DOCKS PRIVATE LIMITED VS FEDERATION OF PAKISTAN through Chairman, 2015 PTD-KARACHI-HIGH-COURT-SINDH 948 (2014)

Customs Agents Licensing Rules, 2001---

----Rr.102(4) & 340---Constitution of Pakistan, Art.199---Constitutional petition---Suspension of license---Non-issuance of show-cause notice---F.I.R., registration of---Petitioner was licensed Bonded Carrier and Clearing Agent, whose license was suspended by authorities on the basis of FIR registered against him---Validity---Licensing Authority was required under law to pass a reasoned order of suspension independently after recording its own reasons---Licensing Authority, in addition, was required under law to immediately initiate process of taking further action, which included issuance of proper show cause notice to the person, whose license had been suspended, as an immediate measure in terms of R. 102(4) of Customs Agents Licensing Rules, 2001---Intention behind R. 102 (4) of Customs Agents Licensing Rules, 2001, was not merely to allow suspension of license as an immediate measure and then have it suspended without issuance of a proper show cause notice within a reasonable time, as otherwise, it would defeat the principles of natural justice---Such power of immediate suspension had to be exercised with utmost care and due diligence---Continuous suspension of license of petitioner merely on the ground that F.I.R. had been registered against petitioner as well as the importer by Directorate of Intelligence and Investigation, Federal Board of Revenue, was not warranted in law and could be justified without any further proceedings in the matter in accordance with law---High Court set aside the order passed by authorities suspending license of petitioner---Petition was allowed in circumstances.

Messrs Pak. Afghan Cargo Service (Pvt.) Ltd., through Director v. Deputy Collector of Customs and 5 others 2014 PTD 661 rel.

Khawaja Shams-ul-Islam and Hassan Sabir for Petitioners.

Dilawar Hussain for Respondent No.1.

Muhammad Sarfaraz Ali Metlo for Respondents Nos. 2 and 4.

Kashif Nazeer for Respondent No.3.

Muhammad Ilyas Ahsan, Appraising Officer, Customs Department.

Date of hearing: 23rd December, 2014.

JUDGMENT

MUHAMMAD JUNAID GHAFFAR, J.---Through instant petition, the petitioner has impugned Circular dated 26-8-2014, whereby the license issued to the petitioner for conducting business as Bonded Carrier and as Clearing Agent has been suspended by respondent No.4.

2.Briefly stated facts as per memo. of petition are that the petitioner is engaged in the business of Bonded Transport Operations and as a Clearing Agent and is duly licensed in this regard by the Customs Authorities in terms of Chapter VIII and Chapter XIV of the Customs Rules, 2001. It is further stated that the office of Director General Intelligence and Investigation. FBR, Lahore, has lodged an FIR bearing No.18/2014 under sections 29(s), 16, 18, 32, 32A, 79 and 121 of the Customs Act, 1969 against the petitioner and the importer of the consignment whereby it has been alleged that the Cargo, which was required to be transshipped from Karachi to Lahore Dry Port, was lying at a Godown of one Mr. Rana Tahir situated at Shamke Bhatia at Multan Road, Lahore, and the container which was carrying the cargo was being replaced with goods of lesser value and quantity. It is further stated that the Director General of Intelligence and investigation, FBR, Lahore reported such incident vide its letter dated 21-8-2014 to the respondent No.4, who has issued the impugned Circular dated 29-8-2014 and has suspended the license of the petitioner.

3.Learned counsel for the petitioner has contended that respondent No.4 has acted in haste and has failed to properly apply its independent mind before issuing the impugned Circular for suspension of the License of the petitioner as respondent No.4 was required in law to issue a proper Show-Cause Notice to the petitioner and after affording, an opportunity of being heard to pass necessary order, whereas, on the contrary, respondent No.4 has resorted to an extreme action against the petitioner, merely on the information that an FIR has been registered against the petitioner at Lahore. Learned counsel further submits that though the impugned Circular was issued on 29-8-2014, but till date no proper Show-Cause Notice as required under the Licensing Rules and the Customs Act, 1969, has been issued to the petitioner, whereas, the suspension of the business operations of the petitioner is still continuing, which has caused huge monitory losses to the petitioner, besides tarnishing the image/reputation of the petitioner amongst the clients and the business Community. Learned Counsel further submits that the petitioner has already been granted bail by the Trial Court, whereas, no further proceedings have taken place in the said FIR and there is no likelihood of conclusion of trial in near future whereas in addition to agony of criminal trial, the livelihood of the petitioner is also at stake as license has been suspended, which is causing serious, prejudice and financial losses to the petitioner. In support of his contention learned Counsel has relied upon a judgment of a learned Division Bench of this Court in the case of Messrs Pak. Afghan Cargo Service (Pvt.) Ltd., through Director v. Deputy Collector of Customs and 5 others (2014 PTD 661)..

4.Conversely, learned counsel appearing on behalf of respondents Nos.2 and 4 submits that though, no proper Show-Cause Notice as required under the Licensing Rules/Act has been issued to the petitioner for the alleged offence committed by the petitioner, however, before issuance of suspension Circular dated 29-8-2014, a preliminary hearing Notice was issued to the petitioner by the office of Director General Intelligence and Investigation, FBR, Lahore, whereafter, the license of the petitioner was suspended. Per learned Counsel, Licensing Authority is vested with such powers under Rule 102(4) of the Licensing Rules, 2001, and can suspend the license of the petitioner before proceeding any further in this regard. However, per learned Counsel for the respondents the matter may be remanded to the Licensing Authority with directions to issue a proper Show-Cause Notice to the petitioner and with an opportunity of being heard, whereafter necessary order may be passed in accordance with law.

5.We have heard both the learned Counsel and perused the record. Since a short controversy is involved in the matter, by consent, instant petition is being disposed of finally at Katcha Peshi stage.

6.It appears that respondents Nos.2 and 4 have been informed by the office of Director General of Intelligence and Investigation, FBR, Lahore, on 21-8-2014 that an FIR bearing No.18/2014 dated 17-8-2014 has been registered against the petitioner, wherein, it has been alleged that the petitioner and the importer are involved in replacement of the consignment of high value goods with goods of lesser value at a private Godown situated at Multan Road, near Lahore. It further appears that the said office of Director General Intelligence and Investigation, FBR, Lahore, has further requested the respondents Nos. 2 and 4 to suspend the license of the petitioner. Thereafter, respondent No.2 after affording a preliminary opportunity of hearing to the petitioner to explain its position and being dissatisfied with the explanation tendered on behalf of the petitioner through respondent No. 4, by exercising powers under Rule 340 of the Chapter XIV of Customs Rules, 2001 read with Rule 102(4) of Chapter-VIII, Customs Rules, 2001 has been pleased to suspend the operation of the license granted to the petitioner forthwith and until further orders.

7.At the very outset, we had confronted the learned counsel appearing on behalf of the respondents, that as to whether, any proper Show-Cause Notice as required under the Licensing Rules, 2001 read with the relevant provisions of the Customs Act, 1969 has been issued to the petitioner after, suspension of the license, to which the learned Counsel for the respondent has replied in the negative, and has admitted that no such notice has so far been issued to the petitioner after issuance of the impugned Circular of suspension dated 29-8-2014. It is pertinent to note that though, the Licensing Authority is empowered in terms of Rule 102(4) of the Customs Agents Licensing Rules, 2001, to take an immediate action, if considered necessary, against the licensee by suspending his license forthwith, after recording reasons in writing and pending the final action under the Act and the Rules made there under. However, firstly, the order of suspension must contain its independent reasons for taking such an immediate and harsh action against the Licensee, and secondly such action of suspension must be followed by issuance of a proper Show-Cause Notice confronting the Licensee with the allegations which had prompted the Licensing Authority to take such an immediate action of suspension. However, on minute examination of the impugned Circular of suspension dated 29-8-2014, it appears that no cogent reason(s) have been recorded in the Circular for resorting to such a harsh action against the petitioner, except the reference of Registration of an FIR at Lahore by the Director General of Intelligence and Investigation, FBR. Lahore. In our view, mere registration of an FIR is not sufficient to invoke the provision of Rule 102(4) of the Customs Agents Licensing Rules for immediate suspension of the License, as the Licensing Authority is required under law to pass a reasoned order of suspension independently after recording its own reasons. In addition to this the Licensing Authority is also required under the law to immediately initiate the process of taking further action, which includes issuance of a proper Show-Cause Notice to the person, whose license has been suspended, as an immediate measure in terms of Rule 102(4) of the Customs Agents Licensing Rules, 2001. The intention behind this Rule is not merely to allow suspension of the license as an immediate measures and then have it suspended without issuance of a proper Show-Cause Notice within a reasonable time, as otherwise, it would defeat the principles of Natural justice. Such power of immediate suspension has to be exercised with utmost care and due diligence. The Licensing Authority ought to have issued a proper Show-Cause Notice immediately after passing the order of suspension, as continuous suspension of the license, without any further action, is not warranted under the law and the licensee must be confronted with the allegations through a proper Show-Cause Notice, whereafter, an appropriate order must be passed in accordance with law, so that, in case of any adverse order, the licensee may seek further remedy as provided in law.

8.In the instant matter, the only cause of action as reflected from perusal of the record available with the respondent and the impugned Circular is registration of an FIR against the petitioner and the importer, whereas the learned counsel for the respondents has not been able to show any substantial material or even any further progress which might have taken place before the Trial Court so that it could be ascertained that as to whether any incriminating material has been brought on record by the Directorate of Intelligence and Investigation, FBR, Lahore, so as to implicate the petitioner directly in the instant case. In our view, mere registration of an FIR, which is merely an initiation of proceedings in the case, cannot be the only basis for taking such an extreme action against the petitioner as it may put the business of the Licensee to a complete halt. Moreover, the Federal Board of Revenue vide its letter dated 19-10-2011 has also directed the Field Collectors that lodging of an FIR is not a conclusive justification of the guilt of an accused person and suspending the business operation of a licensee merely on the basis of an FIR is not the correct approach. The issue of suspension of license under the Custom Agents Licensing Rules, 2001 came up for discussion before a Division Bench of this Court in the case of Messrs Pak Afghan Cargo Service (Pvt.) Ltd., through Director v. Deputy Collector of Customs and 5 others (2014 PTD 661) in which one of us namely, Muhammad Junaid Ghaffar, J, was also a member. The learned Division Bench after a detail examination of the Act, rules, and case-law on the subject, has observed that suspension of license merely on the basis of registration of an FIR is not justified, whereas, the order of the suspension of license must be followed by issuance of a proper Show-Cause Notice under the relevant rules. It would be advantageous to refer to the relevant findings of the learned Division Bench in this regard which reads as under:--

14. The judgments referred above, have categorically held, that even where the powers and authority to suspend the licence as an immediate measure, under exceptional circumstances are available, the same are to be exercised after following the mandate of law and the principles of natural justice. The reason for such observation is that the suspension of a licence like the one in the instant matter is an extreme penal action as it puts a complete halt to the business of such person which can cause incalculable harm to such person, for which there is no redress, even if later the order of suspension is withdrawn. If such suspension continues for a longer period, if may eventually destroy its business totally. In such a situation it is incumbent upon the concerned authority to exercise such powers sparingly and only when the situation demands it as an extreme exigency. It is needless to state that even when such authority is exercised, the same should be done through a reasoned order and the aggrieved person should be informed forthwith, and the action which is to follow for which the immediate suspension has been done, must be completed and decided within the shortest possible time. We have noticed that in the instant matter, no such exercise was carried out before blocking the operations of the licence of the petitioner, (admittedly there is no order and it's only the blocking in computer) and consequently all the business operations of the petitioner have been put to a complete halt and the petitioner has been deprived of its fundamental rights and has already incurred losses owing to such an extreme action which cannot be quantified. The only reason which has been put forth by the respondents for blocking the Transport Licence of the petitioner is, that the petitioner has submitted forged and fake letters, on behalf of US Consulate, consequently two FIRs have been registered against the petitioner, and therefore the name of the petitioner has been blocked and it has been restrained from conducting any further business operations. We are afraid that merely registration of FIR, which is at the very initial stage of the proceedings, cannot be the only basis for taking such an extreme action against the petitioner. Even otherwise, the respondent No. 5 (MR) vide its letter dated 19-10-2011, (though in respect of another Transport Operator), has already directed the field Collectorates that lodging of FIR is not a conclusive justification for guilt and suspending of the business operations of a licencee on the basis of FIR is not the correct approach. Further, this court vide its order dated 6-11-2012 in Constitutional Petition No D-3830/2013, (though by consent) has already restored the licence of a transport company in similar circumstances on the basis of letter dated 19-10-2011 issued by respondent No 5. Therefore, in view of the above, the respondents have no justification to suspend/ block the business operations of the petitioner in the manner it has been done. The learned counsel for the respondents has also drawn attention to the show-cause notice which was issued on 28-10-2013 subsequent to filing of the instant petition and on perusal, we have noticed that the entire case made out even in the show cause notice revolves around on registration of criminal case against the petitioner. Though we will restrain ourselves from commenting on the merits of the case, as it may prejudice the parties, however we may observe that the said show-cause notice has been issued in terms of sections 32, 121 and 129 of the Customs Act, 1969 and so also in terms of Rule 641 of the Customs Rules, 2001 punishable under Rule 651 of the said Rules. We have noticed that none of these provisions as referred to in the show-cause notice, confer any authority on the respondents to suspend/block the licence of the petitioner, pending any action as above.

9.In view of hereinabove facts and circumstances of instant case and by respectfully following the above decision of the Division Bench of this Court as referred to hereinabove we are of the opinion that continuous suspension of license of the petitioner merely on the ground that an FIR has been registered against the petitioner as well as the importer, by the Directorate of Intelligence and Investigation, FBR, Lahore, is not warranted in law and cannot be justified without any further proceedings in the matter in accordance with law. Accordingly, on 23-12-2014, vide our short order, instant petition was allowed and the impugned Circular dated 29-8-2014 was set aside, and these are the reasons for the short order. However, it is clarified that this shall not preclude the respondents from issuing a proper Show-Cause Notice to the petitioner for any alleged violation of the Act and the Licensing Rules, or the terms and conditions of grant of license and after affording a proper opportunity of being heard to the petitioner the respondents may proceed further to pass appropriate order(s) in accordance with law.

10.Petition stands disposed of along with listed application in the above terms.

MH/D-1/SindhPetition allowed.