Natural justice and disputed goods: sand disposal order fell for lack of hearing, with revenue protected by auction and fresh adjudication.

An order directing disposal of disputed river sand was held unsustainable because the underlying factual dispute had not been properly adjudicated and the petitioner was not given a fair opportunity of hearing. The court treated the absence of inquiry and natural justice as fatal to the impugned proceedings. To protect revenue pending fresh determination, it directed sale of the sand by public auction within Tamil Nadu, allowed the petitioner to participate, required the proceeds to be kept in an interest-bearing account, and ordered continuation of the bank guarantee. The authority was also directed to issue a fresh show cause notice, consider the reply, grant personal hearing, and decide the matter independently and in accordance with law.

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Issues: (i) Whether the impugned order directing disposal of the unshipped river sand could be sustained without proper adjudication and affording the petitioner an opportunity of hearing; (ii) what consequential directions were required to protect the interests of revenue while the dispute was determined.

Issue (i): Whether the impugned order directing disposal of the unshipped river sand could be sustained without proper adjudication and affording the petitioner an opportunity of hearing.

Analysis: The conclusion that the sand could not have been quarried at Karaikal was reached without adjudicating the rival claims. The petitioner asserted that the sand had been purchased from traders in Karaikal. If the authority formed an opinion that the sand had been quarried elsewhere and therefore fell within the reach of section 21(4), that issue required proper inquiry and a fair opportunity to the petitioner. In the absence of such procedure, the impugned proceedings were found to be vitiated.

Conclusion: The impugned proceedings were held to be unsustainable for want of proper adjudication and observance of natural justice.

Issue (ii): What consequential directions were required to protect the interests of revenue while the dispute was determined.

Analysis: Instead of setting aside the proceedings outright, the Court directed sale of the sand by public auction within Tamil Nadu, permitted the petitioner to participate, and ordered the sale proceeds to be retained in an interest-bearing account. The District Collector was directed to issue a fresh show cause notice, consider the petitioner's reply, grant personal hearing, and decide the matter independently and in accordance with law. The bank guarantee was directed to be kept alive until the fresh proceedings were concluded.

Conclusion: The matter was directed to be dealt with afresh through notice, hearing, and adjudication, with revenue protected by retention of the sale proceeds and continuation of the bank guarantee.

Final Conclusion: The earlier challenge became academic, and the remaining writ petition was disposed of with procedural safeguards and fresh decision-making directions rather than outright annulment of the impugned action.

Ratio Decidendi: A coercive disposal order affecting disputed goods cannot be sustained unless the underlying factual basis is determined through fair adjudication after giving the affected party an opportunity of hearing; where revenue interests require protection, interim disposal and retention measures may be directed pending fresh adjudication.

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