1. These three appeals arise out of three writ petitions which were heard at the same time although separate judgments have been pronounced therein. They arise out of the same transaction. Some of the questions raised and argued in those appeals are common.
2. The appellant in Writ Appeal No. 321 of 1968 impugn the validity of the order of the Collector of Customs whereby a penalty of Rs. 25,000/- has been levied. The application made by the petitioner under Article 226 was rejected by our learned brother Ekbote, J. who dismissed the other writ petitions also. Hence the appeals.
3. On 7-9-1963 the movements of two persons, who on detraining at Sanathnagar Station, were found to be going along the Railway Track towards the signal post, excited the suspicion of the Customs authorities who appeared to have been previously alerted about their arrival. They were detained and interrogated and a search followed. One of the two persons called Sare Veerayya, was found to be carrying ten slabs of gold each weighing ten tolas. The gold slab were concealed in a cloth bag tied round his waist. His answer when he was interrogated and also his statements were recorded. He gave a detailed version of his antecedents: his employment in the firm of Ramachander and Co., his trip to Bombay along with Lakshminarayana, their errand at Bombay , the purchase of gold at that place and their return journey. It was almost at the journey's end that he was apprehended along with his companion and the search revealed the secreted gold tied to his waist.
4. The other person Lakshminarayana also set out in writing the details of the errand on which he and veerayya had set out their journey. He owns a small business in partnership with one Gyaneswar. The shop is situate in the same building in which Ramachander & Co. is located. He was aware that Veerayya was ringing money given to him by a clerk of Ramachander and Co., with instructions that gold should be purchased at Bombay. He owns to his knowledge that the gold that was to be brought from Bombay was smuggled gold. On arrival at Bombay he and Veerayya were taken by an intermediary to the seller of the gold. After purchase of the gold they set out on their return journey. The reason for alighting at Sanathnagar Station was that he and his companions were afraid that if they proceeded direct to Hyderabad or Secunderabad they might be spied upon and the transport of the smuggled gold might be detected.
5. The ten slabs of gold were seized by the Customs authorities as they bore markings indicative of foreign origin. The purity of gold was also a tell-tale feature pointing to the same conclusion. A panchayatnama was prepared and it was attested by independent witnesses. The seizure of the gold was done because of the reasonable belief of the Customs authorities that the gold was smuggled into the country in contraception of the relevant statutory provisions . After further investigations it became clear to the authorities that Sare Veerayya lacked the necessary means for the purchase of gold. It was also evident that he was an employee of the firm Ramachander and Co. The versions of the said two persons was that they were deputed by Namdev, an employee of the firm under instructions of Gyanoba Yashwant Jadav, a partner of the firm and funds were supplied by the firm. A case was registered against all the persons concerned and in due course there was an adjudication by the Collector of Central Excise by his order dated 23-11-1963. The gold slabs were confiscated and penalties were imposed on all the four individuals against whom proceedings were launched. The partner of the firm who is the appellant in this appeal was subjected to a penalty of Rs. 25,000/-, Namdev , the employee of the firm to a penalty of Rupees 10,000/- and Lakshminarayana and Veerayya to penalties of Rs. 9,000/- and Rs. 6,000/- respectively.
6. The appellant preferred an appeal to the Central Board of Excise and Customs , but the appeal was rejected on the ground of non-compliance with the requirement of Section 129 of the Customs Act, 1962. The appellant then preferred a revision petition to the Government of India which also proved unsuccessful. The dismissal of the revision petition by the Government of India dated 21st December , 1965 was followed by a proceeding under Art. 226 of the Constitution. The Writ Petition No, 413 of 1966 was dismissed as stated above by Ekbote, J.
7. In his writ petition No. 764 of 1966 Namdev contended inter alia that the entire enquiry before the Collector of Central Excise is devoid of jurisdiction. He did not pursue his appeal to the Central Borad of Excise and he failed to comply with the requirement of deposit of the amount levied as penalty. The appeal was summarily rejected and the revision petition to the Government of India evoked a negative reply. The writ petition having been dismissed, he also has preferred an appeal.
8. The third appeal before us arises out of the writ petition presented by Lakshminarayana.
9. In the judgment under appeal, Ekbote, J. pointed out that the writ petition could be disposed of on a short point. The statute provides a remedy subject to the condition, that nay person desirous of appealing against the order of penalty shall , pending the appeal , deposit with the proper officer the penalty levied. The provisio to sub-section (1) of S. 129 enables the appellate authority in its discretion to dispense with such deposit, either unconditionally or subject to such conditions as it may deem fit. The discretion may be exercised by the appellate authority if , in its opinion, the deposit of the penalty levied will cause undue hardship to the appellant. In the instant case, the Central Board of Excise by its letter dated 18th February, 1964, called upon the appellant in Writ Appeal No. 321 of 1968 to deposit the amount levied as penalty within 15 days failing which the appeal was liable to be rejected. The appellant filed an application requesting the Central Board of Revenue to decide the appeal without insisting on the deposit. Presumably after considering the request of the appellant, the Board directed the deposit of half of the amount levied as penalty. The appellant failed to comply with the direction but sought reconsideration of his request by the Board. The Board rejected the appeal because of the appellant's failure to deposit the amount even though sufficient opportunity was given. The Government of India found no reason to interfere with the appellate order which in their opinion was correct in law and was based on facts. The rejection of the appeal by the Central Board of Excise and Customs in the other two cases was based on the identical reason and the rejection of the revision petition by the Government of India also rested on the same ground in all the cases.
10. It is obvious that the Legislature has not conferred an unconditional right of appeal. No doubt is open to the Central Board of Excise and Customs to waive the deposit if, in their opinion, the insistence thereon is likely to produce hardship. The discretion in that respect is vested in the Board. In the cases on hand they were called upon to exercise the discretion to exempt the appellants from the requirement as to deposit. The Borad on a consideration of the request chose to waive the requirement of deposit partially. It is not clear whether the partial exemption was granted in only one case of in all the three cases of appellants. But the fact remains that the benefit of the partial waiver was not availed of. The result was that the appeals were rejected. In this context Ekbote, J. observed:---
'Having failed to effectively avail of the remedy available to him under the statute, he cannot now come to this Court and seek the assistance of Art. 226 of the Constitution. The plea that the appeal should not have been disposed of upon that ground, was not accepted even by the Central Government on revision.'
11. The learned Judge proceeded to say that if the writ petitioners failed to avail themselves of the remedy, it was due to their own faults and it was not open to them to come to this Court and ask for a re-examination of the questions which could have been legitimately considered by the Appellate Tribunal. Having expressed his view in that form, the learned Judge, nevertheless, found that there was no merit in the contentions raised by the Writ Petitioners. However, the only contention finally urged before the learned Judge was that the Collector of Central Excise has acted in breach of the principles of natural justice.
12. As the argument before Ekbote, J., was circumscribed to the solitary submission concerning the alleged violation of the principles of natural justice, it is unnecessary for us to consider elaborately the larger question posed before our learned brother, viz., whether all or any of the other points urged in the appeal before the Central Board of Excise could be made the ground of attack in the proceeding under Art. 226.
13. The proposition of law appropriate to the case on hand is stated in these terms in A. V. Venkateswaran v. Ramchand Sobharaj Widhwani, : 1983ECR2151D(SC) . The existence of an alternative remedy is no bar to be entertained of a portion under Art. 226. Unless there was a complete lack of jurisdiction in the authority or an officer to take the action impugned, or the order in question has been passed in violation of the principles of natural justice, the alternative remedy will ordinarily be a decisive factor for the dismissal in limine of the writ petition. The two exceptions stated above or by no means exhaustive. It is recognised that a discretion is vested in the High Court to entertain the writ petition and grant the petitioner no relief sought notwithstanding the existence of an alternative remedy. But if the petitioner has disabled himself from the pursuit of the statutory remedy by his own fault, in not doing what is required of him within the time allowed, he cannot certainly be permitted to urge the self induced frustration as a sufficient ground for widening the scope of the writ so as to make it a lis virtually before an appellate forum. The Judicial review under Art. 226 does not get enlarged merely because the writ petitioners would not or could not utilise the remedy of appeal. At page 150 in the case cited above, Rajagopala Ayyangar, J. observed a follows:
'If a petitioner has disabled himself from availing himself of the statutory remedy by his own fault in not doing so within the prescribed time, he cannot certainly be permitted to urge that a ground for the Court dealing with his petition under Art. 226 to exercise its discretion in his favour.'
14. Some of the questions urged before us bearing on the alleged procedural irregularities ought to have been presented to the tribunals constituted under the Act to review the order of the Collector of Excise and customs. Though the discretion to entertain the application under the Art. 226 may be exercised in favour of the petitioners it is obvious that the grounds of review in this proceeding are necessarily limited. The impugned order can be quashed only if it is established that the tribunal either lacked jurisdiction or that there were such procedural irregularities, as were tantamount to the denial of the rules of natural justice or a fair hearing.
15. There is no dispute that the Collector of Customs and Excise did have the competence to initiate the proceedings against the appellants. The only question therefore is whether the grievances of the appellants that, there had been a breach of the rules of natural justice, are well founded.
16. The main contention urged on behalf of the appellant in writ Appeal No. 321 of 1968 is that there was a denial of a fair hearing as Lakshminarayana and Veerayya were not called to the witness stand to enable their version to be rested by cross-examination. The action was initiated under the provisions of Section 112 read with clause (b) of Section 111. The latter provision reads as follows:---
'111. The following goods brought from a place outside India shall be liable to confiscation-------
x x x x x (b) any goods imported by land or inland water through any route other than a route specified in a notification issued under Cl. (c) of Section 7 for the import of such goods;' x x x x x
17. Under Section 112, any person who acquired possession of or is in any way concerned in carrying, removing, depositing, harbouring, keeping, concealing, selling or purchasing, or in any other manner dealing with any goods which he knows or has reason to believe are liable to confiscation under Section 111, shall be liable to the penalties specified in the section. The short question is whether the Collector of Customs and Excise did not have sufficient material before him to come to the conclusion that the appellant in W. A. No. 321 of 1968, Gyanoba, comes within the purview of Section 112(b).
18. As stated above the gravamen of the charge is that the two persons Veerayya and Lakshminarayana were not called for the purpose of cross-examination. The statements of the two persons were furnished to Gyanoba along with the notice issued by the Collector o 12th September, 1963. The notice referred to the belief of the Collector that Gyanoba was concerned in the purchase at Bombay of the contraband gold and the subsequent removal by the two persons chosen for the purpose. The gold was found secreted around the waist of Veerayya. This is a fact admitted by the latter and proved by the contemporaneous record attested by panchayatdars. That the gold bars in question were found concealed on the person of Veerayya, cannot be controverted. Copies of the statements of Veerayya and Lakshminarayana were furnished to the appellant along with the panchanama dated 7-9-1963. The collector of Excise and Customs does not function as a Court. The Technical rules of the Criminal Procedure Code and Evidence Act are inapplicable to him. Mr. G. V. R. Mohana Rao, appearing for the appellant does not contend that the provisions of Criminal P. C. or Evidence Act were applicable to the enquiry before the Collector of Customs. But he submits that the rules of natural justice have been transgressed inasmuch as the two persons whose statements were recorded in the absence of the appellant ought to have been made available at the inquiry for cross-examination.
19. Though an attempt was made at the commencement of the argument to sustain the position that the statements of the two persons mentioned above are altogether inadmissible in evidence, the learned counsel did not persist in the argument when it was pointed out that the statement were recorded by the officers belonging to the Excise Department and are consequently admissible. In fact the position is concluded by a decision of the Supreme Court to the effect that the Customs Officers are not police officers and statements recorded by them are admissible in evidence.
20. Though the statements were furnished to the appellant Gyanoba, no request appears to have been made to the Collector of Customs that facility for the cross-examination of the persons should be afforded. There was no intimation by counsel to the Collector of Customs that Gyanoba desired to have the version recorded in the statements tested by cross-examination. The use of the statements at the inquiry was not demurred to. There was no protest to the use of the material at the inquiry on the ground that the statements could be relied upon except after cross-examination of the persons concerned.
21. In support of his contention that the statement of Veerayya and Lakshminarayana ought not to have been acted upon, counsel called our attention to several cases of departmental enquiries in disciplinary proceedings against Government Servants. Reliance has been placed among other cases on Khem Chand v. Union of India, : (1959)ILLJ167SC . It was held in that case that the reasonable opportunity envisaged by the provisions of Art. 311 includes an opportunity to defend himself by cross-examination the witnesses produced against him. Decisions to the same effect in other cases were also pressed into service by learned counsel. We are by no means satisfied that the procedural requirements that govern the departmental of inquiries under Art. 311 are applicable in the same measure in regard to the inquiries by the other tribunals, though of quasi judicial nature. It must be remembered that the Constitution has made it a pure-condition for dismissal etc. of a Government servant that there should be an inquiry held against the officer concerned in which he ought to be informed of the charges against him and he should be given a reasonable opportunity of being heard in respect of those charges. It is evident from the provisions of Art. 311(2) that what is obligatory is the formulation of charges and inquiry into the charges. The evidentiary matters in support of the charges as also in rebuttal thereof constitutes the material on the basis of which findings have to be arrived at. It will therefore be appreciated that the decisions which define the scope of the inquiry under Art. 311 must be understood in the light of the specific requirement of the Constitution that charges should be framed and inquired into after affording an opportunity of being heard to the person against whom the charges are framed. We are accordingly of opinion that the ratio decided of cases decided under Art. 311 in so far as it is based on the need for the cross-examination of witnesses does not govern the case on hand.
22. In State of Mysore v. Shivabasappa, : (1964)ILLJ24SC it has been laid down that domestic tribunal exercising quasi-judicial functions are not courts and therefore they are not bound to follow the procedure prescribed for trial of actions in Courts. Nor or they bound by strict rules of evidence. The can, unlike Courts, obtain all informations material for the points under enquiry from all sources, and though all channels, without being fettered by rules and procedure which govern proceedings in Courts. The only obligation which the law casts on such tribunals is that the information of which they are cognizant should be put to the party against whom it is sought to be used. It is not the method of obtaining the information that is subjected to restraint. It is the use thereof that is conditioned by the requirement that the person against whom it is sought to be used should have an opportunity to explain the adverse features of the information sought to be used against him. Whether a fair opportunity in this regard has been given or not would depend upon the facts and circumstances of each case. Where such opportunity has been given the proceedings will not be open to attack on the ground of procedural irregularity.
23. Where cross-examination of the person whose statement are sought to be used, the request, if rejected will offend the norms of fair hearing. In the instant case no such opportunity was asked for either in the written reply to the notice or at the inquiry. The appellant had an opportunity of explaining the adverse features in the statement of Veerayya and Lakshminarayana. The tribunal had considered the explanation as also the other material made available to it. On a consideration of the entire material the tribunal came to the conclusion that the goods in question come within the ambit of clause (b) of Section 111 and that Gyanoba was concerned with the purchase and the concealment of the goods, which he knew were liable to confiscation.
24. The criticism of learned counsel is that the statement of Veerayya and Lakshminarayana ought not to have been made part of the record of the inquiry unless they were examined afresh at the time of the enquiry. The appellant or his counsel as pointed out earlier did not ask for an opportunity to cross-examine the persons that gave the statements. The appellant was made aware of the crucial fact that it was on the strength of the two statements that he was called upon to show cause against the levy of penalty and confiscation of the goods. We are unable to accede to the proposition that it is for the tribunal to extent an invitation to the counsel or the party concerned to cross-examine the persons whose statements were used against him. In the circumstances it was up to the appellant or his counsel to ask for the facility of cross-examination. They did not ask for it. The inference that the appellant and his council did not think it necessary to test the veracity of the statements by the method of cross-examination. The appellants must be held to have waived the right of cross-examination. It is not open to him to remain passive at the inquiry without asking, when he might or ought to have, for the examination of the persons whose statements were taken cognizance of, and in this proceedings under Art. 226 to complain that the use of statements untested by cross-examination vitiates the inquiry. The acceptance of that plea would imply that the tribunal owes a duty to the persons charged with the transgression of law to alert them about the possible adverse effect of the statements on their defence and to prompt of compel them to exercise the option in a particular way. We do not conceive such to be the function or the obligation of the quasi judicial tribunal which is not governed by the technical rules of evidence.
25. The erroneous refusal or admission of evidence by a tribunal that is obliged to observe the rules of the evidence is an error of law. However, we are not concerned here with the use of evidence in contravention of the rules applicable thereto. The tribunal is not under a constraint to apply technical rules of evidence. It has acted in conformity with the procedure that was upon to it. The test is whether there is any error that offends the rules of natural justice.
26. In analysing the process adopted by the tribunal the question arises; Did a factual situation exist, which comes within or without the limits of the category or standard prescribed by the statute. The questions that fell to be determined related to the standard prescribed by Section 111 and 112 of the Customs Act, 1962 (referred to herein as the Act). The primary facts about which the tribunal had to be satisfied, were firstly whether, the goods could be brought within the class specified in clause (b) of section 111 and, secondly whether the persons charged with the violation of law were concerned in carrying, purchasing, concealing or in any other manner dealing with the goods.
27. It was manifest that the gold slabs bore marks of their foreign origin. That the slabs were found concealed in a bag tied round the waist of Veerayya cannot be doubted for a moment. The admission of Veerayya and the Panchnama afford clinching proof, thereof. It was urged that the data bearing on the department's enquiries concerning the character of the gold were not made available to the appellant. During the course of the enquiry the basis on which the proceedings was initiated viz., that there was a prima facie case for holding that the gold had been illicitly brought into the country was not challenged. Neither the certificates of the mint master nor the letter of the Reserve Bank of India were questioned and the facts stated therein were implidely if not expressly, admitted as true. The tribunal was therefore justified in findings that the goods were liable to be confiscated under Sec 111. In fact the action of the department confiscating the gold bars is not challenged by the appellant. Section 123 places the burden on the persons from whose possession the goods were seized in the reasonable belief that they are smuggled goods, to establish the contrary. The rebuttal has not been attempted and on the contrary there are admissions of Veerayya and Lakshminarayana which place the matter beyond doubt.
28. The next point that had to be determined by the Tribunal was about the part played by each of the persons. The appellant Gyanoba admitted in his statement that he was managing the affairs of the firm Ramachander and Co, and that Namdev was related to the partners and was not treated merely as an employee receiving wages. He admitted that Veerayya was their employee but coupled it with a statement that he left a short time earlier for an undisclosed destination. He admits that he visited Veerayya when the latter was kept in custody. The tribunal was justified in its inference that Veerayya continued to be in the service of the firm. It if not necessary for us to recapitulate all the facts that show that Namdev was instructed to give the funds to Veerayya and that the purpose of the trip was to by smuggled gold. The conclusion that the appellant was concerned in the purchase and concealment of the gold slabs, is fortified by adequate material. Veerayya had no means of his own and was a petty clerk on a salary of Rs. 50/-. His association with the firm is admitted though the admission is sought to be qualified. Namdev was a person in whom the partners had full confidence. He made contradictory statements and tried to go back on his admission that Veerayya was working in the firm till the date of his departure for Bombay. There is no reason to discredit the statement made in the first instance that there is no unauthorised absence or abstention from duty during the week commencing from 29th August, 1963. The attendance Register was not considered reliable, and in our opinion, rightly. It contained no entry in regard to the other employees too, after 29-8-1963, and it is nobody's case that all the other employees abstained from work.
29. As pointed out by the tribunal, the very fact that the appellant took the trouble of going to the Central Excise Office soon after the seizure of goods furnishes a clear evidence of his interest in the transaction and his concern for the two persons kept in custody. The tribunal chose to accept in their entirety the statements of Veerayya and Lakshminarayana. We are unable to find any error of law or any element of perversity in the acceptance of the testimony of the two persons and in the inference drawn. The tribunal thought that even without invoking the aid of the provisions of section 123 of the Act the complicity of the appellant in the transaction was made out. We are not impressed by the criticisim of the learned counsel that the view of the tribunal is vitiated by errors that call for interference.
30. Before Ekboate, J., it was contended that there has been a violation of the rules of natural justice in acting upon the statements of Namdev and Veerayya's wife inasmuch as the copies thereof were not furnished to the appellant. The learned Judge rejected the contention. Copies were not asked for during the enqiry. Apart from that, on a perusal of the order of the Collector of Customs and excise, our learned brother came to the conclusion that the tribunal's findings were not in any material sense attributable to the use of the statements of Namdev and Veerayya's wife. We see no reason to take a different view of the matter. As pointed out by us earlier, the statements of Veerayya and Lakshminarayana as also the admission of the appellant himself constitute sufficient foundation for the findings.
31. An elaborate argument has been addressed by counsel to make out that the inquiry has not been conducted in conformity with rules of natural justice. The essential or the primary rules are that no man shall be a Judge in his own cause and that no person shall be condemned unheard. The latter proposition is embodied in the rule audialteram partem. It requires that both sides should be heard fairly and reasonably. In the instant case there has been no breach of the rule audi alteram partem. Adequate facilities to defend himself and also to explain every feature of the transaction that was prejudicial to them were given to all of the appellants. The authority charged with quasi judicial functions is at liberty to make enquiries on its own and collect evidence which is considered relevant. In the present case the material that was sought to be used against the persons charged offences under the Customs Law was not kept concealed from them. In fact the appellants have adduced evidence intending thereby to meet or explain the circumstances that were adverse to their defence. We are consequently of the opinion that the quasi judicial tribunal did not use any material contrary to the rules of natural justice. There was ample opportunity furnished to the appellants to controvert or explain the circumstances or facts prejudicial to them emerging out of all the statements given by various persons . There is no substance in the plea that by the ommision of the tribunal to give copies when no request therefor was made renders the enquiry void. Nor is there any error apparent on the face of the record. There is consequently no substance in the plea that there has been an infringement of the rules of natural justice.
32. An additional affidavit has been filed in Writ Appeal No. 413 of 1966 to make out a plea that there was no notification by the Government under Section 8(1) of the Foreign Exchange Regulation Act imposing restrictions in the import of gold. It was further pleaded that the import, if prohibited, might be penalised only under Section 23 of the Foreign Exchange Regulation Act and that Collector , Central Excise has no jurisdiction to decide whether an offence under that Regulation has been committed. It was further pointed out that Section 23(a) of the Foreign Exchange Regulation Act in the unamended form refers only to the provisions (see Customs Act) which were repealed on 1-2-1963. It was hence argued that Section 23(a) cannot be invoked in this case and that the customs authorities have no right to levy any penalty for the alleged violation of the provisions of Foreign Exchange Regulation Act.
33. The pleas set out in the additional affidavit do not appear to have been argued before Ekbote, J. The point apparently was not argued before Ekbote, J. However in the grounds of appeal a complaint appears to have been made that the learned Judge should have permitted the petitioner to raise the question regarding the inapplicability of the procedure under the Customs Act. No reference , however to the of the counsel to advance the plea or the refusal of the learned Judge to allow it to be raised is discernible from the judgment of the learned Judge. If the learned Judge declined to leave to the appellants to raise the plea not raised at the inquiry , it was for valid reasons that the new plea was disallowed. We are by no means satisfied that the contention that the tribunal lacked jurisdiction is well founded. It ought to have been raised before the Tribunal but it was not. The violation of law with which the appellants were charged has relevance to the provisions of the Customs Act. The view of the tribunal that the gold was liable to be confiscated under S. 111 of the Act is not devoid of factual basis. There is ample evidence to warrant the view taken by the Tribunal that the goods in question were liable to be confiscated under Sec. 111 and hence the penalties under Section 112 were attracted.
34. The further question is whether the levy of the penalties by the tribunal is arbitrary and unreasonable and hence is liable to be set aside. The value of the gold that was confiscated was of the order of Rupees 6,250/- (valued at the international price of gold as stated in paragraph 24 of the counter affidavit). Under Section 112 it is within the discretion of the tribunal to levy a penalty not exceeding five times of the value of the goods or Rs. 1,000/- which ever is the greater. In some decided cases it has been held that where more than one person are involved in the transaction , each can be penalised to pay a penalty not exceeding five times of the value of the goods is separately applicable to each one of the persons concerned in the transactions. In the instant case the penalty came to a total of Rs. 50,000/-.
35. The statute gives a wide discretion to the tribunal to determine the penalty. It can scarcely be doubted that the power to levy penalty must be exercised according to the canon of judicial discretion. It is not arbitrary power that is vested in the Collector of Customs. It is incumbent on him to take into consideration all aspects of the case before the penalty is determined. There is no indication as to the basis on which the collector has proceeded to make the levy. Namdev was virtually the employee of the firm though he was not paid wages and he was subjected to pay a penalty of Rupees 10,000/-. Veerayya who had no means of his own and who was a petty clerk with meager salary of Rs. 50/- per month was made liable in sum of Rs. 6,000/-. Lakshminarayana, no doubt, was unconnected with the firm either as partner or as employee. But the finding of the tribunal is that he was put on the errand by Namdev at the instance of the partners. Despite the fact that the aggregate amount of Rs. 50,000/- was payable by four persons, there can be little doubt that it was virtually a levy of the penalty on the firm or on Gyanoba who represents the firm. Viewed in this light , the penalty must be held to have been imposed on a single person and in excess of the statutory limit.
36. Apart from the circumstances indicative of the excessive nature of the penalty as pointed out above, it is manifest that the levy has been made in an arbitrary fashion. One does not get any inkling into the reasons that weighed with the tribunal in deetermining the range of the penalty or the apportionment among the several persons concerned in the transaction. One can understand that partner being made liable for a comparatively heavier penalty. But one fails to see why Namdev who merely acted at the behest of the partners and who had no further part in the transaction should have been penalised at all. Even if there was a justification for levying penalty , the amount in his case is altogether disproportionate to the part played by him. Likewise the amounts which Verrayya and Lakshminarayana have been called upon to pay bear no rational proportion to their complicity or culpability. One was a man of straw and the other a man of small means. Their role in the transaction must be attributed to the temptations held out to them by the primary scheming party who must be held liable for the entire transactions. We are clearly of opinion that no thought has been given by the tribunal to the assessment of the penalty and no rational basis therefor is disclosed.
37. As stated by us earlier, the Legislature has conferred on the person making adjudication under Section 112 a judicial discretion in the levy of the penalty. The naked and irrational exercise of the power cannot be upheld. The primary purpose of levying the penalty is to make the levy a deterrent and not to treat the punishment as retributive. The principle, undoubtedly, underlying the levy of the penalty is to make it a deterrent factor so that the offence may not be repeated. The past conduct of the persons concerned is certainly a relevant factor in determining what amount of penalty would be appropriate. It is not borne out by the record that the firm , the primary party in the episode , was engaged in similar activities at any earlier point of time. If this was the first occasion on which the firm has indulged in the nefarious activity it appears to us that the penalty was far too exorbitant and oppressive than that what the circumstances warrant. In the absence of any clear indication that canons appropriate to the determination of penalties shaped the decision of the tribunal, we must hold that the measure adopted was arbitrary.
38. It is well recognised that judicial review is not confined to the question whether the competent authority has kept within the four corners of the Act and whether it has acted in good faith. The Courts will pursue the enquiry further and will use judicial review for determining whether the repository of a discretion although acting in good faith has not abused its power by an excessive or oppressive use thereof on irrelevant grounds or without regard to relevant considerations or with gross unreasonableness. The discretion committed to the authority functioning under Section 112 of the Act is a judicial or qualified discretion and is amenable to correction in the event, among other things , of the unreasonable or patently unjustifiable exercise of the power. Accordingly we quash that part of the order of the Collector of Customs. The Collector of Customs will now reconsider the matter and levy appropriate penalty or penalties in the light of the observations made herein. The writ appeals are allowed in the manner indicated above. The parties will bear their respective costs throughout.
39. Order accordingly.