(1) By this petition under Articles 226 and 227 of the Constitution of India, and the connected petition, being C.W.P. No. 4038 of 1982, Jain Exports Private Limited, a company, inter alia, carrying on business of imports and exports, and R. K. Jain, its Managing Director, for short, the petitioners, challenge the validity of two orders of the Collector of Customs, Ahmedabad, confiscating industrial coconut oil, imported by them against 11 import licenses, of the redemption fine of 5 crores imposed on them and of the proceedings leading thereto, including the show cause notices issued to them at the initiation of the proceedings.
(2) Courts are primarily concerned with the questions in controversy before them, whether of facts or of law, confined to the material properly brought on the record of proceedings uninfluenced by the antecedents of parties, the nature of their activities outside the transactions in dispute, their conduct in spheres and activities with which the court is not directly concerned, their reputations generally and/or the controversies in which parties may be individually involved or with each other elsewhere. This is intended to ensure a fail and impartial adjudication of matters in controversy before the court and to safeguard against any possible bias or extraneous material influencing the judicial mind, particularly, where some of the extra-judicial influence may be based on material which has not been subjected to closer scrutiny or otherwise appropriately sifted. Such a course is absolutely indispensable to ensure the judicial vision is not allowed to be blurred by extraneous considerations.
(3) These are, however, cases of a rather controversial nature, involving equally controversial litigants and it is, thereforee, necessary to notice some of the salient features which lent an unusual character to the impugned orders, the impugned transactions as also to the petitioners, who are understood to have left a trail of controversy in some of the fields in which they operated in the past and are currently operating, not excluding the corridors of the Central Government and even the precincts of this court.
(4) Jain Exports Pvt. Ltd. and its sister concern Jain Shudh Vanaspati Ltd..though of comparatively recent origin in business as manufacturers, importers and exporters, have, during the last decade, considerably expanded and even earned some notoriety and have been at the centre of legal, as well as political, controversies. They are stated to have had considerable business dealings in Singapore and other places and according to a front page exposure in a national weekly in its recent issue were involved in the well-known incident of fake loading of cargo in a couple of ships which are said to have mysteriously disappeared on the high season way to India pursuant to a criminal conspiracy to which a large number of businessmen belonging to Singapore and India were said to be parties. There was a furore in Parliament after the publication of the aforesaid issue when it was alleged that 25000 copies of the aforesaid magazine were destroyed at the intervention of someone in the Central Government or otherwise with a view to prevent exposure of these companies. According to the magazine, and this is now common knowledge, Jain Brothers, the promoters of these companies, had allegedly successfully manipulated matters in such a way as to be kept out of the aforesaid conspiracy charge in which some residents of Singapore have since been tried and convicted. There is, however, nothing on the record of this case in relation to it although vague and veiled references to the activities of the companies in the group and their extensive involvement in litigation in this court and elsewhere the Central Government and Import and Export authorities were freely made in the course of hearings of these petitions.
(5) It is, however, part of the record of the present proceedings that when the petitioners and/or their sister company were involved earliest in some what similar contravention in the importation of the same material, the redemption fine imposed by the Collector of Customs was only Rs. 25 lacs, as against 2 crores and 3 crores in the present cases. It is also part of the record of these proceedings that there are binding precedents of the Central Board of Excise and Customs, as constituted before the recent amendment of the Customs Act, and of the Central Government, as a revisional authority, under the same dispensation, containing concurrent holdings of law that industrial coconut oil was not a canalised item and had been validly imported under the open general license pursuant to the licenses held by them as raw material, etc, and that having regard to the language of the appropriate item of the relevant import policy, the popular meaning of the expression 'coconut oil', as understood in the market place, and a series of decisions of the Supreme Court on the principle of construction of the entries of the Schedules in the import policy, industrial coconut oil had been legitimately imported by the petitioner's associate company. It is also on record that not with standing these decisions, the Central Government in the ministry of Commerce was nevertheless not reconciled to the decision of the Board and the Central Government in the Ministry of Finance adopted an unusual procedure of alerting the custom officers before the arrival of the present consignments pointing out that the industrial coconut oil was a canalised item and could not be legitimately imported. From the aggressive posture adopted by certain officials of the Ministry of Commerce, concerned with the formulation of the import policy, it appears that they felt concerned with regard to the earlier decisions of the Board and of the Central Government. It further appears from the correspondence exchanged between the Ministry of Commerce and the Department of Customs that the Ministry of Commerce had particularly in mind the petitioners and/or their associate companies giving an impression that it was felt that the petitioners and their associate companies had earlier been able to manoeuvre to slip out of the custom net and in the way this fact was put across to the court at the hearing, an impression was created as if the earlier decisions of the Board and/or of the revisional authority or of both were not merely wrong in law but that they contained a taint of impropriety, as it were. It appeared rather unusual that a Collector of Customs should have made orders which prima facie appeared to be in direct conflict with the earlier binding precedents of the Board and the revisional authority, even though objective and independent examination of the material and the true legal position, independently of the binding precedents, may perhaps justify the orders, either on the grounds on which they purport to be based, or on the grounds not specifically considered by the Collector. What lent further colour to the unusual character of the orders is that copies of the orders were specifically endorsed to an officer of the Ministry of Commerce, who had apparently been doggedly pursuing the matter with all Collectors taking a line which may, on one reckoning, appear to be contrary to the earlier precedents. What, however, made the impugned order more controvertial is the quantum of redemption fines. It was Rs. 2 crores in in one and Rs. 3 crores in the other. While it may not be possible at this stage to say if the amounts were unconscionably high or bordered on being 'unreasonable' but there could be little doubt that the amounts were unusually high having regard to the earlier precedents in which the redemption fines ranged between 20 to 25% of the F.O.R. value of the consignments. A definite decision may or may not be possible in the present proceedings as to the direct or indirect contribution of the officials of the Ministry of Commerce on the quantum of fine imposed by the Collector, particularly, where the earlier binding precedents may perhaps provide some mitigation, if not complete justification, for the way in which the petitioners acted. It is nevertheless not possible to ignore that the rather heavy redemption fines were not entirely unconcerned with the past record of the petitioners, the trail of controversies left by them in the various spheres of activity, and the dogged pursuit of the matter by the officials of the Ministry of Commerce.
(6) These companies seem to be involved in extensive litigation with the various Central authorities in this court. This may be quite understandable in view of its fact expanding business activities. Unfortunately, however, these companies got embroiled, of their own accord or in spite of their own inclination to the contrary, in certain extraneous controversies. One of the companies had litigation on the original side of this court. This suit was pending when an Additional Judge of this court was dropped by Government. There has been considerable controversy if the measure was taken on the recommendation of the Chief Justice of this court or in spite of it. It was generally believed that the Chief Justice of this court had recommended the confirmation of the Judge. In the subsequent proceedings in the Supreme Court, it transpired that, that was not true and that the Chief Justice had in fact doubted the integrity of the Judge, inter alia, on an information from a colleague of his on the Bench of this court to the effect that the Judge concerned had struck or was bound to strike a deal with someone concerned with one of the companies in this group in relation to the suit. The truth or falsity of the allegation, as also identity of the colleague, are still to come out. ' The truth or otherwise of the allegations are subject-matter of a suit filled by the former Judge in this court and the defendant in the suit is no other than the Chief Justice of this court. It is likely that some of the people connected with the management of the companies would perhaps be star witnesses either for one or the other of the parties at the trial of the suit. The trial of the suit is at present stalled because of a motion in the Supreme Court for its transfer to any other High Court. This unfortunate incident, as indeed, the pendency of the suit, has lent yet another dimension to the notoriety otherwise earned by the companies. Two other events in this court have some significance in this context. One of the petitions of a company in this group came up for admission before court No. I sometime back. Kirpal, J., who was on this Bench, declined to hear the matter for personal reasons. It would have ordinarily, thereforee, been sent to other two or three a special Bench, consisting of the Chief Justice and Yogeshwar Dayal, J., was constituted to hear the matter. Yet another petition of these companies came up before court No. 2 for preliminary hearing only recently. Court No.2 was, however, told by counsel for the petitioners that the Chief Justice had desired to constitute a special Bench to hear that petition as well. Court No. 2 accordingly directed that the matter be placed before Court No. I. When the matter came up before court No. I, the Chief Justice apparently refuted any possible suggestion that he intended to constitute a special Bench to hear the matter. The matter was accordingly sent back to Court No. 2 for appropriate directions. The unusual treatment of these petitioners and the aforesaid two petitions may perhaps not be unconnected with the fact that the petitioners are controversial , parties, have been at the centre of controversies in this court, including a controversy with regard to a possible attempt to tamper with the course of justice.
(7) The present petitions also do not seem to have had a smooth course in this court. They are filed during the winter break and were listed before Goswamy, J., who declined to interfere and directed that the same be listed before a Division Bench of this court on reopening. They were ordered to be listed before court No. 3. They came 'before that court on January 6, 1983, and a notice to show cause was issued for January 18, 1983. Respondents were apparently unable to file replies for want of time. The Division Bench issued rule for February 21, 1983 (actual) after hearing counsel for the parties and counsel for the respondents was informed 'that the reply must positively be filed by 16th February, 1983 to enable the matter to be heard as a very large amount is involved in the writ petition.' It was then listed before Wad, J., and the learned Judge made a direction on February 10, 1983, that the petitions be listed for final disposal on February 21, 1983, at No. 1 subject to part- heard. The learned Judge added : 'the question as to whether the hearing should be restricted only to the preliminary questions raised or should be beared on merits would be heard on that day'. The matter could not come before Wad, J., as expected because there was a change of roster meanwhile. The matters accordingly came before Avadh Behari, J., on February 21, 1983. The learned Judge made certain directions with regard to completion with a further direction that the matter be listed on March 1, 1983, at item No. 1 subjected to part-heard. The learned Judge heard the matter on a number of days between March,.1, 1983, and March 8, 1983. On March 8, 1983, Mr. D.P. Wadhwa, counsel for the respondents, sought two weeks' adjournment as he had broken his leg and was unable to attend to his work. The learned Judge, however, directed that for personal reasons, he would not like to hear these cases. That is how these petitions were listed and heard by me.
(8) I heard learned counsel for the parties at considerable length. Elaborate arguments were addressed before me both on certain preliminary questions, as well as on the merits. In the course of hearings, learned counsel for the the parties made vague and veiled references to the controvertial background of petitioners, and the equally controversial nature of the impugned orders, but were nevertheless very discreet in the choice of their jargon in attributing improper motives and mala fides to the opposite parties and to their actions and orders. There were repeated references to the impunity with which the Collector had ignored binding precedents of the Board and the revisional authority as also of hints as to what part the petitioners may have played in . obtaining these precedents as indeed a letter from an official of the State Trading Corporation with regard to canalization of industrial coconut oil. During the time these petitions were being beard the weekly magazine referred to above carried the front page news and there was flutter in Parliament in relation to the copies of the magazine having been destroyed. It is during this period that I came to know of the circumstances attending on the listing of two other petitions of the petitioners and/or their sister concerns referred to above. While hearing the matters, I had an uncomfortable feeling that having regard to the controvertial background of the petitioners, the controversy surrounding the making of the impugned orders, the involvement of the petitioners in other proceedings in this court and the fact of their being at the centre of controversy, it may not be possible for me to keep my mind free from some of these which, on one reckoning, may appear to be extraneous to the real questions is controversy before me. I was also conscious of the rather unusually high redemption fines imposed by the Collector, assuming that the confiscation was well-merited. More I heard these matters more convinced I was that the petitions involved not only important but difficult questions of construction but were otherwise of a controversial nature. I, thereforee, told the parties of my reaction that in view of all the circumstances it was a fit case to be referred to a larger Bench. Respondents had no reservation but learned cousel for the petitioners were not inclined and I can understand their disinclination because even though the matters had been heard with expedition, considerable time had been devoted to the hearings and the petitioners had meanwhile deposited a rather large sum of Rs. 5 crores and they possible felt that a reference may delay the final determination of the matter in controversy thereby obviously affecting the liquidity of the petitioners. I did not insist on a reference at that stage since one of the two parties was not inclined in the hope that it may be possible for me to shake off the little prejudice that I may carry both with regard to the background of the petitioners as also the impressions of the manner in which the Ministry of Commerce went about the proceedings before the Collector as to its propriety.
(9) I have since given deep thought to these matters in the privacy of my Chamber and with my mind at complete ease. I an anxious to decide these matters purely on the merits and on the existing material but I am not sure if it will be possible for me by myself to steer the judicial mind clear of considerable bias and prejudice created on both sides. I have a lurking fear in my mind that, consciously or unconsciously, these may perhaps blur my judicial vision and thinking if I decide these matters on my own. Even otherwise I have always believed that a hearing before more than one Judge is any time more satisfactory and proper hearing than before a Single Judge. Such a requirement is all the more imperative in cases having political overtones, involving important, controversial or influential parties, controversial cases and high stakes.
(10) But with all that I have said above a reference to a larger Bench would perhaps not be justified if one were to take the traditional view of a reference. There are, however, other weighty considerations which, to my mind, would justify the course I propose to adopt.
(11) To begin with, respondents raised to preliminary questions with regard to the territorial jurisdiction of this court and the non-exhaustion of an undoubted, effective and efficacious alternative remedy. Does this court have territorial jurisdiction even though the Collector exercised' power outside the territorial limits of this court and that is where the impugned orders were made Could the Colletor, a statutory authority, be nevertheless considered a mere functionary of the Central Government and this court must, thereforee, have jurisdiction because the seat of the Central Government is within this jurisdiction Central Government has also been imp leaded and would this court have jurisdiction, in any event, on the analogy of the Code of Civil Procedure because a necessary party carries on business within this jurisdiction? Won't this court have jurisdiction on the test of situs of cause action, as distinct from the situs of parties Rule was issued by the Division Bench notwithstanding the existence of an effective and efficacious alternative remedy, even though aware that the petitioners had not exhausted that remedy. Would it be open to the respondents to raise objection on that score at the final hearing of the petitions, particularly when on the Rule being issued and the time that has since elapsed, the appeals are now barred by time. There is however, the power in the appellate tribunal to condone the delay and would it make any difference because the respondents offered to raise no objection with regard to condensation of delay The petitioners have since deposited the redemption fines and should that make any difference in the matter of exhaustion of alternative remedy What, if any, is the impact of the recent amendment of the Customs Act creating independent statutory appellate authority in place of the Central Board of Excise and Customs in considering the questions if the petitioners should be referred first to that authority
(12) Whether on the existing material, including some of the unusual circumstances attending on the making of the orders, it could be said that the orders were made at the behest of or under pressure from other authorities either because of prejudice against the petitioners or otherwise suffered from any fatal infirmity Whether such inferences can be drawn from the fact that in making the orders, the Collector disregarded binding precedents, both of the Central Board of Excise and Customs and of the Central Government, and may, on one reckoning, be said to have imposed redemption fines which may be considered to be unusually high. even if not out of all proportions to the contravention If the orders suffered from any such infirmity, could they nevertheless be justified by the respondents in the present proceedings on objective material, reasoning incorporated in the orders and further logic or reasoning independently of the orders Must an order, said to have been improperly made, fail even if capable of being justified on the merits on the existing material
(13) Whether the expression 'Coconut oil' in Appendix 9 of the Import Policy for the relevant year, as understood in business parlance, or in the market place, would mean edible oil and exclude its industrial variety Whether there are internal aids to interpretation in the policy and the Handbook for the relevant period, which -may justify the conclusion that the expression would be wide enough to take within its sweep the industrial variety Whether in the event of any doubt with regard to the interpretation of any expression in the Policy, the State Trading Corporation was in any way a competent authority to rule over it and, if so, approach to it in preference to a competent authority, mentioned in the policy itself, was justified or otherwise reinforced the claim of the petitioners Whether the decisions of the Central Board of Excise and Customs and of the Central Government, under the Customs Act were binding precedents for the Collector at all events and where these precedents are ignored by the Collector what is its impact on his orders Whether in construing the expression 'Coconut oil' and the relevance of reference to the State Trading corporation in that behalf, the Central Board of Excise and Customs, as well as the Central Government, in the precedents, with which the Collector was sought to be bound, the Board and the Central Government fell in grave error of construction, including, in particular, of some of the provisions of the policy, and of the directions contained in the Handbook, and whether for any of these reasons, these binding precedents could be said to be per incuriam and, thereforee, did not stand in the way of the Collector in the way he looked at the matter Was it open to the Government to impose conditions, while revalidating the licenses, so as to attract the provisions of the policy in force at the time of revalidation, even where such policy may be more restrictive than policy which was in force when the licenses were originally issued. Where the subsequent policy amended the relevant entry so as to give to the expression 'Coconut oil' more exhaustive meaning, as including its industrial variety, could the expression in the earlier policy be real in that context and be construed as being equally wide
(14) Assuming that the goods were liable to be confiscated, was the Collector bound to impose a reasonable penalty or redemption fine What was a reasonable penalty or redemption fine in the totality of the circumstances and how far is its quantum justiciable in the present proceedings Whether the penalty provided in the Customs Act could be a good measure of legislative thing as to what was reasonable and if any penalty or redemption fine leviable, fine, which did not exceed the maximum penalty or redemption could be said to be 'unreasonable'? What, if any, are the circumstances in which this court would be justified in its extraordinary jurisdiction to interfere in the quantum of penalty or punishment, or redemption fine
(15) These are some of the questions that arise in these petitions and were canvassed at the trial. There are important, as indeed, difficult questions. There are decisions either way on some of these questions, while some of them represent a grey area and different and even conflicting views may be likely.
(16) What is more, the fines are heavy and so are, thereforee, the stakes. Having regard to the background of the petitioners and of the dogged pursuit by the respondents, these were hotly contested proceedings holding out a promise that, whatever be the outcome in the first instance, matters would not rest until they reach the highest court of the land.
(17) Having regard to all the circumstances, I am reluctantly constrained to take the view that these matters should be heard by a larger Bench, preferably a Full Bench, in view of likelihood of differences of opinion on some of the questions.
(18) I would, thereforee, direct that the records be placed before Hon'ble the Chief Justice for taking appropriate steps for constitution of a larger Bench to hear these matters. In view of the controversy that the petitioners have generated elsewhere, as indeed, in the corridors of this court, I would suggest the matter being placed before the Full Court for the constitution of the Bench so as to save unnecessary embarrassment to Hon'ble the Chief Justice. I would also suggest that if there are other equally controversial matters, involving the petitioners, against the import-export and other authorities and these matters are ready for hearing, they may also be placed before the Bench for further unseemly controversies.
(19) In view of the large amounts deposited by the petitioners, as indeed, the circumstance that the petitions were initially heard by a learned Judge for a number of days, followed by full-dress hearing before me, appropriate directions be made for the hearing of the matters by the Bench at the earliest possible opportunity.