1977 (7) TMI 60 - HC - Customs

Court Upholds Firm Liability Under Customs Act Sections 111 & 112, Dismisses Appeal

The court dismissed the appeal without costs, upholding the liability of the firm and its partners under Sections 111 and 112 of the Customs Act. It ... Confiscation - Show cause notice - Writ jurisdiction Issues Involved:1. Liability of the firm without notice to all partners.2. Option to redeem the goods in lieu of confiscation under Section 125 of the Customs Act.3. Alternative remedy under Section 131 of the Customs Act and the applicability of Article 226(3) of the Constitution.Issue-wise Detailed Analysis:1. Liability of the firm without notice to all partners:The appellants argued that the firm was held liable without proper notice to all its partners. The learned Judge noted that no specific objection regarding the lack of notice to all partners was raised during the proceedings. The definition of 'person' in Section 3(42) of the General Clauses Act was applied, which includes any company, association, or body of individuals, whether incorporated or not. The court referred to precedents such as Narayana Chetty v. I.T. Officer, Nellore and M.M. Ipoh v. I.T. Commissioner, Madras, which established that a firm is treated as a 'person' under relevant statutes. The court also cited Agarwal Trading Corporation v. Collector of Customs, affirming that a firm could be held liable for contraventions under the Foreign Exchange Regulation Act and the Sea Customs Act. The court concluded that service of notice to one partner was sufficient as each partner is an implied agent of the others. The objection regarding the lack of notice to all partners was found to have no substance.2. Option to redeem the goods in lieu of confiscation under Section 125 of the Customs Act:The appellants contended that they were not given the option to pay a fine in lieu of confiscation as mandated by Section 125(1) of the Customs Act. The court noted that this issue was not raised before the learned Single Judge. Despite the procedural lapse, the court considered the argument due to its fundamental nature. The court referred to the Calcutta High Court decision in Shaik Md. Omer v. Customs Collector, affirmed by the Supreme Court, which held that a restriction on import subject to conditions operates as a prohibition if the conditions are not met. Thus, the court concluded that the importation of cloves, being restricted, fell under the category of prohibited goods, and the appellants' contention lacked merit.3. Alternative remedy under Section 131 of the Customs Act and the applicability of Article 226(3) of the Constitution:The respondents raised a preliminary objection based on Clause (3) of Article 226, as amended by the Constitution 42nd Amendment, arguing that the appellants had an alternative remedy under Section 131 of the Customs Act, making the writ petition non-entertainable. The court found this argument well-founded and inclined to accept it. The appellants referred to a Gujarat High Court decision in A'bad Cotton Mfg. Co. v. Union of India, which suggested that the alternative remedy must be adequate and effective. However, the court found it difficult to read such limitations into Article 226(3), given the purpose of the 42nd Amendment. The court accepted the preliminary objection but chose not to express a final view on it, given the lack of merit in the appellants' case.Judgment:The appeal was dismissed with no order as to costs. The court upheld the findings of the adjudicating and appellate authorities, confirming the liability of the firm and its partners under Sections 111 and 112 of the Customs Act. The court also acknowledged the procedural validity of serving notice to one partner and rejected the appellants' arguments on the merits and procedural grounds.