union of india vs. anil chanana

7/29/2019 Union of India vs. Anil Chanana

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IN THE HIGH COURT OF DELHI AT NEW DELHIIN THE HIGH COURT OF DELHI AT NEW DELHIIN THE HIGH COURT OF DELHI AT NEW DELHIIN THE HIGH COURT OF DELHI AT NEW DELHI

SUBJECT : CUSTOMS ACT, 1962

Writ Petition (Civil) No.12912 of 2006

Judgment reserved on: August 23, 2006

Judgment delivered on: October 17, 2006

Union of IndiaThrough Assistant Director

Directorate of Revenue Intelligence

Delhi Zonal Unit

6th Floor, B-3 & 4 BlocksParyawaran Bhawan

CGO Complex, Lodhi RoadNew Delhi ... Petitioner

Through Mr. Satish Aggarwal, Adv.

Versus

1. Mr. Anil Chanana

S/o late Mr. K.C. Chanana36,Sultanpur Farms

Mehrauli, New Delhi

2. Chief Commissioner of Customs (DZ)

New Customs House

Near IGI AirportNew Delhi ...Respondents

Through Mr. A.S. Chandhiok, Sr. Adv. with

Mr. Rajesh Batra, Adv. for R-1

Coram:

HON'BLE MR. JUSTICE MADAN B. LOKUR

HON'BLE MR. JUSTICE VIPIN SANGHI

MADAN B. LOKUR, J.

1. The Union of India has filed a writ petition under Articles 226 and 227 of the

Constitution praying for an appropriate writ of certiorari for setting aside an order dated


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25th May, 2006 passed by the Chief Commissioner of Customs (DZ) in Compounding

Order No.2/CCC(DZ)/SCM/2006.

2. It appears that Respondent No.1 had gone to London on a business visit. On his

return to India on 11th August, 2004, he carried two pairs of diamond earrings and the

allegation is that he tried to smuggle them by walking through the green channel when hewas intercepted. According to Respondent No.1, the earrings were given to him as a gift

in connection with the marriage of his younger son and in view of the long journeyundertaken by him, he was somewhat confused and through an oversight, he entered the

green channel area. This incident occurred on 11th August, 2004.

3. The Petitioner issued a show cause notice to Respondent No.1 on 24th September,

2004 for violating the provisions of the Customs Act, 1962 (for short the Act) and the

matter is pending adjudication. A prosecution was also launched against Respondent

No.1 under the provisions of the Act and a charge sheet was filed in the Court of theAdditional Chief Metropolitan Magistrate, New Delhi on 30th September, 2004.

4. On his part, Respondent No.1 made an application under Section 127-B of the Actfor settlement of the case before the Customs and Central Excise Settlement Commission,

Delhi Bench. Respondent No.1 also made an application under Section 137(3) of the Act

before the Chief Commissioner of Customs (DZ) on 18th January, 2006 stating that hedoes not wish to contest the case against him and he would like the Chief Commissioner

as the Compounding Authority to settle the case and grant him immunity from

prosecution. This application was made by him under the provisions of the Customs

(Compounding of Offence) Rules, 2005 (for short the Rules) which have been framed inexercise of powers conferred by Sections 156 and 137 of the Act.

5. We have been told that the application filed by Respondent No.1 before theSettlement Commission has been admitted and a final order has since been passed on

12th July, 2006. The Settlement Commission directed Respondent No.1 to pay the duty

liability which has been paid. The goods were directed to be released on payment of aredemption fine, which has also been paid and Respondent No.1 was granted immunity

from payment of any interest and imposition of penalty, which would be withdrawn if it

comes to the notice of the Settlement Commission that Respondent No.1 had concealed

any particulars or material relevant to the settlement or had given false evidence to obtainthe same.

6. In so far as the application for compounding the offence is concerned, the ChiefCommissioner accepted the application by the impugned order and allowed compounding

on payment of a compounding fee which, we are told, has since been paid.

7. The grievance of the Petitioner is threefold. It is firstly contended that

Respondent No.1 did not make a true and full disclosure of facts relating to the case and,

therefore, under Rule 6 of the Rules, the Compounding Authority ought not to havegranted him immunity from prosecution. Rule 6 of the Rules reads as follows:-


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6. Power of Compounding Authority to grant immunity from prosecution. The

compounding authority, if he is satisfied that any person who has made the applicationfor compounding of offence under these rules has co-operated in the proceedings before

him and has made full and true disclosure of facts relating to the case, grant to such

person, subject to such conditions as he may think fit to impose, immunity from

prosecution for any offence under the Customs Act, 1962 with respect to the case coveredby the compounding of offence.

8. The second grievance of the Petitioner is that no oral hearing was given before the

application of Respondent No.1 was allowed and the third grievance is that the

Compounding Authority has not recorded any reasons for granting immunity fromprosecution. We find no merit in either of these contentions.

9. Before we deal with the contentions of learned counsel for the Petitioner, it is

useful to refer to two decisions of the Supreme Court cited by learned counsel. InCommissioner of Income Tax, Jalpaiguri v. Om Prakash Mittal, (2005) 2 SCC 751, the

Supreme Court dealt with a challenge to an order passed by the Income Tax SettlementCommission made under the provisions of Section 245-D(4) of the Income Tax Act,1961. It was contended in that case that under Section 245-C of the Income Tax Act, an

assessee was required to make a full and true disclosure of his income in the application

for settlement. The Supreme Court was really concerned with a case of fraud ormisrepresentation of facts and not with a case of failure to make a full and true disclosure

of facts. To that extent, the decision relied upon by learned counsel for the Petitioner

does not take the matter any further. However, it is of importance to note that in

paragraph 14 of the Report, the Supreme Court noted that the object of the legislature inintroducing a procedure for settlement of cases is to see that protracted proceedings

before the authorities or in courts are avoided by resorting to settlement of cases.

10. In State of Jharkhand & Anr. v. Govind Singh, AIR 2005 SC 294, the Supreme

Court observed that where a discretionary power is conferred upon a statutory authority,

he must exercise it in a judicial manner and after recording of reasons as to whycompounding is necessary. On the basis of this decision, learned counsel for the

Petitioner contended that the parameters laid down by the Supreme Court would govern

compounding of offences under the Rules and, therefore, the Compounding Authority

must exercise his discretion in a judicial manner and must also give reasons forexercising his discretion.

11. We are in agreement with learned counsel for the Petitioner that the parameterslaid down by the Supreme Court would certainly govern the exercise of powers by the

Compounding Authority under the Rules. In this context, we may also note that Rule

4(7) of the Rules provides that the applicant cannot claim, as of right, that his offenceshall be compounded.

12. Proceeding on the basis of the principles laid down by the Supreme Court, we areof the view that in so far as the first contention of learned counsel for the Petitioner is


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concerned, it is liable to be rejected inasmuch as it has not been shown to us how it can

be said that Respondent No.1 has not made a full and true disclosure of all material facts.

13. To support his contention, learned counsel drew our attention to the application

filed by Respondent No.1 and the report submitted by the Petitioner in compliance of

Rule 4(2) of the Rules.

14. According to Respondent No.1 he was tired after a long journey and he wanted todeclare the diamond earrings but due to an oversight he entered the green channel area

when he was confronted by officers of the Customs Department. According to the

Petitioner, Respondent No.1 had not entered the green channel area by an oversight buthe was trying to smuggle the goods through the customs area and when he was

confronted by the Customs official, he denied carrying any valuables and he made a

confessional statement only when the officials conducted a search of his baggage and his

personal search. On this basis, it was contended by learned counsel for the Petitioner thatRespondent No.1 did not make a true and full disclosure of facts.

15. We are of the view that the application filed by Respondent No.1 has to beconsidered in the overall context, namely, as an admission of guilt. As long as an

applicant admits that he has committed an offence, of which compounding is sought, he

has broadly fulfilled the requirement of making a full and true disclosure. How theoffence has been committed or how it has been detected is not of much consequence.

What is of importance is whether any material or relevant fact pertaining to an admission

of guilt has not been disclosed.

16. The fact of the matter is that Respondent No.1 has admitted in his application

before the Compounding Authority that he has committed an offence under Sections 111

and 77 of the Act which is punishable under Sections 132 and 135(1)(a) of the Act.Whether the offence was committed by him through oversight or deliberately is an issue

that may have to be adjudicated upon by the learned Additional Chief Metropolitan

Magistrate in the trial of the case. In any event, the Petitioner was given an opportunityby the Compounding Authority of contradicting the oversight theory propounded by

Respondent No.1. This opportunity was given to the Petitioner who was entitled, in

terms of Rule 4(2) of the Rules, to furnish to the compounding authority a report on the

particulars furnished by Respondent No.1 in his application or any other informationwhich may be considered relevant for the examination of the application. The Petitioner

did furnish its report and did contradict Respondent No.1 on the modus operandi relating

to the commission of the offence, but that did not convince the compounding authority toreject the application of Respondent No.1.

17. In cases of this nature, there are bound to be some discrepancies in the versiongiven by an applicant and the report given by the investigating agency but the existence

of one or more discrepancies cannot be interpreted to mean that the applicant has not

made a full and true disclosure of all material facts. That would depend on the nature ofthe fact which has not been disclosed and the impact that it may have on the exercise of

judicial discretion by the Compounding Authority. If there is a discrepancy between the


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version given by the applicant and the report of the investigating agency and the

discrepancy is of a serious nature, the Compounding Authority is, of course, entitled toreject the application and the applicant cannot claim, as a matter of right, that his offence

should be compounded. Even if, later on, it is brought to the notice of the Compounding

Authority that the applicant had concealed any particulars, material or had given false

evidence, then the Compounding Authority may withdraw the immunity granted to theapplicant and thereupon the applicant may be tried for the substantive offence committed

by him as well as for any other offence that may have been committed by him inconnection with the compounding proceedings, in terms of Rule 7(2) of the Rules.

18. In the instant case, the Compounding Authority was obviously of the view that theapplicant had made a full and true disclosure of facts and that is why his application was

accepted. The Petitioner was given an opportunity to have its say before the

Compounding Authority and, in fact, it filed its report but notwithstanding this, the

application of Respondent No.1 was allowed. If the Petitioner had any grievance, itcould have again approached the Compounding Authority under Rule 7(2) of the Rules

but it chose to approach this Court in exercise of its Constitutional Jurisdi_tion.

19. The scope of judicial review in a case such as this is clearly quite limited. We

cannot go into the nitty-gritty of the details but have to look at the meat of the matter and

ask ourselves the question whether the applicant has admitted to the offence through afull and correct disclosure of facts. If there is some discrepancy here or there in the

version given by him and the report of the investigating agency, we cannot make that a

basis for coming to the conclusion that the applicant has not fully or truly disclosed all

the facts. Of course, if a specific fact which would have a bearing on the exercise ofdiscretion of the Compounding Authority is not disclosed, we may be entitled to interfere

in the matter but that is not the problem that we are faced with because the discrepancies

pointed out to us are not at all substantive.

20. In so far as the second contention of learned counsel for the Petitioner is

concerned, namely, that the investigating agency was not given a hearing in the matter,we are of the view that the Rules do not postulate an oral hearing being given to either of

the parties when an application for compounding is intended to be allowed. However, the

proviso to Rule 4(3) of the Rules provides that where the Compounding Authority

intends to reject the compounding application, then the applicant should be heard in thematter and the grounds of rejection shall be mentioned in the order. There is no

requirement in any provision of the Rules which mandates the Compounding Authority to

orally hear the investigating agency in the event the compounding application is allowed.In this context, we may only mention that the facts of the present case are not at all

complicated and, therefore, no personal hearing was necessary. But, in an appropriate

case where the facts are complicated, the Compounding Authority may be well advised tohear both the parties before taking a decision on the compounding application. This is

because there are several cases where all sorts of complicated transactions are involved

and in such a situation, it may not be appropriate for the Compounding Authority to takea view without a personal hearing to any of the parties. Of course, this would depend on


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the facts of each case and we do not propose to lay down any general principles in this

regard.

21. In Union of India v. Jesus Sales Corporation, (1996) 4 SCC 69, the Supreme

Court held that when the authorities are exercising their powers under statutory

provisions, they are deemed to be quasi judicial authorities and are expected to applytheir judicial mind. But, it cannot be held that in all such cases, the authority must give a

personal hearing.

22. While dealing with a case under the Central Excise Rules, the Supreme Court in

M/s Travancore Rayon Ltd. v. Union of India, (1969) 3 SCC 868 observed as follows:-It is true that the rules do not require that personal hearing shall be given, but if in

appropriate cases where complex and difficult questions requiring familiarity with

technical problems are raised, personal hearing is given, it would conduce to better

administration and more satisfactory disposal of the grievances of citizens.

23. In so far as the facts of the present case are concerned, we are of the view that theissues were not so complex that they necessitated a personal hearing being given to theparties. A hearing was given to the Petitioner in the form of enabling it to make a report

and that, to our mind, meets with the requirements of natural justice.

24. In so far as the third contention of learned counsel for the Petitioner is concerned,

we do not find any merit in this contention also. The Compounding Authority has

examined all aspects of the case and has given its reasons for arriving at the conclusion

that it did. The Compounding Authority discussed the market value of the goods, thenature of the offence and whether it falls within the scope of the Rules for the purposes of

compounding and also the basis on which the compounding fee is levied. The

Compounding Authority then gave his decision on the merits of the case. Needless tosay, the Compounding Authority is not a judicial officer and is not expected to write a

judgement as we would understand it. All that his order is required to show is that there

has been an application of mind and that the conclusions arrived at by him are supportedby reasons which show such application of mind. The purpose of reasons being made a

part of the order is that they can be judicially reviewed, if necessary. Once that

requirement is met by the Compounding Authority in his order, it will serve the needs of

law. In so far as the present case is concerned, we have examined the order passed by theCompounding Authority and it meets the requirements that we are concerned with.

25. On all three counts, we are not in agreement with learned counsel for thePetitioner and, therefore, dismiss this petition.

26. Before concluding, we may notice that recently the Code of Criminal Procedure,1973 has been amended by introduction of Chapter XXI-A relating to 'plea bargaining'.

In the Statement of Objects and Reasons for introducing the Bill, it was noted that the

disposal of criminal trials in the courts takes considerable time and in many cases trialsdo not commence for as long a period as three to five years. To reduce the delay in

disposal of criminal trials, the concept of 'plea bargaining' has been introduced as


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recommended by the Law Commission of India in its 154th Report and also by the

Committee on Criminal Justice System Reforms under the chairmanship of Dr. (Justice)V.S. Malimath, formerly Chief Justice of the Kerala High Court who endorsed the

recommendations of the Law Commission. The amendment was introduced in August,

2003 but has been enacted as a law only in June, 2006. The Customs (Compounding of

Offence) Rules, 2005 appear to have been framed keeping in view the Statement ofObjects and Reasons for the introduction of 'plea bargaining' as well as the view

expressed by the Supreme Court in Om Prakash Mittal to the effect that settlementprocedures are intended to see that protracted proceedings before the authorities or in

courts are avoided by resorting to settlement of cases. Consequently, the interpretation of

rules of settlement, such as the Rules with which we are concerned with, need to beliberally construed and resort to a challenge to a decision taken by the Compounding

Authority should not be made as a matter or rule but as an exception.

SD./-

MADAN B. LOKUR, J

SD./-

VIPIN SANGHI, J

union of india vs. anil chanana

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