1. The petitioner-M/s Dewan Tyres Ltd., a Company registered under Companies Act, 1956, was engaged in manufacturing of Automobiles Tyres and Tubes. At the time of filing of this writ petition, the petitioners are said to have closed business, having become sick.
2. Be that as it may, the dispute relates to the period of 1994, when petitioner-Company was granted Value Based Advance Licence No. P/L/2322966 on 10.02.1994 by Controller, Import and Export, Ministry of Commerce Industries under Duty Exemption Scheme under Imports and Exports (Control) Act, 1947 (hereinafter referred to as the "Act, 1947"). The Licence was issued for import of CIF (Cost, Insurance and Freight), for value of U.S. Dollars 1,42,445/- (INR Rs. 45,58,240/-). As per the condition of licence, petitioner-Company was to fulfill export obligation of FOB (Free on Board), value of U.S. Dollars 2,27,344/- (INR Rs. 72,75,000/-). The import period of licence was one year from the date of issuance and export period was three years from the date of issuance of licence. The goods imported against advance licence was to be utilized in accordance with provisions of import and export policy for 1992 to 1997.
3. The petitioners claimed to have complied with aforesaid obligation and also did export as per export obligation under licence through 11 shipping bills. It is also claimed by petitioners that they submitted original shipping bills alongwith Bank realization certificates, with the department, as and when the trade was carried out.
4. In 2003 petitioner-Company suffered huge losses and was registered with the "Board of Industrial and Financial Reconstruction" (hereinafter referred to as the "BIFR") under Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as the "Act, 1985"), who declared it sick on 28.04.2003. The manufacturing activities of Company came to a halt in 2006. The employees and other officials left the job since then.
5. For the first time, petitioners received an adjudication order dated 11.09.2009, i.e., after 13 years from discharge of export obligation, alleging that petitioners have not submitted export details and, therefore, the competent authority has come to conclusion that advance licence has been misutilized and petitioners have violated the provisions of Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as the "Act, 1992"). Consequently, it imposed penalty of Rs. 2,27,91,200/- upon petitioners in purported exercise of power under section 11(a) of Act, 1992. The petitioners were informed that they must deposit entire penalty amount, failing which, if they prefer appeal, the same would be rejected for non-compliance of Section 14 of Act, 1992.
6. Petitioners submitted an appeal stating that they never received any show cause notice and entire proceedings as also the order dated 11.09.2009 are in violation of principles of natural justice and illegal, moreso when they have complied with conditions of export and submitted original documents with department. However, petitioners appeal has been rejected by Additional Director General of Foreign Trade (hereinafter referred to as the "ADG FT") vide order dated 13.06.2011.
7. This writ petition, under Article 226 of the Constitution of India, has been filed by petitioners for issuance of a writ of certiorari quashing the penalty order dated 11.09.2009 as also the appellate order dated 13.06.2011.
8. Sri Vivek Chaudhary, Advocate assisted by Sri Rahul Mishra and Sri Abhishek Mishra, Advocates, has advanced arguments on behalf of petitioners while Sri R.B. Singhal, learned Assistant Solicitor General of India assisted by Sri K.N. Singh, Advocate has appeared and made his submissions on behalf of respondents.
9. Learned counsel for the petitioners has assailed the impugned penalty orders on four grounds:
(i) The Deputy Director General, who has passed impugned order of penalty, had no authority under Section 13 read with notifications issued thereunder to impose penalty of more than one crore and, therefore, the impugned order is without jurisdiction.
(ii) A penalty order after more than a decade is patently illegal and unreasonable.
(iii) There is no finding recorded by respondents in the impugned orders that petitioners have any intention or motive to violate the provisions of Act, 1992 or the terms and conditions of licence. In absence of any finding in respect of mens rea, penalty could not have been imposed.
(iv) Lastly, there was no valid notice issued to petitioners before passing impugned adjudicatory order imposing penalty and, therefore, entire proceedings including impugned order of penalty is void ab initio being in violation of principles of natural justice read with the procedure prescribed under the statute.
10. Per contra, Sri Singhal argued that order of penalty has been passed by Deputy Director General, who was competent to pass such order. Enough opportunity was given to petitioners but they failed to avail. An order of penalty cannot be subjected to period of limitation when none is prescribed in statute and in the present case non-compliance of conditions of export licence per se demonstrate mens rea unless proved otherwise by petitioner.
11. I have heard learned counsels for the parties and perused the record.
12. Act 1992 was enacted to provide for development and regulation of foreign trade by facilitating imports and augmenting exports from India and for matters connected therewith or incidental thereto. It was assented to by President on 07.08.1992 and except Sections 11 and 14, which came into force prospectively, i.e., at once, the remaining provisions of Act were given retrospective effect i.e. from 19.06.1992.
13. In order to adhere to the conditions of import and export, and to regulate it, Section 8 confers power of suspension and cancellation of importer-exporter code number and Section 9 confers power of suspension and cancellation of licence. The term "licence" is defined in Section 2(g) and reads as under:
"(2)(g) "licence" means a licence to import or export and includes a customs clearance permit and any other permission issued or granted under this Act."
14. Once such licence is granted, the Director General or the officer authorized under sub-section (2) of Section 9, for good and sufficient reasons, which are to be recorded, in writing, may suspend or cancel any licence. However such cancellation or suspension precedes compliance of principle of natural justice inasmuch as the authority concerned has to give a reasonable opportunity of being heard to the licence holder. The order of suspension or cancellation, if any, is subject to appeal under sub-section (5) of Section 9 of Act, 1992. Both these provisions are part of Chapter III of Act, 1992.
15. Then comes Chapter IV, which deals with search, seizure, penalty and confiscation. This Chapter, in effect, deals with the provisions which are penal in nature. Section 11 provides various penalties, if any person has violated the provisions of Act, 1992 or the rules framed and orders issued thereunder or conditions of export and import policy. Sub-section (1) of Section 11 makes it obligatory upon a licence holder to observe faithfully, the provisions of Act, 1992, or the rules framed and orders issued thereunder, or conditions of export and import policy, which is for the time being in force. The language of sub-section (2) of Section 11 is in prohibitive term, namely, none shall import or export except in accordance with provisions of Act, Rules and Policy etc. Sub-section (2) provides the quantum of penalty for violation of sub-section (1), i.e., if any person makes or abates or attempts to make any export or import in contravention of Act, 1992 or Rules or Orders made thereunder or export and import policy, he would be subject to a penalty not exceeding Rs. 1000/- or five times of value of goods in respect of which any contravention is made or attempted to be made, whichever is more. Sub-section (3) to (6) of Section 11 are in the nature of procedure including the provision akin to compounding and also relating to seizure and release of goods.
16. Sub-section (3) of Section 11 provides that a person, who has contravened the mandate under Section 11(1) and admits such contravention, such person or class of persons may be subjected to penalty which may be determined by way of settlement as per the procedure prescribed and the adjudicating authority may decide such amount by way of settlement. Sub-section (4) talks of recovery of amount of penalty, if not paid for and sub-section (5) talks of confiscation of goods which are subject matter of such contravention.
17. Section 12 provides that penalty imposed or confiscation made shall not prevent imposition of any punishment to which persons contravening such provision is liable under any other law for the time being in force. Therefore, penalty in Section 11 is in addition to other penal provisions, if any, available in any other law.
18. Section 13 talks of authority who may impose such penalty and reads as under:
"13. Adjudicating Authority.--Any penalty may be imposed or any confiscation may be adjudged under this Act by the Director General or, subject to such limits as may be specified, by such other officer as the Central Government may, by notification in the Official Gazette, authorize in this behalf."
19. Section 14 makes it obligatory upon the adjudicatory authority that no penalty shall be imposed or order of confiscation shall be passed unless the owner of goods or conveyance or other person concerned has been given a notice in writing informing him all the grounds whereupon it has proposed to impose a penalty or to confiscate such goods or conveyance and such person is given an opportunity of making representation in writing within such reasonable time as may be specified in the notice. It also says that if such person so desires, he may be given an opportunity of hearing also, i.e., oral hearing.
20. Chapter V thereafter deals with provisions of appeal and revision with which for the time being this Court is not concerned.
21. Chapter VI contains three Sections, namely, Sections 18, 19 and 20. Section 19 confers power upon Central Government to make rules for carrying out the provisions of Act and also for certain specific subjects, stated under sub-section (2) thereof.
22. In exercise of power under Section 19 of Act, 1992, Foreign Trade (Regulation) Rules, 1993 (hereinafter referred to as the "Rules, 1993") have also been framed which were published in official gazette dated 30.12.1993 and have come into force from the date of publication in the official gazette.
23. Rule 16 thereof talks of procedure for settlement, if any, where a person contravenes previsions of Act, Rules, Regulations or orders etc. in the process of export and import, after having been issued a notice proposing penalty for such violation, admits the same, and, is desires of settling the amount of penalty. It reads as under:
"Rule 16. Settlement.--(1) The Adjudicating Authority may determine the amount of settlement to be paid by the person to whom a notice, has been issued and who has opted for settlement and has admitted the contravention specified in the notice, in the following cases, namely:-
(i) where it is of the opinion that the contravention of any provision of the Act or these rules or the Policy has been made without mens-rea or without wilful mistake or without suppression of facts, or without any collusion, or without fraud and forgery, or without an intent to cause loss of foreign exchange; or
(ii) where the person importing the goods has not met the requirements of the actual user conditions as specified in the policy and has not misutilised the said imported goods; or
(iii) where the person importing the goods has not fulfilled the export obligation and has not misutilised the said imported goods.
(2) Where a person has opted for settlement under sub-rule (1), the settlement made by the Adjudicating Authority shall be final."
24. Now I come to the first question, whether Deputy Director General was competent to pass the order of penalty or not since it goes to the very root of the matter and renders entire proceedings without jurisdiction if this issue is decided in favour of petitioners. It depends on the interpretation of Section 13 of Act, 1992. A perusal of above provision shows that a penalty may be imposed or any confiscation may be adjudged by the Director General, or, subject to such limits, as may be specified, by such other officer as the Central Government may by notification in the official gazette authorize in this behalf.
25. The submission of learned counsel for the petitioners is that the phrase "subject to such limit as specified' qualify the words "any penalty". In other words what Sri Chaudhary contends, is that, if power of penalty is to be exercised by any officer other than the Director General, he would be such officer who is authorized in this behalf by Central Government by notification in the official gazette but such officer must be specified subject to limits of quantum of penalty and none else. What he argues is that the authorization of other officers would be in the context of quantum of penalty and the words "subject to such limits" is in the context of quantum of penalty and not the quantum of value of goods in respect whereof there has been contravention. His argument, in fact, attempts to render notification dated 20.01.1999, as amended by orders dated 06.03.2000 and 14.09.2006, void. It reads as under:
Adjudicating authority for Foreign Trade Regulations.--In exercise of the powers conferred by section 13 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992) and in supersession of Notification of the Government of India in the Ministry of Commerce No. S.O. 145(E), dated 24th February 1998 published in Gazette of India (Extraordinary) Part-II, Section 3, sub-section (ii) except as respects things done or omitted to be done before such supersession, the Central Government hereby authorises the officers specified in column 2 of the Table below for the purposes of exercising powers under section 13 read with section 11, subject to the limits specified against such officers in the corresponding entry in column 3 of the said Table, namely:-
Sl.No Designation of officer Value of the goods in relation to which the power may be exercised.
Additional Director General of foreign Trade Without limit 2 Zonal Jt. Director General of Foreign Trade/Export Commissioner Upto Rs. 10 crores 3 Joint Director General of Foreign Trade Upto Rs. 5 crores 4 Deputy Director General of Foreign Trade Upto Rs. 1 crore 5 Assistant Director General of Foreign Trade Upto Rs. 10 lakhs 6 Foreign Trade Development Officer Uto Rs. 5 lakhs 7 Development Commissioner, Export Processing Zone Without limit in respect of Export Oriented Units in Export Processing Zone under their jurisdiction
26. What he submits is that in table, column no. 2 deals with designation of officer while in column no. 3, instead of quantum of penalty or the amount of penalty the Central Government has provided limit in respect of value of goods, in relation to which power is to be exercised and, therefore, he endevours to pursue this Court to hold that this notification itself is not consistent with Section 13 and, therefore, bad in law, meaning thereby the authorization made to various authorities other than Director General is patently void.
27. Having gone through the various provisions of Act, 1992 including Section 13, read with the above notification, I find myself unable to agree with above submissions. This Court has seen that quantum of penalty which may be imposed under Section 11 is with reference to value of good in respect of which contravention is made. The minimum amount of penalty is Rs. 1000/- or five times of the value of goods in respect of which any contravention is made or attempted to be made in view of use of the word, "whichever is more". Therefore, wherever the value of goods is more than Rs. 201/- the penalty under Section 11(2) would always be five times of the value of such goods for the reason that quantum of penalty is five times of value of goods and, therefore, whenever the value of goods exceed Rs. 200/- the amount of penalty would be Rs. 1000/- and more. The value of goods, therefore, is directly related with quantum of penalty. The words "subject to such limits as may be specified" cannot be read as prefixed with word "any penalty" under Section 13 of Act, 1992. The phrase/words "subject to such limit as may be specified" are independent. The limit as may be specified is open to Central Government to determine in the context of provisions of Act so as to give effect or carry out its provisions effectively. The Central Government has authorized various officers to function as adjudicating authorities competent to impose penalty under Section 11 of Act, 1992 with reference to the value of goods in respect of which power has to be exercised. In my view, this notification is well within the ambit of Section 13.
28. The words of statute are not to be given a restricted or narrowed meaning unless it is necessary by implication so as to make the provision reasonable, practicable and workable. If otherwise there is no ambiguity, the words in a statute are to be given their widest amplitude so as to cover each and every incident which may reasonably be conceded within the ambit thereof. The authorization could be made by Central Government, in my view, with reference to quantum of penalty or the value of goods or any other reasonable and relevant indicia. To suggest that "subject to such limits" will always mean that it is and it must be in the context of quantum of penalty, would result in rendering the scope of authorization to be made by Central Government narrowed down to a large extent which, in my view, would not be justified. There is no ambiguity in the statute so as to compel this Court to do so and by not confining scope of above phrase to the extent as suggested by learned counsel for the petitioner, neither this Court would be doing any violence nor it can be said that statute is being misconstrued. Moreso, when a power has been exercised by State authorities in a particular manner, there is no presumption in validity thereof unless shown otherwise. If exercise of power can reasonably be construed within the scope and ambit of statute, the Court will not make any endeavor to make the power exercised invalid either by process of interpretation so as to narrow down the scope of statute or otherwise. The Central Government has made authorization with reference to value of goods and I find no per se illegality therein. It is within the scope of Section 13.
29. That being so, since value of goods in respect of which contravention has been alleged was more than Rs. 45 lacs but less than Rs. 1 crore, therefore, the Deputy Director General of Foreign Trade was well within his competence to take action under Section 11 and pass order of penalty. It thus cannot be said that order of penalty is without jurisdiction. The submission raised otherwise on behalf of petitioners is, therefore, rejected.
30. Then comes the second question, that a penalty order cannot be passed after more than one decade.
31. The pleadings of the parties in the case in hand show that the licence having been issued on 10.02.1994, petitioners were to complete export obligation upto February, 1995 and import obligation upto February, 1997. So far as export obligation is concerned, he was also under an obligation to produce requisite documents in respect of export obligation before licensing authority within 30 days after expiry of period meant for export obligation.
32. The case set up by respondents is that the petitioners failed to comply with said obligations while petitioners states that they submitted all the original documents with licensing authority. However, petitioners have failed to substantiate their stand inasmuch as no acknowledgement or receipt has been produced either before respondents or before this Court. In absence thereof this Court has no reason to believe what petitioners contend and, instead, finds the stand taken by respondents more creditworthy and believable.
33. The respondents claimed to have issued first letter on 22.06.1998 requesting petitioners to submit requisite export documents for redemption of legal undertaking. As per their stand, petitioners failed to reply the said notice. Another notice claimed to have been issued by respondent-competent authority, i.e., respondent no. 2 on 07.08.1998 and thereafter several reminders were issued on 02.03.2000, 24.05.2000, 16.08.2000, 27.09.2000, 24.01.2000 and 11.06.2003. The copy of first two notices dated 22.06.1998 and 07.08.1998 have been placed on record as Annexures-2 and 3 to the counter affidavit.
34. A perusal of notice dated 22.06.1998 shows that in reference to petitioners' own letter dated 23.02.1998 they were advised to furnish original documents of shipping bill, bank realization certificate etc. for redemption. Then the notice dated 07.08.1998 requires petitioners to submit documents like shipping bills, bank certificate etc. by 08.09.1998, failing which it shall be presumed that petitioners have defaulted 100% in fulfillment of export obligation against advance import licence and appropriate action would be taken accordingly. The petitioners failed to submit documents hence were declared defaulter by order dated 31.03.2004/07.04.2004. Thereafter notice proposing penalty under Section 11(2) of Act, 1992 was issued on 28.06.2005. It thus cannot be said that here is a case where respondents initiated proceedings for the first time after 10 years inasmuch as before declaring petitioners defaulter, respondents have given enough opportunity to them to submit requisite documents.
35. However, after reading para 3 of the notice dated 28.06.2005, it appears that earlier letters were not served upon petitioners and received back undelivered. Therefore, they could not take any action.
36. Be that as it may, Section 11 is a penal provision and no period of limitation has been prescribed. It is no doubt true that normally an action must be taken within a reasonable time but in a case where penal provision exists, without any provision providing limitation, it would not be justifiable on the part of Court to legislate by interpretation so as to introduce a period of limitation in such a statute.
37. Learned counsel for the petitioners has relied on a Division Bench decision of Punjab and Haryana High Court in Neeldhara Weaving Factory Vs. DGFT, New Delhi, 2007(210) ELT 658 wherein penalty was imposed in 2006 in respect of certain export obligations which are said to have been violated in 1988 and the Court held that belated penalty is bad. I have carefully gone through the aforesaid judgment. The Court relied on four judgments of Apex Court, i.e., Government of India Vs. Citedal Fine Pharmaceuticals, 1989(42) ELT 515; State of Gujarat Vs. Patel Raghav Natha, AIR 1969 SC 1297; Ibrahimpatnam Taluk Vyavasaya Collie Sangham Vs. K. Suresh Reddy and others, AIR 2003 SC 3592; and, State of Himachal Pradesh Vs. Rajkumar Brijender Singh, AIR 2004 SC 3218. It also relied on a judgment of Bombay High Court in Parekh Shipping Corporation Vs. Asstt. Collector, 1995(80) ELT 781 and a Madras High Court's decision in Wilco and Co. Vs. Union of India, 2003(151) ELT 49.
38. The dispute in Government of India Vs. Citedal Fine Pharmaceuticals (supra) relates to Rule 12 of Medicinal and Toilet Preparations (Excise Duties) Rules, 1956, the vires whereof was challenged. Under Medicinal and Toilet Preparations (Excise Duties) Act, 1955 certain manufacturers of medicinal preparations were to obtain licence and pay duty. M/s Citedal Fine Pharmaceuticals failed to do so. Commercial Tax Officer then issued notices under Rule 12 of Medicinal and Toilet Preparations (Excise Duties) Rules, 1956 directing them to pay duties on all medicinal preparations manufactured by them after 01.06.1961. These notices were in the shape of notice of demand. The notices were challenged on the ground that Rule 12 is ultra vires of the Act, which challenge succeeded in High Court and Rule 12 was struck down. The question which came to be considered before Apex Court was that Act was silent on the question of levy of duty on escaped turn over hence Rule 12 which provided for recovery of escaped duty was outside the purview and scope of Act. The Court held that rule carries out the purpose of the Act as it seeks to provide for recovery of duty. Mere fact that no period of limitation for recovery of duty is provided, that by itself will not make Rule 12 unreasonable and arbitrary, i.e., violative of Article 14 of the Constitution. Rejecting contention in para 6 of the judgment, the Court said:
"We find no substance in the submission. While it is true that rule 12 does not prescribe any period within which recovery of any duty as contemplated by the rule is to be made, that by itself does not render the rule unreasonable or violative of article 14 of the Constitution. In the absence of any period of limitation, it is settled that every authority is to exercise the power within a reasonable period. What would be a reasonable period would depend upon the facts of each case. Whenever a question regarding the inordinate delay in issuance of a notice of demand is raised, it would be open to the assessee to contend that it is bad on the ground of delay and it will be for the relevant officer to consider the question whether, in the facts and circumstances of the case, the notice of demand for recovery was made within a reasonable period. No hard and fast rule can be laid down in this regard as the determination of the question will depend upon the facts of each case."
39. The aforesaid decision, in my view, does not further case of petitioners on the point and issue involved in the present case.
40. In State of Gujarat Vs. Patel Raghav Natha (supra) the dispute relates to grant of permission under Section 65 of Bombay Land Revenue Code, 1879. The Collector granted permission on 02.07.1960 to petitioner, M/s Patel Raghav Natha and others to use some land for non-agricultural purposes but the same was cancelled by Commissioner vide order dated 12.10.1961. Therein the Court found that an order passed by Collector under Section 65 though was revisable by Commissioner under Section 211 and no period of limitation was prescribed but such revisional power ought to have been exercised within a reasonable time. Looking to the scheme of statute the Court in para 14 of the judgment said:
"14. It seems to us that Section 65 itself indicates the length of the reasonable time within which the Commissioner must act under, Section 21 1. Under Section 65 of the Code if the Collector does not inform the applicant of his decision on the application within a period of three months the permission applied for shall be deemed to have been granted. This section shows that a period of three months is considered ample for the Collector to make up his mind and beyond that the legislature thinks that the matter is so urgent that permission shall be deemed to have been granted. Reading Sections 211 and 65 together it seems to us that the Commissioner must exercise his revisional powers within a few months of the order of the Collector. This is reasonable time because after the grant of the permission for building purposes the occupant is likely to spend money on starting building operations at least within a few months from the date of the permission. In this case the Commissioner set aside the order of the 'Collector on October 12, 1961, i.e. more than a year after the order, and it seems to us that this order was passed too late."
41. This judgment, in my view, also does not help petitioners in any manner.
42. In Ibrahimpatnam Taluk Vyavasaya Collie Sangham Vs. K. Suresh Reddy (supra) the question which was considered by Court is quoted in para 1 of the judgment, as under:
"Whether Collector can exercise suo-motu power under sub-section (4) of Section 50-B of Andhra Pradesh (Telangana Area) Tenancy and Agricultural Land Act, 1950 at any time or such power is to be exercised within a reasonable time."
43. Here also the Court observed that when a power is conferred, to be exercised at any time, it should be exercised within a reasonable time and while affirming the decision of High Court, taking above view, it said:
"In the absence of necessary and sufficient particulars pleaded as regards fraud and the date or period of discovery of fraud and more so when contention that the suo-motu power could be exercised within a reasonable period from the date of discovery of fraud was not urged, the learned Single Judge as well as the Division Bench of the High Court were right in not examining the question of fraud alleged to have been committed by the non-official respondents. Use of the words "at any time" in sub-section (4) of Section 50-B of the Act only indicates that no specific period of limitation is prescribed within which suo-motu power could be exercised reckoning or starting from a particular date advisedly and contextually. Exercise of suo-motu power depended on facts and circumstances of each case. In cases of fraud, this power could be exercised within a reasonable time from the date of detection or discovery of fraud. While exercising such power, several factors need to be kept in mind such as effect on the rights of the third parties over the immovable property due to passage of considerable time, change of hands by subsequent bona fide transfers, the orders attaining finality under the provisions of other Acts (such as Land Ceiling Act). Hence, it appears without stating from what date the period of limitation starts and within what period the suo-motu powers is to be exercised, in sub-section (4) of Section 50-B of the Act, the words "at any time" are used so that the suo-motu power could be exercised within reasonable period from the date of discovery of fraud depending on facts and circumstances of each case in the context of the statute and nature of rights of parties. Use of the words "at any time" in sub-section (4) of Section 50-B of the Act cannot be rigidly read letter by letter. It must be read and construed contextually and reasonably. If one has to simply proceed on the basis of dictionary meaning of words "at any time", the suo-motu power under sub-section (4) of Section 50-B of the Act could be exercised even after decades and then it would lead to anomalous position leading to uncertainty and complications seriously affecting the rights of the parties, that too, over immovable properties. Orders attaining finality and certainty of the rights of the parties accrued in the light of the orders passed must have sanctity. Exercise of suo-motu power "at any time" only means that no specific period such as days, months or years are not prescribed reckoning from a particular date. But that does not mean that "at any time" should be unguided and arbitrary. In this view, "at any time" must be understood as within a reasonable time depending on the facts and circumstances of each case in the absence of prescribed period of limitation."
44. Reliance was also placed on an earlier decision in D. Saibaba Vs. Bar Council of India and another, 2003(3) SCR 1209 wherein the Court had observed that exercise of suo-motu power depended on facts and circumstances of each case. In cases of fraud, this power could be exercised within a reasonable time from the date of detection or discovery of fraud. While exercising such power, several factors need to be kept in mind, such as effect on the rights of third parties over immovable property due to passage of considerable time, change of hands by subsequent bona fide transfers, the orders attaining finality etc. It further said that without stating from what date the period of limitation starts and within what period the suo-motu powers is to be exercised, in sub-section (4) of Section 50-B of Andhra Pradesh (Telangana Area) Tenancy and Agricultural Land Act, 1950, the words "at any time" are used so that the suo-motu power could be exercised within reasonable period from the date of discovery of fraud depending on facts and circumstances of each case in the context of the statute and nature of rights of parties.
45. Looking to the facts of the present case, I do not find that above observations do help petitioners in any manner.
46. In State of Himachal Pradesh Vs. Rajkumar Brijender Singh (supra) the Financial Commissioner's power under Section 20(2) and (3) of Himachal Pradesh Ceiling on Land Holdings Act, 1972 came to be considered. Therein Commissioner had exercised power under Section 20 sub-section (3) after 15 years of the order of Collector. The power was appellate in nature as observed in para 5 of the judgment. The Court said that though no period has been prescribed in sub-section (3) but that does not mean that there could be no time limit or it is in infinity. It further said:
"6. . . . . . All that is meant is, that such powers should be exercised within a reasonable time. No fixed period of limitation may be laid but unreasonable delay in exercise of the power would tend to undo the things which have attained finality. It depends on the facts and circumstances of each case as to what is the reasonable time within which the power suo moto action could be exercised. For example, in this case, as the appeal had been withdrawn but the Financial Commissioner had taken up the matter in exercise of his suo moto power, well it could be open for the State to submit that the facts and the circumstances were such that it would be within reasonable time but as we have already noted the order of the Collector which has been interfered with, was passed in January 1976 and the appeal preferred by the State was also withdrawn some time in March 1976. The learned counsel for the appellant was not able to point out such other special facts and circumstances by the reason of which it could be said that exercise of suo moto power after 15 years of the order interfered with, was within a reasonable time. That being the position in our view, the order of the Financial Commissioner stands vitiated having been passed after a long lapse of 15 years of the order which has been interfered with. Therefore, while holding that the Financial Commissioner would have power to proceed suo moto in a suitable case even though an appeal preferred before lower appellate authority is withdrawn may be by the State. Thus, the view taken by the High Court, is not sustainable. But the order of the Financial Commissioner suffers from vice of the exercise of the power after unreasonable lapse of time and such delayed action on his part nullifies the order passed by him in exercise of power in sub-section (3) of Section 20."
47. The above observations of Apex Court clearly shows that the case was decided on its own facts and even otherwise aforesaid decision also lends no credence to petitioners.
48. Now coming to the judgment of Bombay High Court in Parekh Shipping Corporation Vs. Asstt. Collector (supra) I find that there the documents were demanded for the first time after 12 years from the date of vessel leaving port of Bombay. The case set up by petitioners was that it is impossible for agents of foreign vessel to keep the record for such a long time to show whether goods were short-landed or not. This explanation was accepted by Bombay High Court and it said as under:
"In our judgment, the submission is correct and deserves acceptance. It surpasses our imagination as to what prompted respondent No. 1 to wait for a duration of 12 years to issue show cause notice. The exercise of powers under Section 116 of the Customs Act, if necessary, must be undertaken within a reasonable time. Shri Venkateswaran submitted that the Customs Excise and Gold Control Tribunal has held that show cause notice issued beyond the period of five years from the date of vessel leaving the Port is arbitrary and unreasonable. In our judgment, the period of five years is more than reasonable. Indeed, the bond executed by the Agents should also be for a duration of five years and in case the respondents desire to proceed against the Agents, action must be taken before the expiry of the period. The bond should not be kept alive for all time to come and must be limited for a duration of five years from the date of execution."
49. The Madras High Court's judgment in Wilco and Co. Vs. Union of India (supra) also relates to the nature of goods which were subject to spillage and shrinkage. There the Court found that delay in imposing penalty could not be explained by department at all and in that view of the matter the Court in exercise of its jurisdiction under Article 226 of the Constitution found it expedient to interfere with the order of penalty passed under Section 116 of Customs Act.
50. In the present case the facts, as already discussed, show that since very beginning the department has been pursuing petitioners to furnish requisite documents and several letters and notices were issued. Therefore, it cannot be said that there was an extraordinary undue delay or on account of such delay, petitioners were not in a position to furnish requisite material on account of weeding or loss etc. or for any other valid reason. It thus cannot be said that on mere ground of delay, particularly, when petitioner is equally responsible, the impugned proceedings of penalty can be held illegal or unreasoned.
51. Now comes the question about motive/mens rea. Counsel for petitioners has placed reliance on Commissioner of Central Excise, Chandigarh Vs. Pepsi Foods Ltd., 2010(260) ELT 481 (SC), which is a matter arising from proceedings initiated under Section 11 AC of Central Excise Act, 1944 where the Court held that in order to attract aforesaid provision, criminal intent or mens rea is a necessary constituent. Referring to Section 11 AC of Act the Court in para 19 and 20 of the judgment said as under:
"19. From a perusal of the aforesaid section, especially the underlined portion, it is clear that in order to attract the penalty provision under Section 11 AC, criminal intent or `mens rea' is a necessary constituent. In the reply to the show cause notice the stand which has been taken by the respondent is that it has been paying the duty and there is no malafide intention on its part to evade the payment of duty. The further stand is that the goods were cleared from the factory only on payment of duty. This stand which has been taken in the reply to the show cause notices was not found to be incorrect in the order-in-original. As such the imposition of penalty of the equal amount of duty under the order-in-original cannot be sustained.
20. It is well settled that when the statutes create an offence and an ingredient of the offence is a deliberate attempt to evade duty either by fraud or misrepresentation, the statute requires `mens rea' as a necessary constituent of such an offence. But when factually no fraud or suppression or misstatement is alleged by the revenue against the respondent in the show cause notice the imposition of penalty under Section 11 AC is wholly impermissible."
52. To my mind the aforesaid decision would apply to the provision up for consideration in the case in hand also since it is penal provision empowering the authority to impose penalty on account of certain violation on the part of petitioners which is subject to imposition of penalty under the statute. A perusal of orders impugned in this writ petition nowhere shows that this aspect has been taken care by authorities concerned before passing impugned orders.
53. Now coming to the last question regarding notice, the Court finds that no valid notice has been issued to petitioners. During course of argument counsel for respondents admitted that copy of notice dated 28.06.2005 which they have filed as Annexure CA-5 clearly shows that it is an incomplete and misprinted notice form and, therefore, the same cannot be said to be a valid notice issued to petitioners and in absence of any valid notice order of penalty cannot be sustained.
54. In view of above, the writ petition is allowed. The impugned orders dated 11.09.2009 and 13.06.2011 are hereby quashed. However, this judgment shall not preclude the respondents from passing a fresh order in accordance with law.
55. No costs.
Order Date :- 24.04.2014 AK