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Jagannath Dattatrreya Shah Vs. Collector of Central Excise and Customs, Bangalore and anr. - Court Judgment

LegalCrystal Citation
SubjectCustoms
CourtKarnataka High Court
Decided On
Case NumberWrit Petition No. 17851 of 1980
Judge
Reported in1989(20)LC257(Karnataka); 1983(12)ELT233(Kar); ILR1981KAR896; 1981(1)KarLJ387
ActsCustoms Act 1962 - Sections 115(2)
AppellantJagannath Dattatrreya Shah
RespondentCollector of Central Excise and Customs, Bangalore and anr.
Appellant AdvocateB.T. Chhabria, Adv.
Respondent AdvocateU.L. Narayana Rao, Central Government Senior Standing Counsel
Excerpt:
.....to do so a sum of rupees 70,000/- was recoverable from the petitioner and also the security deposit of rs. 5,000/-,nevertheless held that the collector's order had clearly established on evidence that the lorry was liable to be confiscated. this principle is well settled and does not call for any authority to be cited......he could not produce the lorry for reasons beyond his control and therefore his vehicle was not liable to confiscation under the bond and that the order of the 1st respondent, collector was not sustainable inasmuch as, having found him not guilty of any complicity in carrying contraband articles it was not open to the 1st respondent to proceed to make an order under section 115(2) of the customs act, 1962. 4. the 2nd respondent, appellate authority, while allowing the appeal in part reduced the fine in lieu of confiscation to rs. 5,000/-, nevertheless held that the collector's order had clearly established on evidence that the lorry was liable to be confiscated. in other respects the appeal was rejected. aggrieved by the two orders referred to above, the petitioner has approached this.....
Judgment:
ORDER

1. The petitioner on 30-7-1973 was the registered owner of a motor lorry bearing registration No. MHD 8539. It was seized by the officials of the Customs Authorities, Bangalore, on Bangalore-Tumkar Road (about 9 miles from Bangalore) as it was carrying smuggled articles. It was searched and it was found to be carrying some contraband articles valued at Rs. 50,505/-. In the circumstance a mahazar was drawn up and the lorry was also seized and the driver was arrested. In the mahazar the value of the lorry was shown at Rs. 40,000/- however, the Assistant Controller of Central Excise and Customs released the said lorry to the petitioner on his depositing the sum of Rs. 5,000/- in cash and also executing a bond for Rs. 70,000/-. One of the conditions in the bond so executed was that the petitioner would produce the lorry as and when required by the specified Customs Authorities or Courts. Further under the terms of the bond, if he failed to do so a sum of Rupees 70,000/- was recoverable from the petitioner and also the security deposit of Rs. 5,000/- was liable to be forfeited.

2. By a letter dated 12-7-1976 the 1st respondent herein called upon the petitioner to produce the lorry bearing No. MHD 8539 on 22-7-1976. On receipt of the letter the petitioner wrote back saying that the lorry was destroyed on 12-12-1973 at Haveri during riots on account of border dispute between Karnataka and Maharashtra. However, the 1st respondent, by his order dated 18-10-1976 issued on 24-6-1977 ordered confiscation of the petitioner's lorry with permission to redeem the same at Rs. 50,000/-. He further ordered that Rs. 5,000/- deposited by the petitioner as security deposit under the bond should be forfeited towards the redemption fine and the balance of Rupees 45,000/- recovered from the petitioner as the owner of the lorry.

3. Aggrieved by the order of the 1st respondent the petitioner preferred an appeal to the 2nd respondent, Central Board of Excise and Customs, New Delhi, substantially on the two main grounds that he could not produce the lorry for reasons beyond his control and therefore his vehicle was not liable to confiscation under the bond and that the order of the 1st respondent, Collector was not sustainable inasmuch as, having found him not guilty of any complicity in carrying contraband articles it was not open to the 1st respondent to proceed to make an order under Section 115(2) of the Customs Act, 1962.

4. The 2nd respondent, appellate authority, while allowing the appeal in part reduced the fine in lieu of confiscation to Rs. 5,000/-, nevertheless held that the Collector's order had clearly established on evidence that the lorry was liable to be confiscated. In other respects the appeal was rejected. Aggrieved by the two orders referred to above, the petitioner has approached this Court under Art. 226 of the Constitution for redress.

5. Sri B. T. Chhabria, learned counsel appearing for the petitioner has argued that both the Collector and the 2nd respondent Central Board of Excise and Customs erred in law in coming to the conclusion that the lorry was liable for confiscation inasmuch as on the date the order came to be passed the lorry was proved satisfactorily to be non-existent which fact, after investigation was accepted by the 1st respondent as evidence by his order at para 6. When the vehicle used for carrying smuggled or contraband goods was not in existence, the question of confiscation would not arise. It is his argument that what the Revenue could not do directly, it was trying to accomplish it indirectly, by enforcing the terms of the bond executed by the petitioner on 17-8-1973. In terms of clause C of the bond dated 17-3-1973, the petitioner undertook to pay the value of the vehicle at the time of release in the event of the said vehicle being damaged, destroyed or otherwise depreciated in value due to any accident before the completion of investigation and adjudication and therefore when none of the things stipulated in clause C was required to be performed by the petitioner as the lorry was damaged or destroyed or otherwise depreciated in value not on account of any accident or any action on the part of the petitioner but on account of reasons beyond his control inasmuch as the same was destroyed by a rioting mob at Haveri. It is, therefore, learned counsel's argument that under Section 56 of the Contract Act, the contract became non-performable with the result that it was not open to the 1st or 2nd respondent to enforce the bond against the petitioner.

6. There is some force in this argument though Sri U. L. Narayana Rao, learned counsel appearing for the respondents has resisted the same. Mr. Narayana Rao's argument is that it is a voluntary undertaking given by the petitioner and in terms of clause C, even the rioting could be included within the expression 'any accident' and therefore, the contract was enforceable in so far as the Department is concerned.

7. It is difficult to accept this argument. In clause C of the bond 'any accident' referred to is undoubtedly to a road accident which would have the effect of damaging, destroying or depreciating the value of the vehicle and not events such as floods, rioting, war, earthquake, fire and such acts of God or force majeure which would render the performance of the contracts impossible to one of the parties. Both the 1st and 2nd respondents have overlooked this aspect after recording a finding of fact that the vehicle in question was destroyed at Haveri in a rioting on account of the border dispute between Karnataka and Maharashtra. If the term in the contract is incapable of performance and can be avoided lawfully by the party whose performance has become impossible on account of an act of God or by an event which was beyond his control as in the instant case, then the penal provisions of that contract cannot be enforced against him. This principle is well settled and does not call for any authority to be cited.

8. I have already stated that the destruction of the lorry in question by a rioting mob had made it impossible for the Department to confiscate the vehicle. Therefore, the question of making an order of confiscation under Section 115(2) of the Act would not arise in this case at all. To that extent the petitioner's argument must be accepted. Whether in the instant case, had the lorry existed it was liable to be confiscated need not be gone into as there is no specific pleading in that behalf. As the petitioner is getting relief in this Court on account of the view I have taken in regard to enforcement of the term in the bond it is unnecessary to embark on any investigation as to whether the lorry in question if it existed was liable for confiscation. No doubt a ground has been urged by the petitioner that the entire proceedings against him were vitiated inasmuch as the seizure of the vehicle and the subsequent proceedings were illegal inasmuch as the spot mahazar of the seizure was not done at the place of interception on Tumkur Road but at the office of the 1st respondent. This, no doubt, would require investigation of facts and the records. This matter was argued on the understanding that it would be decided on the pure question of law as to application of Section 56 of the Contract Act to the bond executed by the petitioner and not in regard to the other matters raised in the petition. Therefore, it is unnecessary to say anything more on this aspect of the case of the petitioner.

9. For the above reasons, the petition is allowed. The rule is made absolute. The order of Central Board of Excise and Customs in which the order of the 1st respondent stands merged in so far as it affects the petitioner to the extent of forfeiture of deposit, is quashed.

10. If that forfeiture cannot be effected on account of Section 56 of the Contract Act, then that amount is liable to be returned to the petitioner. Accordingly, if an application is made by the petitioner, the 2nd respondent should cause refund of the amount of Rs. 5,000/- to the petitioner. It shall not carry any interest.

11. In the circumstances of the case there will be no order as costs.


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