ORDER
P.G. Chacko
1. The appellant in this appeal is the Jammu & Kashmir State Financial Corporation (hereinafter referred to as ‘the Corporation’) constituted under Section 3 of the State Financial Corporations Act, 1951 (Central Act No.63 of 1951). The controversy involved in this appeal relates to a truck bearing registration No.JK-02/7357 which was under hypothecation to the Corporation on the date (2.1.1997) on which it was seized by officers of Customs believing that the vehicle was being used for carriage of smuggled goods (viz. roller bearings) of foreign origin and hence liable to confiscation under Section 115 of the Customs Act.
2. Investigations conducted by the Departments subsequent to the seizure of the truck revealed, inter alia, that the vehicle had been purchased by one Shri Chuni Lal by taking loan from the Corporation in 1990, that he had hypothecated the vehicle to the Corporation as security for due repayment of the loan and interest thereon, that Shri Chuni Lal died a few months before the seizure and that the Registration of the truck and the Insurance policy covering the vehicle continued to be in the name of Chuni Lal after his death. On the basis of investigative results, the department issued show-cause notice (SCN) to the Corporation, among others, for confiscating the vehicle along with the seized goods of foreign origin and for imposing penalty. The Corporation contested the SCN claiming ownership of the vehicle and asking for its possession for the purpose of realisation of the dues in the loan account of the deceased borrower. In adjudication of the dispute, the Commissioner of Customs, by the order impugned in this appeal, confiscated the vehicle under Section 115 (2) of the Custom Act.
3. Examined the records and heard both sides.
4. Ld. Advocate Shri Naveen Mullick, for the appellants, submits that as Chuni Lal had defaulted payments, the Corporation was entitled to take over the vehicle and realise the hypothecated property in terms of the Deed of Hypothecation read with Section 29 of the Financial Corporations Act. The Corporation was a deemed owner of the vehicle by virtue of Sub-section (5) of the said Section 29 and a co-owner by virtue of the endorsement of hypothecation in the Registration certificate. In support of the plea of co-ownership, ld. Advocate also relies on the bill dated 06.06.1990 of M/s National Garage (dealers of TATA diesel vehicles) under which the truck was purchased. The bill (vide copy available on record) was issued to “J&K State Financial Corporation through A/c Shri Chuni Lal”. Ld. Advocate submits that the Commissioner ought to have determined the ownership of the vehicle in favour of the Corporation on the above basis and released the truck to the Corporation in terms of the proviso to Section 115(2) ibid instead of leaving the question to Courts of law. Ld. Counsel, with reference to the provisions of Section 115 of the Customs Act, submits that, under the proviso to Sub-section 2 of Section 115, the Department was liable to give an option to the Corporation (an co-owner) for redeeming the vehicle. Since no such option was given to the appellants, the order of the Commissioner is b ad in law. On these short grounds, Counsel prays for setting aside the order of confiscation. Shri A.K.Jain, SDR, reiterates the findings contained in the impugned order and prays for rejecting the appeal.
5. I have examined the submissions. I note that Chuni Lal was the registered owner of the truck. He died before the seizure of the vehicle. The Corporation came to be aware of his death atleast on receipt of the SCN. If they had a genuine claim of co-ownership, they would have taken steps for amending the Registration certificate of the vehicle under the provisions of the Motor Vehicles Act and the Rules thereunder. The Corporation did not even attempt anything of that sort. The fact is that they did not even raise the plea of co-ownership in their reply to SCN. The plea has been raised at the bar now. No legal basis has been stated by ld. Counsel in support of his argument that the Corporation was a co-owner of the vehicle. Neither the dealer’s bill nor the endorsement of hypothecation in Registration certificate could confer the right of co-ownership on the Corporation. I have perused the provisions of the Hypothecation Deed, a copy of which is available on record. I have not found any provision in that Deed entitling the Corporation to claim ownership of the vehicle in the event of default of payment by Chuni Lal. I have also examined Section 29 of the Financial Corporations Act. Counsel has particularly relied on Sub-section (5) which reads as under:
“(5) [Where the Financial Corporation has taken any action against an industrial concern] under the provisions of sub-section (1), the Financial Corporation shall be deemed to be the owner of such concern, for the purposes of suits by or against the concern, and shall sue and be sued in the name of [the concern]”.
Counsel has admitted that no suit was filed by the Corporation against Chuni Lal or his legal representatives for realising the dues under the Hypothecation Deed. Even otherwise, as seen from the above provision of law, deemed ownership could be pleaded for the limited purpose of suits under the Financial Corporations Act. It is not a valid plea against confiscation under the Customs Act. There is nothing in the former Act which limits or circumscribes the scope of confiscation under Section 115 of the latter Act. Therefore, it is impossible for me to accept the advocate’s argument that the Financial Corporation should be deemed to be the owner of the vehicle for purposes of Section 115 of the Customs Act and an option under the proviso to Section 115(2) of the Act ought to have been given to the Corporation to redeem the vehicle. The ‘owner’ referred to in the said proviso is the legal owner of the conveyance, which the Corporation is not.
6. The vehicle was confiscated in terms of sub-section (2) of Section 115 of the Customs Act on the basis of a finding that it was used for transporting smuggled goods. The smuggled nature of the goods transported by the truck in question is not in dispute in this appeal. Those goods were also, in fact, confiscated. Both sides have submitted that the Commissioner’s order of confiscation of the goods has become final. In view of this position, it must be held that the vehicle used for transporting smuggled goods was rightly confiscated under the provisions of Section 115 of the Customs Act. The appellants failed to prove that they were the legal owner of the vehicle and hence they had no valid claim under the proviso to sub-section (2) of Section 115 of the Customs Act to redeem the vehicle. The appeal fails and the same is dismissed.
(Dictated and pronounced in open Court.)