UNION BANK OF INDIA LTD Vs. M. PACHAPPA

JUDGEMENT

(1.) THIS petition has been filed by the Union Bank of India Limited for a writ or direction under Article 226 of the Constitution to quash and set aside an order of confiscation passed by respondent No. 1, the Additional Collector of Customs, Bombay, under Section 167(5) of the Sea Customs Act, 1878, in respect of property which had been pledged with the petitioner Bank.

(2.) THE facts leading to the order of confiscation are not in dispute. On April 16, 1962, one Hansraj Chopra, the sole proprietor of Paramount Steel Industries, Varanasi, applied to a Calcutta branch of the petitioner Bank for opening an Irrevocable Letter of Credit in favour of a certain Japanese party, and agreed that the shipping documents and the goods imported under his import licence shall remain pledged with the petitioner Bank as security for amounts advanced in the transaction. An Irrevocable Letter of Credit was accordingly opened in favour of the Japanese party through a Japanese agent of the petitioner Bank, against an import license in favour of the said Paramount Steel Industries dated February 2, 1962. The import licence was in respect of stainless steel sheets. The imported goods arrived in India in two consignments. When the shipping documents of the first consignment were received by the petitioner Bank through their agent in Japan, the said Hansraj Chopra of Paramount Steel Industries paid the bill of the petitioner Bank in respect of that consignment and took delivery of the shipping documents. It appears that the goods of the first consignment were cleared under the said shipping documents and no objection was taken by the Customs authorities at the time of the clearance of those goods. Shipping documents of the second and final consignment of the stainless steel sheets were received by the petitioner Bank on July 9, 1962. In accordance with the terms of the Letter of Credit, the petitioner Bank remitted the price of the goods, which amounted in Indian currency to Its. 26,780 and odd, to their Japanese agent. However, the said Hansraj Chopra, proprietor of Paramount Steel Industries, did not pay this amount to the petitioner Bank, but requested the latter to arrange clearance of the goods in Bombay and store the goods in the Bank's go down. Towards the end of August 1962 the ship which carried the second instalment of the imported goods arrived in Bombay. On August 30, 1962, a firm of clearing agents acting on behalf of the petitioner Bank submitted a bill of entry in respect of the goods to the Customs authorities in Bombay. The importer's name mentioned in the Bill of Entry was 'the Union Bank of India Ltd., Fort, Bombay -1 A/c. Paramount Steel Industries, Varanasi'. The Clearing Agents, however, were unable to clear the goods. They were informed that the Customs' copy of the said licence, together with some other papers, had been taken into possession by an officer of the Special Investigation Branch, Customs.

(3.) IN the meantime, the Customs authorities had sent on October 3, 1962, a show cause memorandum to the Paramount Steel Industries, Varanasi, calling upon the latter to show cause why penal action should not be taken against them under Section 167(5) of the Sea Customs Act, 1878, read with Section 3(2) of the Imports and Exports (Control) Act, 1947. It was stated in the memorandum that the Customs House had received information to the effect that the said import licence of the Paramount Steel Industries authorising the import of stainless steel sheets was a forged licence. No intimation of this memorandum was given to the petitioner Bank. The registered letter in which the memorandum was sent to the Paramount Steel Industries, Varanasi, was returned through the Post with the remark 'addressee unknown'. Then on November 22, 1962, an intimation of the said show cause memorandum was published in the 'Northern India Patrika', which is said to be a local paper having circulation in the town of Varanasi. Again, no intimation of this Public Notice was given to the petitioner Bank. Then on December 26, 1962, the Additional Collector of Customs (respondent No. 1) passed the impugned order confiscating the stainless steel sheets of the second consignment under Section 167(8) of the Sea Customs Act, 1878, and further ordered that there shall be no option under Section 183 of the said Act to pay a fine in lieu of confiscation. A month after this order was passed, a copy thereof was sent to the petitioner Bank.