Writ Petition No. 3678 of 2004 · Andhra Pradesh High Court

In this case, the petitioner seeks issuance of a rule calling upon the respondents to show cause why a Writ in the nature of Certiorari could not be issued under Article 226 of the Constitution of India to call for the records relating to impugned notice dated 17.2.2004 issued by respondent-Mandal Revenue Officer, Tirumalagiri Mandal and to quash the same. The facts in nutshell are as under: The petitioner who stated to be doing export business exported bulk drugs to Dubai under Duty Entitlement Passbook (DEPB) Scheme. The petitioner while exporting certain quantity of bulk drugs namely “Naproxen”, which were lying in Bombay Nhava Sheva Docks, they were seized and petitioner was arrested and detained by the Director of Revenue Intelligence under Conservation of foreign Exchange and Prevention of Smuggling Activities Act. A show cause notice dated 12.9.2001 was issued to the petitioner under Section 14 of the Foreign Trade (Development & Regulation) Act, 1992 alleging that the petitioner exported chalk powder under DEPB scheme by grossly mis-declaring the same as “Naproxen and Rifampicin BP” (bulk drugs) against the licence and the goods have been over invoiced to fraudulently claim the benefit under DEPB scheme by calling upon the petitioner to show cause why action should not be taken to impose fiscal penalty under Section 11(2) of the Foreign Trade Act, 1992 and why licence should not be cancelled.

Not satisfying with the explanation offered by the petitioner, final show cause notice dated 25.1.2002 was issued to the petitioner by the Joint Director General of Foreign Trade calling upon him to explain why fiscal penalty should not be imposed. As the petitioner did not submit his explanation to the said show cause notice, the Joint Director General of Foreign Trade, Hyderabad passed final orders dated 19.3.2002 imposing fiscal penalty of Rs.1,30,60,725/- on the petitioner under Section 11(2) of the Foreign Trade Act, 1992. For due recovery of the same, necessary authorization was made duly authorizing the District Collector-Respondent No.2 herein to recover the said amount of Rs.1,30,60,725/- from the petitioner. Pursuant to which, the Mandal Revenue Officer passed the impugned order dated 17.2.2004 directing the petitioner to pay a sum of Rs.1,30,60,725/- within (7) days from the date of receipt of the notice.

The legality and validity of the said impugned order is assailed in the present writ petition. It is stated that the petitioner’s licence was also cancelled by order, dated 13.5.2002. Aggrieved by the same, petitioner preferred W.P.No.12878 of 2002 and the same was directed to post along with batch of writ petitions, which were tagged along with W.A.No.1953 of 2001, are pending consideration of this Court and no interim orders were passed in the above batch of cases. Respondents 1 and 4 have filed separate counter affidavits. The first respondent in his counter affidavit submits that on a requisition received from the fourth respondent for recovery of dues from the petitioner under Foreign Trade Act as contemplated under Section 5 of the Revenue Recovery Act, 1890 (Central Act), second respondent sent a requisition and directed him to recover the said amount from the petitioner and pursuant to such instructions, he issued impugned demand notice under Section 25 of the A.P. Revenue Recovery Act, 1864 calling upon the petitioner to pay a sum of Rs.1,30,60,725/-. The fourth respondent in his counter affidavit stated that the penalty imposed under the Foreign Trade Act if not paid, the same may be recovered as an arrear of land revenue and under Section 5 of the Central Act, when any sum is recoverable as an arrear of land revenue by any public officer other than a Collector, on request of such Officer, the Collector may proceed to recover the same as an arrear of land revenue which accrued in his own district.

Thus, the District Collector, on requisition, is empowered to recover the said amount payable to fourth respondent by duly following the procedure prescribed under the State Act. He also submits that against the final orders passed by the fourth respondent dated 19.3.2002, petitioner preferred W.P.No.12879 of 2002 and batch, but no interim orders were granted in the said cases and in the absence of any interim orders, there is no bar for the fourth respondent to recover the said amount. The learned counsel for the petitioner submits that questioning the show cause notices and the suspension of the licence, he filed writ petitions before this Court and while the same are pending adjudication, the issuance of impugned notice is bad and violative of Articles 14, 19 and 21 of the Constitution of India. It was contended that unless necessary notification as contemplated under Section 52-A of the State Act is issued, the same cannot be recovered as an arrear of land revenue under the said Act.

In the absence of specific procedure laid down for recovery of the amount as an arrear of land revenue under Revenue Recovery Act, 1890 (Central Act) second respondent cannot recover the same. Per contra, the learned Advocate General appearing for Respondents 1 to 3 would urge that on requisition received from the Collector as contemplated under Section 5 of the Central Act, the Mandal Revenue Officer was authorized to recover the said amount since the petitioner resides within the jurisdiction of fourth respondent. Under Section 11(4) of the Foreign Trade Act, the District Collector or his Officer is empowered to recover the penalty as an arrear of land revenue. In support of his contention, he placed reliance on the judgment of the Apex Court in PURSHOTTAM GOVINDJI HALAI V . SHREE B.M.DESAI, ADDITIONAL COLLECTOR OF BOMBAY, and contends that any recovery of the certified demand amount, the Collector can have recourse to the machinery devised for a particular purpose for enforcing the payment of land revenue under A.P. Revenue Recovery Act, 1864 (State Act).

Sri Rajasekhar Reddy, learned Standing Counsel for Central Government would contend that Section 5 of the Revenue Recovery Act, 1890 authorizes the District Collector for recovery of sums recoverable as arrears of revenue by other public officers or by local authorities and Section 7 saves the local laws relating to revenue and the same can be recovered under Section 52 of the Act. He also placed reliance on the judgment of this Court in SOMASUDARSHAN GOUD V. THE DISTRICT COLLECTOR, and contends that Sections 3 and 5 of the Central Act authorizes the Collector not only in respect of sums recoverable as land revenue and payable to the Collector but also in respect of sums recoverable as land revenue by public officers other than the Collector or by local authority and therefore he contends that the requisition to recover the amount imposed as penalty is justified. Before I proceed to consider the rival contentions, it is appropriate to notice the relevant statutory provisions under which the amounts sought to be recovered. Section 11 of the Foreign Trade (Development and Regulation) Act, 1992 reads as under:

Contravention of Provisions of this Act, Rules, orders and export and import policy.

No export or import shall be made by any person except in accordance with the provisions of this Act, the rules and orders made thereunder and the export and import policy for the time being in force. Where any person makes or abets for attempts to make any export or import in contravention of any provisions of this Act or any rules or orders made thereunder or the export and import policy, he shall be liable to be a penalty not exceeding one thousand rupees of five times the value of the goods in respect of which any contravention is made or attempted to be made, whichever is more. Where any person, or a notice to him by the Adjudicating authority, admits any contravention, the Adjudicating Authority may, in such class or classes of cases and in such manner as may be prescribed, determine, by way of settlement, an amount to be paid by that person A penalty imposed under this Act may, if it is not paid, be recovered as an arrear of land revenue and the Importer-exporter Code Number of the person concerned may, on failure to pay the penalty by him, be suspended by the Adjudicating Authority till the penalty is paid. Section 5 of the Revenue Recovery Act, 1890, reads as follows:

Recovery by Collectors of sums recoverable as arrears of revenue by other public officers or by local authorities: Where any sum is recoverable as an arrear of land revenue by any public officer other than a Collector or by any local authority, the Collector of the district in which the office of that officer or authority is situate shall, on the request of the officer or authority, proceed to recover the sum as if it were an arrear of land revenue which had accrued in his own district, and may send a certificate of the amount to be recovered to the Collector of another district under the foregoing provisions of this Act, as if the sum were payable to himself. In PURSHOTTAM GOVINDJI HALAI’s case (1 supra), the Supreme Court has considered this issue with regard to recovery of income tax on assessment being finalized and certificate issued under Section 46(2) of the Income Tax Act and forwarding the same to the Collector, who issued notice of demand of the assessee for payment of assessed amount of tax and on failure to pay, the Collector attached the goodwill and tenancy rights in the premises in which a sale proclamation was issued and the sale proceeds not being sufficient to satisfy the assessed tax, a notice was issued under Section 13 of the Bombay City Land Revenue Act, 1876 requiring the assessee to appear before the Collector in person and show cause why the assessee should not be apprehended and confined to civil jail in satisfaction of the said certified demand.