VIJAY PRAKASH D. MEHTA & ANR.versusCOLLECTOR OF CUSTOMS (PREVENTIVE), BOMBAY

                 VIJAY PRAKASH D. MEHTA & ANR.                            \
A
                                        v.
       COLLECTOR OF CUSTOMS (PREVENTIVE), BOMBAY

                              AUGUST 16, 1988

B    [SABYASACHI MUKHARJI AND S. RANGANATHAN, JJ.]

         Customs Act, 1962: ss. 130E(b) & 129E-Statutory right of
    appeal-Neither an absolute right nor an ingredient of natural justice-
    Can be circumscribed by the conditions in the grant-Held-Obligatory
    on appellants to deposit duty or penalty levied pending the appeal.
c         Section 129A of the Customs Act, 1962 confers right of appeal to
    the Appellate Tribunal. Where, however, the order appealed against
    relates to duty demanded in respect of goods which are not under the
    control of the cnstoms authorities or any penalty levied under the Act,
    s. l29E requires the aggrieved person to deposit with the proper officer
D   the duty demanded or the penalty levied, pen!ling the appeal. The pro-
    viso thereto, however, empowers the Appellate Authority to dispense
    with such deposit in case of undue hardship.

          The appellants, Indian citizens based in Hong Kong and Singa-
    pore respectiveiy, were caught red-handed, while on a visit to India,
E with huge amounts of foreign exchange. They admitted their part in
    systematic illegal export of foreign exchange from the country over the
    past several years. In proceedings under ss. 111 to 114 and ll8 of the
    Act the Addi. Collector of Customs imposed a penalty of Rs.3 lacs on
    each of them. They preferred appeals to the Appellate Tribunal under
    s. 129A. In an application made under s. 129E the Tribunal reduced the
F amount of penalty to be deposited to Rs. I lac for each of them. The
    appellants sought further reduction. Their case was that they had not
    gone out of the country and had' no assets in India. Their passports were
    impounded at the time of arrest. Their visas had lapsed and could not
    be renewed. They had no money and that in a situation of this type the
    condition for deposit of penalty was bad as it whittled down the appel-
G · (ants' right of appeal. The Tribunal after considering the relevant
    factors declined to reduce the penalty further and dismissed the appeal
    for non-compliance with the provisions of s. 129E.

          Dismissing the appeals under s. 130E(b) of the Customs Act,

H         HELD: R.i'ght to appeat is neither an absolute right nor an in-
                                       434
                 V.P, MEHTA v. COLLECTOR OF CUSTOMS                         435

gredient of natural justice the principles of which must be followed in
                                                                                   A
all judicial and quasi-judicial adjudications. The right to appeal is a
statutory right and it can b-" circumscribed by the conditions in the
grant. [439A-B]

    .. 2,_. It is not the law that adjudication by itself following the rules of
natl!ral justice would be violative of any right, constitutional or statu-         B
tory, without any right of appeal, as such. If a statute gives a right to
appeal upon certain conditions, it is upon _fulfilment of those conditions
that toe right becomes vested and exercisable to the appellant. [440C]

       3. The purpose of s. 129E of the Customs Act is to act in terrorem to
make the people comply with the provisions of law. The right of appeal
provided therein is a conditional o.ne. The petitioner could obtain stay of
                                                                                   c
realisation of tax levied or penalty imposed in an appeal subject to the
limitations contemplated therein. Although the section does not ex-
pressly provide for rejection of the appeal for non-deposit of duty or
penalty yet it makes it obligatory on the appellant to deposit the same
pending the appeal, failing which the Appellate Tribunal is fully compe-           D
tent to reject the appeal. The proviso thereto gives a discretion to the
authority in cases of undue hardships to con.done the obligation· to
deposit or reduce. It is a discretion vested in an obligation to act judi-
cially and properly. [440E, 439F, 437G, 440C]

      In the instant case, the order of the Tribunal was passed honestly,
bona fide and having regard to the plea of 'undue hardship' as canvas-
sed by the appellants. AU the relevant factors, namely, the probability
of the prima facie case of the appellants and the conduct of the parties
were taken into consideration. The Tribunal noted the several abortive
and defective attempts made to get extension of time to .deposit the
security. Firstly, the prayer was to accept Rs.35,000 and secondly to
accept Rs. 60,000 in two months. It also noted the fact that the appeals
were filed two years ago. It could not, therefore, be said that there was ·
any improper exercise of jurisdiction or misdirection by the Appeilate
Authority. [439H, 440A, D, 438C]

     Navin Chandra Chhotelal v. Central Board of Excise & Customs                  a·
& Ors., [1971] 3 SCR 357, referred to.

     Hoosein Kasam Dada (India) Ltd. v. The State of Mddhya
Pradesh & Ors., [1953] SCR 987 and Collector of Customs & Excise,
Cochin & Ors. v. A.S. Bava, [1968] l SCR 82, distinguished.
    436         SUPREME COURT REPORTS                [1988] Supp. 2 S.C.R.

A        CIVIL APPELLATE JURISDICTION: Civil. Appeal Nos.
    1219-20(NM) of 1987.

         From the Judgment and Order dated 17.2.1987 of the Customs,
    Excise & Gold (Control) Appellate Tribunal, New Delhi in Appeal
    No. CD/BOM 398 & 399 of 1984.
B
          M.S. Ganesh for the Appellants.

          The Judgment of the Court was delivered by

          SABYASACHI MUKHARJI, J. These two appeals are under
C   Section 130E(b) of the Customs Act, 1962 (hereinafter called 'the
    Act') from the orders passed by the Customs, Excise & Gold (Control)
    Appellate Tribunal (hereinafter called 'the CEGAT'). The questions
    involved in these two appeals are identical. The appellants' claim to be
    the citizens of India is not disputed. At the material time in 1983 they
    were based in Hong Kong and Singapore respectively .
D                                    •
        In February, 1983, when the appellants came to India, they were
  charged with alleged offences under Sections 112 and 114 of the Act
  and also simultaneously with the alleged offences under the Foreign
  Exchange Regulation Act, 1973 (hereinafter called 'the FERA'). The
  Enforcement authorities recorded under Section 40 of the FERA the
E appellants' statements at the time of their arrest. It is alleged that these
  statements were obtained under duress and by using third degree
  methods against them, who soon thereafter retracted their statements.
  No statements were, however, recorded by the Customs authorities
  under the corresponding Section 108 of the Act. In the FERA pro-
  ceedings, the Enforcement Directorate, it is stated, applied that there
F was no evidence against the appellant-Vijay Prakash Mehta and the
  Directorate had no objection to his discharge. Accordingly, by an
  order dated 29.10.1985, of the Additional Chief Metropolitan Magis-
  trate, 8th Court, Esplanade, Bombay, he was discharged and his bail-
  bond was cancelled.

G       So far as the appellant J.D. Mehta is concerned, he had replied
  to the show-cause notice issued by the Enforcement Directorate and
  the matter is pending adjudication. In the meantime, the proceedings
  under Sections 111 to 114 & 118 of the Act resulted in the order dated
  19.1.1984 of the Addi. Collector of Customs (Preventive) Bombay,
  whereby he imposed a penalty of Rs.3,00,000 on each of the appel-
H !ants. It may be mentioned that each of the appellants was alleged to
               V.P. MEHTA v. COLLECTOR OF CUSTOMS                    437

have been caught red-handed with the foreign exchange to the tune of
                                                                            A
Rs.11,90,648. The appellants had admitted their part in the systematic
illegal export of foreign exchange from India during the past several
years. Against the said order dated 19.1.1984, the appellants preferred
their respective appeals to the Appellate Tribunal under Section 129A
of the Act. The Tribunal reduced the amount of penalty to be
deposited, in an application made under Section 129E of the Act,            B
pending hearing of the appeal, to Rs. I lakh for each of the appellants.

       It is alleged that since neither of the appellants were in any
financial position to deposit even Rs. I lakh, they sought further reduc-
tion. The Appellate Tribunal, after considering the facts and circums-
tances of the case and taking into consideration all the relevant mate-
rial facts and factors, by its order dated 17th February, 1987, dectined
                                                                            c
to do so and dismissed the appeals for non-compliance with the provi-
sions of Section 129E of the Act. Aggrieved thereby the appellants
have appealed to this Court. Section 129E of the Act provides as
follows.
                                                                            D
            "Wher.e in any appeal under this Chapter, the decision or
            order appealed against relates to any duty demanded ·in
            respect of goods which are not under the control of the
            customs authorities or any penalty levied under this Act.
            the person desirous of appealing ·against such decision or
            order shall, pending the appeal, deposit with the proper        E
            officer the duty demanded or the penalty~evied:

            Provided that where in any particular case, the Collector
            (Appeals) or the Appellate Tribunal is of opinion that the
            deposit of duty demanded or penalty levied would cause
            undue hardship to such person, the Collector (Appeals) or,      F
            as the case may be, the Appellate Tribunal may dispense
            with such deposit subject to such conditions as he or it may
            deem ·fit to impose so as to safeguard the interests of
            revenue."

     The aforesaid Section provides a conditional right of appeal in        G
respect of an appeal against the duty demanded or penalty levied.
Although the Section does not expressly provide for rejection of the
appeal for non-deposit of duty or penalty, yet it makes it obligatory on
the appellant to deposit the duty or penalty, pending the appeal, fail-
ing which the Appellate Tribunal is fully competent to reject the
appeal. See, in this connection, the-observations of this Court in          H
    438         SUPREME COURT REPORTS               [1988] Supp. 2 S.C.R.

A   respect of Section 129 prior to substitution of Chapter XV by the
    Finance Act, 1980 in Navin Chandra Chhotelal v. Central Board of
    Excise & Customs & Ors., [1971] 3 SCR 357. The proviso, however,
    gives power to the Appellate Authority to dispense with such deposit
    uneonditionally or subject to such conditions in cases of undue hard-
    ships. It is a matter of judicial discretion of the Appellate Authority.
B
          The case of the appellants was that they had not gone out of
    India and had no assets in India. Their passports were impounded at
    the time of arrest. Their visa had lapsed and could not be renewed.
    They had no money, hence, the right of appeal could be illusory unless
    they are permitted to deposit only Rs.60,000 each which they contend
C   they are able to procure with the assistance of their father.

         In the impugned order the Tribunal noted the several abortive
  and defective attempts made to get extension of time to deposit the
  security. Firstly, the prayer was to accept the deposit of Rs.35.000 and
  secondly, to accept the deposit of Rs.60,000 in 2 months. The Tribunal
D took into account the probability of the prima facie case of the appel-
  lants. The appeals were filed two years ago. After taking into con-
  sideration these factors, the Tribunal rejected the prayer for reduc-
  tion. It was contended that this was wrong. Shri M.S. Ganesh, learned
  advocate for the petitioners, pleaded that in a situation of this type the
  condition for deposit of penalty was bad as it whittled down the appel-
E !ants' right of appeal. This, in our opinion, is incorrect. Shri Ganesh
  .tried to contend that the right of appeal is being whittled down by the
  procedure followed in this case. He drew our attention to certain
  observations of this Court in Hoosein Kasam Dada (India) Ltd. v. The
  State of Madhya Pradesh & Ors., [1953] SCR 987. There this Court
  held that when the right to appeal vests, change of law after initiation
F of proceedings in lower court would not divest the vested rights of the
  appellant. The right of appeal is a matter of-substantive right and not
  merely a matter of procedure, and this right becomes vested in a party
  when the proceedings are first initiated in, and before a decision is
  given by the inferior court and such a right cannot be taken away
  except by express enactment or necessary intendment.
G
         The aforesaid observations, in our opinion, have no application
  to the instant case. Here the right that was granted, was a right held
  with a condition. There was no question of change of that right. In the
  instant case the only substantive right is the right of appeal as contem-
  plated under Sections 129A and 129E of the Act.and that right is a
H conditional one and the Legislature in its wisdom has imposed that
                V.P. MEHTA v. COLLECTOR OF CUSTOMS                     439

condition. No question of whittling down that right by an alteration of        A
procedure arises in this case.

        Right to appeal is neither an absolute right nor an ingredient of
  natural justice the principles of which must be followed in all judicial
  and quasi-judicial adjudications. The right to appeal is a statutory right
. and it can be circumscribed by the conditions in the grant.                  B

       Counsel referred us to the decision of this Court in Collector of
 Customs & Excise, Cochin & Ors. v. A.S. Bava, [1968] I SCR 82.
 There this Court found that Section 35 of the Central Excises & Salt
 Act, 1944 (Excises Act) gave a right to appeal. Under Section 12 of the
 Act, the Central Government was authorised to apply to appeals C
 under the Excises Act the provisions of the Sea Customs Act, 1878
 dealing with the procedure relating to appeals. In exercise of that
 power, the provisions of Section 129 of the Act were made applicable
 to appeals under the Excises Act. The Section required an appellarit to ·
 deposit, pending the appeal, the duty or penalty imposed, and
 empowered the Appellate Authority, in his discretion, to dispense D
 with such deposit pending the appeal in any particular case. The
 respondent therein filed an appeal against the duty imposed on him
 under the Excises Act and prayed for dispensation of the deposit. The
  Collector, who was the appellate authority, rejected the prayer and
 when no deposit was made within the time fixed, dismissed the appeal.
  The respondent filed a petition in the High Court which was allowed, E
· and the Collector was directed to hear the appeal on merits. This
  Court held that Section 35 of the Excises Act gave a r-ight of appeal and
  Section 129 of the Act whittled down that substantive right and, as
  such, Section 129 could not he regarded as "Procedure relating to
  appeals" within Section 12 of the Excises Act.

       These observations cannot be applied to the facts of this-case.
 Here we are concerned with the right given under Section 129A of the
 Act as controlled by Section 129E of the Act, and that right is with a
 condition and thus a conditional right. The petitioner in this case has
 no absolute right of stay. He could obtain stay of re«lisation of tax
 levied or penalty imposed in an appeal subject to the limitations of          G
 Section 129E. The proviso gives a discretion to the authority to dis-
 pense with the obligation to deposit .in case of "undue hardships".
 That discretion must be exercised on relevant materials, honestly,
 bona fide and objectively. Once that position is established it cannot
 be contended that there was any improper exercise of the jurisdiction
 by the Appellate Authority. In this case it is manifest that the order of     H
    440         SUPREME COURT REPORTS                [1988] Supp. 2 S.C.R.

A   the Tribunal was passed honestly, bona fide and having regard to the
    plea of 'undue hardship' as canvassed by the appellant. There was no
    error of jurisdiction or misdirection:

          Though in a different context the public policy involved in not
    granting interim stay has been explained by this Court in Asstt.
B
    Collector of Central Excise West Bengal v. Dunlop India Ltd., [1985]
    19 ELT 22.

          It is not the law that adjudication by itself following the rules of
    natural justice would be violative of any right-constitutional or
    statutory, without any right of appeal, as such. If the statute gives a
c   right to appeal upon certain conditions, it is upon fulfilment of those
    conditions that the right becomes vested and exercisable to the appel-
    lant. The proviso to Section 129E of the Act gives a discretion to the
    Tribunal in cases of undue hardships to condone the obligation to
    deposit or to reduce. It is a discretion vested in an obligation to act
    judicially and properly.
D
          In the facts and circumstances of the case and all the relevant
    factors, namely, the probability of the prima facie case of the appel-
                                                                                 [
    lants, the conduct of the parties, have been taken into consideration by
    the Tribunal. The purpose of the Section is to act in terrorem to make
    the people comply with the provisions of law.
E
          In that view of the matter, we are unable to accept the submis-
    sion that there was improper rejection and non-consideration of mate-
    rial and relevant facts. If that is the position then the appeals have no
    merit and are accordingly rejected.
F   P.S.S ..                                              Appeals dismissed.