Abdulla Nedumalayil Vs Principal Commissioner of Customs (Karnataka High Court)
Summary : The Karnataka High Court, in Abdulla Nedumalayil & Ors. Vs Principal Commissioner of Customs & Ors., partly allowed a writ petition challenging customs adjudication proceedings concerning the seizure of undeclared foreign currency from a passenger scheduled to travel from Bengaluru to Bangkok. The dispute arose from Show Cause Notice No. 37/2024-25 dated 22 April 2024, issued under Section 124 of the Customs Act, 1962, which culminated in Order-in-Original No. 1368/2025-26 dated 28 February 2026. The petitioners sought the quashing of the show-cause notice, adjudication order and consequential recovery communications, including those dated 7 July 2026. The principal procedural grievance was that the adjudicating authority had failed to consider a written reply submitted by email on 11 September 2025, specifically raising objections concerning WhatsApp conversations and screenshots relied upon during the investigation.
The petitioners contended that the investigating authorities had referred to WhatsApp conversations and screenshots in paragraphs 6.2 to 6.5 of the show-cause notice to establish liability against the second and third noticees. However, copies of those electronic records had not been included in the supplied list of documents, and the requisite certificate contemplated under Section 138C of the Customs Act had not been furnished. Their counsel submitted that withholding the electronic material and failing to decide the request for its disclosure deprived the affected persons of an effective opportunity to defend themselves. Although personal hearings had been offered, the petitioners maintained that the absence of relevant relied-upon evidence prevented meaningful participation in the adjudication proceedings.
The customs authorities had proceeded on the basis that no written reply had been submitted and that the noticees had failed to participate in the scheduled hearings. The adjudication order recorded several hearing dates, including 25 June, 14 July, 15 July, 10 September and 11 September 2025. On the substantive allegations, the authority concluded that the passenger had failed to establish that the seized foreign currency was acquired in the normal course of business, drawn from an authorised person in accordance with the Foreign Exchange Management Act and applicable regulations, or brought into India during earlier foreign travel. The department’s counsel argued that the emailed reply had not been handed over during the hearing or immediately following service of the show-cause notice, which explained why it had not been considered.
The High Court acknowledged that there was some force in the department’s explanation concerning the manner in which the reply had been submitted. Nevertheless, it considered the existence and contents of the emailed reply material to the legality of the adjudication process. The reply specifically requested copies of the WhatsApp messages and screenshots together with the certificate contemplated under Section 138C. The Court held that the adjudicating authority must examine whether these documents and the certificate were required to be furnished, particularly because failure to address the issue could expose the proceedings to subsequent challenge on technical grounds. The Court did not conclusively determine the admissibility of the WhatsApp evidence or decide whether the certificate was mandatory in the particular circumstances.
Accordingly, the High Court partly allowed the petition, quashed the Order-in-Original dated 28 February 2026 and restored the proceedings to the third respondent for reconsideration. The petitioner was directed to appear before the authority on 30 November 2026 without further notice, produce a certified copy of the High Court’s order and submit a copy of the earlier reply. The adjudicating authority was directed first to decide, after hearing the petitioner, whether the WhatsApp messages, screenshots and Section 138C certificate should be furnished, and thereafter proceed in accordance with that determination. The ruling emphasises the procedural importance of addressing requests for relied-upon electronic evidence before completing customs adjudication, without expressing any final opinion on the substantive foreign-currency allegations.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
The petitioner has called in question the Show Cause Notice dated 22.04.2024 [Annexure-A] under Section 124 of the Customs Act, 1962 [for short, ‘the Customs Act’] and the Order-in-Original dated 28.02.2026 [Annexure-F] which is a culmination of the Show Cause Notice. The Show Cause Notice relates to the recovery of undeclared foreign currency from the petitioner when he was scheduled to travel according to the authorities from Bengaluru to Bangkok. The petitioner has been extended personal hearings, and on 11.09.2025 [one of the personal hearing dates] the petitioner has filed a reply [as per Annexure-C] stating inter alia that he has not been furnished with WhatsApp messages/screenshots relied upon by the investigating authorities and that no liability could be fastened on him unless these are provided along with a Certificate under Section 138C of the Customs Act.
2. Sri. Haaris Moosa, the learned counsel for the petitioner, submits that apart from the other grounds that the petitioner would urge, he would request this Court’s interference with the impugned Order-in-Original dated 28.02.2026 on the short ground of failure to consider the petitioner’s reply dated 11.09.2025; and in elaboration, the learned counsel canvasses that:
- the failure to furnish the copies has prejudiced the petitioner because there is a denial of an effective opportunity, and
- if only the reply was considered and a decision made on whether the petitioner is to be furnished with the copies of the documents as aforesaid, the petitioner would have had an opportunity to effectively defend himself against the proceedings.
3. Sri Aravind V Chavan, a learned standing counsel for the respondents who is called upon to accept notice, is heard for disposal on whether this Court must intervene as requested and if this Court must, the terms upon which interference must be. The petitioner, while not disputing that he has been extended personal hearings prior to 11.09.2025 and on 11.09.2025, relies upon email addressed by his counsel to [email protected] enclosing his reply to the Show Cause Notice. The petitioner in this reply has specifically stated amongst others the following:
“From para 6.2 to 6.5 refers to various Whatsapp conversion and screenshots relied upon by the investigation to fasten the liability under the Customs Act on the 2nd and 3rd noticee herein. These screenshots are neither annexed to the list of documents as given on pages 29 and 30 and there was no certificate under Section 138C of the Customs Act, 1962 that has been attached to Ref(1).”
4. However, the third respondent has confirmed the terms of the Show Cause Notice recording thus on the petitioner’s response to the Show Cause Notice and participation in the proceedings.
The noticees Shri Abdulla Nedumalayil (the passenger), Shri Yasir Muhammed and Shri Sharafuddin PT, have not submitted any written reply to the above-mentioned show cause notice. Further, an opportunity to be heard in person or in virtual mode was granted to him as per Section 122A of the Customs Act, 1962 multiple times on 25.06.2025, 14.07.2025, 15.07.2025, 10.09.2025 and 11.09.2025. However, the said notices neither appeared for the personal India.
The third respondent, referring to the statutory provisions, has opined that the petitioner is not successful in proving that the foreign currency seized from his possession was acquired by him during the normal course of business and that he is unable to provide any evidence indicating that the foreign exchange obtained by him was by drawal from an authorised person in accordance with the provisions of the Foreign Exchange Management Act or the rules or regulations or directions made or issued thereunder. The third respondent has also observed that the petitioner has not even made any attempt or claim to prove that the foreign currency in his possession was ever brought by him while returning from the foreign travel.
5. This Court finds some force in the submissions by Sri Aravind V. Chavan that the reply is not considered because it is not handed over during the personal hearing or immediately after the service of Show Cause Notice but is sent by e-mail, but the underlying salient is that the petitioner’s reply has been sent by e-mail making the point that the petitioner is entitled to be served with copies of WhatsApp messages/screen shots along with the Certificate as contemplated under Section 138C of the Customs Act. This Court opines that whether the petitioner must be issued with the copies and Certificate as aforesaid will have to be examined lest the proceedings fail at a later stage on technical grounds. This persuades this Court to dispose of this petition interfering with the impugned Order-in-Original dated 28.02.2026 restoring the proceedings to the third respondent. Hence, the following:
ORDER
The petition is allowed in-part quashing the third respondent’s Order-in-Original dated 28.02.2026 [Annexure-F] restoring the proceedings for re-consideration subject to the following terms.
[i] The petitioner, without further notice, shall appear with the third respondent on 30.11.2026 along with a certified copy of this order and file a copy of the reply dated 11.09.2026.
[ii] The third respondent after hearing the petitioner shall first decide on whether he must be furnished with certain documents [Whatsapp/screenshots] along with Certificate under Section 138-C of the Customs Act and proceed to pass orders and then proceed further based on such consideration.
