Full Judgment Text
2008:BHC-OS:6409-DB
-1-
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO. 181 OF2008
IN
NOTICE OF MOTION NO. 248 OF 2008
IN
SUIT NO. 198 OF 2008
1. Bhagwandas Laxmichand Shah, an adult, )
rd
Indian Inhabitant, residing at 204, 3 floor, )
Jogani Apartment, Doongarshi Cross Road, )
Mumbai-400 006 )
2. Mahesh Kushaldas Shah, an adult, )
Indian Inhabitant, residing at Rustomjee Regency )
Jaywant Sawant Road, Building No.1, )
th
“A” Wing, 8 floor, Borivli (West), )
Mumbai-400 068 )
3. Jayesh Amrutlal Shah, )
an adult, Indian Inhabitant, residing at 3, )
Kadampali Society, Timaliyawad, Nanpura, )
Surat-395 001 )..Appellants
versus
1. Union of India, through )
Aayakar Bhavan, New Marine Lines, )
Mumbai-400 020 )
2. The Commissioner of Customs, )
(Export Promotion), New Customs House, )
Ballard Estate, Mumbai-400 038 )
3. The Assistant Commissioner of Customs, )
Tax Recovery Cell (Export), New Customs House, )
Ballard Estate, Mumbai-400 001. )..Respondents
Mr. K.P. Bulchandani, instructed by M/s. Kamal & Co., for the
appellants.
::: Downloaded on - 26/06/2024 07:32:36 :::
-2-
Mrs. S.I. Shah, instructed by M/s. S.I. Shah & Co., for the respondents.
CORAM : SWATANTER KUMAR, C.J. &
V.M. KANADE, J.
Judgment reserved on : April 07, 2008
Judgment delivered on: April 10, 2008
JUDGMENT (Per Swatanter Kumar, C.J.):
th
This appeal is directed against the order dated 28 February,
2008, rejecting the Notice of Motion taken out by the plaintiffs-appellants
praying for interim relief of injunction restraining the Union of India, the
Commissioner of Customs (Export Promotion) and the Assistant
Commissioner of Customs, Tax Recovery Cell, (Export), from acting in
any manner in furtherance to the recovery certificate and the order of
th
attachment dated 25 April, 2007.
2. The facts, as recorded in the impugned order and which
th
appear from the record before us, are that on 4 August, 1987, an order
was passed by the Collector of Customs, New Customs House,
Mumbai, in exercise of the power of adjudication under the Customs
Act, 1962, holding that the partnership under the name and style of M/s.
N. Devidas & Company, was liable to pay an amount of Rs.
2,83,43,821/- and personal penalties were also imposed on the firm
and its partners. The partnership had four partners. The said partners
::: Downloaded on - 26/06/2024 07:32:36 :::
-3-
were even detained under the COFEPOSA. In furtherance to this order,
the Tax Recovery Cell of the Customs Department served the order of
th
attachment dated 28 February, 2007 upon the partnership firm and its
partners and attached properties i.e. immovable properties which stood
in the name of the partners viz. Niranjan and Jaykant Devidas Shah.
3. The appellants, who claim to be the executors of the Will of
th
Smt. Kusumben Virchand Shah dated 4 May, 2003, were granted
th
Letters of Administration on 4 May, 2007. The will provided that all her
movables and immovable properties including the property at Mazgaon,
after the payment of all taxes, will be distributed amongst the members
of the family of her sons as per the ratio stated in the Will. In the year
1988 a suit was filed being Suit No. 328 of 1988 wherein, inter alia, the
deceased testatrix Kusumben was impleaded as seventh defendant .
Consent terms were entered into between the parties. As per clause 3
of the said consent terms, it was envisaged that the three flats reflected
therein would be sold by a private treaty towards the realisation of the
decretal debt of Rs. 3.35 crores outstanding in the name of the
appellants. The properties were agreed to be handed over and would
vest in deceased Kusumben. As per clause 7 of the said consent
terms, all the remaining properties and assets of the partnership firm
::: Downloaded on - 26/06/2024 07:32:36 :::
-4-
were to belong to deceased Kusumben.
4. The basic argument raised on behalf of the appellants, while
th
impugning the order dated 28 February, 2008, is that the partnership
firm and its partners were not defaulters within the meaning of the
provisions of Customs Act, 1962, and as such no properties could be
attached. Further, it is stated that the properties had unequivocally
vested in the deceased who had bequeathed the properties vide her Will
th
dated 4 May, 2003 to the appellants and as such the properties had
come to their hands without any charge. These contentions were
rejected by the learned single Judge after noticing the facts in great
detail and for the following reasons:-
“In fact, it would be of some significance to note that after
the attachment was levied, some of the partners of the
partnership firm namely Mr. Niranjan Shah, Mr. Jaykant
Shah, Mr. Rameshchandra Shah and Mr. Vijay Shah have
in pursuance of the order of adjudication purported to
deposit in part the penalty each in the amount of
Rs.25,000/- with the Assistant Commissioner of Customs.
6. There is no material forthcoming on the record to lead
the Court to hold that prima facie, the Government of
India has proceeded to take action by levying an
attachment against a party who is not a defaulter. The
burden in such a case must clearly lie upon a party which
seeks raising of the attachment to demonstrate by means
of cogent documentary material that an attachment has
been levied other than in respect of the property of the
defaulter. That burden has not been displaced. An
internal arrangement between the partners of M/s. N.
::: Downloaded on - 26/06/2024 07:32:36 :::
-5-
Devilal & Co., albeit in the form of Consent Terms after
the order of adjudication cannot operate to divest the
Union Government of its overriding and paramount claim
arising out of the order of adjudication.
7. In these circumstances, no case has been
made out for lifting the order of attachment or for the grant
of an interlocutory injunction restraining the Union
Government from taking recourse to its remedies for the
realization of its dues under the order of adjudication.”
5. As is evident from the above reasoning, the appellants had no
prima facie case nor the was the balance of equity in their favour so as
to entitle them for grant of an ad-interim injunction. An attempt was
also made by the appellants to show that the properties were already
under attachment and there was no need and occasion to sell the
properties in question. According to them, no prejudice would be
caused to the department, if the properties continue to be under
attachment. These contentions are again without any merit. It is not
even in dispute that the properties in question belonged to the partners
and were in the name of the partners in the year 1987. The order of the
th
Collector of Customs was passed on 4 August, 1987 whereafter it is
nobody's case that the dues were not paid as as such they would be
apparently defaulters. A decree was obtained by way of consent terms
in Suit No. 328 of 1988 to which the department was not a party. Thus
the consent terms and/or even a finding recorded in the suit would in no
::: Downloaded on - 26/06/2024 07:32:36 :::
-6-
way bind the respondents in the present appeal. There is no dispute to
the fact that the partners were detained under the provisions of the
COFEPOSA. If during the interregnum period the properties have been
diverted by adopting a cleverly devised methodology, there is no dispute
that even the present appellants were the partners of the firm. In fact,
the appellants are the step-sons of the deceased. The property would
change the hands subject to its liabilities. The concerned parties were
heard by the competent authority before the partners were held liable to
pay a sum of Rs. 2,83,43,821/-. The whole process adopted by the
appellants is merely a camouflage to overreach the order of attachment.
The finding of the learned single Judge, that there was no prima facie
case and no material had been produced on record to show that the
property belongs to the persons who were not defaulters and as such
the order of attachment cannot be executed, cannot be faulted.
6. We find no merit in this appeal and the same is dismissed,
while leaving the parties to bear their own costs.
CHIEF JUSTICE
V.M. KANADE, J.
::: Downloaded on - 26/06/2024 07:32:36 :::
-7-
::: Downloaded on - 26/06/2024 07:32:36 :::