Allowed

Sai Textile Industries Pvt.Ltd v. Union of India Thro Secretary

Gujarat HC6 Dec 2012SCA/10112/2012

Case brief

AI extract

What is this about?

The Court held that issuing a second show cause notice on identical allegations while an appeal against the first order was pending violated legal principles. The High Court allowed the Special Civil Appeal, quashing the second notice.

What did the court decide?

Order dated 17.7.2009 passed by Adjudicating Authority, as confirmed by Appellate Authority, set aside. Petition allowed.

Sai Textile Industries Pvt.Ltd Vs Union of India Thro… — Company and Corporate | Gujarat HC (2012)

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C/SCA/10112/2012 JUDGEMENT

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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

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SPECIAL CIVIL APPLICATION NO. 10112 of 2012

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FOR APPROVAL AND SIGNATURE:

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HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MS JUSTICE SONIA GOKANI

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1 Whether Reporters of Local Papers may be allowed to see the judgment ?

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2 To be referred to the Reporter or not ?

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3 Whether their Lordships wish to see the fair copy of the judgment ?

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4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?

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5 Whether it is to be circulated to the civil judge ?

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SAI TEXTILE INDUSTRIES PVT.LTD & 1....Petitioner(s) Versus

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UNION OF INDIA THRO SECRETARY & 2....Respondent(s)

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================================================= Appearance:

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MR PARESH M DAVE, ADVOCATE for the Petitioner(s) No. 1 - 2 MR PS CHAMPANERI, ADVOCATE for the Respondent(s) No. 1 RULE SERVED for the Respondent(s) No. 2 - 3

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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and

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HONOURABLE MS JUSTICE SONIA GOKANI

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Date : 06/12/2012

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ORAL JUDGEMENT

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(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)

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1. Heard learned counsel for the parties for the final disposal of the petition.

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2. The petitioners have filed this petition making

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Page 1 of 8

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C/SCA/10112/2012 JUDGEMENT

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following substantive prayers:-

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“15.(A)That Your Lordships may be pleased to
issue a Writ or Certiorari or any other
appropriate writ, direction or order, quashing
and setting aside OIO F.No.08/199/AM-07/ECA dated
17.7.2009 (Annexure-”G”) and OIA NO.11/120/09-
10/ECA.1/2529 dated 11/17.11.2011 (Annexure-”I”)
and also Show Cause Notice F.No.08/199/AM-
2007/ECA dated 25.9.2006 (Annexure-”F”) with all
consequential benefits;

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(B)That Your Lordships may be pleased to issue
a Writ of Mandamus or any other appropriate writ,
direction or order, directing the respondent No.3
herein to decide forthwith case pertaining to OIO
No.08/F-5/68/AM-03/ECAdated18.5.2006in
accordance with the remand order being OIA dated
3.4.2007;”

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3. In brief, facts are as under:-

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Petitioner No.1 is the company registered under

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the Companies Act. Petitioner No.2 is its office

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bearer. The petitioners are engaged in the manufacture
of textile goods. The petitioners applied for and were

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granted an Advance Licence dated 3.12.1991 enabling

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the petitioners to import materials with CIF Value of
Rs.12,73,500/-, which was later on enhanced to
13,48,500/-. Under such licence, the petitioner was
allowed to import goods duty free on a condition of
exporting finished products, namely, 100% Polyester

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Printed Sarees/ Fabrics. On the premise that the
petitioners did not fulfill its export obligation
flowing from such licence, respondents issued a show

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Page 2 of 8

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C/SCA/10112/2012 JUDGEMENT

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cause notice dated 24.10.2002 calling upon the

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petitioners as under:-

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“11.Now, therefore in exercise of the
powers vested in me under Section 13 of the
Foreign Trade (Development & Regulation) Act,
1992, I call upon the Noticee firm to show cause
notice within period of 30 days from receipt of
this notice as to why action should not be taken
under Section 11(2) of the Foreign Trade
( Development & Regulation) Act, 1992 to impose
fiscal penalty on the Noticee firm. If you want
to hear in person to explain your case appear
before the undersigned on 18.8.2003 at 3.00 P.M.

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4.Adjudicating authority passed his order in

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original dated 18.5.2006 on such show cause notice and
imposed a penalty equivalent to Rs.15,14,913/-. This
order in original was challenged by the petitioners

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before the Appellate Authority. Additional Director
General of Foreign Trade, partially allowed the appeal
by his order dated 3.4.2007. He set aside the order in
original and remanded the case back to the
Adjudicating Authority for de novo consideration in
terms of the provisions of Public Notice No.79 dated
2.1.2006 and as per the Foreign Trade policy. He
further provided that in case of shortfall company
shall have to pay customs duty along with interest on
the unutilized imported material, if any, found during
the process of regularization.

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Page 3 of 8

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C/SCA/10112/2012 JUDGEMENT

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5.Even while the order in original in connection
with show cause notice dated 24.10.2002 was pending in
appeal before the appellate authority, for some
strange reasons, the Adjudicating Officer issued fresh
show cause notice dated 25.9.2006 on the same set of
allegations concerning the same import licence
containing identical allegations of non-fulfillment of
export obligation by the petitioners. In such show
cause notice also he called upon the petitioner to
show cause as to why:-

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“5.Now, therefore in exercise of the powers
vested in me under Section 13 of the Foreign
Trade (Development & Regulation) Act, 1992, I
call upon the Noticee firm to show cause within
period of 30 days from receipt of this notice as
to why action should not be taken under Section
11(2) of the Foreign Trade (Development &
Regulation) Act, 1992 to imposition of fiscal
penalty on the Noticee firm and its directors. If
they want to have personal hearing to explain
their case they may appear before the Jt.
Director General of Foreign Trade of this office
on 30.10.06 at 3.p.m.”

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6.It is the stand of the petitioners that since the
first show cause notice was already adjudicated upon
and appeal against the order in original was initially
pending with appellate authority, and, thereafter,
already allowed, the petitioners were not required to
respond to the second show cause notice, which was
issued under the same set of allegations. Despite such

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Page 4 of 8

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C/SCA/10112/2012 JUDGEMENT

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stand presented by the petitioners before the

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Adjudicating Authority, and despite the fact that by
the time he proceeded further with adjudication of the
second show cause notice, the Appellate Authority had
already set aside his order imposing penalty on the
petitioners in connection with the first show cause
notice, the Adjudicating Authority passed a fresh
order in original dated 17.7.2009 and this time around
imposed penalty of Rs.38,20,500/- on the petitioners.

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7.This order of the Adjudicating Authority the
petitioners challenged before the Appellate Authority,
who by his order dated 11.11.2011, dismissed the
appeal.

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8.Having heard learned counsel for the parties, and
having noted facts as above, to our mind, the issue is
rather simple. As already noted,the Adjudicating
Authority issued first show cause notice and imposed
certain penalty, which order came to be challenged

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before the Appellate Authority. The Appellate
Authority allowed the appeal and remanded the
proceedings for de novo consideration in light of
certain observations made by him. Even before such
appeal was decided, the Adjudicating Authority

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Page 5 of 8

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C/SCA/10112/2012 JUDGEMENT

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strangely and, to our mind, wholly unauthorizedly,

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issued fresh show cause notice on same set of
allegations, facts and proposals. Even when his first
order was quashed and he was asked to undertake de

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novo proceedings, ignoring such directions of the
Appellate Authority, he proceeded to adjudicate the
second show cause notice and imposed a penalty of more
than 2½ times, which he had originally done.

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9.To our mind, the entire procedure was totally
irregular. When in connection with the first show

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cause notice the order-in-original was quashed by the
Appellate Authority and proceedings were remanded for

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de novo consideration, it was the duty of the
Adjudicating Authority to proceed to do so. If, in the
mean time, however, erroneously, irregularly or
legally impermissibly he had issued show cause notice,
he had to abandon such notice proceedings. He,
instead, proceeded to pass an order on the second show
cause notice and abandoned the first proceedings,

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which were remanded by the Appellate Authority. The

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issue can be looked from a slightly different angle.
Second show cause notice was issued even when the

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appeal filed by the petitioners against the order-in-

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Page 6 of 8

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C/SCA/10112/2012 JUDGEMENT

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original passed pursuant to first show cause notice,
was still pending. If the appeal was dismissed, would
the Adjudicating Authority be authorized to thereafter
proceed further with the second show cause notice and

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enhance the penalty, or if this time around, he was
persuaded to drop the proceedings, delete the penalty
he himself imposed in the first order,which he had

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imposed in the first round? Conversely, if the appeal
was allowed in its entirety and the Appellate

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Authority, without a remand, had accepted the
petitioner’s case on merits and quashed the penalty,
could the Adjudicating Authority thereafter proceed
with second show cause notice on the same set of
allegations?. Answer to all these questions have to be
in the negative.

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10.Be that as it may, our case is far less

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complicated in law. The Adjudicating Authority, in our
opinion, had to proceed in terms of the remand order
passed by the Appellate Authority and not with the
second show cause notice in which the petitioners
refused to participate and rightly so, in our opinion.

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11.In the result, the petition is allowed. Order

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dated 17.7.2009 passed by the Adjudicating Authority,

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Page 7 of 8

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C/SCA/10112/2012 JUDGEMENT

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as confirmed by the order dated 11.11.2011 of the
Appellate Authority, is set aside. It is clarified
that the Adjudicating Authority shall proceed further
de novo in connection with the first show cause notice

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dated 24.10.2002 as provided and directed by the
Appellate Authority in the first Appellate order dated
3.4.2007. The issue being old the petitioners shall
cooperate with the early disposal of such proceedings.
The Adjudicating Authority shall endeavour to dispose

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of the same expeditiously and preferably within 6(six)
months from the date of receipt of the copy of this
order. Petition is disposed of accordingly.

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(Ms. Sonia Gokani, J.)

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sudhir

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Page 8 of 8

Sai Textile Industries Pvt.Ltd v. Union of India Thro Secretary

Case brief

What is this about?

What did the court decide?

Sai Textile Industries Pvt.Ltd v. Union of India Thro Secretary

Case brief

What is this about?

What did the court decide?

What the court decided

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