JUDGMENT
1. This is a petition for the issue of a writ of certiorari to call for the records of the respondents and quash the order dated nil and made in No. 2/155/84CHA are despatched on 8.1.1986 by which the customs house agent’s licence No. R64 issued in favour of the petitioner was revoked and the security deposit of Rs. 5000/- which had been furnished by the petitioner was forfeited and for passing such further orders as this Court may deem fit and proper in the circumstances of the case.
2. The petitioner is a private limited company carrying on the businesses of customs house clearing agent since 1921. On the ground that the petitioner is guilty of misconduct which in the opinion of the respondent-Collector of Customs rendered it unfit to transact any business in the customs station, the respondent purporting to exercise his powers under Regulation 21 of the Customs House Agents Licensing Regulation (hereinafter referred to as the Regulations), revoked the licence. The misconduct attributed to the petitioner was that it has failed to comply with its obligation to promptly account to its client for funds received by it as provided under Regulation 14(g) of the Regulations.
3. Before I set out the charge and the findings a few facts may now be noticed. In the year 1979, M/s. Neyveli Lignite Corporation Ltd., Neyveli (hereinafter referred to as N.L.C.), a public sector undertaking of the Government of India decided to expand the Power Generating Project at Neyveli by installing a second thermal power station. For this purpose, the N.L.C. called for global tenders for (a) to supply 3 Nos. of Steam Turbine Generation with ancillaries and (b) for unloading, clearance through customs, transportation to site, erection, testing and commissioning the complete plant. The tender for the supply to three numbers of Steam Turbine Generators with ancillaries was given in favour of M/s. Franco Toshi Industries, SPA, Italy and the tender for unloading, clearance through customs, transportation to site, erection, testing and commissioning the complete plant was given in favour of M/s. Franco Toshi Ingegneria, SPA, Italy. In this writ petition we are not concerned with the contract for the supply of three numbers of Steam Turbine Generators. There was a separate contract with M/s. Franco Toshi Ingegneria, SPA, Italy (hereinafter referred to as the foreign suppliers) in respect of unloading clearance through customs, transportation to site, erection, testing and commissioning the complete plant. The local Indian representative of the foreign supplier is M/s. Vinkals Power Engineers (P.) Ltd., Madras-34. Under the contract entered into by the N.L.C. with the foreign supplier, the entire responsibility of clearing the generators with ancillaries, etc. through the customs is with the foreign supplier. However, the N.L.C. has to provide the import licence and funds required for payment of the customs duty and port dues. The contract further provided that the foreign supplier has to choose and appoint their customs house clearing agent from among the panel of customs house agents. But however, such appointment has to be approved by the N.L.C. The Indian representative of the foreign supplier viz., M/s. Vinkals Power Engineers (P) Ltd., Madras in the capacity as the representative of the foreign supplier called for tenders for the clearing business from the approved panel of names given by the N.L.C. The tender given by the petitioner was ultimately accepted by the foreign supplier. Accordingly a contract was entered into between the petitioner and the local representative of the foreign supplier representing the foreign supplier. It is in pursuance of this contract that the petitioner came to function as the clearing agent for the consignment intended for N.L.C.
4. It is seen from the above admitted facts that there was no contract between the petitioner and the N.L.C. in respect of the clearing of the goods consigned to N.L.C. The responsibility for clearing from the customs under the agreement entered into between the N.L.C. and the foreign supplier was with the foreign supplier. They in turn have entered in an agreement with the petitioner appointing the petitioner as their agent for the purpose of the clearing the consignment of goods. The contract as such clearing agent was also entered into between the petitioner and the local representative of the foreign supplier, though the petitioner was one of the persons included in the panel of agents approved by the N.L.C.
5. The procedure adopted for payment of customs duty which is the liability of the foreign supplier under the agreement though the funds will be provided by the N.L.C. is as follows :
6. The petitioner will intimate the local representative of the foreign supplier as also the N.L.C. the approximate amount required for payment of customs duty and port dues. The N.L.C. remits the funds to the local representative of the foreign supplier who in turn forwards the same to the petitioner. The petitioner opens a customs account in the name of the N.L.C. with the Collector of Customs or the customs station and credits that account with the funds necessary to meet the customs duty demanded and on adjustment of that money, the goods are permitted to be cleared.
7. It appears that on 14-8-1984 the N.L.C. sent a cheque for a sum of Rs. 1,96,55,075 to the Indian representative of the foreign supplier for payment of the customs duty in respect of the imported consignment along with a challan prepared by the N.L.C. for the remittance of the cheque into the N.L.C. Deposit Account with the Customs House. The Indian representative of the foreign supplier in turn sent the cheque to the petitioner, who after the bill of landing was submitted, finding that the demand was for Rs. 1,44,40,548, remitted that money on time in the accounts of the N.L.C. with the customs house and the goods were cleared. When the statement of accounts was sent by the Customs House to N.L.C. noticing that is against the remittance of Rs. 1,96,55,075 they have been credited and adjusted only for a sum of Rs. 1,44,40,548 in respect of the two bills of lading, they wrote a letter to the Collector of Customs informing him of the fact and asking him to show the entire deposit of Rs. 1,96,55,075 with corresponding adjustment for clearance of the customs duty so that the excess amount after the adjustment may be made available in the Deposit Account. This letter started the proceedings in motion against the petitioner. On the ground that the petitioner as customs house clearing agent has violated its obligation, the following charges were framed :-
“1. On 14.8.1984 M/s. N.L.C. drew a banker’s cheque in favour of the Collector of Customs, Madras for a sum of Rs. 1,96,55,075 for payment of customs duty in respect of imported consignments under customs clearance and handed over the cheque to the authorised representative M/s. Vinkals Power Engineers along with a challan prepared by M/s. N.L.C. for the remittance of the cheque into N.L.C. Deposit Account No. NLC-TS-II with the Customs House. It is alleged that this amount was not remitted by M/s. Sugesan & Co. (P) Ltd. into the Neyveli Lignite Corporation ‘s account as evidenced by the statement of accounts for the month of August 1984 issued by the Customs House to M/s. N.L.C. It is further alleged that the proceeds of the said cheque have not been satisfactorily accounted for by M/s. Sugesan & Co. (P) Ltd. to M/s. N.L.C. till date.
2. On 10.8.1984 M/s. N.L.C. Ltd. drew a banker’s cheque for Rs. 32,50,000 in favour of the Collector of Customs (Cheque No. 670927 dated 10.8.1984) and gave the same together with a challan to M/s. Sugesan & Co. (P) Ltd. for remittance to N.L.C.’s Deposit Account No. TS-II. It is alleged that M/s. Sugesan & Co. failed to deposit the cheque promptly. Instead M/s. Sugesan & Co. retained the cheque in their possession for 20 days and tendered the cheque to the Customs Treasury only on 1.9.1984.
3. M/s. Sugesan & Co. (P) Ltd. in discharging their functions as a Customs House Agent have demanded and collected from their clients M/s. N.L.C. huge sums of money (approximately Rs. 52 lakhs) which are far in excess of the amounts of duty payable to the customs department on behalf of their client. The excess amounts so collected have been misappropriated by M/s. Sugesan & Co. (P) Ltd. for their own advantage to the detriment of the interests of their clients M/s. Neyveli Lignite Corporation Ltd. This amounts so collected and misappropriated by the Customs House Agent still remain to be paid back in full to their clients M/s. Neyveli Lignite Corporation Ltd. Further M/s. Sugesan & Co. failed to deposit a banker’s cheque for Rs. 32,50,000 given by M/s. Neyveli Lignite Corporation promptly but they retained the cheque in their possession for about 20 days and tendered the cheque to the customs after retaining the cheque for such inordinately long period. These acts on the part of M/s. Sugesan & Co. (P) Ltd. are in violation of the provisions of Reg. 14(g) of the C.H.A.L.R., 1984.”
8. The Second charge and the latter portion of the third charge relating to the deposit of Rs. 32,50,000 were dropped finding the petitioner not guilty of the same. It may be seen that the first charge and the first part of the third charge related to the same transaction. An enquiry into the charges was conducted by the Assistant Collector nominated for this purpose under Regulation 23 of the Regulations. The enquiry officer was of the view that the charges had been proved and the petitioner is guilty of not submitting the accounts to N.L.C. as required under Regulation No. 14(g) and it amounts to misappropriation. After a further enquiry, the Collector of Customs confirmed the finding and held that it is clear case of misappropriation of the funds provided for the specific purpose of clearance of goods imported by N.L.C. and in that view ordered that the licence granted to the petitioner shall stand revolved with immediate effect. It is as against this order, the present writ petition has been filed.
9. The main contention of the learned counsel for the petitioner was that the petitioner was the clearing house agent of the foreign supplier and not the clearing house against of N.L.C. and that there was no contract between the petitioner and the N.L.C. making the petitioner liable either to render an account of the moneys received by the petitioner for clearing the goods in question or to account for the moneys from the local representative of the foreign supplier, that the foreign supplier had not complained about any non-furnishing of the accounts or for not accounting for the money and that therefore both the charges framed in this case as also the ground advanced before the respondent. But somehow the respondent had missed the legal point raised by the petitioner. As stated in the beginning of this judgment while nothing the facts which are admitted in the counter affidavit, under the contract entered into between N.L.C. and the foreign supplier, clearing the generators with ancillaries through the customs is the responsibility of the foreign supplier. In fact, the responsibility does not stop with clearing from the customs alone, but it extends to transporting the goods to the site, erection, testing and commissioning of the plant. Thus, though the goods are intended for N.L.C., they continue to be in the ownership and control of the foreign supplier until the goods are erected and handed over to the N.L.C. The only responsibility of the N.L.C. so far as the clearance of the goods from the customs is concerned, is as provided in the agreement to provide the foreign supplier with funds required for payment of customs duty and port dues. The customs house agent is chosen and appointed by the foreign supplier as their agent and the agent acts as the agent of the foreign supply and not the N.L.C. It is true that either the clearing agent should be chosen from among the panel of clearing agents given by the N.L.C. or even if any other clearing agent is to be chosen and appointed by the foreign supplier, the prior approval of the N.L.C. was needed. But that was for the purpose of ensuring the proper compliance with the contract and not for the purpose of creating any privity between the clearing agent and the N.L.C. In fact, the tender was called for only by the Indian representative of the foreign supplier and not by the N.L.C. and the tender was also accepted by the foreign supplier through the Indian representative and not by the N.L.C. It is also seen from the facts that the cheques are given by the N.L.C. only to the Indian representative of the foreign supplier and not directly to the petitioner. Technically, the Indian representative could credit the amount to themselves and give a separate cheque to the petitioner in order to pay the customs duty for clearance of the goods in question. By adopting the procedure of transferring the cheque received from the N.L.C. to the petitioner in order to enable the petitioner to pay the customs duty, the legal position is not changed. Nor is the fact that the cheque itself is drawn in favour of the Collector of Customs makes any difference since ultimately the bill of lading is in the name of N.L.C. and customs duty will have to be remitted in the name of N.L.C., and under the contract entered into with the foreign supplier, the responsibility for payment of the customs duty is on the foreign supplier and the liability of the N.L.C. is only to provide the necessary funds in order to enable them to pay the customs duty, and the payment by the petitioner was on account of the foreign supplier, though in the name of the N.L.C. All these facts therefore clearly go to show that there was absolutely no contract between the petitioner and the N.L.C. The petitioner looked forward for payment of the customs duty for clearing the goods to the Indian representative. But when they received the funds by cheque dawn in favour of the Collector of Customs from the N.L.C. through the Indian representative of the foreign supplier, the legal position cannot be over looked that they are receiving the money from the foreign supplier in order to enable them to clear the goods on their behalf and not that they are clearing the goods on behalf of the N.L.C. In the circumstances, therefore, the two charges framed in this case are clearly wrong and could not form the basis for an enquiry. As seen from the charge set out above, the gravamen of the charge is that the petitioner has not satisfactorily accounted for the moneys received from the foreign supplier to M/s. N.L.C. That cannot be a charge because the petitioner cannot be said to have received any one from the N.L.C. the petitioner’s liability to account for the money is only to the Indian representative of the foreign supplier from whom the petitioner received the money. In fact, after deducting Rs. 1,44,40,548 a sum of Rs. 52,14,527 was available which was taken as roughly Rs. 52,00,000 for the purpose of the charge and the enquiry. Of this money, only on instruction from M/s. Venkals Power Engineers (P) Ltd., Madras, the Indian representative of the foreign supplier, they credited the N.L.C. with a sum of Rs. 30,00,000. It is also stated that the Indian representative of the foreign supplier had already accounted [to] N.L.C. for the entire Rs. 52,00,000 since they know clearly that it was their responsibility and the contract is between them and the N.L.C. and any accounting is between them and the petitioner. Legally therefore the petitioner was not under an accountable relationship with the N.L.C. and that (sic) therefore regulation 14(g) of the regulations could not have been invoked in this case for the purpose of finding the liability to account [to] the N.L.C. Therefore, the finding of the respondent that the petitioner was under the obligation to the N.L.C. or the non-accounting of the money amounts to misappropriation cannot be supported legally.
10. Apart from this, certain other factors which are very relevant should also be taken into account. As already stated, the petitioner was carrying on the business of customs house clearing agents since 1921. In their written statement and during the oral hearing, the petitioner relied on the unbroken clearing record of the company and the unfortunate circumstance created by an interim suspension order made by the Collector in August 1984 before a final hearing was made. Though these facts may not be relevant, if a clear case of misappropriation is not made out on the facts of this case, in my opinion, these facts cannot be ignored. Added to this, it was never the case of any person nor even alleged that even at the time when the probable import duty was assessed, the petitioner know that it may not be more than Rs. 1,44,00,000 and deliberately with any ulterior purpose the petitioner asked for more money to be deposited and appropriated that money for the purposes. I am mentioning this aspect to show that the petitioner never had any criminal intention of misappropriating the money, and the petitioner was driven to this necessity by the force of the circumstances aggravated by the interim suspension order of the licence even before the charges were framed and the case was decided on merits. It is also pertinent to note that the Indian representative of the foreign supplier never complained about any misappropriation or for non-submission of accounts to them to the Collector, though in the oral hearing a representative of that company seems to have been also examined and he has opined that this may amount to non-submission of accounts to N.L.C. That was his personal opinion, but that would not advance the position any further. In the circumstances, therefore, the order of the Collector finding the petitioner guilty of misappropriation of the funds and also guilty of non-submission of accounts to the N.L.C. and thereby misconducted themselves within the meaning of regulation 21(c) of the Regulations is unsustainable and the impugned order of the Collector is liable to be set aside and it is accordingly set aside. The writ petition is allowed and the rule nisi is made absolute. There will be no order as to costs in this petition.