Mayur Enterprises Vs Union of India & Ors. (Bombay High Court)
Bombay High Court held that attachment of saving bank account and detention of goods in absence of duty demand without service of notice is also without jurisdiction and without any authority of law.
Facts- The petitioner is a proprietorship concern engaged in the business of buying and selling CRGO sheets, scraps, etc. in the local market. The petitioner entered into an agreement with one Pacific Powertech Solutions (Pacific) for purchase of CRGO Strips. The petitioner made market enquiries and found that Pacific had purchased the said goods from one GSD Technology, who, in turn, had purchased the goods from one M/s ST Electricals, who is the actual importer of the goods. M/s ST Electricals is located in Jaipur.
The petitioner purchased these goods from Pacific. The petitioner, in the course of his business, sold the goods, which were purchased from Pacific to one Narayan Power Solutions and one Transel Engineer over the period of 4 July 2023 to 11 July 2023 under various invoices, which are annexed to the petition. The petitioner claims to be a bonafide purchaser of the goods as originally imported by M/s S. T. Electricals and cleared for home consumption.
Meanwhile, the Customs Authorities at Jaipur initiated proceedings against M/s ST Electricals alleging undervaluation of goods. M/s ST Electricals has challenged the said action of the authorities before the Rajasthan High Court which is stated to be pending. The Customs Authorities, during the investigation, found that M/s ST Electricals had sold these goods to GST Technology, who, in turn, has sold to Pacific and Pacific has sold goods to the petitioner and the petitioner has further sold these goods in the market.
The respondents attached the bank accounts and sealed the premises of the petitioner based on communication received from the Commissioner of Customs, Jodhpur as averred by the respondents in their reply.
Conclusion- Section 28BA of the Act provides for attachment of any property of a person on whom notice under Sections 28(1), 28(4), 28-AAA(3) or 28B (2) of the Act is served. In the present case, the respondents have not served notice/s under any of these sections on the petitioner and therefore even on this account the respondents are not justified in attaching bank account and detaining the goods and documents.
Held that the impugned action of the respondents in detaining the goods in question and attaching the bank account of the petitioner without there being any demand due from the petitioner or any proceedings pending is without jurisdiction and without any authority of law.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs:-
“a. That this Hon’ble Court be pleased to hold and declare;
i. that freezing of the Petitioner’s Savings Account No. 809510264 and Current Account No.6010527667 held with Respondent No.2 is bad in law;
ii. that the Respondent No.2 does not have to the power to the seal the godown premises of the Petitioner;
b. That this Hon’ble Court be pleased to issue a Writ of Mandamus or Writ in the nature of mandamus or any other appropriate Writ, Order or Direction directing Respondents, their servants, subordinates and agents:
i. To unfreeze the Petitioner’s bank accounts i.e. Savings Account No.809510264 and Current Account No. 6010527667 held with Respondent No.3 bank;
ii. To unseal the Petitioner’s godown Premises located at Plot No.497, Road No.4, Steel Market, Kalamboli 410213;”
2. Brief facts :- The petitioner is a proprietorship concern engaged in the business of buying and selling of CRGO sheets, scraps, etc. in local market.
3. The petitioner, in the course of his business, entered into an agreement with one Pacific Powertech Solutions (Pacific) for purchase of CRGO Strips. The petitioner made market enquiries and found that Pacific had purchased the said goods from one GSD Technology, who, in turn, had purchased the goods from one M/s ST Electricals, who is the actual importer of the goods. M/s ST Electricals is located in Jaipur. The petitioner purchased these goods from Pacific under Invoice No. 043 dated 02.07.2023, No. 044 dated 02.07.2023, No. 045 dated 03.07.2023 and No. 046 dated 05.07.2023. The petitioner, in the course of his business, sold the abovereferred goods, which were purchased from Pacific to one Narayan Power Solutions and one Transel Engineers over the period of 4 July 2023 to 11 July 2023 under various invoices, which are annexed to the petition. The petitioner claims to be a bonafide purchaser of the goods as originally imported by M/s S. T. Electricals and cleared for home consumption.
4. Meanwhile, the Customs Authorities at Jaipur initiated proceedings against M/s ST Electricals alleging undervaluation of goods. M/s ST Electricals has challenged the said action of the authorities before the Rajasthan High Court in Writ Petition No. 10480 of 2023, which is stated to be pending. The Customs Authorities, during the investigation, found that M/s ST Electricals had sold these goods to GST Technology, who, in turn, has sold to Pacific and Pacific has sold goods to the petitioner and the petitioner has further sold these goods in the market.
5. Pursuant to the above investigation, the respondents attached the bank accounts and sealed the premises of the petitioner on the basis of communication received from the Commissioner of Customs, Jodhpur as averred by the respondents in their reply. However, no such communication is annexed to the reply. This led to the petitioner approaching this Court in the present petition against the attachment of the bank accounts and sealing of the office premises, seeking reliefs as prayed for in the petition. On 25 July 2023, this Court had passed the following order:
3. “As an immediate ad-interim relief, the petitioner is seeking defreezing of the Current Account No. 6010527667 contending that the said account is cash credit account of the petitioner and to that effect, a certificate is issued by the Branch Manager of the Indian Bank. Copy of the certificate is placed on record with an undertaking that an affidavit to that effect will also be placed on record during the course of the day and a copy of the same would also be furnished to the respondents. Such affidavit of Mr. Bhagirath Bheraram Chaudhary, Accountant of the petitioner dated 25 July, 2023 is placed on record.
4. It is submitted that it would be illegal for the respondents to freeze the cash credit account. This is also contrary to the settled principles of law. In support of such contention, reliance is placed by the petitioner on the decision of a co-ordinate Bench of this Court dated 8 July, 2010 in the case of M/s. Sargam Foods Pvt. Ltd. & Anr. vs. State of Maharashtra & Ors., in which the Division Bench referring to the judgment of learned Single Judge of the Madras High Court in the case of Adam vs. Income-tax Officer as also the decision of the learned Single Judge of the Karnataka High Court in case of Karnataka Bank Ltd. vs. Commissioner of Commercial Taxes, observed that the account in question being a cash credit account, in other words, a overdraft facility, the unutilised overdraft account does not render the banker a debtor in any sense and the banker is therefore not a person from whom money is due to the customer. It is further observed that where the banker lends money on an overdraft and the customer is always in debit there is no stage at which the banker is debtor to the customer, nor at any point of time at which he holds any money of the customer or the later’s account. The Division Bench in making such observations, agreed with the view expressed in Adam’s case (supra) and also in Karnataka Bank Ltd.’s case (supra) holding that the respondent therein had no authority to freeze the cash credit account and accordingly such orders were set aside. In our opinion, although the issue in such case fell under the provisions of Bombay Provincial Municipal Corporations Act, 1949 (now the Maharashtra Municipal Corporation Act), however, the principles in that regard are applicable with full force insofar as the actions taken by the customs authority are concerned.
5. Thus, it would be necessary and in the interest of justice that an ad-interim order directing the Current Account No. 6010527667 of the petitioner to be defreezed forthwith are required to be passed. We order accordingly.
6. Insofar as the sealing of the godown premises is concerned, the petitioner has several submissions. It is his contention that the respondents would not have any authority to seal the godown premises, being immovable property. It is also contended that the godown has several materials of the petitioner and the respondent in the present case undertaking any search operations would not be concerned for the entire goods and they will be required to identify the goods on which the respondent may intend to proceed. It is thus contended that blanket action of this nature is highly prejudicial and it is also illegal and violative of the petitioner’s right guaranteed under Article 19(1)(g) and Article 300A of the Constitution. Insofar as the action of sealing of the petitioner’s godown premises is concerned, we are of the prima facie opinion that the issue for the time being can be resolved by the premises being unsealed by the concerned officer of the respondent in the presence of representatives of the petitioner, which be held tomorrow (26 July, 2023) at 4 p.m. The officers of the respondent shall take inspection in respect of the material as available in the godown and sofar as any materials relevant for such search are revealed/located, they may take an appropriate position and pass appropriate orders as the law may permit. Let such exercise be undertaken so that further appropriate orders on the present petition can be passed on the adjourned date of hearing. Ordered accordingly.”
6. Pursuant to the above order, Overdraft Account No.6010527667 was defreezed.
7. The respondents, thereafter, opened the seal of the petitioner’s godown in the presence of the petitioner and searched the said premises. A panchanama was drawn by the respondents on 26 July 2023 at the godown of the petitioner and, as per the panchanama, following goods and documents were detained from the premises of the petitioner.
Table-A
