STATE BANK OF SAURASHTRA Vs. UNION OF INDIA

JUDGEMENT

(1.) THE State Bank of Saurashtra advanced loan to respondent No. 2 for construction of a vessel and for fitting marine engine in the said vessel. The amount was secured by respondent No. 2 executing an agreement of hypothecation of the vessel in favour of the Bank. The vessel was used by respondent No. 2 as a fishing trawler. The amount advanced by the Bank was more than rs. 2,60,000/-Respondent No. 2 used the vessel for smuggling activities. The Additional collector of Customs, in exercise of powers under Section 125 of the Customs Act, confiscated the vessel, as on March 16, 1983, vessel was found to be carrying contraband goods worth Rs. 23,04,684/ -. Subsequently, the Customs Authorities disposed of the vessel.

(2.) THE petitioner-Bank has filed the present petition under Article 226 of the Constitution claiming that the Customs Department is liable to pay the proceeds of the auction sale of the vessel to the Bank on the ground that the vessel was pledged with the Bank towards the satisfaction of the dues. The claim made by the Bank is entirely unsustainable. The power exercised by the Customs Authorities under Section 115 of the Customs Act was due to the fact that the vessel was used as a means of transport in smuggling of goods. The auction sale of the vessel was after the order of confiscation was passed and it hardly requires to be stated that the such auction sale can never be subject to the right of the pledgee. It is difficult to imagine how the Bank can ever claim that the proceeds of the auction sale of the vessel should be handed over to the Bank in satisfaction of the amount due for respondent No. 2 A reference was made by the learned counsel for the petitioner to the decision of Supreme Court reported in 1971 Vol. 41 company Cases 591 [bank of Bihar (Now State Bank of India) v. State Bihar and Others]. The judgment has no application whatsoever to the facts of the present case. In our judgment, petition is without any substance and is liable to be dismissed.

(3.) ACCORDINGLY, rule is discharged, but there will be no order as to costs.