2025 (12) TMI 142 - HC - Customs

Writ petitions dismissed as not maintainable; statutory appeal preferred, frivolous writ practice condemned and costs of Rs50,000 imposed

HC dismissed the writ petitions as not maintainable in view of an efficacious statutory appellate remedy. It held that the alleged non-consideration of ... Maintainability of petition - availability of alternative remedy - none of the Petitioners’ contentions or documents in reply to the show cause notice were considered - violation of principles of natural justice - HELD THAT:- The issue of alleged denial of cross-examination, as a reason for bypassing the alternative remedy, has not been strongly argued. The impugned order in this case spans almost 335 pages. Even if the claim of petitioner is accepted that most of the paragraphs reproduce the show cause notice and only about 30 pages of this order address the merits of the case, it is still found, upon reviewing the order, that the Adjudicating Authority has either considered the Petitioner’s arguments or taken into account relevant documents provided by the Petitioner in response to the show cause notice. It is hesitated to go into further detail on this matter, as doing so might prejudice the Petitioners’ right to appeal before the Appellate Authority. Of late, there is an increased tendency to institute Petitions directly before this Court by making false and frivolous averments. In most cases, arguments are advanced without the backing of any pleadings to sustain the same, only to take a chance and, if possible, secure some interim orders. The Petitioners are aware of the pressure on this Court’s docket, and it is often increasingly difficult to take up all the listed matters. In this manner, the interim reliefs once obtained tend to continue for a considerable period of time. In the case of Oberoi Constructions Ltd. Vs. Union of India And Ors. [2024 (11) TMI 588 - BOMBAY HIGH COURT], this Court, examined the issue of exhaustion of alternate remedies in great details. Relying on the reasoning in the said decision and the reasoning in the several precedents referred to therein, we are satisfied that no case is made out to deviate from the practice of exhaustion of alternate remedies in both these Petitions. The Petition dismissed with costs of Rs. 50,000/- in each Petition. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the writ jurisdiction under Article 226 can be invoked to challenge an Order-in-Original under the Customs Act despite availability of a statutory appellate remedy. 1.2 Whether alleged violation of principles of natural justice, including non-consideration of contentions/documents and rejection of cross-examination, justified bypassing the rule of exhaustion of alternate remedies. 1.3 Whether inability or unwillingness to comply with the statutory pre-deposit requirement for filing an appeal can constitute an exceptional ground to maintain a writ petition. 1.4 Whether filing writ petitions on vague, unsubstantiated pleas of natural justice and financial incapacity amounts to abuse of the process of Court warranting imposition of costs. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 & 2: Maintainability of writ petition in presence of statutory appeal; alleged breach of natural justice as an exception Legal framework (as discussed) 2.1 The Court noted that the Customs Act provides a statutory right of appeal against the Order-in-Original and that the doctrine of exhaustion of alternate remedies ordinarily restrains the exercise of writ jurisdiction where such efficacious remedies exist. 2.2 The Court referred to prior decisions, including those in Oberoi Constructions Ltd., Khemchand Uttamchand Bhojwani, and the Supreme Court's decision in Rikhab Chand Jain, which emphasize that High Courts should not entertain writ petitions under Article 226 when effective statutory remedies are available, save in exceptional cases such as jurisdictional error or clear violation of natural justice. Interpretation and reasoning 2.3 The Court observed that the impugned Order-in-Original runs to about 335 pages. Even assuming substantial reproduction of the show cause notice, approximately 30 pages deal with merits, and on perusal, the Adjudicating Authority has either considered the petitioners' arguments or taken into account relevant documents submitted in response to the show cause notice. 2.4 The plea that none of the petitioners' contentions or documents were considered was found to be inconsistent with the record of the adjudication order. The Court declined to undertake a deeper merits review so as not to prejudice the petitioners' statutory appeal rights. 2.5 The ground of denial of cross-examination was noted to have not been strongly argued; further, the main thrust of challenge was subsequently shifted to non-consideration of contentions and financial inability to meet pre-deposit, undermining the seriousness of the natural justice plea. 2.6 The Court distinguished the precedent relied upon (GlobeOp Financial Services), observing that in that case almost none of the noticee's contentions or documents were referred to or considered, whereas here there was a detailed order disposing of the adjudication proceedings. 2.7 It was held that dissatisfaction with the merits or sufficiency of reasoning in the adjudication order is a matter for statutory appeal, and such grievances do not in themselves constitute a ground to invoke writ jurisdiction bypassing the appellate remedy. Conclusions 2.8 The Court held that no exceptional circumstances or clear violation of principles of natural justice were made out to justify deviation from the rule of exhaustion of alternate remedies. 2.9 The writ petitions challenging the Order-in-Original were held to be not maintainable in the face of the statutory appellate remedy under the Customs Act. Issue 3: Inability or unwillingness to comply with pre-deposit requirement as ground to bypass alternate remedy Legal framework (as discussed) 3.1 The Court recorded that the statutory requirement of pre-deposit for maintaining an appeal is mandatory. 3.2 Reference was made to prior decisions (including Oberoi Constructions Ltd. and Khemchand Uttamchand Bhojwani) where vague assertions of incapacity to pay pre-deposit, unsupported by material, were held insufficient to justify entertaining a writ petition; the Supreme Court had declined to interfere with this approach. Interpretation and reasoning 3.3 The Court noted that the real reason for resorting to the writ jurisdiction emerged only at a later stage of arguments, when counsel for the petitioners asserted inability to comply with the pre-deposit requirement, after it became apparent that the natural justice challenge was not impressing the Court. 3.4 Apart from a bare statement from the bar, there was no pleading or material on record to substantiate financial incapacity. The Court held such an unsubstantiated assertion could not be the basis for bypassing the statutory appeal. 3.5 The Court referred to findings in the impugned order describing the petitioners' alleged roles in large-scale smuggling and trade-based money laundering operations involving substantial values of smuggled gold and large financial flows through multiple accounts and dummy entities. Without pronouncing on the correctness of these findings (which were left to the Appellate Authority), the Court cited them to demonstrate the hollowness of the plea that the petitioners could not afford the pre-deposit. 3.6 The Court also adverted to a comparable writ petition by another alleged participant in the same smuggling racket, where a similar plea of inability to pay 7.5% pre-deposit was rejected and the petition dismissed due to lack of supporting material and an affidavit that concealed more than it disclosed. Conclusions 3.7 The Court held that financial incapacity to meet pre-deposit, particularly when asserted only orally and without evidentiary support, cannot constitute an exceptional ground to invoke writ jurisdiction in preference to the statutory appellate remedy. 3.8 The plea of inability to comply with pre-deposit was rejected, and it was held that the petitioners must pursue the statutory appeal with the mandated pre-deposit if they wish to contest the Order-in-Original. Issue 4: Abuse of process and imposition of costs Interpretation and reasoning 4.1 The Court observed an increasing tendency of litigants to institute writ petitions on false or frivolous averments, often without adequate pleadings, as a strategy to obtain interim relief and delay statutory processes, fully aware of docket pressures that impede early final hearing. 4.2 In the present matters, the Court found that: (a) the plea of violation of natural justice was prima facie untenable and deployed mainly to avoid the pre-deposit requirement; (b) the financial incapacity plea was raised late in arguments, unbacked by pleadings or material; and (c) the overall approach reflected an attempt to circumvent the statutory scheme rather than to vindicate any genuine procedural right. 4.3 Relying on the approach endorsed in earlier cases and in line with the principle that exceptional cases must be supported by proper pleadings and material, the Court treated the institution of these petitions as an abuse of the process of Court. Conclusions 4.4 The writ petitions were dismissed as not maintainable and as an abuse of process. 4.5 The Court imposed costs of Rs. 50,000/- in each petition, directed to be paid to the Maharashtra Legal Services Authority within four weeks from the date of uploading of the order.