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Judgment
K. Mohan Ram, J.—By consent of counsel on either side, the writ petitions are taken up for final disposal.
The petitioner is a partnership firm. The firm was holding a regular licence granted under Regulation 10 of the Customs House Agents Licensing
Regulations, 1984 (in short, CHALR) read with Section 146 of the Customs Act, 1962 to transact business as a Customs House Agent (in short,
CHA) and the said licence was issued by the Cochin Customs House. After framing of the new Regulations under the Customs House Agent
Licencing Regulations 2004, the petitioner was permitted to operate in the Chennai Custom House with the said licence and the petitioner has also
been operating in Coimbatore. The first respondent in W.P.No. 5663 of 2006 suspended the licence with immediate effect as per order dated
15.02.2006 under Regulation 20(2) of the CHALR 2004. The said order dated 15.02.2006 is challenged in W.P.No. 5663 of 2006.
Subsequently, the respondent / the Commissioner of Customs, Chennai, by an order dated 27.02.2006 suspended the operation of the
petitioner''s Licence No. 153/COC based on the suspension order dated 15.02.2006 passed by the first respondent in W.P.No. 5663 of 2006.
Challenging the same, W.P.No. 7129 of 2006 has been filed.
Since the facts of the two cases and the issues involved are same, both the writ petitions are being heard together.
Pursuant to an investigation conducted by the Customs Intelligence Unit, Special Investigation Team of Coimbatore Commissionerate, it is said
to have been found that the petitioner-CHA had transacted business for non-existing firms since the exporters as per ICE and shipping documents
did not exist in the address declared therein on verification by the investigation team and certain other irregularities also are alleged to have been
found out. Based on the alleged irregularities the impugned order dated 15.02.2006 came to be passed. In the said impugned order, it is stated as
follows:
From the foregoing it is clear that the CHA has failed to
(i) Obtain authorization from his clients for processing documents in Customs, hence it appears that the CHA has not complied with Regulation
13(a) of CHALR, 2004;
(ii) Advice his clients to comply with provisions of the Customs Act 1962 and thus failed to comply with the obligation caused upon then in terms
of Regulation 13(d) of the CHALR, 2004.
(iii) Exercise due deligence to ascertain the correctness of any information with regard to work handled in his name thus it appears that the CHA
has failed to comply with the obligation under Regulation 13(e) of CHALR, 2004.
(iv) Have not control over the Customs clearance work and thereby failed to exercise supervision ensuring proper control of the persons who
transacted business. Hence the CHA apparently failed to comply with the provisions of Regulation 19(8) of CHALR, 2004.
In view of the circumstances and facts, I am satisfied that if the CHA is allowed to operate even after the detection of the above fraud it would
be detrimental to the interest of the Revenue. Therefore, I am fully satisfied it warrants immediate action against the said CHA under the provision
of CHALR, 2004 pending completion of the investigation.
ORDER
Accordingly in exercise of the power conferred under the provisions of Regulation 20(2) of Custom House Agents Licensing Regulations, 2004, I
order suspension of operation of CHA License No. CHA/CBE/09/2001 Dt.03.04.2001 issued to M/s. Cargomar, in terms of Regulation 20(2) of
the CHALR, 2004 read with Section 159A of the Customs Act, 1962, with immediate effect and until further orders.
As stated above, pursuant to the said impugned order dated 15.02.2006, the order impugned in W.P.No. 7129 of 2006 came to be passed.
The relevant part of the impugned order reads as follows:
Whereas the Commissioner of Central Excise, Coimbatore has vide his Order C.No. VIII/13/8/97-Cus.Pol dated 15.02.2006 suspended the
operation of the CHA Licence No. CHA/CBE/09/2001 with immediate effect, under the provisions of Regulation 20(2) of the CHALR, 2004 as
the CHA have contravened the various provisions of Regulation 13 and 19(8) of the CHALR, 2004.
On examination of the above Suspension Order dated 06.02.2006 isued by Coimbatore Commissionerate, I am satisfied that this is a case
where immediate action is necessary in terms of Regulation 20(2) of the erstwhile CHALR, 2004.
ORDER
I therefore order suspension of the operation of the aforesaid licence No. 153/COC granted to M/s. Cargomar, No. 19, 1st Cross Street,
V.G.P. Murthy Square, St. Thomas Mount, Chennai - 600 016, in terms of the said Regulation No. 20(2) of the CHALR, 2004 read with Section
159A of the Customs Act, 1962, with immediate effect and until further orders.
The above said proceedings are challenged on several grounds. One such ground being that the impugned orders result in serious civil
consequences and therefore they should have been made after complying with the principles of natural justice, whereas the impugned proceedings
have been passed without providing the petitioner any opportunity to make representation and explain the allegations made against the petitioner.
The second ground is that under Regulation 20 of the Customs House Agent Licensing Regulations, 2004, power is vested with the licencing
authority only to revoke a license subject to the procedure prescribed under Regulation 22 and the power under Regulation 20(2) to suspend the
license where an enquiry against the agent is pending or contemplated is also subject to the procedure prescribed under Regulation 22.
A detailed counter affidavits have been filed in the above two writ petitions. The main objection taken by the respondent is that an alternative
remedy by way of an appeal is available to the petitioner under Regulation 22(8) of CHALAR 2004 and as such the writ petitions should not be
entertained. It is a further contention of the respondent that no show cause notice is required to be issued before the issue of suspension order in
terms of the provisions of Regulation 20(2) of the CHALR 2004.
Heard both sides.
Mr. N. Venkataraman, learned Senior Counsel elaborated the contentions raised in the writ petitions and submitted that,
(i) Regulations 1984 has been superceded by CHALR, 2004 introduced by Notification No. 21 of 2004 Cus-NT dated 23.03.2004. The
erstwhile Regulation 21 and 23 is presently in the form of Regulation 20 and 22, but with a major difference. Under the erstwhile Regulations
1984, two types of suspensions were conceived, a preventive suspension under Regulation 21(2) and a punitive suspension under Regulation
21(1). The punitive suspension under Regulation 21(1) is subject to the procedures under Regulation 23 which obligated compliance to natural
justice. However under the present Regulations 2004, punitive suspension as originally contemplated under the erstwhile Regulation 21(1) is no
longer there. Under Regulation 20 of the new Regulation 2004, power to revoke alone is vested with the Commissioner. Suspension where
enquiry is pending or contemplated is conceived under new Regulation 20(2) which again can be invoked only in appropriate cases where
immediate action is necessary. New Regulation 22 which corresponds to old Regulation 23 obligates the Commissioner to follow the principles of
natural justice before proposing suspension or revocation. In the circumstances the preventive suspension under Regulation 20(2), which is the only
form of suspension contemplated is subject to compliance of principles of natural justice by virtue of Regulation 22.
(ii) While introducing new Regulations 2004, the Central Board of Excise and Customs has chosen to delete punitive suspension under Sub-Clause
(1), after retaining the power to revoke, along with preventive suspension under Sub-clause (2) and the new Regulations obligate compliance of
natural justice under Regulation 22 both for suspension and revocation. Any construction excluding natural justice would render Regulation 22
otiose. Courts should lean towards preserving the provision rather than rendering them redundan.
(iii) The Central Board of Excise and Customs while deleting suspension under Regulation 20 has not chosen to delete the expression ""suspension
under Regulation 22. Consequently the conditions contemplated under a Regulation which is later in the numerical order shall prevail.
Since it will be useful to refer to the provisions of Regulations 21 and 23 of the CHALR, 1984 and Regulations 20 and 22(1) of the CHALR,
2004, the said provisions are extracted below:
Suspension or revocation of licence. - (1) The Commissioner may, subject to the provisions of Regulation 23, suspend or revoke the licence of
a Custom House Agent so far as the jurisdiction of the Commissioner is concerned and also order for forfeiture of security on any of the following
grounds:-
a) failure of the Custom House Agent to comply with any of the conditions of the bond executed by him under Regulation 11;
b) failure of the Custom House Agent to comply with any of the provisions of these regulations, whether within the jurisdiction of the said
Commissioner or anywhere else;
c) any misconduct on his part whether within the jurisdiction of the said Commissioner or anywhere else which in the opinion of the Commissioner
renders him unfit to transact any business in the Customs Station.
(2) Notwithstanding anything contained in Sub-regulation (1), the Commissioner may, in appropriate cases, where immediate action is necessary,
suspend the licence of a Custom House Agent where an enquiry against such agent is pending or contemplated.
Procedure for suspending or revoking licence under Regulation 21. (1) The Commissioner shall issue a notice in writing to the Custom House
Agent stating the grounds on which it is proposed to suspend or revoke the licence and requiring the said agent to submit within such time as may
be specified in the notice not being less than forty-five days, to the Assistant Commissioner of Customs or Deputy Commissioner of Customs
nominated by him, a written statement of defence and also to specify in the said statement whether the Custom House Agent desires to be heard in
person by the said Assistant Commissioner of Customs or Deputy Commissioner of Customs.
Suspension or revocation of licence. (1) The Commissioner of Customs may, subject to the provisions of Regulation 22, revoke the licence of
a Custom House Agent and order for forfeiture of part or whole of security, or only order forfeiture of part or whole of security, on any of the
following grounds, namely:-
a) failure of the Customs House Agent to comply with any of the conditions of the bond executed by him under Regulation 10;
b) failure of the Customs House Agent to comply with any of the provisions of these regulations, within the jurisdiction of the said Commissioner of
Customs or anywhere else;
c) any misconduct on his part, whether within the jurisdiction of the said Commissioner of Customs or anywhere else which in the opinion of the
Commissioner renders him unfit to transact any business in the Customs Station.
(2) Notwithstanding anything contained in Sub-regulation (1), the Commissioner of Customs may, in appropriate cases where immediate action is
necessary, suspend the licence of a Customs House Agent where an enquiry against such agent is pending or contemplated.
Procedure for suspending or revoking licence under Regulation 20 - (1) The Commissioner of Customs shall issue a notice in writing to the
Customs House Agent stating the grounds on which it is proposed to suspend or revoke the licence and requiring the said Customs House Agent
to submit, within such time as may be specified in the notice, not being less than forty-five days, to the Deputy Commissioner of Customs or
Assistant Commissioner of Customs nominated by him, a written statement of defense and also to specify in the said statement whether the
Customs House Agent desires to be heard in person by the said Deputy Commissioner of Customs or Assistant Commissioner of Customs.
In 1984 regulations, the elaborate procedure for suspending or revoking licence under Sub-regulation (1) of Regulation 21 has been laid down
under Regulation 23. The principles of natural justice are embodied in that procedure. If a question arises before this Court as to whether the
procedure of show cause notice and personal hearing as provided under Regulation 23 is applicable to the proceedings under Sub-regulation (2)
of Regulation 21, this Court would without any hesitation say ""no"" to this question. The action (immediate suspension of licence) contemplated
under the said Sub-Regulation (2) is only of an interim nature warranted by the exigencies of the factual situation arising from the CHA''s conduct.
If the procedure laid down in Regulation 23 is not applicable to the function under Sub-regulation (2) of Regulation 21, though it is strictly
applicable to the suspension or revocation of licence under Sub-regulation (1). This position is abundantly clear from the fact that while the
Commissioner''s function under Sub-regulation (1) has been made, expressly, subject to the provisions of Regulation 23, his function under Sub-
Regulation (2) is not fettered by any such condition as evidenced by the non obstante clause (""Notwithstanding anything contained in Sub-
regulation (1)"") contained in that Sub-regulation.
But a question that has arisen for consideration before this Court is as to whether a show cause notice and personal hearing as provided under
Regulation 22 is applicable to the proceedings under Sub-regulation (2) of Regulation 20 of the 2004 regulations, in view of the deletion of the
word ""suspend"" in Regulation 20(1) of the CHALR 2004, which found place in Regulation 21 (1) of the CHALR, 1984.
In the case of Union of India v. G.M. Kokil reported in 1984 Supp SCC 196 it is laid down as follows:
It is well-known that a non obstante clause is a legislative device which is usually employed to give overriding effect to certain provisions over some
contrary provisions that may be found either in the same enactment or some other enactment, that is to say, to avoid the operation and effect of all
contrary provisions.
If we consider Regulation 20(2) in the light of the above law laid down by the Honourable Supreme Court of India, the provisions contained in
Regulation 22 will not apply to an action taken under Regulation 20(2) of the CHALR, 2004. But the submission of the learned senior counsel is
that the procedure for suspending or revoking the licence under Regulation 22 will be applicable to an action taken under Regulation 20(2) also
since the procedure contemplated in Regulation 22 applies both for suspending as well as revoking the licence, eventhough the word ""suspend"" is
deleted from Regulation 20(1) of CHALR 2004, but this Court is unable to accept the said contention of the learned senior counsel for the reasons
set out below. As laid down by the Honourable Supreme Court of India in a catena of decisions, when there is an apparent conflict between
different provisions of statutes, this Court must give effect to all of them by adopting the principle of harmonious construction.
The Honourable Supreme Court of India in the case of Reserve Bank of India Vs. Peerless General Finance and Investment Co. Ltd. and
Others, and Others, in paragraph 33, has observed as follows:
Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is
what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the
contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and
then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the
glasses of the statute-maker, provided by such context, its scheme, the sections, clauses, phrases and words may take colour and appear different
than when the statute is looked at without the glasses provided by the context. With these glasses we must look at the Act as a whole and discover
what each section, each clause, each phrase and each word is meant and designed and say as to fit into the scheme of the entire Act. No part of a
statute and no word of a statute can be construed in isolation. Statutes have to be construed so that every word has a place and everything is in its
place.
The action (immediate suspension of licence) contemplated under Regulation 20(2) is only of an interim nature warranted by the exigencies of
the factual situation arising from the CHA''s conduct. If the procedure contemplated under Regulation 22 is to be followed before taking action
under Regulation 20(2) that is the action under Regulation 20(2) can be taken only after issuing a notice in writing (giving not less than 45 days
time) to the CHA stating the grounds on which it is proposed to suspend the licence and requiring the CHA to submit a written statement of
defence etc., and to conduct a full fledged enquiry before passing the interim suspension order, the very purpose of taking immediate action in
appropriate cases will be frustrated and the provisions contained in Regulation 20(2) of CHALR 2004 will become otiose and nugatory. Such an
interpretation as sought to be made by the learned senior counsel could not be accepted. It is true that there is an apparent conflict between
Regulation 20 and Regulation 22, in view of the omission of the word ""suspend"" from Regulation 20(1) while retaining the word ""suspend"" in
Regulation 22. But then the Court must give effect to both the Regulations by adopting the principle of harmonious construction. If the
interpretation sought to be made by the learned senior counsel is accepted no exparte order of suspension could not at all to be made even in an
appropriate case where immediate action is necessary. Therefore, this Court is not able to accept the interpretation sought to be made by the
learned senior counsel.
Further as observed in Reserve Bank of India Vs. Peerless General Finance and Investment Co. Ltd. and Others, , no part of a statute and no
word of a statute can be construed in isolation and statutes have to be construed so that every word has a place and everything is in its place. If
such a principle is applied, Regulation 20(2) should have a purpose and the purpose contemplated therein should be able to be achieved and if the
procedure contemplated in Regulation 22 is to be followed before taking action under Regulation 20(2) then the very purpose sought to be
achieved under Regulation 22 will not be able to be achieved. Therefore, this Court is of the considered view that the procedure contemplated
under Regulation 22 is not applicable for an action to be taken under Regulation 20(2).
In the case of Liberty Oil Mills and Others Vs. Union of India (UOI) and Others, , the following legal principles have been enunciated:
Pre-decisional natural justice is not usually contemplated when the decisions taken are of an interim nature pending investigation or enquiry, or
where the danger to be averted or the act to be prevented is imminent or where the action to be taken can brook no delay. But an interim order of
stay or suspension which has the effect of preventing a person, however temporarily, say, from pursuing his profession or line of business, may
have substantial, serious and even disastrous consequences to him and may expose him to grave risk and hazard. There must be observed some
modicum of residual, core natural justice, sufficient to enable the affected person to make an adequate representation. Therefore, while exparte
interim orders may always be made without a pre-decisional opportunity or without the order itself providing for a post-decisional opportunity, the
principles of natural justice which are never excluded will be satisfied if a post-decisional opportunity is given if demanded. An aggrieved party has
always the right to make an appropriate representation seeking a review of the order and asking the authority to rescind or modify the order, and it
would be sufficient but obligatory to consider such representation which would satisfy the requirements of procedural fairness and natural justice.
Therefore as per the law laid down by the Honourable Supreme Court of India in the above decision, pre-decisional natural justice issue of a
show cause notice is not usually contemplated when the orders passed are of an interim nature pending investigation or enquiry. Hence in the light
of the legal principles laid down in Liberty Oil Mills and Others Vs. Union of India (UOI) and Others, and in view of the availability of an effective
alternative remedy by way of an appeal under Regulation 22 (8) of the CHALR 2004 read with the provisions of the Customs Act, it is always
open to the petitioner either to prefer an to the Appellate Authority or make an adequate representation to the respondents who passed the
impugned orders and if such a representation is made, a post decisional opportunity can be given to the petitioner to satisfy the principles of natural
justice. The petitioner being an aggrieved party can make an appropriate representation seeking a review of the impugned order and asking the
concerned respondent to rescind or modify the order and if such a representation is made by the petitioner the concerned respondent in the above
writ petitions shall consider such representation in accordance with law and pass orders on merits within a period of two weeks from the date of
receipt of the representation after giving an opportunity of hearing to the petitioner. If the petitioner chooses to file any appeal against the impugned
orders, it is open to the petitioner to file the appeals within a period of two weeks from the date of receipt of a copy of this order and if the
petitioner files the appeals, the Appellate Authority shall entertain the appeals without reference to the period of limitation prescribed under the
CHALR 2004 read with the provisions of the Customs Act. It is open to the petitioner to seek appropriate interim orders before the Appellate
Authority. The impugned orders shall remain suspended till the filing of the appeals by the petitioner within the above said stipulated time.
In view of the above view taken by this Court, the other contentions relating to the merits of the case are not considered. With the above
directions, the writ petitions are disposed of. No costs. Consequently, the connected WPMPs are closed.