2005 (5) TMI 81 - HC - Customs

Suspension Order Overturned Due to Violation of Natural Justice Principles; Reconsideration Ordered by Court.

The HC quashed the suspension order dated 5th January 2005, finding it violated principles of natural justice due to lack of a pre-decisional hearing and ... Maintainability of the writ petition - Customs House Agent's Licence - Suspension/revocation of licence​​​​​​​ - services of clearing and presenting documents on behalf of the importers/exporters - Violation of principles of Natural justice - ex facie demonstrates - HELD THAT:- In cases where the conduct of the agent is such that it would cause serious prejudice to the public interest as well as violates the provisions of the Act, it may be a case of invoking the provisions of the regulations with immediate effect. The provisions of the Act and the regulations classify different situations. The situations relate to providing of right of hearing in terms of regulation 22 for invoking powers under the regulations 20(1), while in an emergent situation under regulation 20(2) the post-decisional hearing but within the shortest span would be adequate compliance to the principles of natural justice. We must herein emphasise the need on the part of the authorities to no way prolong the order of suspension even by a day than necessary, without granting hearing to the applicant. In the present case, no circumstances existed which would suggest invoking of this emergency provisions without taking recourse to the principle of natural justice. Furthermore, the order does not state, much less specifically give reasons which show proper application of mind by the concerned authorities for arriving at such a conclusion. Even administrative orders should be supported by proper reasons and application of mind. We have already noticed that respondents have raised a preliminary objection to the very maintainability of the writ petition on the ground that the petitioner should take recourse to the alternative statutory remedy of appeal provided under Section 128 of the Act and more particularly under regulation 22(8), which specifically grants right of appeal to an agent against such an order of the authority before the Central Excise and Service Tax Appellate Tribunal. No doubt, an alternative remedy is available to the petitioner under the regulations itself, but that by itself may not be a sufficient ground for dismissing the writ petition because of availability of alternative remedy particularly when the order impugned in the writ petition is passed in violation to the provisions of the regulations and is also clearly against the principles of natural justice. Patent violation of principles of natural justice or basic rule of law would vitiate the order and the proceedings in their entirety It is not an absolute rule of law that availability of an alternative remedy would bar entertainment of a writ petition under Article 226 of the Constitution of India, always and in all circumstances. It is obligatory upon the respondent who raises such an objection to show that remedy is not of onorous character and is adequately effective in the facts of the given case. It should also show that compliance of such alternative remedy would not be a mere formality but would be in consonance with the concept of substantial justice. The existence of an alternative remedy does not per se bar the jurisdiction of the Court under Article 226 but only raises a point for its consideration in the exercise of its discretion. Thus, we would allow this writ petition and quash the order of suspension dated 5th January, 2005. However, the respondents would be at liberty to re-consider the case of the petitioner in accordance with law. Issues Involved:1. Violation of principles of natural justice.2. Interpretation of Regulation 20(2) of the Custom House Agents Licensing Regulations, 2004.3. Issuance of show cause notice under Section 124 of the Customs Act, 1962.4. Arbitrary exercise of power by the Commissioner of Customs.5. Maintainability of the writ petition.Detailed Analysis:1. Violation of Principles of Natural Justice:The petitioner contended that the order dated 5th January 2005 violated the principles of natural justice as they were not granted an opportunity to be heard before the order was passed. The Court emphasized that the principles of natural justice have twin ingredients: a notice to show cause and a reasonable opportunity of being heard, and the order must demonstrate proper application of mind. The Court noted that violation of these principles, especially in quasi-judicial actions, usually renders an order invalid. However, exceptions exist where emergent actions are necessary, provided that a post-decisional hearing is granted promptly.2. Interpretation of Regulation 20(2) of the Custom House Agents Licensing Regulations, 2004:The Court examined the scope of Regulation 20(2), which allows the Commissioner of Customs to suspend a license where immediate action is necessary, even if an inquiry is pending or contemplated. The Court highlighted that this regulation is an emergent provision and should be invoked only in situations requiring immediate action. The Court emphasized the necessity of a post-decisional hearing to comply with the principles of natural justice, ensuring that the suspension order is reviewed promptly.3. Issuance of Show Cause Notice under Section 124 of the Customs Act, 1962:The petitioner received a show cause notice under Section 124 of the Act, which was related to the alleged misuse of the license and violation of its terms. The respondents argued that this notice was issued without prejudice to other actions permissible under the law. The Court observed that no show cause notice was issued under Regulation 22, which outlines the procedure for suspending or revoking a license. The Court found that the respondents' reliance on Regulation 20(2) did not justify bypassing the procedural safeguards provided under Regulation 22.4. Arbitrary Exercise of Power by the Commissioner of Customs:The Court scrutinized the impugned order and found that it lacked specific reasons or circumstances justifying immediate suspension. The order did not indicate proper application of mind or any emergent situation necessitating such action. The Court held that the absence of recorded reasons and the failure to provide a pre-decisional hearing rendered the order arbitrary and invalid.5. Maintainability of the Writ Petition:The respondents argued that the writ petition was not maintainable due to the availability of an alternative remedy under Section 128 of the Act and Regulation 22(8). The Court acknowledged that while an alternative remedy exists, it does not per se bar the jurisdiction under Article 226 of the Constitution. The Court noted that the impugned order violated principles of natural justice and was patently illegal, justifying the exercise of its discretionary jurisdiction. The Court emphasized that an alternative remedy must be effective and not merely a formality, and in cases of patent illegality, the writ jurisdiction can be invoked.Conclusion:The Court allowed the writ petition, quashing the suspension order dated 5th January 2005, and directed the respondents to reconsider the case in accordance with the law. The Court underscored the importance of adhering to principles of natural justice and proper application of mind in administrative actions. The parties were directed to bear their own costs.