UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & ORS.

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A 67.3. In the case of Brooks International (supra), the market value of goods under export was found to be less than the amount of drawback claimed. The question was whether such goods could be confiscated for violation of the provisions of the Customs Act? While considering the import of the definition of “prohibited goods” in Section 2(33) and of Section 11 of the Customs Act, this Court referred to the following exposition in the case of Om Prakash Bhatia (supra): - “10. From the aforesaid definition, it can be stated that: (a) if there is any prohibition of import or export of goods under the Act or any other law for the time being in force, it would be considered to be prohibited goods; and (b) this would not include any such goods in respect of which the conditions, subject to which the goods are imported or exported, have been complied with. This would mean that if the conditions prescribed for import or export of goods are not complied with, it would be considered to be prohibited goods. This would also be clear from Section 11 which empowers the Central Government to prohibit either ‘absolutely’ or ‘subject to such conditions’ to be fulfilled before or after clearance, as may be specified in the notification, the import or export of the goods of any specified description. The notification can be issued for the purposes specified in sub-section (2). Hence, prohibition of importation or exportation could be subject to certain prescribed conditions to be fulfilled before or after clearance of goods. If conditions are not fulfilled, it may amount to prohibited goods….” (emphasis in bold supplied)

F 67.4. Learned counsel for the importers have strongly relied upon a 3-Judge Bench decision of this Court in Atul Automations (supra) to submit that therein, the goods imported without authorisation were held to be ‘restricted’ goods; and the same principle applies to the subject goods when they have been imported without import licence and hence, they cannot be taken as prohibited goods. The submissions have been G countered by the ASG that the said decision related to the matter under the FTDR Act and different facts and different regulations concerning the goods were involved therein. 67.4.1. In the case of Atul Automations (supra), the goods imported without authorisation were found to be not ‘prohibited’ but H

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 455 ORS. [DINESH MAHESHWARI, J.]

‘restricted’ items for import and the orders for their release with payment of fine in lieu of confiscation were approved. However, a close look at the factual aspects puts it beyond the pale of doubt that therein, this Court has neither laid down the law that in every case of import without authorisation, the goods are to be treated as restricted and not prohibited nor that the goods so imported without authorisation are always to be released on payment of redemption fine. 67.4.2. The factual aspect of Atul Automations (supra) makes it clear that the imported Multi-Function Devices, Photocopiers and Printers (MFDs) involved in that case were restricted items, importable against authorisation under Clause 2.31 of the Foreign Trade Policy. Thus, the MFDs were found to be restricted items for import and not prohibited items. That had not been the case where import was restricted in terms of quantity in the manner that the goods were importable only up to a particular extent of quantity and that too against a licence. It was also found therein that the Central Government had permitted the import of used MFDs having utility for at least five years, keeping in mind that they were not being manufactured in the country. 67.4.3. The present case is of an entirely different restriction where import of the referred peas/pulses has been restricted to a particular quantity and could be made only against a licence. The letter and spirit of this restriction, as expounded by this Court earlier, is that, any import beyond the specified quantity is clearly impermissible and is prohibited. This Court has highlighted the adverse impact of excessive quantity of imports of these commodities on the agricultural market economy in the case of Agricas (supra) whereas, it had not been the case in Atul Automations (supra) that the import was otherwise likely to affect the domestic market economy. In contrast to the case of Atul Automations, F where the goods were permitted to be imported (albeit with authorisation) for the reason that they were not manufactured in the country, in the present case, the underlying feature for restricting the imports by quantum has been the availability of excessive stocks and adverse impact on the price obtainable by the farmers of the country. The decision in Atul G Automations (supra), by no stretch of imagination, could be considered having any application to the present case.

68Copy pinpoint68. Thus, we have no hesitation in holding that the goods in question, having been imported in contravention of the notifications dated 29.03.2019 and trade notice dated 16.04.2019; and being of import beyond H

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A the permissible quantity and without licence, are ‘prohibited goods’ for the purpose of the Customs Act18. 68.1. The unnecessary and baseless arguments raised on behalf of the importers that the goods in question are of ‘restricted’ category, with reference to the expression ‘restricted’ having been used for the B purpose of the notifications in question or with reference to the general answers given by DGFT or other provisions of FTDR Act are, therefore, rejected. The goods in question fall in the category of ‘prohibited goods’. Whether the goods in question are liable to absolute confiscation?

69Copy pinpoint69. Once it is clear that the goods in question are improperly imported and fall in the category of ‘prohibited goods’, the provisions contained in Chapter XIV of the Customs Act, 1962 come into operation and the subject goods are liable to confiscation apart from other consequences. Having regard to the contentions urged and the D background features of these appeals, the root question is as to how the goods in question are to be dealt with under Section 125 of the Customs Act? The relevant part of Section 125 of the Customs Act reads as under: - Section 125(1) of the Customs Act, 1962 E “125. Option to pay fine in lieu of confiscation.—(1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any F other goods, give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit: xxx xxx xxx” G 69.1. A bare reading of the provision aforesaid makes it evident that a clear distinction is made between ‘prohibited goods’ and ‘other goods’. As has rightly been pointed out, the latter part of Section 125 18 In the passing, we may observe that even in the orders-in-original dated 28.08.2020 by the Adjudicating Authority, it was clearly held that the goods in question were prohibited goods (vide the findings reproduced hereinbefore in paragraph 22.2).

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 457 ORS. [DINESH MAHESHWARI, J.]

obligates the release of confiscated goods (i.e., other than prohibited goods) against redemption fine but, the earlier part of this provision makes no such compulsion as regards the prohibited goods; and it is left to the discretion of the Adjudicating Authority that it may give an option for payment of fine in lieu of confiscation. It is innate in this provision that if the Adjudicating Authority does not choose to give such an option, the result would be of absolute confiscation. The Adjudicating Authority in the present matters had given such an option of payment of fine in lieu of confiscation with imposition of penalty whereas the Appellate Authority has found faults in such exercise of discretion and has ordered absolute confiscation with enhancement of the amount of penalty. This takes us to the principles to be applied for exercise of the discretion so available in the first part of Section 125(1) of the Customs Act.

70Copy pinpoint70. The principles relating to the exercise of discretion by an authority are expounded in various decisions cited by the parties. We may take note of the relevant expositions as follows: 70.1. In the case of Sant Raj (supra), referred to and relied upon by both the sides, this Court dealt with the matter as regards the discretion of Labour Court to award compensation in lieu of reinstatement and observed as under: - “4…..Whenever, it is said that something has to be done within the discretion of the authority then that something has to be done according to the rules of reason and justice and not according to private opinion, according to law and not humor. It is to be not arbitrary, vague and fanciful but legal and regular and it must be exercised within the limit to which an honest man to the discharge of his office ought to find himself….. F Discretion means sound discretion guided by law. It must be governed by rule, not by humor, it must not be arbitrary, vague and fanciful…..” (emphasis in bold supplied) 70.2. In the case of Reliance Airport Developers (supra), this G Court, with reference to various pronouncements pertaining to the legal connotations of ‘discretion’ and governing principles for exercise of discretion observed, inter alia, as under: - “30. Discretion, in general, is the discernment of what is right and proper. It denotes knowledge and prudence, that discernment H

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A which enables a person to judge critically of what is correct and proper united with caution; nice discernment, and judgment directed by circumspection: deliberate judgment; soundness of judgment; a science or understanding to discern between falsity and truth, between wrong and right, between shadow and substance, between equity and colourable glosses and pretences, and not to do according to the will and private affections of persons.” 70.3. In the case of U.P. State Road Transport Corporation (supra), while dealing with the case of non-exercise of discretion by the authority, this Court expounded on the contours of discretion as also on limitations on the powers of the Courts when the matter is of the discretion of the competent authority, in the following terms: - “12. The High Court was equally in error in directing the Corporation to offer alternative job to drivers who are found to be medically unfit before dispensing with their services. The court cannot dictate the decision of the statutory authority that ought to be made in the exercise of discretion in a given case. The court cannot direct the statutory authority to exercise the discretion in a particular manner not expressly required by law.The court could only command the statutory authority by a writ of mandamus to perform its duty by exercising the discretion according to law. Whether alternative job is to be offered or not is a matter left to the discretion of the competent authority of the Corporation and the Corporation has to exercise the discretion in individual cases. The court cannot command the Corporation to exercise discretion in a particular manner and in favour of a particular person. That would be beyond the jurisdiction of the court.

13. In the instant case, the Corporation has denied itself the discretion to offer an alternative job which the regulation requires it to exercise in individual cases of retrenchment. ……It may be stated that the statutory discretion cannot be fettered by self- G created rules or policy. Although it is open to an authority to which discretion has been entrusted to lay down the norms or rules to regulate exercise of discretion it cannot, however, deny itself the discretion which the statute requires it to exercise in individual cases. …… H xxx xxx xxx

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“15.……Every discretion conferred by statute on a holder of public office must be exercised in furtherance of accomplishment of purpose of the power. The purpose of discretionary decision making under Regulation 17(3) was intended to rehabilitate the disabled drivers to the extent possible and within the abovesaid constraints. The Corporation therefore, cannot act mechanically. The discretion should not be exercised according to whim, caprice or ritual. The discretion should be exercised reasonably and rationally. It should be exercised faithfully and impartially. There should be proper value judgment with fairness and equity…..” (emphasis in bold supplied) C

70.4. In the case of Glaxo Smith Kline (supra), this Court expounded on the principles that the Constitutional Courts, even in exercise of their wide jurisdictions, cannot disregard the substantive provisions of statute while observing, inter alia, as under: - D “12. Indubitably, the powers of the High Court under Article 226 of the Constitution are wide, but certainly not wider than the plenary powers bestowed on this Court under Article 142 of the Constitution. Article 142 is a conglomeration and repository of the entire judicial powers under the Constitution, to do complete justice to the parties. E

Even while exercising that power, this Court is required to bear in mind the legislative intent and not to render the statutory provision otiose.”

71Copy pinpoint71. Thus, when it comes to discretion, the exercise thereof has to be guided by law; has to be according to the rules of reason and justice; and has to be based on the relevant considerations. The exercise of discretion is essentially the discernment of what is right and proper; and such discernment is the critical and cautious judgment of what is correct and proper by differentiating between shadow and substance as also between equity and pretence. A holder of public office, when exercising discretion conferred by the statute, has to ensure that such exercise is in furtherance of accomplishment of the purpose underlying conferment of such power. The requirements of reasonableness, rationality, impartiality, fairness and equity are inherent in any exercise of discretion; such an exercise can never be according to the private opinion. H

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A 71.1. It is hardly of any debate that discretion has to be exercised judiciously and, for that matter, all the facts and all the relevant surrounding factors as also the implication of exercise of discretion either way have to be properly weighed and a balanced decision is required to be taken.

72Copy pinpoint72. It is true that the statutory authority cannot be directed to B exercise its discretion in a particular manner but, as noticed in the present case, the exercise of discretion by the Adjudicating Authority has been questioned on various grounds and the Appellate Authority has, in fact, set aside the orders-in-original whereby the Adjudicating Authority had exercised the discretion to release the goods with redemption fine and penalty. Having found that the goods in question fall in the category of C ‘prohibited goods’ coupled with the relevant background aspects, including the reasons behind issuance of the notifications in question and the findings of this Court in Agricas (supra), the question is as to whether the exercise of discretion by the Adjudicating Authority in these matters, giving option of payment of fine in lieu of confiscation, could be approved?

73Copy pinpoint73. As regards the question at hand, we may usefully take note of the relevant decisions cited by learned counsel for the parties. However, it may be observed that the decision of the Punjab and Haryana High Court in Horizon Ferro Alloys (supra), dealing with a particular class of goods that were ‘restricted’ and not ‘prohibited’, needs no elaboration.

74Copy pinpoint74. On behalf of the appellants, the learned ASG has relied upon the decision in the case of Garg Woollen Mills to support the contention that the subject goods deserve to be confiscated absolutely. In that case, the Additional Collector of Customs had directed confiscation of goods when it was found that there had been an attempt of fraudulently F importing huge quantity of raw material in the name of non-existent units; and serviceable garments were concealed against mutilated garments. That being a case where fraud was involved, the order of absolute confiscation was not interfered with. This Court, inter alia, observed and held as under: -

G “5. Another contention that was urged by Shri Mahabir Singh was that the Additional Collector, as also the Tribunal, have failed to take into consideration the provisions contained in Section 125 of the Act which prescribes that whenever confiscation of any goods is authorised by the Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under the Act or under any other law for the time being

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 461 ORS. [DINESH MAHESHWARI, J.]

in force, and shall, in the case of any other goods, give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit. We do not find any merit in this contention of Mr Mahabir Singh. Under Section 125 a discretion has been conferred on the officer to give the option to pay fine in lieu of confiscation in cases of goods, the importation or exportation whereof is prohibited under the Act or under any other law for the time being in force but in respect of other goods the officer is obliged to give such an option. In the present case, having regard to the facts and circumstances in which the goods were said to be imported and the patent fraud committed in importing the goods, the Additional Collector has found that the goods had been imported in violation of the provisions of the Import (Control) Order, 1955 read with Section 3(1) of the Import and Export (Control) Act, 1947. In the circumstances he considered it appropriate to direct absolute confiscation of the goods which indicates that he did not consider it a fit case for exercise of his discretion to give an option to pay the redemption fine under Section 125 of the Act. The Tribunal also felt that since this was a case in which fraud was involved, the order of the Additional Collector directing absolute confiscation of the goods did not call for any interference. We do not find any reason to take a different view.” (emphasis in bold supplied)

75Copy pinpoint75. The learned ASG has also referred to the decision in the case of Shri Amman Dhall Mills (supra) where the Kerala High Court has dealt with the imports made in violation of the subsequent notifications concerning the same commodities as are involved in the present case. Therein, on 22.04.2020, the importer applied for issuance of license for import of 200 MTs of green peas but, before actual grant of license to import, filed a bill of entry dated 23.06.2020 for clearance of goods declared as Canadian Green Peas. As per declaration in the bill of entry, the quantity declared was 210 MTs with declared assessable value of Rs. 79,28,444/-. The Commissioner of Customs, Kochi, by his order dated 16.10.2020, made on the request of the importer for release of goods, noted that DGFT notification dated 18.12.2019 had revised the H

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A policy for import of peas; further policy conditions as regards minimum import price and annual fiscal quota of Rs. 1.5 lakh MTs were incorporated and the imports were permitted through Calcutta seaport. The importer, who had imported the subject goods after the issue of notifications dated 18.12.2019 and 28.03.2020, filed a writ petition in the High Court seeking provisional release of the subject goods but this prayer for provisional release was declined. The importer filed an intra-court appeal that was also dismissed. However, the High Court desired that the customs authorities proceed with the adjudication proceedings expeditiously. The Commissioner of Customs, in his order dated 16.10.2020, while considering the request of importer for provisional release, referred to three conditions in the notification dated 18.12.2019 as modified in the notification dated 28.03.2020; and ordered absolute confiscation of the goods for contravention of the provisions of Section 111(d) of the Customs Act read with Section 3(3) of the FTDR Act; and imposed a penalty of Rs. 4 lakhs. The importer challenged the order of Commissioner before the Appellate Tribunal. The Appellate Tribunal D observed that the subject goods, having been imported in violation of the conditions of EXIM Policy, acquired the nature of prohibited goods in terms of Section 2(33) of the Customs Act and were liable to confiscation in terms of Section 111(d). Thereafter, the Tribunal formulated the question as to whether the Adjudicating Authority had an option to allow E such goods to be redeemed on payment of fine in lieu of confiscation. After referring to the judgment of this Court in the case of Atul Automations (supra) and the order passed by the Bombay High Court in the case of M/s. Harihar Collections (impugned herein), the Tribunal directed redemption of impugned goods on payment of Rs. 12 lakhs as fine and confirmed the penalty of Rs. 4 lakhs imposed by the F Commissioner. 75.1. In cross-appeals by the importer and by the revenue, the Kerala High Court consciously took note of the decision of this Court in Agricas (supra) and also the fact that the order so passed by the Bombay High Court in the case of M/s. Harihar Collections had been stayed by G this Court in the present appeals. Thereafter, the High Court proceeded to disapprove the order passed by the Appellate Tribunal for release of goods, with the following amongst other findings and observations: - “25. We hasten to add, that if in every case goods are released on payment of redemption fine, by the primary or H

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 463 ORS. [DINESH MAHESHWARI, J.]

appellate Tribunal, then such decisions are unsustainable in law and judicial review. In our considered view, exercise of power and discretion under Section 125 of Customs Act 1962, are specific and generally governed by the applicable policy, notification etc. Notification dated 18.4.2019 stipulates restriction on import of a quantity of 1.5 lakh MT only; stipulates minimum import price of Rs. 200/- and above CIF per kg and the import is allowed through Calcutta Sea Port only. These are the conditions which the licensee for import of the goods is expected to conform. The primary authority has noted that by keeping in view the stand taken by the Union of India before the Supreme Court in Agricas LLPcase; the available stock position of green peas is treated as surplus, and declined release and ordered confiscation. The further import according to Customs Commissioner is not needed or alternatively detrimental to the interest of farmers. He has further noted that in his order dated 16.10.2020 that the importer does not conform to any of the conditions applicable for import of green peas. In our considered view the exercise of above discretion by Customs Commissioner is the question for consideration before the Appellate Tribunal. The Appellate Tribunal on the contrary, as already noted, considered matters not completely germane for appreciating the mode and manner of exercise of authority by the Commissioner E of customs, but, however, recorded that the subject goods can be treated as restricted goods and can be released on payment of redemption fine. …. The Tribunal fell in clear error of law. By holding that release of goods is the only option to Customs Commissioner in the case on hand the language of Section 125 of F Customs Act is fully liberalised. The reasoning of Tribunal is adopted both by other primary authority/Appellate Tribunal, then Exim policy, notifications are defeated and opens floodgates of the import Green Peas, and such contingencies are commented by Supreme Court in Agricas Case. We are of the view that the consideration of Appellate Tribunal in the case on hand is illegal, G ignored relevant notifications, the mandate of FTDR Act and Customs Act 1962.” (emphasis in bold supplied)

76Copy pinpoint76. On the other hand, the importers have placed heavy reliance upon the decision in the case of Hargovind Das K. Joshi (supra). H

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A Therein, a consignment of zip fasteners imported by the appellants was ordered for absolute confiscation by the Additional Collector of Customs and a penalty was also imposed. The order was confirmed by the Appellate Tribunal. In appeal to this Court, three questions were raised by the appellants, namely, on validity of the order confiscating the goods; on validity of the orders imposing penalty; and failure on the part of the customs authority to give an option to them for redeeming the goods on payment of fine in lieu of confiscation. This Court rejected the first two contentions after finding that the order directing confiscation was unassailable in facts or in law and that the order levying penalty was also justified. However, this Court found substance in the third part of the submissions because the Collector of Customs had passed the order for absolute confiscation without giving the appellants an option to redeem the goods on payment of fine. This Court observed that the said Adjudicating Authority, undoubtedly, had the discretion to give an option of payment of fine in lieu of confiscation but omitted to consider such a discretion available with him. In the given circumstances, this Court D remitted the matter to the Adjudicating Authority to the limited extent as to whether or not to give an option to the importers to redeem the confiscated goods on payment of fine. In that regard, this Court left it open for the officer concerned to take a decision one way or the other in accordance with law, while observing in the last that the officer concerned E will take into consideration all the relevant circumstances including the submission on behalf of the importers that the free import of the goods in question had also been allowed, of whatever worth that was. 76.1. From the decision in Hargovind Das K. Joshi (supra), it is not borne out as to what was the reason for which the goods (zip fasteners) F became subject to confiscation and it appears that at a later point of time, free import of the item had also been allowed. Be that as it may, what this Court found therein was that the Adjudicating Authority omitted to take into consideration one part of the discretion available for him i.e., of giving an option for redemption with payment of fine in lieu of confiscation and for that reason alone, the matter was remitted. The G said decision cannot be read as an authority for the proposition that in every case of confiscation, invariably, the discretion has to be exercised by the Adjudicating Authority to give an option for redemption by payment of fine. In our view, the said decision does not make out any case in favour of the importers. H

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76.2. In fact, the observations made in Hargovind Das K. Joshi A (supra) rather operate against the orders-in-original in the present appeals because therein, the Adjudicating Authority, after finding the goods liable to confiscation, straightaway proceeded as if the option for payment of fine in lieu of confiscation has to be given and did not consider the other part of discretion available with him that the goods could also be confiscated absolutely.

77Copy pinpoint77. Thus, for what has been noticed above, the Kerala High Court has approved absolute confiscation of similar goods while following the decision of this Court in Agricas (supra) and after finding unsustainable the order of Tribunal for release of goods. In the case of Garg Woollen Mills (supra), this Court approved absolute confiscation when fraud was involved. In Hargovind Das K. Joshi (supra), when one part of discretion of Section 125(1) of the Customs Act was not taken into account, this Court remitted the matter for proper exercise of discretion.

78Copy pinpoint78. It is true that, ordinarily, when a statutory authority is invested with discretion, the same deserves to be left for exercise by that authority but the significant factors in the present case are that the Adjudicating Authority had exercised the discretion in a particular manner without regard to the other alternative available; and the Appellate Authority has found such exercise of discretion by the Adjudicating Authority wholly unjustified. In the given circumstances, even the course adopted in the case of Hargovind Das K. Joshi (of remitting the matter for consideration of omitted part of discretion) cannot be adopted in the present appeals; and it becomes inevitable that a final decision is taken herein as to how the subject goods are to be dealt with under Section 125 of the Customs Act. F

79Copy pinpoint79. As noticed, the exercise of discretion is a critical and solemn exercise, to be undertaken rationally and cautiously and has to be guided by law; has to be according to the rules of reason and justice; and has to be based on relevant considerations. The quest has to be to find what is proper. Moreover, an authority acting under the Customs Act, when exercising discretion conferred by Section 125 thereof, has to ensure G that such exercise is in furtherance of accomplishment of the purpose underlying conferment of such power. The purpose behind leaving such discretion with the Adjudicating Authority in relation to prohibited goods is, obviously, to ensure that all the pros and cons shall be weighed before taking a final decision for release or absolute confiscation of goods. H

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80Copy pinpoint80. For what has been observed hereinabove, it is but evident that the orders-in-original dated 28.08.2020 cannot be said to have been passed in a proper exercise of discretion. The Adjudicating Authority did not even pause to consider if the other alternative of absolute confiscation was available to it in its discretion as per the first part of Section 125(1) of the Customs Act and proceeded as if it has to give the option of payment of fine in lieu of confiscation. Such exercise of discretion by the Adjudicating Authority was more of assumptive and ritualistic nature rather than of a conscious as also cautious adherence to the applicable principles. The Appellate Authority, on the other hand, has stated various reasons as to why the option of absolute confiscation was the only proper exercise of discretion in the present matter. We find the reasons assigned by the Appellate Authority, particularly in paragraph 54.3 of the order- in-appeal dated 24.12.2020 (reproduced in point ‘c’ of paragraph 38.2 hereinabove) to be fully in accord with the principles of exercise of discretion, as indicated hereinabove and in view of the facts and peculiar circumstances of this case. D

81Copy pinpoint81. It needs hardly any elaboration to find that the prohibition involved in the present matters, of not allowing the imports of the commodities in question beyond a particular quantity, was not a prohibition simpliciter. It was provided with reference to the requirements of balancing the interests of the farmers on the one hand and the importers on the other. Any inflow of these prohibited goods in the domestic market is going to have a serious impact on the market economy of the country. The cascading effect of such improper imports in the previous year under the cover of interim orders was amply noticed by this Court in Agricas (supra). This Court also held that the imports were not bona fide and were made by the importers only for their personal gains.

82Copy pinpoint82. The sum and substance of the matter is that as regards the imports in question, the personal interests of the importers who made improper imports are pitted against the interests of national economy and more particularly, the interests of farmers. This factor alone is sufficient to find the direction in which discretion ought to be exercised in these matters. When personal business interests of importers clash with public interest, the former has to, obviously, give way to the latter. Further, not a lengthy discussion is required to say that, if excessive improperly imported peas/pulses are allowed to enter the country’s market, the entire purpose of the notifications would be defeated. The H

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discretion in the cases of present nature, involving far-reaching impact on national economy, cannot be exercised only with reference to the hardship suggested by the importers, who had made such improper imports only for personal gains. The imports in question suffer from the vices of breach of law as also lack of bona fide and the only proper exercise of discretion would be of absolute confiscation and ensuring that these tainted goods do not enter Indian markets. Imposition of penalty on such importers; and rather heavier penalty on those who have been able to get some part of goods released is, obviously, warranted.

83Copy pinpoint83. Before closing on this part of discussion, we may also refer to a decision of Bombay High Court in the case of Finesse Creation Inc. (supra), cited on behalf of one of the importers. In that case, the declared value of goods imported by the assessee in respect of 13 consignments over a period of about three years was rejected and the Commissioner ordered re-assessment of the value of goods; and after re-determination, differential duty was confirmed under Section 28(2) of the Customs Act with recovery of interest under Section 28AB thereof. Moreover, the imported goods were confiscated and redemption fine under Section 125 of the Customs Act was also imposed in lieu of confiscation. While confirming the differential duty and consequent penalty and interest, CESTAT quashed the imposition of redemption fine because the goods were not available for confiscation. In that context, the High Court said that the concept of redemption fine would arise in the event the goods were available and were to be redeemed; and if the goods were not available, there was no question of redemption of goods. The said decision cannot be pressed into service in the present case merely because the said importer M/s. Harihar Collections has been able to obtain release of all the goods after passing of the order-in-original of the Adjudicating F Authority dated 28.08.2020 when the same was under challenge. The present one is not a case where the subject goods were not available on the day of passing of the order by the Adjudicating Authority.

84Copy pinpoint84. Hence, on the facts and in the circumstances of the present case as noticed and dilated hereinabove, the discretion could only be for G absolute confiscation with levy of penalty. At the most, an option for re- export could be given to the importers and that too, on payment of redemption fine and upon discharging other statutory obligations. This option we had already left open in the order dated 18.03.2021, passed during the hearing of these matters. H

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85Copy pinpoint85. For what we have observed hereinabove, the orders-in-original dated 28.08.2020 cannot be approved. As a necessary corollary, the orders-in-appeal dated 24.12.2020 deserve to be approved. However, before final conclusion in that regard, a few more aspects need to be dealt with. B Invocation of equity by the importers

86Copy pinpoint86. Various submissions invoking equity have been made on behalf of the importers while submitting that they have already suffered huge losses and that even re-export of subject goods is not a feasible option. 86.1. In regard to the submissions invoking equity, noticeable it is that various such features of equity were taken into consideration by the Adjudicating Authority, in the orders-in-original dated 28.08.2020 and by the High Court, in the impugned order dated 15.10.2020 while directing release of goods. We have already disapproved the orders so passed by the Adjudicating Authority and the High Court. Therefore, no leniency in the name of equity can be claimed by these importers. In fact, any invocation of equity in these matters is even otherwise ruled out in view of specific rejection of the claim of bona fide imports by this Court in Agricas (supra). Once this Court has reached to the conclusion that a particular action is wanting in bona fide, the perpetrator cannot claim any relief in equity in relation to the same action. Absence of bona fide in a claimant and his claim of equity remain incompatible and cannot stand together. 86.2. The overt suggestions on behalf of the interveners that demand and supply of pulses is dynamic and not static in nature have only been noted to be rejected. In our view, meeting with the requirements of demand and supply is essentially a matter for policy decision of the Government. No equity could be claimed with such submissions by the importers. Similarly, if, for whatever reason, any consignment of the subject goods has been released, such release had not been in accord with law and no equity could be claimed on that basis. G 86.3. Therefore, all the submissions seeking relief in equity are required to be, and are, rejected. Prayer for keeping issues open for statutory appeal

87Copy pinpoint87. We have also pondered over the prayer for keeping the opportunity of further statutory appeal to CESTAT open for the importers. H

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Though in ordinary circumstances, such a prayer might have been of no difficulty but, we are of the view that having regard to the background and the relevant circumstances, any liberty for further rounds of litigation, at least in relation to the respondents before us, is not called for; and the matters ought to be given a finality.

88Copy pinpoint88. As regards the importer M/s. Raj Grow Impex, as noticed, the order-in-appeal was consciously challenged by it by way of a fresh writ petition in the High Court despite being aware of the availability of statutory remedy of appeal before CESTAT. No cogent and plausible reason is forthcoming as to why it had chosen to avoid the regular remedy of appeal except that it had the keen desire to get the remaining goods (under seven bills of entry) released after it had obtained release of goods under three bills of entry; and in that attempt, filed a fresh writ petition challenging the order-in-appeal and also filed a contempt petition in the High Court. 88.1. So far as the question of release of goods is concerned, the matter stands concluded once we have found that the goods covered by the notifications in question and by the judgment of this Court in Agricas (supra) are liable to absolute confiscation. Therefore, any prayer for release of any of such goods becomes redundant and cannot be granted by any authority or Court. Of course, it is true that the Appellate Authority has enhanced penalty from Rs. 1.485 crores to Rs. 5 crores but, the fact that this importer had taken release of the goods covered by three bills of entry and that aspect of the matter was required to taken as fait accompli by the Appellate Authority, in our view, effectively operates against any claim for reduction of the amount of penalty. Putting it differently, once we have approved the order-in-appeal, any attempt for further appeal by this importer shall remain an exercise in futility. F

89Copy pinpoint89. So far as the other importer M/s. Harihar Collections is concerned, it had obtained release of goods covered by all its eight bills of entry and, therefore, the matter was taken as fait accompli by the Appellate Authority with appropriation of redemption fine and enhancement of penalty. As noticed, this importer has even attempted to G argue before us against redemption fine with the submissions that the goods were not available for confiscation. Neither the redemption fine nor even the enhancement of penalty from Rs. 2.34 crores to Rs. 10 crores could fully set off the damage caused by the actions of this importer. Needless to repeat that with our approval of the order-in-appeal, H

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A any attempt for further appeal by this importer shall also remain an exercise in futility.

90Copy pinpoint90. In view of above, we find no reason to allow any prayer for filing appeal against the orders-in-appeal dated 24.12.2020. Incidentally: principles relating to the grant or refusal of interim relief

91Copy pinpoint91. While closing on these matters, we are constrained to observe that the root cause of the present controversy had not been that much in the notifications in question as it had been in the interim orders passed by the High Court of Rajasthan, Bench at Jaipur. It needs hardly any elaboration that only under the cover of such interim orders that the importers ventured into the import transactions which resulted in excessive quantities of peas/pulses than those permitted by the notifications reaching the Indian ports. As has been noticed in the present cases, some of the goods so imported got released and the Commissioner (Appeals) had to take that aspect as fait accompli. For what has been held by this Court in Agricas (supra), and further for what has been held in this judgment, the goods in question were not to mingle in the Indian market. Such mingling, obviously, has an adverse impact on the agricultural market economy and defeats the policy of the Government of India. This state of affairs was an avoidable one; and would have been avoided if, before passing interim orders, the respective Courts would have paused to consider the implications and impact of such interim orders, which were, for all practical purposes, going to operate as mandatory injunction, whereby the appellants were bound to allow the goods to reach the Indian ports, even if the notifications were prohibiting any such import. F 91.1. Having regard to the scenario that has unfolded in the present cases, we are impelled to re-state that even though granting of an interim relief is a matter of discretion, such a discretion needs to be exercised judiciously and with due regard to the relevant factors.

92Copy pinpoint92. In addition to the general principles for exercise of discretion, G as discussed hereinbefore, a few features specific to the matters of interim relief need special mention. It is rather elementary that in the matters of grant of interim relief, satisfaction of the Court only about existence of prima facie case in favour of the suitor is not enough. The other elements i.e., balance of convenience and likelihood of irreparable injury, are not of empty formality and carry their own relevance; and H

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while exercising its discretion in the matter of interim relief and adopting A a particular course, the Court needs to weigh the risk of injustice, if ultimately the decision of main matter runs counter to the course being adopted at the time of granting or refusing the interim relief. We may usefully refer to the relevant principle stated in the decision of Chancery Division in Films Rover International Ltd. and Ors. v. Cannon Film B Sales Ltd.:[1986] 3 All ER 772 as under: - “….The principal dilemma about the grant of interlocutory injunctions, whether prohibitory or mandatory, is that there is by definition a risk that the court may make the “wrong” decision, in the sense of granting an injunction to a party who fails to establish his right at the trial (or would fail if there was a trial) or alternatively, in failing to grant an injunction to a party who succeeds (or would succeed) at trial. A fundamental principle is therefore that the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been “wrong” in the sense I have described. The guidelines for the grant of both kinds of interlocutory injunctions are derived from this principle.” (emphasis in bold supplied) 92.1. While referring to various expositions in the said decision, this Court, in the case of Dorab Cawasji Warden v. Coomi Sorab E Warden and Ors.: (1990) 2 SCC 117 observed as under: - “16. The relief of interlocutory mandatory injunctions are thus granted generally to preserve or restore the status quo of the last non-contested status which preceded the pending controversy until the final hearing when full relief may be granted or to compel the undoing of those acts that have been illegally done or the restoration of that which was wrongfully taken from the party complaining. But since the granting of such an injunction to a party who fails or would fail to establish his right at the trial may cause great injustice or irreparable harm to the party against whom it was granted or alternatively not granting of it to a party who succeeds or would succeed may equally cause great injustice or irreparable harm, courts have evolved certain guidelines. Generally stated these guidelines are:

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A (1) The plaintiff has a strong case for trial. That is, it shall be of a higher standard than a prima facie case that is normally required for a prohibitory injunction. (2) It is necessary to prevent irreparable or serious injury which normally cannot be compensated in terms of money. B (3) The balance of convenience is in favour of the one seeking such relief.

17. Being essentially an equitable relief the grant or refusal of an interlocutory mandatory injunction shall ultimately rest in the sound judicial discretion of the court to be exercised in the light of the C facts and circumstances in each case. Though the above guidelines are neither exhaustive nor complete or absolute rules, and there may be exceptional circumstances needing action, applying them as prerequisite for the grant or refusal of such injunctions would be a sound exercise of a judicial discretion.” D (emphasis in bold supplied)

93Copy pinpoint93. In keeping with the principles aforesaid, one of the simple questions to be adverted to at the threshold stage in the present cases was, as to whether the importers (writ petitioners) were likely to suffer irreparable injury in case the interim relief was denied and they were to ultimately succeed in the writ petitions. A direct answer to this question would have made it clear that their injury, if at all, would have been of some amount of loss of profit, which could always be measured in monetary terms and, usually, cannot be regarded as an irreparable one. Another simple but pertinent question would have been concerning the element of balance of convenience; and a simple answer to the same would have further shown that the inconvenience which the importers were going to suffer because of the notifications in question was far lesser than the inconvenience which the appellants were going to suffer (with ultimate impact on national interest) in case operation of the notifications was stayed and thereby, the markets of India were allowed to be flooded with excessive quantity of the said imported peas/pulses.

94Copy pinpoint94. In fact, the repercussion of the stay orders passed in the earlier years were duly noticed by this Court in Agricas (supra); and unfortunately, more or less same adverse consequences had been hovering over the markets because of the imports made under the cover of the interim orders passed in relation to the notifications dated

UNION OF INDIA & ORS. v. M/S. RAJ GROW IMPEX LLP & 473 ORS. [DINESH MAHESHWARI, J.]

29.03.2019. This, in our view, was not likely to happen if the material factors relating to balance of convenience and irreparable injury were taken into account while dealing with the prayers for interim relief in the writ petitions. As noticed, this Court had, in unequivocal terms, declared in Agricas (supra), that the importers cannot be said to be under any bona fide belief in effecting the imports under the cover of interim orders; and they would face the consequences in law. It gets, perforce, reiterated that all this was avoidable if the implications were taken into account before granting any interim relief in these matters.

95Copy pinpoint95. We need not expand the comments in regard to the matters relating to the grant or refusal of interim relief and would close this discussion while reiterating the principles noticed above. C Summation

96Copy pinpoint96. For what has been discussed hereinabove, these appeals deserve to be allowed and, while setting aside the orders passed by the High Court and approving the orders-in-appeal, the goods in question D are to be held liable to absolute confiscation but with a relaxation of allowing re-export, on payment of the necessary redemption fine and subject to the importer discharging other statutory obligations. The respondent-importers being responsible for the improper imports as also for the present litigation, apart from other consequences, also deserve to be saddled with heavier costs. E Conclusions and directions

97Copy pinpoint97. Accordingly, and in view of the above: (a) these appeals are allowed; (b) the impugned order dated 15.10.2020 (read with modification order dated 09.12.2020), as passed by the High Court in Writ Petition (L) Nos. 3502-3503 of 2020, is set aside and the writ petitions so filed by the respondent-importers are dismissed; (c) the impugned interim order dated 05.01.2021, as passed by the High Court in Writ Petition (ST) No. 24 of 2021 is also set aside and the said writ petition shall be governed by this judgment; (d) the orders-in-appeal dated 24.12.2020, as passed by the Appellate Authority in the respective appeals, are approved and consequently, the orders-in-original dated 28.08.2020 in the respective cases of the respondent-importers stand quashed; H

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A (e) the orders-in-appeal having been approved by this Court, the questions of release of goods as also the quantum of penalty stand concluded with this judgment and hence, the prayer for keeping open the option of further statutory appeal stands rejected; and (f) the subject goods are held liable to absolute confiscation but, in continuity with the order dated 18.03.2021 in these appeals, it is provided that if the importer concerned opts for re-export, within another period of two weeks from today, such a prayer for re- export may be granted by the authorities after recovery of the necessary redemption fine and subject to the importer discharging other statutory obligations. If no such option is exercised within two weeks from today, the goods shall stand confiscated absolutely.

98Copy pinpoint98. The matters relating to the interveners shall also be governed by the findings of this judgment and appropriate orders in their regard shall be passed by the authorities/Courts, wherever their matters relating to the subject goods are pending but, their options of further appeal, only in relation to the quantum of amount payable, including that of penalty, is left open.

99Copy pinpoint99. The respondent-importers shall pay costs of this litigation to the appellants, quantified at Rs. 2,00,000/- (Rupees two lakhs) each.

100Copy pinpoint100. All pending applications stand disposed of.

Bibhuti Bhushan Bose Appeals allowed.