2014 (1) TMI 1070 - HC - Customs

Court dismisses challenge to bank guarantee encashment; clarifies jurisdiction & appeal limitation period; emphasizes forum convenience

M/s. Gippsaero Pty Ltd. Versus Union of India & Others

The High Court dismissed the writ petition challenging the communication seeking to encash a bank guarantee by the Commissioner of Customs. The Court ... Invocation of bank guarantee - Confiscation of imported aircraft - Imposition of redemption fine - Jurisdiction of Court - Commissioner customs is located at Kolkata - Held that:- Merely because the bank happens to be within the territorial jurisdiction of this Court, it cannot be said that any part of any cause of action has arisen within the territorial jurisdiction of this Court. The situs of the Bank at Mumbai is no part of the cause of action seeking to restrain the Commissioner of Customs, Kolkata from encashing its Bank Guarantee. Thus it cannot be said that any part of the relevant cause of action has arisen in Mumbai for the purpose of Article 226(2) of the Constitution of India - the Court may refuse to exercise its jurisdiction on the ground of forum convenience. In this case the contesting respondent viz. Commissioner of Customs is at Kolkata and therefore it would not be appropriate for this Court to exercise jurisdiction , even if it is assumed that this Court has jurisdiction - Decided against Petitioner. Issues:1. Challenge to communication seeking to encash a bank guarantee by the Commissioner of Customs.2. Jurisdiction of the High Court to entertain the writ petition.3. Coercive recovery by authorities during the period of limitation for filing an appeal.4. Forum convenience in exercising jurisdiction.Analysis:1. The writ petition challenged a communication from the Assistant Commissioner of Customs seeking to encash a bank guarantee due to the petitioner's dues under an adjudication order. The aircraft imported by the petitioner was seized, and upon release, a bank guarantee was furnished. The adjudication order imposed fines, duties, and penalties leading to the invocation of the bank guarantee.2. The High Court analyzed the jurisdiction to entertain the petition. The bank guarantee was paid to the Commissioner of Customs in Kolkata, indicating the cause of action within the territorial jurisdiction of the Calcutta High Court. The Court held that the situs of the bank in Mumbai did not constitute a part of the cause of action for the petition, thus rejecting the petitioner's claim of jurisdiction.3. The petitioner argued against coercive recovery during the appeal limitation period, citing established legal principles. However, the Court clarified that the issue of maintainability in the Court was distinct from the merits of the petitioner's challenge. The Court emphasized that the cause of action arose from the adverse adjudication order and subsequent bank guarantee invocation, not from the bank's location.4. Considering forum convenience, the Court referred to precedent where jurisdiction may be refused based on the location of the contesting respondent. As the Commissioner of Customs was in Kolkata, the Court deemed it inappropriate to exercise jurisdiction, even if assumed to have it. Consequently, the petition was dismissed without costs, emphasizing the importance of forum convenience in legal proceedings.