Import policy restrictions alone cannot justify confiscation; mandatory notice service also created Article 226 territorial jurisdiction.

Import control policy instructions, without backing from a statutory order or notified prohibition, cannot by themselves sustain confiscation under customs law; on that footing, the confiscation, redemption fine and personal penalty were set aside. The Court also held that service of mandatory notices and receipt of consequential orders at the petitioners' Bombay address formed part of the cause of action under Article 226 because such notice was integral to confiscatory proceedings and the petitioners were affected there by payment of fine and penalty. Territorial jurisdiction was therefore upheld in favour of the petitioners.

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Issues: (i) Whether confiscation could be sustained on the basis of an import policy restriction not embodied in a statutory order or notified prohibition; (ii) Whether the Bombay High Court had territorial jurisdiction under Article 226 on the facts of service of notices and receipt of orders in Bombay.

Issue (i): Whether confiscation could be sustained on the basis of an import policy restriction not embodied in a statutory order or notified prohibition.

Analysis: The import was treated by the customs authorities as unauthorised on the footing that the import policy for 1976-77 limited imports to 10% of the face value of the licences. The Court held that such policy instructions do not, by themselves, have the force of law against citizens unless supported by a statutory order or notified prohibition under the governing control legislation. Since the confiscation under Section 111(d) rested only on the import policy and not on any statutory prohibition, the basis for confiscation could not stand. The finding on misdescription under Section 111(m) having already been negatived in revision, the dispute narrowed to the validity of the licence-based import restriction.

Conclusion: The confiscation under Section 111(d) was not sustainable; the finding was in favour of the petitioners.

Issue (ii): Whether the Bombay High Court had territorial jurisdiction under Article 226 on the facts of service of notices and receipt of orders in Bombay.

Analysis: The Court held that notices under Section 124(1) of the Customs Act, 1962 and the consequential orders served at the petitioners' Bombay address formed an integral part of the cause of action because no confiscation or penalty could be made without such notice. The petitioners were also affected at Bombay by payment of the fine and penalty there. On that basis, the service of notices and receipt of orders in Bombay were treated as material facts giving rise to a part of the cause of action within the Court's territorial limits.

Conclusion: The Bombay High Court had territorial jurisdiction to entertain the petition; the finding was in favour of the petitioners.

Final Conclusion: The confiscation, redemption fine and personal penalty were set aside, and the writ petition was entertained within territorial jurisdiction.

Ratio Decidendi: An import control policy, by itself, cannot justify confiscation or penalty unless it is backed by a statutory order or notified legal prohibition, and service of mandatory notice forming an integral part of confiscatory proceedings can create a part of the cause of action for Article 226 jurisdiction.

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