JUDGMENT A. Banerji, J.
1. The principal question in this petition is whether the respondents are justified in withholding the seized goods belonging to the petitioner and whether they are liable to return the same to the petitioner no. 1.
2. The officers of the Central Excise and Customs intercepted, seized certain imported goods at Ghaziabad. Petitioner no. 1 claimed through its Managing Director, petitioner no. 2, that the goods belonged to petitioner no. 1 and had been imported by it through proper invoice and import permit. The petitioner claimed that the seized goods which are components of watches have not yet been returned to the petitioner. It was further pleaded that in view of the provisions of Section 110 of the Customs Act, 1962, hereinafter referred to as 'the Act', it was mandatory for the respondents to have given a show cause notice as contemplated under Section 124(a) of the Act within six months of the seizure of the goods, and since that was not done, they were liable to return the seized goods. The petitioners therefore claimed that the matter remained pending with the respondents and further proceeding before them was liable to be set aside and a direction be issued for the return of the seized goods to the petitioner no. 1.
3. The case of the respondents, on the other hand, was that the goods were smuggled item and did not belong to petitioner no. 1 and had been rightly seized. Further that the notice under Section 110(2) had been duly given and the respondents were entitled to continue the proceedings against the petitioners and were not liable to return the seized goods.
4. Two principal questions arise in this case : Firstly, whether the seizure was illegal, as the officers had no reason to believe that the goods were liable to confiscation under the Act. Secondly, there was no notice as contemplated under Section 110(2) of the Act. The latter question raises two subsidiary questions viz, what is the meaning to be given to the words 'notice in respect thereof is given under Section 110(2) of the Act' and secondly, whether the service of the notice on the alleged agent of a Director of a Company was a valid service of the said notice.
5. We have heard the learned counsel for the petitioner, Shri H.S. Sharma, and the learned Standing Counsel for the Union of India, Shri K.C. Sinha. If either of the two questions mentioned above is answered in the affirmative the order of seizure would be invalid and the consequence would be that the writ petition would succeed. We propose to deal with the second question first.
6. First a few facts. The petitioner Company is a Private Limited Company with its registered office at 25-B, Pleasure Garden, Chandni Chowk, New Delhi, and they have their factory for the manufacture of watches at Begum Bridge, Meerut. Petitioner no. 2 is the Managing Director of Petitioner no. 1, hereinafter referred to as 'the Company'. The Company had obtained a Central Excise licence for the manufacture of watches, time pieces and clocks. The petitioner Company had imported against bills and invoices a number of packets containing components of watches under the import licence and they had taken those packets on payment of custom duty from the Customs House, New Delhi on the 29th August, 1981. The packets containing the components of watches were being transported from New Delhi to the petitioner's factory at Meerut. The vehicle which was transporting the goods was checked by the Central Excise Officers of the Division headed by Respondent No. 3. They detained the goods with the vehicle. The goods were seized. A Panchnama was executed on 11-9-1981 by the officers of respondent no. 2, Collector of Central Excise and Customs, Meerut.
7. According to the petitioners the goods were seized on the 29th August, 1981 along with all import documents.
8. No show cause notice, oral or written, in terms of Section 124 read with Section 110(2) of the Act was given either to the petitioners or its authorised agent within a period of six months from the date of the seizure.
9. The respondents' case is that the goods were seized only on the 11th September, 1981 and the period of six months expired on the 11th March, 1982. On the question of service, the case of the respondents was that a notice had been served on Shri Anil Kumar Gupta, an agent of the Director, and it would be deemed to be a valid service on the petitioners. Even otherwise it was stated that summons were issued on the 19th September, 6th October and 20th October, 1981, and the petitioners were aware of the pending proceeding and as such were aware of the notice given under Section 110(2) of the Act. The respondents' case further is that the show cause notice was issued on 25-2-1982 by respondent no. 3 and the same was served on the petitioners by the officers of respondent no. 4 (Assistant Collector, Central Excise, Meerut). On a further elucidation, it transpired that the notice was not served either on petitioner no. 1 or petitioner no. 2, but had been served on one Anil Kumar Gupta, who was said to be an agent of the petitioners, on 27-2-1982 orally.
10. It is apparent from the above that there is a dispute as to the date of the seizure of the goods and about the service of the notice. While the petitioners' case is that the seizure was effected when the goods were being taken from Delhi to Meerut, the respondents' case was that it was seized only on the 11th of September, 1982 and a Panchnama was prepared. In our opinion, nothing much turns on this point. Whether the goods were seized on the 29th of August or 11th of September, 1981. The notice is said to have been given on the 27th February, 1982 which will be within 6 months. Hence, this will not make much difference in the present case. What is essential is the giving of a show cause notice and within six months of the date of the seizure. The giving of the show cause notice is hotly disputed. The petitioners maintained that no such notice was ever given to them. The respondents, on the other hand, maintained that the notice was given to Shri Anil Kumar Gupta whom the respondents had reason to believe to be the agent of the petitioners. It would be relevant to cite the provisions of Section 110(2) of the Act:
"110 (2). Where any goods are seized under Sub-section (1) and no notice in respect thereof is given under Clause (a) of Section 124 within six months of the seizure of the goods, the goods shall be returned to the person from whose possession they were seized :
Provided that the aforesaid period of six months may, on sufficient cause being shown, be extended by the Collector of Customs for a period not exceeding six month."
It stipulates that when any goods are seized under Sub-section (1) i.e. by a proper officer having reasons to believe that the goods are liable to confiscation under the Act, a show cause notice has to be given to the person owning the goods within six months of the seizure of the goods. If the notice as contemplated under Clause (a) of Section 124 of the Act is not given the goods have to be returned. What is relevant under this provision is the giving of a show cause notice as contemplated under Clause (a) of Section 124 of the Act. The provisions of Section 124 of the Act read as follows :
"124. No order confiscating any goods or imposing any penalty on any person shall be made under this Chapter unless the owner of the goods or such person-
(a) is given a notice in writing informing him of the grounds on which it is proposed to confiscate the goods or to impose a penalty."
This provision makes it imperative that before confiscating any goods or imposing any penalty a notice has to be given to the owner of the goods in writing intimating to him the grounds on which it is proposed to confiscate the goods or to impose the penalty. The period of time within which the aforesaid notice has to be given is fixed as six months from the date of the seizure, but the proviso to Section 110(2) of the Act enables the Collector of Customs to extend the said period by six months on sufficient cause being shown. It is, therefore, clear from the above that whenever goods are seized by the Customs authorities with the object of confiscating the goods or imposing penalty, a show cause notice has to be given to the owner of the person from whose possession the goods were seized, and such a notice had to be served within six months from the date of the seizure.
11. A pertinent question arises here as to the meaning of the word 'given' in the phrase 'notice in respect thereof is given'. Whether the passing of an order directing issue of a notice is sufficient ? Or does it contemplate service of the said notice on the owner or the person from whose possession the goods were seized ? An argument was raised on behalf of the respondents that an order was passed for the issue of notice as contemplated under Section 110(2) read with Section 124(a) of the Act, and this fact was known to the petitioners and it was tantamount to the giving of the notice. In other words, the contention was that even if the notice was not served on the petitioners by registered post or even directly, the very fact that the petitioners were aware of the proceedings, it would be sufficient compliance with the provisions of law. We are unable to accept this contention. The giving of the notice does not mean mere passing of an order for the issue of notice by an officer competent to do so, but means due service of the notice on the party concerned. The object of the giving of the notice is to afford an opportunity to the party concerned to show cause against the seizure and the proposed confiscation of the goods or the imposition of penalty. The notice is also required to mention the grounds on the basis of which it is proposed to confiscate the goods or to impose a penalty. Until the concerned party is aware of the grounds, he cannot effectively show cause. In our opinion it is imperative for the authorities under the Act not only to pass an order for the issue of a show cause notice, but also to cause the notice to be served on the concerned party.
12. We are supported in our view in this respect by a decision of a Division Bench of the Gujarat High Court reported in AIR 1972 Guj. |126- A.M. Soni v. Union of India. The Division Bench was considering the meaning of the words 'given a notice' as used in Section 79 of the Gold (Control) Act, 1968 and Sections 110(2) and 124(a) of the Customs Act. The Division Bench held that the notice contemplated by Section 124 of the Customs Act and Section 79 of the Gold (Control) Act cannot be said to have been given unless and until it is issued and reaches the person concerned. In this context, the Division Bench referred to a decision of the Supreme Court in the case of Narasimhiah v. Singri Gowda, AIR 1966 SC 330. Their Lordships were considering as to when a notice of calling a meeting contemplated by the provisions of the Mysore Town Municipalities Act, 1951 could be said to have been given. Das Gupta, J., delivering the judgment of the Supreme Court observed :
" 'Giving' of anything as ordinarily understood in the English language is not complete unless it has reached the hands of the person to whom it has to be given. In the eye of law however 'giving' is complete in many matters where it has been offered to a person but not accepted by him. Tendering of a notice is in law therefore giving of a notice even though the person to whom it is tendered refuses to accept it. Thus as soon as the person with a legal duty to give the notice despatches the notice to the address of the person to whom it has to be given the giving is not complete.
The main object of giving the notice under Section 27(3) is to make it possible for the Concillors to so arrange their other business as to be able to attend the meeting...."
13. The Division Bench of the Gujarat High Court held :-
"The whole object of giving notice is to inform the person concerned of the grounds on which it is proposed to confiscate the goods or to impose a penalty and to give him an opportunity to make a representation in writing within such reasonable time as may be specified in the notice and he must be given reasonable opportunity of being heard in the matter."
We are in entire agreement of the above view. The giving of the notice would be complete, in our opinion only when it reaches the party concerned. In other words, the notice has to be tendered to the party. Of course, the party can be served when the notice is sent by registered post correctly addressed and even service on the agent of the party would be deemed sufficient.
14. In the present case, it was necessary to find out whether the show cause notice was served or in other words reached the petitioners. It would, therefore, be relevant to examine the respondents' case in regard to service of the notice. Their case is that the notice was served on the 27th February, 1982 on Shri Anil Kumar Gupta, whom the officers or the respondents believed to be the agent of the petitioners. In paragraphs 20 (page 10 of the counter affidavit) the averment reads as follows :-
"Earlier on 28-2-1982 when the answering respondent visited the premises of the factory for conducting the budget days stock taking (which is invariably mandatory every year on the day of the presentation of the budget), the Director as well as other authorities of the petitioner were informed about the said show cause notice which was served on Anil Kumar Gupta on 27-2-1982 orally."
According to the aforesaid averment, the officers of the respondents, who had visited the Company premises on the 28th February, 1982 had informed the Director and other authorities of the Company and the show cause notice had been served on Shri Anil Kumar Gupta on the previous date. The company has two Directors as revealed in the very same paragraph on page 13 of the counter affidavit, but it is not mentioned in this affidavit as to which of the two Directors and which authority of the petitioners was informed about this show cause notice being served on Anil Kumar Gupta. The averment an page 10 of the counter affidavit indicates that the show cause notice was served on Shri Anil Kumar Gupta orally. Section 124(1) of the Act contemplates giving of a show cause notice in writing. Mere intimation of the issuance of the show cause notice is not enough. The notice has to be in writing and must contain the grounds on which the proposed confiscation and the imposing of penalty are based. Where the law requires the giving of a notice in writing, the giving of a notice orally is no compliance with the requirement of law. It is trite that in all proceedings where punitive action is proposed, the provisions of the law must be strictly complied with. When the goods of a party are proposed to be confiscated or a penalty is proposed to be imposed on the person. It is imperative that the show cause notice should be in accordance with the provisions of Section 124(a) and must also be given within six months as stipulated under Section 110(2) of the Act.
15. In the above view of the matter, there was no due compliance with the requirements of law and, as such, there was no due service of notice or in other words, due notice had not been given to the petitioners.
16. In view of the above, it would not be strictly necessary to go into the question as to whether Shri Anil Kumar Gupta was the agent of the petitioner company or its Director, but since the question has been raised in arguments, we propose to deal with this matter also. Admittedly, Shri A.K. Gupta was not a Director of the company. Shri Anil Kumar Gupta was a shareholder of the company. There is no material on the record to show that Shri Anil Kumar Gupta was the agent either of the two Directors of the company or the agent of the company. The company is an existing company within the meaning of the Companies Act, 1956, and the notice on the company is to be served on the principal officer of the company. It has not been shown that Shri Anil Kumar Gupta was the principal officer of the company. In this context, reference may be made to Section 153 of the Act, which provides for the service of order, decision or notice under the Act. Section 153 of the Act reads as follows :
"153. Service or order, decision etc.-Any order or decision passed or any summons or notice issued under this Act, shall be served -
(a) by tendering the order, decision, summons or notice or sending it by registered post to the person for whom it is intended or to his agent; or
(b) If the order, decision, summons or notice cannot be served in the manner provided in Cl. (a), by affixing it on the notice board of the customs house."
In view of the above provisions, the notice issued under Section 110(2) of the Act could be served by tendering the notice to the party or sending it by registered post to the person for whom it was intended or to his agent. In view of the provisions of Section 124(a) of the Act, the notice had to be in writing. The notice could be given either by tendering it directly to the party or to his agent or it could be sent by registered post to the party or his agent. In the present case, admittedly it was not sent by registered post either to the party or to his agent. The allegation that it was tendered to the agent of the party is also not established because nothing was served in writing.
17. However, an attempt has been made to show that besides the petitioner Company there were two other firms viz. M/s. Olympic Times India (P) Ltd., and M/s. Olympic Electronic Company, which were adjuncts of the petitioner company. Shri Anil Kumar Gupta is said to be a partner of M/s. Olympic Electronic Company and the other partner was Smt. Anita Gupta, who was the Director of the petitioner Company. A presumption was sought to be raised that intimation to Shri Anil Kumar Gupta was tantamount to a service on Smt. Anita Gupta, a Director of the petitioner company. The attempt, in our opinion, is futile, for until the respondents established that Shri Anil Kumar Gupta was the agent of the petitioners, the alleged service of the notice on Shri Anil Kumar Gupta is of no avail. In our opinion, there was no service of the notice as contemplated by Section 110(2) read with Section 124(a) of the Act. It is not the case of the respondents that any other notice was served on the petitioners within a period of six months from the date of the seizure of the goods. The service of the summons on the petitioners in the year 1981 is of no avail, for according to the respondents the notice was issued only on the 25th February, 1982. Since the provisions of Section 110(2) of the Act had not been complied with, the seized goods were liable to be restored to the petitioner. Consequently, the proceedings for confiscation of the goods or imposing a penalty on the petitioners are liable to be quashed.
18. In view of the above, it is not necessary to go into the first question viz. whether the officers had reason to believe that the goods were liable to confiscation under the Act. Even if the question is answered in the negative even then the petition will have to be allowed on the grounds of non-compliance with the requirements of Section 110(2) of the Act. However, we do not express any opinion on the first point, as, in our opinion, a decision on the second point is sufficient to dispose of the matter.
19. In view of the above, the writ petition succeeds and is allowed. The seizure of the goods by the respondents is liable to be set aside, and a direction is issued to the respondents and 3 to return the seized goods to the petitioners. Further, proceedings for the confiscation of the seized goods and for the imposition of penalty on the petitioners are quashed. The petitioners will be entitled to their costs.