2025 (6) TMI 2097 - HC - Customs

Seized gold jewellery refund and release dispute; court orders interim payment of sale proceeds while market-value claim remains contested

Entitlement to release and refund of seized personal effects (gold bangles) was contested after the customs department secretly sold the jewellery in ... Entitlement to release and refund for seized personal effects - gold bangles - exemption under the Baggage Rules, 2016 - confiscation under the Customs Act - writ jurisdiction under Article 226 of the Constitution - HELD THAT:- As can be seen from the above order [2025 (5) TMI 2025 - DELHI HIGH COURT], the Court had, after giving a detailed hearing to the parties, directed release of the gold items to the Petitioner. However, to the utter shock of the Petitioner and to the consternation of this Court, we have been informed that the gold bangles were disposed of way back in the year 2021. This fact was completely concealed from this Court, when the final order was passed for release. On a query from the Court, it is submitted by ld. SSC that the amount that would be paid to the Petitioner, would be the amount which was recovered from the sale in the year 2021 and not the present market rate of Gold. This position is not acceptable to the Petitioner and rightly so, inasmuch as, the value of gold has substantially increased in the last four years and even when the Petition was finally disposed of, this fact was not communicated to the Court. The Court directed issuance of notice, ordered the admitted sum to be paid to the petitioner on production of documents as an interim measure, and required the Customs Department to file a detailed counter-affidavit; the interim payment is subject to final adjudication on whether the petitioner is entitled to market value or interest arising from the undisclosed disposal of the seized jewellery. Issues: (i) Whether the Petitioner is entitled to payment for the disposed gold bangles and, if so, whether the Customs Department must pay the present market value or only the amount realised on sale in 2021; (ii) Whether interim relief should be granted directing payment by the Customs Department pending final disposal and whether the Department must file a detailed counter-affidavit addressing non-communication of disposal and related aspects.Issue (i): Whether the Petitioner is entitled to payment for the disposed gold bangles and the correct measure of compensation (market value or sale proceeds).Analysis: The Court noted that the gold bangles had been ordered released by earlier directions but were disposed of in 2021 without disclosure to the Court. The Customs Department admitted liability to pay an amount recovered from sale but proposed payment only of the 2021 sale proceeds. The Court observed that the value of gold has substantially increased since 2021 and that questions of communication prior to disposal, entitlement to market value, and interest require detailed factual and legal response from the Department in a counter-affidavit.Conclusion: The Court did not finally determine whether market value or sale proceeds is the correct measure but directed interim payment of the amount admitted by the Customs Department, leaving determination of entitlement to market value and interest to final adjudication.Issue (ii): Whether interim relief should be granted and whether the Customs Department must file a detailed counter-affidavit addressing disposal and related issues.Analysis: The Court found prima facie that disposal ought to have been communicated and that several factual and legal aspects (notice prior to disposal, nature of jewellery as old personal effects, entitlement to market value or interest) remained unresolved. In view of the admitted amount and the need to protect the Petitioner's interest pending final adjudication, the Court ordered interim payment and issued notice requiring a detailed counter-affidavit within a fixed time.Conclusion: The Court directed the Customs Department to pay the amount admitted within two weeks (subject to specified documents) and to file a detailed counter-affidavit within four weeks; these directions constitute interim relief while the substantive issues remain to be finally decided.Final Conclusion: The writ petition is partly allowed by granting interim relief in favour of the Petitioner (payment of the amount admitted by the Customs Department) while preserving the Department's right to contest entitlement to market value, interest and other reliefs; the matter is listed for further hearing on the specified date.