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TMI Blog1987 (4) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... d to as the Regulations), revoked the licence. The misconduct attributed to the petitioner was that it has failed to comply with its obligation to promptly account to its client for funds received by it as provided under Regulation 14(g) of the Regulations. 3. Before I set out the charge and the findings, a few facts may now be noticed. In the year 1979, M/s. Neyveli Lignite Corporation Ltd., Neyveli (hereinafter referred to as N.L.C.), a public sector undertaking of the Government of India decided to expand the Power Generating Project at Neyveli by installing a second thermal power station. For this purpose, the N.L.C. called for global tenders for (a) to supply 3 Nos. of Steam Turbine Generators with ancillaries and (b) for unloading, clearance through customs, transportation to site, erection, testing and commissioning the complete plant. The tender for the supply to three numbers of Steam Turbine Generators with ancillaries was given in favour of M/s. Franco Toahi Industries, SPA, Italy and the tender for unloading, clearance through customs, transportation to site, erection, testing and commissioning the complete plant was given in favour of M/s. Franco Toshi Industries, SP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of agents approved by the N.LC. 5. The procedure adopted for payment of customs duty which is the liability of the foreign supplier under the agreement though the funds will be provided by the N.L.C. is as follows: 6. The petitioner will intimate the local representative of the foreign supplier as also the N.L.C. the approximate amount required for payment of customs duty and port dues. The N.L.C. remits the funds to the local representative of the foreign supplier who in turn forwards the same to the petitioner. The petitioner opens a customs account in the name of the N.L.C. with the Collector of Customs or the customs station and credits that account with the funds necessary to meet the customs duty demanded and on adjustment of that money, the goods are permitted to be cleared. 7. It appears that on 14-8-1984 the N.L.C. sent a cheque for a sum of Rs. 1,96,55,075 to the Indian representative of the foreign supplier for payment of the customs duty in respect of the imported consignment along with a challan prepared by the N.L.C. for the remittance of the cheque into the N.LC. Deposit Account with the Customs House. The Indian representative of the foreign supplier in turn s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use Agent have demanded and collected from their clients M/s. N.L.C. huge sums of money (approximately Rs. 52 lakhs) which are far in excess of the amounts of duty payable to the customs department on behalf of their clients. The excess amounts so collected have been misappropriated by M/s. Sugesan Co. (P) Ltd. for their own advantage to the detriment of the Interests of their clients M/s. Neyveli Lignite Corporation Ltd. The amounts so collected and misappropriated by the Customs House Agent still remain to be paid back in full to their clients M/s. Neyveli Lignite Corporation Ltd. Further M/s. Sugesan Co. failed to deposit a banker's cheque for Rs. 32,50,000 given by M/s. Neyveli Lignite Corporation promptly but they retained the cheque in their possession for about 20 days and tendered the cheque to the customs after retaining the cheque for such inordinately long period. These acts on the part of M/s. Sugesan Co. (P) Ltd. are In violation of the provisions of Reg. 14(g) of the C.H.A.L.R., 1984." 8. The second charge and the latter portion of the third charge relating to the deposit of Rs. 32,50,000 were dropped finding the petitioner not guilty of the same. It may be se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the agreement to provide the foreign supplier with funds required for payment of customs duty and port dues. The customs house agent is chosen and appointed by the foreign supplier as their agent and the agent acts as the agent of the foreign supplier and not the N.L.C. It is true that either the clearing agent should be chosen from among the panel of clearing agents given by the N.L.C. or even if any other clearing agent is to be chosen and appointed by the foreign supplier, the prior approval of the N.L.C. was needed. But that was for the purpose of ensuring the proper compliance with the contract and not for the purpose of creating any privity between the clearing agent and the N.L.C. In fact. the tender was called for only by the Indian representative of the foreign supplier and not by the N.L.C., and the tender was also accepted by the foreign supplier through the Indian representative and not by the N.L.C. It is also seen from the facts that the cheques are given by the N.L.C. only to the Indian representative of the foreign supplier and not directly to the petitioner. Technically, the Indian representative could credit the amount to themselves and give a separate cheque t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited the N.L.C. with a sum of Rs. 30,00,000. It is also stated that the Indian representative of the foreign supplier had already accounted [to] N.L.C. for the entire Rs. 52,00,000 since they know clearly that it was their responsibility and the contract is between them and the N.L.C. and any accounting is between them and the petitioner. Legally therefore the petitioner was not under an accountable relationship with the N.L.C. and that (sic) therefore regulation 14(g) of the regulations could not have been invoked in this case for the purpose of finding the liability to account [to] the N.L.C. Therefore, the finding of the respondent that the petitioner was under the obligation to the N. L.C. or the non-accounting of the money amounts to misappropriation cannot be supported legally. 10. Apart from this, certain other factors which are very relevant should also be taken into account. As already stated, the petitioner was carrying on the business of customs house clearing agents since 1921. In their written statement and during the oral hearing, the petitioner relied on the unbroken clearing record of the company and the unfortunate circumstance created by an interim suspension or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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