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Judgment
M.L. Pendse, J.—All these eight Motions can be conveniently disposed of by this order. The dispute raised in these Motions is inter alia connected. The facts which gave rise to the filing of these Motions are not iii dispute and are required to be briefly stated to appreciate the claim made in these Motions.
Ratandeep Textile Mills and Jayantilal Mehta filed Writ Petition No. 1681 of 1983 under Article 226 of the Constitution on the Original Side of this Court to challenge show cause notice dated June 15, 1983 served by Collector of Customs, Bombay. The show cause notice called upon the petitioners to explain why penalty should not be levied in respect of import of certain cargo. The Department submitted that the import was made illegally and the petitioners are liable to pay a large amount of duty. The petition was admitted on July 16, 1983 and interim relief was granted on condition that the petitioners shall furnish 100% bank guarantee in respect of the claim of duty and I.T.C. amount. Accordingly, the petitioners furnished 18 bank guarantees for a sum of Rs. 51,00,000/- in respect of the claim of duty and other guarantees for a sum of Rs. 28,34,000/- in respect of I.T.C.
The petition was placed for hearing before Division Bench to which one of us (Pendse J.) was a party on August 5,1993 and the petition was disposed of by giving certain directions. The competent authority was directed to complete adjudication in pursuance of show-cause notice by passing reasoned order within a period of eight weeks from August 5,1993. The order further directed that in the event of adjudicating authority not completing the adjudication within eight weeks, then the bank guarantees shall automatically stand discharged and shall be returned to the petitioner Nos. J2(a) to 2(d). The petitioner Nos. 2(a) to 2(d) are the legal representatives of Jayantilal Mehta, the original petitioner No. 2. Petitioner No. 2(e) is one Smt Gajiaben Ratanchand Mehta and she is the mother of Shri Jayantilal. The order of the Division Bench further provided that the Collector of Customs will have liberty to encash the bank guarantees with regard to the landing charges customs duty as the said points are covered against the petitioners by virtue of judgment of this Court reported in Ashok Traders Vs. Union of India and another, . The order finally directed that the respondents will not apply for any further extension of time for adjudication.
It is not in dispute that the adjudication was not completed within a period of eight weeks as directed by Division Bench of this Court. The order of adjudication was ultimately passed on December 2,1993. In the meanwhile, the Collector of Customs did not return the bank guarantees furnished by the petitioners and 18 bank guarantees totalling to approximately Rs. 51,00,000/-were encashed and the amount was received by the respondents on December 9,. 1993.
The petitioner Nos. 2(a) to 2(d) have taken out four Notices of Motion against the respondents under the Contempt of Courts Act while the Department has taken out four Notices of Motion for modification of the order passed by the Division Bench on August 5, 1993. The grievance of the petitioner Nos. 2(a) to 2(d) is that inspite of the order of the Division Bench that the bank guarantees stand automatically discharged, the Department did not return the guarantees after expiry of eight weeks from August 5,1993 but on the other hand encashed some of them and recovered an amount of Rs. 51,00,000/- approximately. The Department claims that the order of the Division Bench passed on August 5, 1993 should be modified and period to complete the adjudication should be extended till December 2, 1993. The Department also claims that the order providing automatic discharge of the bank guarantees should be revoked and Department should be given liberty to enforce the bank guarantees and recover the duty and penalty affirmed by order of adjudication.
Shri Deodhar, learned Counsel appearing on behalf of the Department, submitted that the order of adjudication could not be passed within stipulated period of eight weeks from August 5, 1993 because the petitioners did not respond to the notices issued. Shri Deodhar submitted that the bank guarantees were not returned but some of them were encashed in view of the order of adjudication passed on December 2, 1993. The claim of Shri Deodhar that the order of the Division Bench should be modified cannot be accepted in toto. The order is required to be modified only to an extent that the authority is given permission to adjudicate till December 2, 1993. The period of adjudication is extended because it is not in dispute that the order of adjudication was ultimately passed on December 2,1993. The second prayer made by the learned Counsel that the bank guarantees should not stand discharged at the end of eight weeks from August 5, 1993 but should be kept alive even thereafter cannot be accepted. The order of the Division Bench was self-operative and the bank guarantees stood automatically discharged at the expiry of eight weeks from August 5,1993. Shri Deodhar could not explain why the Department did not think it proper to approach this Court to seek extension before expiry of date or even thereafter. The modification is sought only because the petitioner Nos. 2(a) to 2(d) have taken out the contempt proceedings. In our judgment, the action of the Department in not returning the bank guarantees on the expiry of eight weeks but on the other hand encashing 18 bank guarantees and crediting the said amount towards the duty and penalty imposed by order of adjudication is clearly illegal. The Department is bound to return the bank guarantees which are still to be encashed and is required to bring back the amount covered by 18 bank guarantees and which amount was received by the Department on December 9, 1993. Shri Deodhar assures that the amount accrued from 18 bank guarantees will be deposited with the Prothonotary and Senior Master within a period of two weeks from today.
Smt. Nanavati, learned Counsel appearing on behalf of petitioner Nos. 2(a) to 2(d), submitted that the bank guarantees which the Department has not encashed should be returned back to petitioner Nos. 2(a) to 2(d) and to the exclusion of petitioner No. 2(e). The learned Counsel also urged that the amount covered by 18 bank guarantees and which the Department is directed to deposit within a period of two weeks from today with the Prothonotary and Senior Master should be paid over to petitioner Nos. 2(a) to 2(d). The learned Counsel urged that the order of the Division Bench directing the respondents to return the bank guarantees to petitioner Nos. 2(a) to 2(d) was proper and should be maintained.
Shri Jain, learned Counsel appearing on behalf of petitioner No. 2(e), submitted that neither the bank guarantees, which are still not encashed should be returned to petitioner Nos. 2(a) to 2(d) nor the amount to be deposited by the Department with the Prothonotary and Senior Master should be paid over to petitioner Nos. 2(a) to 2(d). Shri Jain submitted that the petitioner No. 2(e) has got interest in the said amount. The learned Counsel further submitted that the dispute between petitioner Nos. 2(a) to 2(d)) on the one hand and petitioner No. 2 (e) on the other is pending before the Bombay City Civil Court and question as to which of the petitioners are entitled to the amount cannot be determined in the present proceedings. It is undoubtedly true that the disputed inter-se is pending between the petitioners and Suit No. 212 of 1988 is pending in the Bombay City Civil Court for resolution of the dispute. Smt. Nanavati submitted that the petitioner No. 2(e) cannot claim any amount and the bank guarantees as well as the amount to be deposited by the Department should be paid over to petitioner Nos. 2(a) to 2(d) only. Smt. Nanavati relied upon order dated November 26,1993 passed by Division Bench of this Court on Notice of Motion No. 656 of 1993 in Writ Petition No. 1681 of 1993. This Motion was taken out at the behest of petitioner No. 2(e) and after hearing the parties, the Division Bench directed that in accordance with the earlier order of the Division Bench dated August 5, 1993, the Department shall handover the bank guarantees to Shri B.I. Dalvi, Advocate for petitioner Nos. 2(a) to 2(d) within one week. Shri Dalvi assured the Court that the said bank guarantees will be presented to the concerned bank for cancellation within one week of the receipt. Relying on this order of the Division Bench, it was claimed by Smt. Nanavati that petitioner No. 2(e) cannot claim any interest in the said amount. In our judgment, it would not be appropriate in the present proceeding to determine the interest of petitioners inter alia in respect of the amount covered by bank guarantees. It would be appropriate on the facts and circumstances of the case to direct the Department to return bank guarantees which are not encashed to petitioner Nos. 2(a) by 2(d) in accordance with the order dated November 26, 1993 passed by the Division\\Bench on Notice of Motion No. 653 of 1993. The amount which the Department is directed to deposit with the Prothonotary and Senior Master within two weeks from today shall be transmitted to the credit of Suit No. 212 of 1988 pending in the Bombay City Civil Court. The petitioner Nos. 2(a) to 2(d) are at liberty to move that Court for direction as regards disbursement of the amount. The City Civil Court to pass appropriate order after examining the claim of petitioners Nos. 2(a) to 2(d) as well as petitioner No. 2(e). We wish to make it clear that merely because the bank guarantees which are not encashed are returned to petitioner Nos. 2(a) to 2(d) the claim of petitioner No. 2(e) in respect of the amount covered by those bank guarantees is not decided and the claim of petitioner No. 2(e) will be decided by an appropriate Court. Any order passed in these proceedings should not be considered as determining right, title and interest of petitioner Nos. 2(a) to 2(e) in respect of the amount covered by those bank guarantees. In view of this direction, in our judgment, it is not necessary to take any proceedings under the Contempt of Courts Act against the respondents. It is made clear that respondents are entitled to adopt appropriate proceedings to recover duty and penalty amount out of estate of deceased petitioner No. 2.
Accordingly, the four Notices of the Motion taken out by the Department are disposed of and the only modification of order dated August 5,1993 passed by Division Bench in four writ petitions is that the time to complete adjudication is extended till December 2, 1993. The four Notices of Motion taken out by petitioner Nos. 2(a) to 2(d) are dismissed. In the circumstances of the case, there will be no order as to costs in all the eight Motions.