# M/S King Star Handicraft & Anr v. Union of India & Ors

- **Citation:** (2019) 3 ILRA 1190
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019-08-20
- **Case number:** Writ C No. 780 of 2017
- **Bench:** Bala Krishna Narayana, Prakash Padia
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-king-star-handicraft-anr-v-union-of-india-ors-44644
- **Pages:** 10

## Headnote

A. Administrative Law - The Customs Act,
1962 - Section 110, 124 (A) - Natural
Justice - No show cause notice u/s 124
(A) - no step taken u/s 110(2) - Bank
Account
cannot
be
frozen
during
investigation - Authority to defreeze the
bank Account of Petitioner.

Writ Petition allowed (E-9)

List of cases cited referred: -

1.RaghuramGrahPvt.Ltd.Vs.Commissioner
of C. Ex.
& Service Tax, reported in
(2005) (186) E.L.T. 50 (All.) (D.B.).

2.Veritas Exports Vs UOI, reported in (2005)
(184) E.L.T. 341 (Bom.) (D.B.).

3.Am Overseas Vs UOI, (2006) (194) E.L.T. 267
(Guj.)
4.Multitek Engineer Vs UOI, reported in (2012)
(05) JEE(E) page 1458

## Text

1190 INDIAN LAW REPORTS ALLAHABAD SERIES
(2019)11ILR A1190

ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 20.08.2019

BEFORE

THE HON'BLE BALA KRISHNA NARAYANA, J.
THE HON'BLE PRAKASH PADIA, J.

Writ C No. 780 of 2017

M/S King Star Handicraft & Anr.
 ...Petitioners
Versus
Union of India & Ors. ...Respondents

Counsel for the Petitioners:
Sri Kshitij Shailendra

Counsel for the Respondents:
A.S.G.I., S.C., Smt. Raj Kumari Devi

A. Administrative Law - The Customs Act,
1962 - Section 110, 124 (A) - Natural
Justice - No show cause notice u/s 124
(A) - no step taken u/s 110(2) - Bank
Account
cannot
be
frozen
during
investigation - Authority to defreeze the
bank Account of Petitioner.

Writ Petition allowed (E-9)

List of cases cited referred: -

1.RaghuramGrahPvt.Ltd.Vs.Commissioner
of C. Ex.
& Service Tax, reported in
(2005) (186) E.L.T. 50 (All.) (D.B.).

2.Veritas Exports Vs UOI, reported in (2005)
(184) E.L.T. 341 (Bom.) (D.B.).

3.Am Overseas Vs UOI, (2006) (194) E.L.T. 267
(Guj.)
4.Multitek Engineer Vs UOI, reported in (2012)
(05) JEE(E) page 1458
5. CivilMisc. Writ Petition No. 17424 of 2015 (
M/S M.Z. Handicraft & anr. Vs UOI, & 4 ors.
(Delivered by Hon'ble Prakash Padia, J.)

1. Heard Sri Kshitij Shailendra,
learned counsel for the petitioners and
Smt. Raj Kumari Devi, learned counsel
appearing on behalf of respondent nos. 1
to 3.

2. Notices were issued to the
respondent nos. 2, 3 and 4 by this Court
vide its order dated 11.01.2017. As per
the office report dated 10.02.2017 notices
were issued to the aforesaid respondents
by RPAD fixing on 13.02.2017. Neither
acknowledgment nor undelivered cover
has been returned back. As such in view
of provision chapter VIII Rule XII of
Allahabad High Court Rules notices are
deemed to be served upon the aforesaid
respondents.

3. The petitioners have preferred the
present writ petition interalia with the
prayer to issue a mandamus commanding
the
Senior
Intelligence
Officer,
Directorate
of
Revenue
Intelligence,
Nahva Sheva Unit, First Floor, Port Users
Building (PUB), Nhava Sheva Uran,
Raigard, Maharashtra/respondent no. 2 as
well as Federal Bank Limited, Ground
Floor, Gandhi Nagar, Rampur Road,
Moradabad/respondent no. 4 to defreeze
the
Current
Account
No.
16250200002619 held at Fedral Bank
Limited, Ground Floor, Gandhi Nagar,
Rampur Road, Moradabad.

4. The facts in brief as contained in
the writ petition are that petitioner no. 1 is
a
proprietorship
concern
which
is
engaged in the activities of manufacturing
and export of Brass Artwares. The
petitioner no. 2 is its proprietor. The firm
of the petitioners' was duly registered
with the department of commercial taxes
3 All. M/S King Star Handicraft & Anr. Vs. Union of India & Ors.
1191
and it is also registered under the Central
Taxation laws as well as with the Expert
Promotion Council for Handicrafts, New
Delhi.

5. In the month of August 2014,
Federal Bank Limited/respondent no. 4
freezed
the
Bank
account
of
the
petitioners and the petitioners were
restrained from operating the bank
account maintained by them in the
aforesaid Bank. It was informed to the
petitioners
that
the
department
of
Revenue Intelligence in the proceedings
initiated under Customs Act, had directed
the bank not to allow operation of the
Bank account.

6. Summons were issued to the
petitioner no. 2 on 14.08.2014 under
section 108 of the Customs Act, 1962
whereby
Senior
Intelligence
Officer
Directorate
of
Revenue
Intelligence
Maharashtra/respondent no. 3 asked the
petitioner to submit documents in respect
of petitioners' business activities in
connection with some inquiry. The
petitioners sent an application dated
21.08.2014 to the Directorate of Revenue
Intelligence assailing the freezing of bank
account with request to permit the
petitioners to operate the said bank
account. A reply in response to the
summons dated 14.08.2014 was also duly
submitted by the petitioners through their
authorized representative, on 05.09.2014.
Without passing any order on the
aforesaid reply another summon dated
11.09.2014 was issued under section 108
of the Customs Act, 1962 requiring
personal appearance of the petitioner no.
2 in the Maharashtra office of the
respondents. Petitioners duly submitted
their reply on 06.11.2014. Petitioner no. 2
appeared before respondent no. 3 on
07.11.2014 along-with all the requisite
documents
and
got
her
statement
recorded. Thereafter another summon was
issued on 19.10.2015 under section 108 of
Customs
Act,
1962
against
which
petitioners duly submitted their reply on
17.11.2015. The authorized representative
of the petitioners also appeared before the
respondents and produced all the relevant
documents. It is contended that the
petitioners
have
completed
all
the
formalities
regarding
proceedings
pending against them under section
108/110 of the Customs Act and they
have
produced
all
the
necessary
documents as required under the different
summons issued to the petitioners. It is
contended that till date no orders were
passed permitting the petitioners to
operate their bank accounts.

7. It is argued by Sri Kshitij
Shailendra, learned counsel for the
petitioners that respondents have no
power, authority or jurisdiction to freeze
the account pending investigation under
sections 108/110 of the Customs Act,
1962. For a ready reference, Sections 108
and 110 of the Customs Act, 1962 are
being quoted herein-below:-

"Section 108 - Power To
Summon Persons To Give Evidence And
Produce Documents

[(1)) Any gazetted officer of
customs shall have power to summon any
person whose attendance he considers
necessary either to give evidence or to
produce a document or any other thing in
any inquiry which such officer is making
under this Act]

(2) A summons to produce
documents or other things may be for the
production of certain specified documents
or thing or for the production of all
1192 INDIAN LAW REPORTS ALLAHABAD SERIES
documents or
things
of a
certain
description in the possession or under the
control of the person summoned.

(3) All persons so summoned
shall be bound to attend either in person
or by an authorized agent, as such officer
may direct; and all persons so summoned
shall be bound to state the truth upon any
subject
respecting
which
they
are
examined
or
make
statements
and
produce such documents and other things
as may be required :

Provided that the exemption
under section 132 of the Code of Civil
Procedure, 1908 (5 of 1908), shall be
applicable
to
any
requisition
for
attendance under this section.

(4) Every such inquiry as
aforesaid shall be deemed to be a judicial
proceeding within the meaning of section
193 and section 228 of the Indian Penal
Code (45 of 1860)

Section 110 - Seizure Of
Goods, Documents And Things

(1) If the proper officer has
reason to believe that any goods are
liable to confiscation under this Act, he
may seize such goods :

Provided that where it is not
practicable to seize any such goods, the
proper officer may serve on the owner of
the goods an order that he shall not
remove, part with, or otherwise deal with
the goods except with the previous
permission of such officer.

[ (1A) The Central Government
may, having regard to the perishable or
hazardous
nature
of
any
goods,
depreciation in the value of the goods
with the passage of time, constraints of
storage space for the goods or any other
relevant considerations, by notification in
the Official Gazette, specify the goods or
class of goods which shall, as soon as
may be after its seizure under sub-section
(1), be disposed of by the proper officer in
such manner as the Central Government
may, from time to time, determine after
following
the
procedure
hereinafter
specified.

(1B) Where any goods, being
goods specified under Sub-section (1A),
have been seized by a proper officer
under sub-section (1), he shall prepare an
inventory of such goods containing such
details relating to their description,
quality, quantity, mark, numbers, country
of origin and other particulars as the
proper officer may consider relevant to
the identity of the goods in any
proceeding under this Act and shall make
an application to a Magistrate for the
purpose of -

(a) certifying the correctness of
the inventory so prepared; or

(b) taking, in the presence of the
Magistrate, photographs of such goods,
and certifying such photographs as true;
or Magistrate, and certifying the
correctness of any list of samples so
drawn.

(1C) Where an application is
made
under
sub-section
(1B),
the
Magistrate shall, as soon as may be,
allow the application.]

(2) Where any goods are seized
under sub-section (1) and no notice in
respect thereof is given under clause (a)
of section 124 within six months of the
seizure of the goods, the goods shall be
returned to the person from whose
possession they were seized :

Provided that the aforesaid
period of six months may, on sufficient
cause being shown, be extended by the
[Principal Commissioner of Customs or
Commissioner of Customs] for a period
not exceeding six months.

(3) The proper officer may seize
any documents or things which, in his
3 All. M/S King Star Handicraft & Anr. Vs. Union of India & Ors.
1193
opinion, will be useful for, or relevant to,
any proceeding under this Act.

(4) The person from whose
custody any documents are seized under
sub-section (3) shall be entitled to make
copies thereof or take extract therefrom in
the presence of an officer of customs."

8. It is contended that except the
issuance of summons to the petitioners a
reply to which were duly submitted by the
petitioners, no other show cause notice
has been issued to the petitioners under
any provisions of the Customs Act. It is
further contended that no notice under
section 124 of the Customs Act, 1962 has
been issued to the petitioners, as such,
assuming without admitting that the
notices issued under section 110(2) was
valid notice, it automatically stands
lapsed after a period of six months,
immediately in the first quarter of July
2015 itself and as such there is no
justification to continue with the seizure.
In this background of the matter it is
argued by Sri Kshitij Shailendra that
impugned action is violation of principles
of natural justice. It is further argued that
on account of unwarranted and illegal
action of the respondents the entire
business operations of the petitioners
have come to stand-still and as such there
is a violation of Article 19 (1)(g) of the
Constitution of India. Learned counsel for
the petitioners
also relied upon a
following judgments:-

(i) Raghuram Grah Pvt. Ltd.
Vs. Commissioner of C. Ex. & Service
Tax, reported in 2005 (186) E.L.T. 50
(All.) (D.B.).

(ii) Veritas Exports vs. Union
of India, reported in 2005 (184) E.L.T.
341 (Bom.) (D.B.).

(iii) Am Overseas vs. Union of
India, 2006 (194) E.L.T. 267 (Guj.)
(D.B.);

(iv)
Multitek
Engineer
vs.
Union of India, reported in 2012 (05)
JEE(E) page 1458.

(v) Judgment and order dated
07.05.2015 passed in Civil Misc. Writ
Petition No. 17424 of 2015 (M/S M.Z.
Handicraft and another Vs. Union of
India and 4 Others).

9. In the short counter affidavit filed
on behalf of the respondents it is stated
that:-

(i) the office of the respondent
no. 2 is investigating a case of fraudulent
drawback claim by a group of firms by
exporting cardboard waste in place of
'Brass Artware' declared in the shipping
bills filed for such exports.

(ii) The exporters adopted an
ingenious modus operandi to defraud the
Government.
They
carted
into
the
Container Freight Station (CFS, in short)
a
consignment
containing
genuine
brassware which was presented to the
customs
officers
for
examination.
However, after verification by Customs
and
after
obtaining
the
mandatory
permission to export (Let Export Order or
'LEO'), they filed fresh shipping Bills and
on such Shipping Bills carted into the
CFS fresh consignments of similar
looking cartons that contained waste such
as shredded paper/ cardboard. Then, while
stuffing the container for shipping bill
where LEO had been obtained, instead of
stuffing the cargo which had been
examined by the customs staff, the
subsequently
carted
consignment
containing
waste
was
stuffed
and
exported.
This
cycle
was
repeated
numerous times and, in the process, waste
1194 INDIAN LAW REPORTS ALLAHABAD SERIES
was
exported
while
drawback
was
claimed on the value of the non-existent
Brass Artware declared in the respective
shipping bills.

(iii) During investigation, 13
containers stuffed with goods covered
under 47 shipping bills were intercepted
at various points (CFS, Docks and also at
the port of destination) and 1281 loose
packages, pertaining to 17 shipping bills,
lying in the Export Shed of CFS Forbes &
Co. Ltd were detained. These goods were
examined and seized by officers of DRI
during
the
period
04.06.2014
to
28.06.2014 as there was reason to believe
that they were liable to confiscation under
provisions of the Custom Act, 1962.
Based on their contents, the packages
were broadly of three different types: (1)
Those
containing
only
waste
paper/cardboard shredding and pieces of
what appeared to be scrap metal foil (2)
Those containing waste paper/cardboard
shredding and metal plates and (3) Those
that did contain some pieces of the
declared brass items, however in very low
quantity in comparison to the declared
quantity. Total drawback claimed under
the said 64 shipping bills is about Rs. 1.71
crore and the total declared (FOB) value
is about Rs. 14.27 crores. A total number
of 16 firms were shown as exporter (as
per the shipping bills) in the said seized
consignments, however not a single firm
came forward to claim the goods under
seizure. Of the said total number of
subject 16 firms, Proprietors of only four
firms appeared before DRI in response to
summonses issued to them and gave their
statements. However, the said proprietors,
in statement given by them claimed
ignorance about nature of the exports
carried out in the name of their respective
firms and named Mohd. Asad Ali as the
person responsible for the exports. A
show cause notice proposing, inter alia,
confiscation of goods, denial of drawback
and penalty on those concerned was
issued on 01.12.2014.

(iv) A total no. of 29 suspect
firms are under investigation and besides
the
drawback
claimed
in
case
of
consignments seized by DRI, the said
firms
have,
collectively
claimed
drawback amount of around Rs 13 crores
in respect of consignments already
exported by them in the past of a total
declared FOB value of about Rs. 120
crores.

(v) The petitioner no. 1, is one
of the 29 firms under investigation, and
freight forwarding work of the petitioner
in respect of export from Nhava Sheva
Port was handled by Pandurang Bajirao
Dere, also known as Adinath Dere,
proprietor of M/s Emmar Logistics, who
is one of the two prime suspects in the
case (the other being Mohd. Asad Ali.

(vi) That Pandurang Bajirao
Dere, in his statement, recorded under
section 108 of the Customs Act, 1962,
admitted, inter alia, that he had handled
freight forwarding work of 15 firms,
including M/s King Star Handicraft, the
Petitioner no. 1; that he did not know the
proprietors of any of the said 15 firms;
that the said 15 firms were operated by a
trio of Moradabad based persons, namely
Nasir Khan, Bobby Khan and Rahat
Khan; that the modus operandi adopted
by the said trio was 'Adjustment Method',
wherein the quantity of goods declared in
the shipping bills would be much higher,
up to 5 to 6 times than what was packed
in the cartons; there would be no problem
with their Customs clearance as the
packing would be done in such a manner
that it would not be detected easily; that
he (Dere) was promised 22% of the
drawback sanctioned to the party and that
3 All. M/S King Star Handicraft & Anr. Vs. Union of India & Ors.
1195
the operator of M/s King Star Handicraft,
the Petitioner no. 1 was Bobby Khan.

(vii)
The
said
Pandurang
Bajirao Dere and three other persons
involved in the case were arrested by DRI
on 21.08.2014 ) (Mohd Asad Ali) and
22.08.2014 (Pandurang Bajirao Dere and
others) and are presently released on bail.

(viii) Petitioner no. 1 had
exported goods declared as 'brass artware'
under three shipping bills filed during
May 2014 involving a total declared value
of Rs. 51,64,816/- and drawback claim of
Rs. 6,19,779/-. The remittance received in
bank accounts of all of the 29 firms under
investigation is suspected to be arranged
by a syndicate and not relatable to the
exports done by the firms.

(ix) As the petitioner firm
appeared to be one of the firms operated
by a syndicate engaged in such fraudulent
exports, further sanction of drawback to
petitioner was put on hold vide letter
dated 05.06.2014 issued to drawback
section, JNCH. The petitioner's impugned
bank account no. 16250200002619 with
Fedral Bank Ltd, Moradabad Branch
shows credit of Rs. 12,94,971/- which
relates to receipt of foreign inward
remittance and is suspected to be arranged
by a syndicate and not relatable to the
exports done by the firm. Hence, a letter
dated 05.06.2014 was also issued to
Fedral Bank Ltd, Moradabad Branch
requesting, inter alia, not to allow
withdrawal from the current account of
the petitioner no. 1.

10. It is stated in the prayer clause
of aforesaid short counter affidavit that
"however,
the
department
has
no
objection to the petitioner operating their
account for transactions other than those
related
to
the
exports
under
investigation."

11. In the rejoinder affidavit filed on
behalf of the petitioners, the facts as
narrated in the short counter affidavit
were denied and again it is stated that
procedure as prescribed under sections
108/110 of the Customs Act 1962 was not
complied with and as such the petitioners
are entitled for the reliefs as claimed in
the present writ petition.

12. Heard learned counsel for the
parties.

13. With the consent of learned
counsel for the parties, the writ petition is
being disposed of at the admission stage
itself.

14. From perusal of the facts as
sated above, it is clear that as many as
three summons were issued by the
respondents under sections 108/110 of the
Customs Act 1962. No proceedings
whatsoever has been initiated at any point
of time as provided under Sub-section 2
of Section 110 of the Customs Act 1962.
It is provided Sub-section 2 of Section
110 of the Customs Act 1962 that where
any goods are seized under sub-section
(2) and no notice in respect thereof is
given under clause (a) of Section 124
within six months of the seizure of the
goods, the goods shall be returned to the
person from whose possession they were
seized.

15. It is clear from perusal of the
record that no proceeding has been
initiated by the respondents by issuing
notice as provided under clause (a) of
Section 124 of the Customs Act 1962
within six months.

16. In the case of Raghuram Grah
Pvt. Ltd (Supra) it was held by Division
1196 INDIAN LAW REPORTS ALLAHABAD SERIES
Bench of this Court that "As we find no
provision nor any authority under which
the bank account can be freezed pending
investigation we are left with no option
but to quash the order dated 16th
January, 2004 (Annexure 17 to the writ
petition) and direct the Respondent No. 1
to forthwith release Current Account Nos.
28430 and DRCs Account Nos. 7538 to
7541 with the Union Bank of India,
Banda Branch, Banda. As the action of
the respondent in freezing the bank
accounts have been set aside the
petitioner shall be entitled to operate
them."

17. In the case of Veritas Exports
(Supra), a Division Bench of Bombay
High Court was pleased to hold in
paragraph 6 that it is necessary for the
Customs authority to take appropriate
steps for confiscation of goods within a
period of 6 months from the date of
seizure in accordance with the provisions
contained in Section 124(c) of the said
Act and in case no such steps are taken
then to proceed in accordance with Subsection 2 of Section 110 of the said Act.

18. Paragraph nos. 6, 7 and 8 of the
aforesaid judgment is produced below:-

"6. Obviously once the goods
are seized in exercise of powers under
Section 110(1) of the said Act, it is
necessary for the Customs authority to
take appropriate steps for confiscation of
goods within a period of 6 months from
the date of seizure in accordance with the
provisions contained in Section 124(c) of
the said Act and in case no such steps are
taken then to proceed in accordance with
Sub-section 2 of Section 110 of the said
Act. Undoubtedly, proviso to Sub-section
2 of Section 110 provides that the period
of months may be extended by the
Commissioner of Customs, on sufficient
cause being shown, for a period not
exceeding six months. We are fully aware
that in a given case where the delay is
occurred on account of acts on the part of
owners of the goods then such period can
even be excluded from the period of six
months as was held by the Apex Court in
the case of Poolpandi v. Superintendent,
Central
Excise
.
Nevertheless,
the
authorities under the said Act have no
power to continue to keep the goods
seized under Section 110(1) after the
expiry of period of 6 months unless they
follow the procedure prescribed under
Section 124 and/or 110(2) of the said Act,
as the facts and the circumstances of the
case may warrant. The provisions of law
contained in Section 110 read with
Section 124 are to be followed by the
authorities and the goods cannot be
detained without complying the said
provisions of law. The law in this regard
is well settled by the decision of the Apex
court in Harbans Lal v. Collector of
Central Excise & Customs read with I.J.
Rao, Asstt. Collector of Customs and Ors.
v. Bibhuti Bhushan Bagh and Anr. and
The Asstt. Collector of Customs v. Charan
Das Malhotra as well as Lokenath
Tolaram Etc. v. B.N. Rangwani and Ors.

7. In the case in hand, though
the respondents have filed two affidavits
in the course of the hearing of the matter,
the same nowhere discloses any action
having been taken by the respondents in
accordance with the provisions of law
contained in Section 124 or 110(2) in
relation to the goods in question i.e. the
said bank accounts which have been
frozen by the respondents. Apart from
giving
a
lame
excuse
that
the
investigation is not yet complete and the
freezing has been done as a precautionary
3 All. M/S King Star Handicraft & Anr. Vs. Union of India & Ors.
1197
measure, no justification has been given for
not taking steps in accordance with the
provisions contained in Section 110(2) and the
proviso thereto, in case the petitioners have
not been able to take appropriate steps in
accordance with Section 124. It is to be noted
that the accounts have remained frozen atleast
from 1998 onwards and till this date there has
been no action on the part of the respondents
in accordance with the provisions of law.
There is also no explanation for such inaction
on the part of the respondents. Inspite of
repeated querry being made, the Advocate for
the respondents, apart from submitting that
the said amount is seized for other
investigation either under the Income Tax Act
or some other Act and that too without
making good by producing documentary
evidence in that regard, no explanation is
forthcoming to justify continuation of the
accounts in frozen condition. In the
circumstances, therefore, we are left with no
alternative than to allow the petition and to
order the release of the accounts in
accordance with the prayer Clause-b(i) of the
petition."

8.
The
petition
therefore,
succeeds and the same is allowed in terms
of prayer Clause-b(i) and the rule is made
absolute accordingly with no order as to
costs."

19. A Division Bench of the Gujrat
High Court in the case of Am Overseas
(Supra) had an occasion to examine this
controversy. The Division Bench held that
the provisions of Section 110 of the Act
cannot
restrict
the
petitioner
from
operating the Bank account. The relevant
portion of the judgement is quoted
below:-

"6. Coming to Section 110(3) of
the Act, it permits the authority to
exercise power on seizure of any
document or thing which, in the opinion
of the authority, will be useful for, or
relevant to, any proceeding under the Act.
Emphasizing the use of the term `things'
in the provision, it was submitted that
when the same is read with definition of
`goods' under Section 2(22) of the Act, as
also the definition of the term `things'
from the Black's Law Dictionary, it would
also take within its sweep `currency', and
in the circumstances, the action of the
respondent authorities was required to be
upheld. The said submission, though
attractive at first blush, does not hold
ground when the same is examined in
light of the scheme of the Act. One cannot
lose sight of the fact that the provision is
part and parcel of a statute which deals
with import and export of goods. In other
words, permitting such transactions of
goods in accordance with law. The term
`currency' is used in the definition of the
term `goods' in the context of either
importing the currency or exporting the
currency through legal channels or
illegally. In violation of the requisite law
in relation to such transactions of
currencies,
the
authority
would
be
empowered to take appropriate action
under the Act. In the present case, it is not
the case of respondent authorities that the
petitioner is either dealing in currency or
is charged with illegally transacting in
currency by way of import or export.
Therefore, even this provision cannot
support
the
action
of
respondent
authorities.

7.
Though
Mr.
Oza
has
addressed the Court in relation to various
facts narrated in the affidavit in reply, it is
not necessary to deal with the same at this
stage, for the simple reason that the
investigation which is in progress should
not be affected by any observation or
finding which the Court may record in
1198 INDIAN LAW REPORTS ALLAHABAD SERIES
relation to the facts and evidence which is
in the stage of being ascertained, collated
and brought on record. Therefore, without
entering into any discussion on merits of
the facts and evidence, suffice it to state
that the averments made in the affidavit in
reply do not carry the case of revenue any
further."

20. In the case of Multitek
Engineers (Supra) a Division Bench of
the Karnataka High Court was pleased to
hold that, from a bare perusal of the
provisions contained under section 110 of
the Customs Act, 1962 shows that the
statutory provision does not expressly
enable an Investigating Officer to attach
the Bank account.

21. In the case of M/S M.Z.
Handicraft (Supra) it was held by
Division Bench of this Court that "power
under section 110 of the Customs Act
1962 could not have been exercised for
passing an order that the petitioners
should not be permitted to make any
withdrawal from the account. Relevant
paragraphs of the aforesaid judgment is
reproduced below:-

"The submission of learned
Senior Counsel for the respondents that
even if the account is permitted to be
operated by the petitioners, a direction
should be issued to provide the security
for the amount in view of the judgements
relied upon cannot also be accepted in
view of the provisions of Section 110 A of
the Act. Section 110 A of the Act provides
that any goods, documents or things
seized under Section 110 may pending
order of the Adjudicating Authority be
released to the owner on taking a bond
from him in the proper form with such
security
and
conditions
as
the
Adjudicating Authority may require. Thus
the precondition stipulated under Section
110 A is that goods, documents or things
must have been seized under section 110
of the Act. We have already held that the
power under section 110 of the Act could
not have been exercised for passing an
order that the petitioners should not be
permitted to make any withdrawal from
the account. In such circumstances, the
respondents
cannot
insist
that
the
petitioners
should
furnish
adequate
security bond.

Thus for all the reasons stated
above, the impugned order dated 5 June
2014 passed by Senior Intelligence in the
Directorate
of
Revenue
Intelligence
cannot be sustained and is, accordingly,
set aside. The respondent shall forthwith
permit the petitioner to operate the
Account No. 019005500238.

The writ petition is allowed to
the extent indicate above."

22. From perusal of the provisions
contained
under
sub-section
(2)
of
Section 110 of the Customs Act, 1962, it
is clear that the customs authority must
have issued a show cause notice under
section 124 of the Customs Act, within a
period of 6 months from the date of order
of the seizure and in case no such notice
is issued within 6 months, the said period
of 6 months may be extended on
sufficient cause being shown by the
Principal Commissioner of Customs or
Commissioner of Customs as provided in
proviso to sub section (2) of section 110
of the Customs Act. Thus, in no case the
seizure of goods and documents may
continue for a period of more than 1 year,
if no show cause notice as contemplated
under section 124 of the Customs Act is
issued. In the present case, it is clear that
the accounts were freeze in August 2014.
3 All. New Tech Import Pvt. Ltd. Vs. Union of India & Ors.
1199
The writ petition was filed in 2017. In the
short counter affidavit filed on behalf of the
respondent nos.1, 2 and 3 on 10.2.2017 it is
not at all stated that any show cause notice as
contemplated under clause (a) of section 124 of
the Customs Act has been issued. It is only
alleged in the counter affidavit that the
investigation with regard to the fraudulent
drawback is being going on. Even no
justification has been given for not taking steps
in accordance with the provisions contained in
Sub Section (2) of Section 110 and proviso
thereto, as such, it is obligatory on part of the
respondent customs authority to defreeze the
bank account of the petitioner but the
respondents customs authority have not yet
defreeze the bank account of the petitioner.

23. In view of the facts stated above,
it is clear that the bank account cannot be
remained freeze during investigation for
the period as contemplated under Subsection (2) of Section 110 of the Customs
Act, 1962. The respondents have failed to
pass appropriate order for defreeze of the
bank account of the petitioner, therefore, a
mandamus
is
issued
directing
the
respondent nos. 3 & 4 to defreeze the
bank account of the petitioner being
Account No. 16250200002619 at Federal
Bank Ltd., Ground Floor, Gandhi Nagar,
Rampur Road, Moradabad.

24. In the facts and circumstances of
the case a mandamus is issued to the
respondents to permit the petitioners
forthwith to operate his current account
no. 16250200002619 held at Fedral Bank
Limited, Ground Floor, Gandhi Nagar,
Rampur Road, Moradabad.

25. With the aforesaid observations,
the writ petition is allowed to the extent
indicated above.
----------
(2019)11ILR A1199

ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 01.10.2019

BEFORE

THE HON'BLE SUDHIR AGARWAL, J.
THE HON'BLE RAJENDRA KUMAR-IV, J.

Writ C No. 8225 of 2019

New Tech Imports Pvt. Ltd. ...Petitioner
Versus
Union Of India & Ors. ...Respondents

Counsel for the Petitioner:
Sri Shashi Nandan, Sri Udayan Nandan,
Sri Sondhi Narula Dalal

Counsel for the Respondents:
Sri Rajnish Kumar Rai

A. Constitution of India, Article 226 -
Scope; Indian Contract Act, 1872 -
Private Contract - Principles of Natural
Justice do not apply to termination. It is
not a quasi-judicial Act. Contract cannot
be enforced by Writ Court.

Writ Petition dismissed (E-9)

Cases referred: -

1.Bareilly Development Authority Vs Ajai Pal
Singh, AIR (1989) SC 1076

2.Kerala St. Electricity Board & anr. Vs Kurian
E. Kalathil & ors., (2000) (6) SCC 293

3.St. of U.P. & anrs. Vs Bridge & Roof Co.
(India) Ltd., AIR (1996) SC 3515

4.The Rajasthan St. Industrial Development &
Investment Corp. & anr. Vs Diamond & Gem
Development Corporation Ltd. & anr., (2013)
(5) SCC 470

5. Zonal Manager, Central Bank of India Vs
Devi Ispat Ltd. & ors., (2010) (11) SCC 186