SINNARAJU CHETTIAR Vs. UNION OF INDIA

JUDGEMENT

(1.) MESSRS. Arvind Emporium No. 81/3, Mahatma Gandhi Road , Pondicherry, imported a consignment of nine cases containing "mahle" pistons below 5 "under the cover of the Bill of Entry No. 130/242 dated 27-4-1964/26-6-1964 ex. s. s. Meliakerk. The goods were described as Ex. Army surplus material in the invoice and declared as disposal goods in the Bill of Entry. The value was declared as Rs. 1, 022. The goods were consignment from holland and the country of origin shown in the Bill of Entry as well as in the invoice was U. S. A. The Customs officials examined the goods and came to the conclusion that the goods were brand new goods; that there was an under-valuation to the extent of Rs. 28, 629 which would have resulted in loss of revenue to the extent of Rs. 14, 827 and that the importers had also failed to produce a valid import licence for the amount of Rs. 28, 631 with the result that the import of goods valued at Rs. 28, 631 should be treated as unauthorized importation. A show cause notice dated 11-11-1964 was issued to the firm. After considering the explanation, the goods were confiscated subject to redemption fine of Rs. 55, 000 for home consumption and a personal penalty of Rs. 12, 000 was also imposed on the firm by the Collector of Customs, bombay, by order dated 11-1-1965 under Section 112 of the Customs Act, 1962 (hereinafter referred to as the Act ). The firm filed an appeal to the Central board; but the same was rejected on 7-4-1967. The revision filed against that order was rejected by the Government of India by order dated 30-8-1968. The firm sent a petition to the President of India. The same was also turned down by order dated 18-3-1969. As the personal penalty of Rs. 12, 000 remained unpaid, action was initiated for recovery of the same as provided in Section 142 of the act. The Revenue Officer, Pondicherry who was requested to effect recovery under Section 142 was able to recover only Rs. 4000 leaving the balance, namely rs. 8, 000. This writ petition is filed impugning the validity of these proceedings and praying for an order of prohibition to restrain the Union of india, the first respondent and the Tahsildar, Pondicherry, the second respondent from collecting the penalty.

(2.) MESSRS. Arvind Emporium was a registered firm consisting of three partners (1) Shanmugha Mudaliar, the third respondent (2)Somasundaram Chettiar, late husband of the second petitioner and father of petitioners 3 to 7 and (3) Sinnaraju Chettiar, the first petitioner. Under the terms of the partnership deed, the business of the firm was conducted by the third respondent and the late Somasundaram Chettiar, all the partners having contributed equally. The firm stood dissolved as per notice of dissolution dated 28-6-1969. The contention raised by the petitioners is that the action taken by the Customs Official under the Act resulting in the imposition of penalty is a penal action for which individual notices should have been issued to partners, that the first petitioner and late Somasundaram Chettiar were not aware of the proceedings resulting in the imposition of the fine, that they had no opportunity of putting forward their contentions and that inasmuch as the fine imposed on firm is sought to be recovered from them, the proceeding is vitiated. It is contented that though there is no statutory provision requiring notice to be given to the partners of a firm still principles of natural justice would require that such a notice should be given and that inasmuch as that requirement was not complied with, the petitioners are not liable to answer the claim. It is, therefore, submitted that the respondents 1 and 2 should be restrained from taking any action to recover the balance from them.

(3.) AS already pointed out, it is not in dispute in this case that the consignment in question was obtained for the benefit of the firm. It is also not in dispute that the order for importation was made by the third respondent for and on behalf of the firm in the usual course of the business of the firm. Emphasis may also be laid upon the fact that it is not the case of the petitioner, that with regard to the transaction in question, the third respondent was either guilty of fraud or malpractice. In substance, the transaction was one concluded for and on behalf of the firm and is binding on the firm. In these circumstances, the simple question is whether the customs authorities should have issued individual notices to the partners before holding the firm liable. Mr. Venkatachari, appearing for the petitioner, contended that under the Import Trade Control Policy which was in force for the relevant period namely, April 63 to March 1964 that the form of the application required particulars to be given about the partners of the applicant firm and that the authorities concerned were put on notice as to who all were partners. No doubt, Annexure I to Appendix V dealing with the form of certificate of income-tax assessment to be produced by an applicant for import and export licence, inter alia requires a list of partners with addresses of the concern in a firm. It may be presumed that in making the application for the import in question, this requirement was complied with. The question is whether the authorities were bound in law to issue notices to individual partners before holding the firm liable. It should not be forgotten in this connection that the applicant was the firm, a legal entity entitled to make the application. In other words, the importer was the firm. He who as an importer was liable for the unlawful importation is not either one or the other of the partners, but the firm as a whole. It cannot be informed from the mere requirement of particulars of the names of the partners to be given in the application that a duty is cast upon the authorities concerned to issue notices to the individual partners before holding the firm liable. After the application for import is made, the partners may change without reconstitution of the firm. No legal duty can be cast upon the customs authorities to find out who were the actual partners at the time of illegal importation and to issue notices to them.