AAMIR RIAZ VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2012 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 495 (2011)

Customs Rules, 2001---

----R.67---Complaint against non-refund of earnest money---Claim of the complainant was that at the auction of vehicle in question he offered bid for Rs.2,400,000 and being the highest bidder he deposited Rs.600,000 as earnest money equal to 25% of the bid amount according to Rules---Complainant had alleged that auction authority despite receiving the amount, not only did not deliver the vehicle in question to him, but also had forfeited amount deposited by him---Contention of Departmental Representative was that highest bid offered by the complainant was for Rs.42,50,000 as per bid recording sheet and the complainant who was required amount of Rs.1,062,500 equal to 25% of bid amount but he had deposited Rs.600,000---As the highest bid was for Rs.4,250,000 as per the documentary evidence produced by the Departmental Representative, the authorities should not have accepted the earnest money less than Rs.1,062,500 i.e. 25% of the bid amount---Accepting partial payment of earnest money, was not in keeping with the requirement of R.67 of Customs Rules, 2001---If the bidder had failed to deposit the full amount of earnest money soon after the fall of the hammer, the bid should have been cancelled as per the provisions of R.67 of Customs Rules 2001---Approval of the highest bid without immediate deposit of full amount of the earnest money was done in violationofR. 67ofthe Rules---Non-issuanceofreceiptandforfeiture of partial amount was unfair---Dispatch of the forfeiture intimation letter on wrong address of the complainant too involved inefficiency and irresponsibility---Said acts of omission and commission of authorities were tantamount to maladministration in terms of S.2(3) of the Establishment of Office of Federal Ombudsman Ordinance, 2000---FederalBoardofRevenuewasrecommendedtodirectDirector General (Intelligence and Investigation) to refund theunfairly forfeited amount of Rs.600,000 to the complaint; to take necessary steps to ensurecomplianceoftheAuctionRulesinletterand spirit byallconcernedandreportcompliancewithin15days.

Yasin Tahir, Senior Advisor Dealing Officer.

Aamir Riaz for the Complainant (in person).

Ghulam Ali Malik Deputy Director, DGI&I, F.B.R. Departmental Representative.

FINDINGS/RECOMMENDATIONS

DR. MUHAMMAD SHOAIB SUDDLE, FEDERAL TAX OMBUDSMAN.---This complaint has been filed against Directorate General (Intelligence and Investigation) (DGI&I) for non-refund of earnest money deposited by an overseas Pakistani complainant, in connection with auction of a BMW car.

2.The complaint was sent to Secretary, Revenue ,Division, for comments, which were received vide DGI&I's No.DA-114/2010/SWH/ TRL/6153 dated 4-11-2011.

3.During the hearing, the complainant stated that at the auction held at the State warehouse, Tarnol, he offered bid for Rs.2,400,000 for a BMW 525. Being the highest bidder, he was required to deposit earnest money equal to 25% of the bid amount. He accordingly deposited Rs.600,000. The auction authorities received the amount but, did not deliver the vehicle. Instead, they forfeited it. The complainant has been running from pillar to post for the last over one year for refund of the earnest money, but to no avail.

4.The letter intimating forfeiture of the earnest money was also wrongly addressed. So the postal authorities could not deliver it to the complainant for want of proper address. According to the complainant, it indicated mischief on the part of the authorities to keep the bidder in the dark about forfeiture of his earnest money. He, however, came to know of the forfeiture when he personally met the auction authorities to know the fate of his bid.

5.The DR stated that two cars: BMW 745-I (2002 silver metallic) and BMW 745-LI (2003 black) were offered for auction as per the auction list. There was no BMW 525 which was offered for auction. According to the DR, the complainant's contention that he offered his bid for BMW 525 was factually incorrect.

6.The DR also contended that the highest bid offered by the complainant was for Rs.4,250,000 as per bid recording sheet duly signed by him. An amount of Rs.1,062,500 was required to be deposited immediately after fall of the hammer as earnest money under the auction rules notified vide S.R.O. No.450(I)/2001 dated 18-6-2001. The complainant, however, deposited only Rs.600,000 and promised to deposit the remaining amount the same day. That is why no receipt was issued. Instead of depositing the amount due, the complainant wanted to get the bid cancelled which was declined. He neither deposited the balance amount of earnest money nor the total bid amount to get the vehicle delivered to him. As this was a clear violation of Rules 67 and 68 of the Auction Rules, the partial bid amount deposited by him, was forfeited in terms of rule 69. The car was then given to another bidder in a subsequent auction for Rs.3,325,000.

7.Controverting the averments of the DR, the complainant stated that he was made to sign blank bid recording sheet which he did in good faith. As he had never participated in any such auction, he was not familiar with the auction rules and implications of signing a blank bid recording sheet.

8.The complaint has been examined in the light of the written and oral submissions of the parties. The complainant's contention that he offered the bid for BMW 525 is not borne out by the facts. However, as the highest bid was for Rs.4,250,000, as per the documentary evidence produced by the DR, the authorities should not have accepted the earnest money less than Rs.1,062,500 i.e. 25% of the bid amount. Accepting partial payment of earnest money was not in keeping with the requirement of rule 67 of Auction Rules. If the bidder had failed to deposit the full amount of earnest money soon after the fall of the hammer, the bid should have been cancelled as per the provisions ofrule 67, which are reproduced below for facility of reference:

"67. Earnest money payable.---Twenty five percent of the amount of the highest bid given at an auction shall be payable by the bidder in each case as earnest money immediately after the fall of the hammer failing which the bid will be cancelled and the goods may be sold to the second highest bidder or the higher offer or re-auctioned, as deemed appropriate."

Findings:

9.The approval of the highest bid without immediate deposit of full amount of the earnest money was done in violation of rule 67 of Auctions Rules. The non-issuance of receipt and forfeiture of partial amount was also unfair. Dispatch of forfeiture intimation letter on wrong address too involved inefficiency and irresponsibility. These acts of omissionandcommission on the part of DGI&I'sstaffaretantamountto maladministration in terms of section 2(3) of the FTO Ordinance, 2000.

Recommendations:--

10.F.B.R. to direct DGI&I to--

(i)refund the unfairly forfeited amount of Rs.600,000 to the complainant.

(ii)take necessary steps to ensure compliance of the Auction Rules in letter and spirit by all concerned; and

(iii)report compliance within 15 days.

H.B.T./3/FTOOrder accordingly.