Oral Judgment:

1. Rule. Respondents waive service. By consent Rule made returnable forthwith.

2. This Writ Petition is by the petitioner which is a company registered under the Indian Companies Act, 1956 engaged, inter-alia, in the business of forwarding and clearing of cargoes of various importers and exporters at Mumbai Port. The petitioner has been established in the year 1983, has 26 offices across India and 340 employees who are engaged in the aforementioned business activities. The petitioner claims to have acted as Agent and under the sub regulations namely the Customs Brokers Licensing Regulations, 2013 for reputed clients.

3. The order dated 9th June, 2014 hereinafter referred to as impugned order has been passed by the Commissioner of Customs (General) Mumbai, who is second respondent before this Court. By this order, respondent No.2 has prohibited the petitioner from operating as customs house brokers within Mumbai Customs Zones I, II and III pending enquiry under Regulation 20 of the aforementioned regulations.

4. The brief facts leading to the institution of this Writ Petition are that the petitioner has been issued the license under the Customs Agents Licensing Regulations, 2004 on 21st February, 2005. This license was issued under the then Customs House Agents License Regulations. The said license is renewed from time to time and valid upto 26th July, 2016. The petitioner claims to be operating on the basis of this license and throughout India.

5. In terms of this license and acting as customs house agent, the petitioner claims to have handled major cargoes at Mumbai Port. The details of the cargoes handled have been set out in paras-11 and 12 of the Writ Petition.

6. One Larsen & Toubro Sapura Shipping Pvt. Ltd. (hereinafter referred to as a client) engaged the services of the petitioner in respect of import of heavy duty pipe laying Vessel. The petitioner filed advance bill of entry dated 2nd December, 2010 on behalf of this client, seeking assessment of the Vessel under heading 89.01 at nil rate duty for the purpose of assessment under the Act. The petitioner claims that he was acting on the advise of the importer, which initially declared the import of the said Vessel on permanent basis. However, the clients subsequently decided to treat the said import on temporary basis and applied for Essentiality Certificate from the Director General Hydrocarbon and decided to claim exemption from payment of duty of customs under a certain notification. Therefore, the requisite procedure was complied with by the importer and the petitioner claims that its role was limited to facilitate submission of documents. By letter dated 15th December, 2010, the client requested the Assistant Commissioner of Customs to permit them to amend the Bill of Entry to assess the said Vessel on temporary basis instead of permanent basis, copy of which has been annexed. Based on these instructions of the importer, even the petitioner requested the Assistant Commissioner of Customs to permit the amendment of the Bill of Entry and assess the Vessel on temporary import basis instead of permanent basis. The request made by the petitioner was allowed by making endorsement at the foot of the letter dated 15th December, 2010 (Annexure-F).

7. We are not really concerned with the disputes between the clients/importer and the customs authorities. Be, that as it may, certain dispute did arose with regard to the claim of the importer/client for exemption from payment of custom duty. The Writ Petition was filed in this Court by the client seeking appropriate directions to the Customs authorities to make an assessment of the Vessel. An order came to be passed on 23rd December, 2010 on the said Writ Petition recording the statement of the customs authorities that a provisional release order will be passed as expeditiously as possible which resulted in disposal of the Writ Petition. Thereafter, the provisional assessment order was passed but the Vessel came to be seized on 7th April, 2011. This led to a Writ Petition filed by the Larsen & Toubro Limited bearing Writ Petition No.2959 of 2011 challenging the seizure of the Vessel on which this Court made an order, copy of which is at Annexure-H to the Writ Petition. There was another round of litigation inasmuch as the Essentiality Certificate was cancelled by the Director General of Hydrocarbons, Noida (UP). Therefore, another Writ Petition bearing No.2980 of 2011 was filed and the order cancelling the Essentiality Certificate was set aside.

8. There are now show cause notices issued to the importer and Larsen & Toubro Limited and others and which are pending adjudication. However, what we are concerned with, is the notice issued to the petitioner dated 14th April, 2014 seeking to prohibit it from operating as customs house broker within Mumbai Customs Zone-I, II and III namely Mumbai Port, Airport and Nhava Sheva. The petitioner had to come to this Court because the authorities made an order on 9th May, 2014 on the show cause notice and that was assailed by it by filing the other Writ Petition which is also on board today. This Court directed the authorities to pass a speaking order after hearing the petitioner on the show cause notice and until, then, not to prohibit it from operating as customs house broker.

9. In terms of this Courts order, the hearing was held and now the impugned order has been passed which is challenged in the present Writ Petition.

10. Mr. Shah, learned advocate, appearing in support of the petition submitted that the Customs Brokers Licensing Regulations, 2013 may contain a regulation enabling the Commissioners of Customs at a given port namely the Mumbai Port in this case to prohibit any custom broker from working in a section or more sections of the Customs Station if he is satisfied that such Customs Broker has not fulfilled his obligations as laid down under Regulation 11 in relation to work in that section or sections. This power can be exercised notwithstanding anything contained in the regulations, and would, therefore, be presumed to override a power to either suspend or revoke the license. However, Mr. Shah submits that the satisfaction of the authorities namely Commissioner of Customs has to be based on some definite material. The allegations made in the present show cause notice would show that they are only based on the solitary import on behalf of the client M/s. Larsen & Toubro Sapura Shipping Pvt. Ltd. Beyond that single or solitary case, the show cause notice does not allege anything by which one can conclude that the petitioner deserves to be prohibited from operating and functioning as a customs broker at the concerned Station. Even that single or solitary incident is nearly three years old. Based on that, a notice cannot be issued in April 2014 and a drastic order passed. Mr. Shah submits that the order is completely arbitrary and highhanded inasmuch as the department could not succeed in their endeavour to seize the Vessel and prior thereto could not withhold the request for amendment of the Bill of Entry. The petitioner has moved the authorities in writing with the request on behalf of the importer. That the importer was allegedly not entitled to the relief claimed in the said communications is no ground to proceed against the petitioner for violating the stipulations or the provisions of Regulation 11 and 17. Mr. Shah submits that Regulation 11(d) and 11(m) so also the Regulation 17(9) which is stated to be violated does not envisage such a step or drastic action. The Customs Broker cannot be proceeded against the petitioner for any technical lapse on his/her part or merely because the matter was not brought to the notice of Deputy Commissioner of Customs and Assistant Commissioner. Even if, that was brought to the notice, the Custom Broker may pursue the case of the importer but that does not mean that he has failed to perform his duties as Custom Broker or failed to supervise proper conduct of the employees in the transaction of his business or that there are acts of omission or commission on the part of the petitioner or its employees during their employment. Mr. Shah submits that this drastic order has been passed merely to ensure that the petitioner does not pursue the case of the importer/client. When the proceedings are pending and the client is yet to be saddled with any liability of payment of duty, or penalty, then, the impugned order could not have been passed. Further, the impugned order proceeds on the footing that the matter has been taken up with the parent Commissionerate at Cochin. Pending the parent Commissionerates action and under Regulation 20, the Commissioner of Customs (General) Mumbai, has chosen to propose a prohibition order. He has on his own stipulated a time frame for the parent Commissionerate to act. That does not mean that Mumbai Commissionerate can ensure a suspension of the license in an indirect manner. It is for the parent Commissionerate to take the requisite step. The present order means forcing a decision on the parent Commissionerate to suspend the license of the petitioner. For all these reasons, it is submitted that the impugned order be quashed and set aside.

11. On the other hand, Mr. Jetly supported the impugned order by pointing out that Regulation 23 which has been invoked in this case must be seen as an independent power conferred in the Commissioner of Customs, In-charge of a customs Station. A Custom Broker may be operating in several custom Stations across the country. However, in a particular case, the Commissioner of Customs may prohibit the Customs Broker from working in one or more sections of the Customs Station of which he is in-charge if he is satisfied that the Custom Broker has not fulfilled the obligations laid down in Regulation 11 in relation to the working in that section or sections. Mr. Jetly, therefore, submits that this is an independent power and not controlled by the power to suspend or revoke the license which is conferred in the parent Commissionerate. In the present case, there are reasons assigned and which would show that the Customs Broker has violated Regulation 11(d), 11(m) and 17(9) of the Customs Brokers Licensing Regulations, 2013. The petitioner cannot take shelter of the order passed in the Writ Petition instituted by Larsen & Toubro Limited namely the importers/clients. The petitioner as a broker was obliged to follow the Regulation and particularly the stipulations in Regulation 11 and 17. Therefore, this is a step taken so as to prevent misuse of the license and just because the Commissioner relied upon a single instance does not mean that the impugned order is vitiated by any error of law apparent on the face of the record or perversity leave alone is arbitrary and highhanded as alleged. If the petitioner was to assist the client/importer in effecting payment of custom duty by claiming only legitimate benefits and when the petitioner was aware that the imports were permanent in nature, then, it is a serious act and particularly when the obligations under the Regulation have not been discharged. For these reasons, it is submitted that such powers which are in the nature of a trust reposed in the Commissionerate should be allowed to be exercised without any interference by a Writ Court. More so, when none of the parameters within which the writ jurisdiction can be exercised are attracted in this case. There is no merit in the contention that this amounts to suspension or revocation of the license. For these reasons, it is submitted that the Writ Petition be dismissed.

12. We have with the assistance of Mr. Shah and Mr. Jetly, perused the impugned order and all annexures to the Writ Petition. We have carefully perused the Regulations. We need not go into any larger controversy or question. For the present, we are satisfied that the Regulation empowers the authorities to issue license, supervise and control the working of the Customs Brokers and equally ensure fulfillment and compliance with the terms and conditions on which the license is issued. That the Customs Broker is required to be licensed and cannot, therefore, carry on the business otherwise, is clear from reading of Regulation 3. Thereafter, there are stipulations and clauses which enable making of an application and its due consideration. The grant of license is covered by Regulation No.7 and thereafter the execution of bond, furnishing of security, period of validity of license, are dealt with by Regulations 8 and 9. As per Regulation 10, the license is not transferable. The obligations of the Customs Broker are set out in Regulation 11 and it is his duty to advise his client to comply with the provisions of the Act and in case of non10/ compliance, he shall bring the matter to the notice of the Deputy Commissioner of Customs or Assistant Commissioner of Customs, as the case may be. We cannot be unmindful of the fact that brokers who are licensed have a duty not only to their client but to the public and they have to act in such a way and manner that not only the Regulations are not violated but the larger public interest is served. Regulation 23 confers a discretionary power and which would enable the Commissioner of Customs of a particular Station to prohibit the Custom Broker from operating as Custom Broker or from working in one or more sections. That power is coupled with a duty and must be exercised only on the requisite satisfaction being reached. It cannot be exercised merely because in the opinion of the Commissioner of Customs, the broker has pursued the case of the client/importer needlessly or endlessly. That is a matter which the Commissioner has to deal with independently and for which in a given case he can proceed not only against the importer/client but the broker as well. There are enough provisions in the Customs Act enabling the Commissioner to take care of evasion of duty and dealing with persons responsible for the same. There are also enough measures and which can be initiated so as to prevent such activities in future. However, when the proceedings against the importer in this case are pending and no final adjudication has taken place and the matter is as old as 3 years, then, we do not see any justification for issuing a notice to the petitioner and proceeding against it in terms of Regulation 23. There is much substance in the contention of Shri Shah that the show cause notice has close proximity with the case or stand of the importer/client. From time to time the importer/client has succeeded in protecting its rights, namely, of import and the grant of Essentiality Certificate. The petitioner can be proceeded against together with the importer under independent powers conferred in the Commissioner by the Customs Act, 1962, and that is not disputed. That a show cause notice against the importer/client is issued and is pending adjudication, is further not disputed. That provisional orders enabling clearance of the Vessel and giving security for payment of duty has been passed and all this is to the knowledge of the department. Further, the attempt of the importer/client in approaching the Assistant Commissioner of Customs to assess the Vessle not on permanent basis but temporary one and seeking amendment to the Bill of Entry, is also to the knowledge of the department. These events are of the year December 2010. Therefore, there is no explanation much less a justification for initiation of proceedings in the year 2014 against the petitioner and that too for prohibition from operation or working at the Mumbai Customs Station.

13. The Commissioner at Mumbai had taken up the issue with the Cochin Customs which is the parent Commissionerate and which has issued the license to the petitioner in terms of the Regulations. That Commissioner could have very well suspended the license if there was any requirement and necessity of doing so. Further that Commissioner could have also proceeded against the petitioner in terms of the Regulations for revoking the license. That despite, such a matter being taken up with the parent Commissionerate, the Customs Commissioner at Mumbai, thought it fit to invoke Regulation 23 is something which has not been clarified leave alone explained to us. There was, therefore, a clear haste and arbitrariness in proceeding against the petitioner. There was no reason to keep aside the adjudication proceedings and only proceed in terms of Regulation 23. For all these reasons and finding that the action is only based on the allegations in the show cause notice issued to the importer/client that we are of the opinion that the impugned order cannot be sustained. The power under Regulation 23 which is discretionary and coupled with a duty could not have been exercised in the given facts and circumstances and for the reasons that we have set out above.

14. As a result of the above discussion, the Writ Petition succeeds. The impugned order is quashed and set aside. The Commissioner is free to take such steps against the importer/client as also the petitioner in terms of the pending adjudication proceedings or otherwise but in accordance with law. We are also not in any manner preventing the parent Commissionerate at Cochin from taking suitable action against the petitioner in terms of the Regulations. We are, therefore, clarifying that our order will not prevent the exercise of all such powers and by the competent authorities. We keep open the remedies of the petitioner as well in the event such powers are invoked and exercised by the authorities by clarifying that our present order will not prevent invocation of the power or the petitioners right to defend the proceedings or take such measures as are permissible in law in furtherance thereof. Our order also does not prevent the adjudicating authority from passing such orders against the importer as also the petitioner in terms of the pending show cause notice and adjudication proceedings and in accordance with law. We keep open all contentions of both sides in that behalf. The Writ Petition is allowed with the above clarifications. Rule made absolute accordingly. No costs.