearance from the customs. Clause 4.0 of the tender cum-online auction sale, reads as under: "4.0 Opening of sealed tender and declaration of auction results The sealed tenders shall be opened at respective ICD's from 11:30 hrs. on 29-3-2008 in presence of the Tenderers/highest bidders of online auction who wish to be present at the time of opening. The pre-results of successful bidder/tenderer will be displayed on the website www.niatexnet.com on 13-2-2008 or later and the final result will be declared after clearance from Customs of respective ICDs. The results will be displayed in the following manner. CODE STATUS OK Accepted Bid. STA Subject to approval/Provisional Acceptance However, final confirmation of Bid acceptance will be done on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mediate effect and further vide letter dated 13-6-2008 Customs Department further directed CONCOR that respondent No. 3 being the importer, he had the first right clear the goods. The Customs Department also took into consideration that the importer had filed the Bill of Entry after delay but mere delay by itself does not mean that he had relinquished the title of the goods. Considering that the importer has a much larger financial stake in the goods, in question, and further at the time when the goods were imported, "Processed Pig Bristles" were a prohibited item and at that stage in any case the goods could not have been released in faovur of the respondent No. 3 and the prohibition was lifted subject to fulfillment of certain conditions only on 23-5-2008, concomitantly, respondent No. 3 had the first right. 41. The respondents Nos. 1 and 4 as well as No. 2 have given detailed reasons as to why the shipment Lot No. 106, subject matter of the writ petition, has been withdrawn from the auction. Respondent No. 2 had amply made it clear to the petitioner at the very outset that the auction held in March, 2008, was subject to final clearance by the Customs Authorities. As per letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i for in formation please. ASSISTANT COMMISSIONER (Disp.)" 42. A reading of Clause 3.0(ix) of the terms of auction as well as the communication dated 104-2008, copy of which has been filed by the petitioner, makes it abundantly clear that the goods could only be cleared, subject to Customs clearance, and the goods could be withdrawn at any time before they were actually physically delivered out of the campus. While, it is not in dispute that respondent No. 3, importer, did not participate in the auction but respondent No. 3 could not have filed the Bill of Entry on the arrival of the goods in view of the fact that the import of 'pig bristles' was prohibited as per the notification dated 2-2-2007 issued by the Department of Animal Husbandry, as also the notification dated 13-4-2007, which embargo was removed in November, 2007 and duly notified on 23-5-2008, subject to furnishing of a No Objection Certificate from the Department of Animal Husbandry and also from the Quarantine Department. 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 ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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