Globotrans Prologistix Pvt. Ltd. v. Union of India

16. Mr. Salvi would contend that the petitioners duly complied with all the requirements as noted in the factual matrix above for the grant of the said License which was accordingly issued to the petitioners in the prescribed Form - B[2], on 3rd July 2019, under Regulation 7(2)(b) of the 2018 Regulations. A Public Notice dated 5th July 2019 was also issued in this regard by the Respondent No. 2. This is an undisputed factual position. However, the Respondent No. 2 issued a Corrigendum dated 27th August 2019 to the Public Notice dated 5th July 2019 by inserting the word ‘provisionally’ in respect of the grant of the said License. This was completely contrary not only to the earlier Public Notice dated 5th July 2019 but also to the 2018 Regulations, as the said License was changed to ‘provisional’ after granting a conclusive/unconditional license on 3rd July 2019. Moreover, such Corrigendum which materially altered the petitioner’s eligibility for the said License, is issued in gross violation of natural justice, qua the petitioners.

17. According to Mr. Salvi the Impugned Letter of 28th February 2020 referring to the Corrigendum dated 27th August 2019 as noted above is completely contrary to law. This is in as much as the said letter was primarily based on the said OM issued by the CBIC dated 9th August 2019. In this context, Mr. Salvi would contend that the said OM which purportedly requires the Petitioner No. 2 to appoint another qualified person to transact business in Mumbai, despite Petitioner NO. 2 already being qualified under the 2013 Regulations, is illegal. The Regulation 7(2) of the 2018 Regulations does not support such position taken by the petitioners.

18. Mr. Salvi would submit that Petitioner No. 2 duly satisfied the criteria under Regulation 7(2)(b) by passing the examination under Regulation 6 of the 2018 Regulations, pursuant to which the said License was issued to the Petitioner No. 1. It is for such reason that the Petitioner No. 1 was granted the Customs Broker License in Form – B[2] in terms of Regulation 7(2) of the 2018 Regulations read with Section 146 of the Customs Act, 1962. Thus, there was no necessity, legal and or otherwise, for the respondents to issue the Impugned Communication 28th February 2020 being contrary to 2018 Regulations, having no legal basis whatsoever.

19. Mr. Salvi would strenuously urge that the harassment of the petitioner by the respondents does not stop here. The petitioner did respond to the Impugned Letter dated 28th February 2020 by its letter dated 24th August 2020. However, Respondent No. 1 straight away proceeded to issue the Impugned Public Notice and letter, both dated 03rd September 2020, withdrawing the petitioner’s license retrospectively from 26th

20. Mr. Salvi would submit that such withdrawal of the said License granted to the petitioner under the 2018 Regulations is in the teeth of Regulation 14 and 17 of the said Regulations which provide for revocation of license and the procedure in this regard, respectively. This was completely overlooked by the respondents. Not just that but such withdrawal of the petitioner’s license duly issued in its favour on 3rd July 2019 was in complete breach of principles of natural justice, which the respondents ought to have followed before taking such drastic action which has seriously prejudiced the petitioners. Thus, such arbitrary and illegal action of the respondents to withdraw the petitioner’s License, in the absence of any provision for withdrawal under the 2018 Regulations ought to be set aside. Accordingly, the court may be pleased to allow the petition.

21. To the contrary, Mr. Sharma, learned counsel for the Respondents would seriously contest the case put forth by the petitioners and urge that the respondents have acted all times in accordance with law. He would place due reliance on an Affidavit-in-Reply filed by Rajan Chaudhary, Principal Commissioner, New Commissioner-I, Mumbai dated 29th July 2025, in support of his submissions and adopt its contents.

22. Mr. Sharma would primarily contend that the issuance of the license dated 3rd July 2019 granted to the Petitioner NO. 1, under the 2018 Regulations is void ab initio being violative of Regulation 7(2)(b) of the 2018 Regulations. This is because, the petitioners failed to comply with the requirement of appointing a person qualified under Regulation 6 in Mumbai to transact the business in Mumbai. Such appointment, according to the respondents, had to be made within a period of two years from the date of issuance of license, as stipulated under Regulation 7(4).

23. Mr. Sharma relying on the Affidavit-in-Reply of the respondents would submit that sufficient opportunity was afforded to the petitioners to comply with the aforementioned Regulations to appoint a qualified person in Mumbai by issuing a letter dated 28th February 2020. Despite, such intimation the petitioners failed to comply. Thus, according to Mr. Sharma the Principle of Estoppel would not apply qua the petitioners in the given facts and circumstances.

24. Further, relying on the Impugned Letter dated 28th February 2020, Mr. Sharma would submit that the said letter refers to the applicable Regulations which required that the Petitioner No. 2 who is a qualified person under 2013 Regulations from Pune Commissionerate, is not eligible to conduct business in Mumbai. In this context, he would rely on the said OM issued by CBIC dated 9th August 2019 to the effect that the said License is to be issued to the person under Regulation 7(2) of the 2018 Regulations, only in the customs area where they have cleared the examination and not otherwise. Thus, the petitioners failed to comply with the said OM which rightfully entitled the respondents to take action of withdrawal of the petitioner’s License, more particularly under Regulation 7(2)(b) of the 2018 Regulations.

25. Mr. Sharma would defend the action of withdrawal of the said License the respondents by relying on Regulation 7(4) of the 2018 Regulations as noted above. As the petitioners had failed to comply such requirement, the Corrigendum dated 27th August 2019 was rightly issued by the Respondents converting the license from final to provisional. In such facts and circumstances, the petitioners cannot avail the benefit under Regulation 7(3) of the 2018 Regulations which otherwise would enable the petitioners to transact business as Custom Broker in Mumbai.

26. For the above reasons, on account of the petitioners’ blatant violation of the provisions of the applicable Regulations, Mr. Sharma would urge that the said License issued to the petitioners was rightly and legally withdrawn. The provisions of Regulations 14 and 17 of the 2018 Regulations which deal with the procedure for revocation of such license would not apply in the given case.

27. For all of the above reasons, Mr. Sharma would submit that the petition is devoid of merits, is misconceived and ought to be dismissed. ANALYSIS:-

28. At the very outset, it is undisputed that the Petitioner No. 1 was granted the said License on 3rd July 2019 by the Respondent No. 2, in respect of which public notice was issued on 5th July 2019. The said License was issued by Respondent No. 2 only after Petitioner No. 2, being a Director/authorised representative of the Petitioner No. 1, had duly cleared both the written and oral examination as prescribed under Regulation 6 of the 2018 Regulations. However, much after the grant of the said license the respondents appear to have turned turtle by issuing a Corrigendum dated 27th August 2019 by altering the petitioner’s eligibility in respect of the said License, by making it ‘provisional’ which was originally unconditional. On a bare perusal of the said Corrigendum, it is to be noted that neither the 2013 nor the 2018 Regulations contemplate such material alteration, after the said License is issued in accordance with Regulation 7(2) of the 2018 Regulations read with Section 146 of the Customs Act, which provides for a license for customs brokers.

29. It is evident that the Respondent No. 2 has made the grant of the said License to the Petitioner No. 1 ‘provisional’ without assigning a single reason and/or justification in law, to back such action. What is equally glaring is that there is no prior notice/intimation by the respondents to the petitioners prior to issuance of such Corrigendum which materially alters the eligibility criteria of the petitioners, qua the said License, already granted to the Petitioner No. 1 by Respondent No. 2 on 3rd July 2019.

30. At this juncture, it is apposite to refer to a decision of the Hon’ble Supreme Court in Raj kishor Jha vs. State of Bihar and Ors[1] and Sant Lal Gupta and others vs. Modern Cooperative Group Housing Society Limited and others[2] where the Hon’ble Supreme Court has accord that reason is the heartbeat of every conclusion without the same it becomes lifeless to ensure transparency and fairness in decisions making….… For such reasons, Mr. Salvi is correct in submitting that such Corrigendum issued by the Respondent No. 2 is not just arbitrary but also in breach of the elementary principles of natural justice which, to say the least, ought to have been adhered to, in the given facts and circumstances.

31. To place the fundamental issue of withdrawal of the petitioner’s License by the respondents in its proper perspective, it becomes necessary to advert to Regulation 4 of the 2018 Regulations, which reads as under: -

32. On a plain reading of Regulation 4(2) of the 2018 Regulations above, it is evident that what has been contemplated in Regulation 4(2) has been duly fulfilled by the petitioners. This is inasmuch as the Petitioner No. 2 has applied for the said License in the prescribed Form - A only after clearing the written and oral examination as prescribed under 6 of 2018 Regulation, pursuant to which the said License was granted to Petitioner No. 1 on 3rd July 2019 and a public notice dated 5th July 2019 was issued accordingly. Therefore, in our view, in the given factual complexion, the said Regulation 4(2) stands complied with in letter and spirit, qua the petitioners which resulted in the issuance of the said License, in favour of Petitioner No. 1 by Respondent No. 2.

33. However, the respondents seem to contend that the petitioners, having passed the said examination from Pune, as set out in the Impugned Letter dated 28th February 2020, have failed to comply with Regulation 7(2) of the 2018 Regulations. According to them, the Petitioner No. 2, being the Director of Petitioner No. 1, is a qualified person from Pune under the then prevailing 2013 Regulations. This would make it necessary for the petitioners to appoint another Regulation 6 qualified person by 24th August 2014, for transacting such business in Mumbai. In this context we advert to the said Regulation 7, which reads as under:- “7. Grant of License.—(1)The applicant who has passed the written as well as oral examination shall make a payment of a fee of five thousand rupees within two months of the declaration of the results of the oral examination and inform the payment particulars to the Principal Commissioner r Commissioner of Customs referred to in sub-regulation (2) of regulation 4 and the said Principal Commissioner or Commissioner shall, on verification of the payment particulars grant license to the applicant within one month of the payment or the said fee: Provided that where the successful applicant fails to make the payment of the said fee within the stipulated period, the right to be granted a license to an applicant shall be forfeited. (2) The applicant who has paid the fee referred to in subregulation (I) shall be granted a license by the Principal Commissioner or Commissioner of Customs, as below:— (a) An individual shall be granted the license in FormB[1] if that individual has passed the examination referred to in regulation 6. (b) A customs broker's license may be granted to any company, firm or association in FormB[2] if at least one director, partner, or an authorised employee, as the case may be, has passed the examination referred to in regulation 6: Provided that at any given time such director, partner or an authorised employee shall not engage himself for transacting business under these regulations on behalf of more than one such firm or company: Provided further that where a company or a firm which has been granted a license under this regulation undergoes any change in the directors, or managing director or partner, such change shall forthwith be communicated by such licensee to the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, within one month of such change: Provided also that where a company or a firm which has been granted a license under this regulation undergoes any change whereby there is a change in the PAN, the licensee shall apply for a fresh license to the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, within sixty days of such change. (3) The applicant who has been granted license under subregulation (2) shall be eligible to work as Customs Broker in all Customs Stations subject to intimation in Form C to the Principal Commissioner or Commissioner of Customs of the Customs Station where he intends to transact business and a copy of this intimation shall also be sent to the Principal Commissioner or Commissioner of Customs who has issued the license in Form BI or FormB[2], as the case may be. (4) A customs broker shall be eligible to transact business under these regulations at a customs station which requires intimation under the said Form C, subject to the condition that such customs broker shall be able to transact such business only after a period of two years from the date of issue of license in FormBl. or FormB[2]: Provided that the said period of two years shall be waived in respect of a license issued to a customs broker under the respective provisions of the Customs House Agents Licensing Regulations, 1984 or the Customs House Agents Licensing Regulations, 2004 or the Customs Brokers Licensing Regulations, 2013: Provided further that the period of two years referred to in sub-regulation (4) shall not be applicable where the intimation under the said Form C is to the Principal Commissioner or the Commissioner of Customs, as the case may be, referred to in sub-regulation (2) of regulation 4.” (Emphasis Supplied)

34. In our considered view, a bare perusal of the above Regulations, clearly indicate that the said License in Form - B[2] can be issued, if at least one director/partner/employee has passed the examination, referred to in Regulation 6 of the 2018 Regulations. In the given case, admittedly and undisputedly, the Petitioner No. 2 is the Director of Petitioner No. 1. Having fully complied with such statutory prescription by clearing both the written and oral examination which, under the Regulation 7(2) renders the Petitioner No. 2 both eligible and competent for grant of the said License. Thus, it is evident that the respondents by relying on the Impugned February 2020 has completely missed the wood for the trees by misconstruing, much less misinterpreting the said Regulations.

35. A careful perusal of the scheme of the Regulations, more particularly, the purport and language used in Regulation 4(2) read with the Regulation 7(2) of the 2018 Regulation. It is discernible that (i) the application for the said License ought to be made to the Principal Commissioner of Custom having jurisdiction over the area where the applicants to carry on business; (ii) and for such purpose at least one Director or partner as the case may be should have passed the examination referred to in Regulations. We are afraid that interpreting the said Regulations in the manner as sought to be given effect to by the respondents would tantamount to supplying language and meaning to the said Regulations which is clearly not reflected therein.

36. It is pertinent to note that, there are exceptions carved out under the proviso to Regulation 7(2) of the 2018 Regulations. These contemplate situations where a license ought not to be granted to an Applicant who has paid fees and applied for the same under Regulation 7(1). It is definitely not the respondent’s case that such exceptions under the proviso to Regulation 7(2) would apply to the petitioners in the given facts and circumstances.

37. At this juncture, it is apposite to refer to a decision of the Hon’ble Supreme Court in the case of Union of India and Another vs. Sunil Kohli and Ors[3] which upheld the decision of the Calcutta High Court in Ravindra Kamalnath Shukla vs. Commissioner of Customs[4]. The High Court was considering an application for the grant of license under the erstwhile Customs House Agents Licensing Regulations 1984, which was rejected on the ground that the applicant passed the examination from Mumbai and not from Calcutta. However, affirming such view, the Hon’ble Supreme Court held that it will make little difference whether the examination is conducted by one commissionerate and or the other. If the examination is cleared, the examinee qualifies for license anywhere in India, subject to fulfillment of the other requirements. Thus, in light of the decisions (supra) the stand taken by the respondents and its insistence on the petitioners to appoint a qualified person in Mumbai, as the Petitioner NO. 2 passed the examination from Pune, is exfacie contrary to law.

38. As submitted by Mr. Salvi, the record also bears out that the Petitioner No. 1 has duly responded to the Impugned Communication Letter dated 28th February 2020 by its letter dated 24th August 2020. The petitioner sought some time to respond, considering the lockdown period in light of the then prevailing Covid-19 pandemic situation. However, the

Respondent No. 2 chose to issue the Impugned Public Notice along with a letter dated 3rd September 2020 stating that the said License issued to the Petitioner No. 1 under Regulation 7(2)(b) of the 2018 Regulations stood withdrawn from 26th

39. Mr. Salvi is correct in submitting that there is no provision for withdrawal of license under the 2018 Regulations. In this regard, reliance placed by the respondents on the said OM dated 9th August 2009 through Mr. Sharma, is misplaced. In fact, on a specific query to him he accepted that the same is not annexed to the affidavit in reply of the respondents nor was it produced before the court. In any event, it is trite law that an OM stand alone cannot override the statutory Regulations issued under Section 146 of the Customs Act. Thus, the contention of Mr. Sharma who sought to justify the withdrawal of the petitioner’s license by the respondents, mainly by relying on the said OM appears to be misconceived and does not persuade us.

40. What is mandated under the Regulations, is in fact, a provision for revocation of license or imposition of penalty under Regulation 14 of the said Regulations, for which a procedure is prescribed under Regulation 17. The respondents in their reply affidavit accept that this is not a case of revocation and thus, the procedure under Regulation 17 is, therefore, not followed. The stand of the respondents is not only contradictory but also self-defeating in as much as the extant Regulations have not referred to such withdrawal of the said License as the respondents would want it to be. The factual matrix in the given case and the nature of withdrawal of the said License granted to the Petitioner No. 1, by the respondents, would imply nothing but revocation of the said License. Thus, it cannot be ruled out that to wriggle out from the mandate and rigours, more particularly under Regulation 17 of the 2018 Regulations, the respondents have chosen to justify their action by using the expression withdrawal of the said License. However, this appears to the extraneous to the Regulations as applicable in the given case.

41. We may observe that as rightly submitted by Mr. Salvi the Impugned Public Notice dated 3rd September 2020 was issued without any hearing much less an opportunity to the petitioners to defend themselves. Adverting to the facts of the given case the respondents cannot take shelter under the Impugned Letter dated 28th February 2020, to justify withdrawal of the petitioner’s License. In any event, it is after six months or its whereabouts that the respondents belatedly issued the Impugned Public Notice dated 3rd September 2020 along with a separate letter of intimation to the petitioners, bearing the same date, in breach of natural justice as discussed above.

42. In the above context, it may be apposite to refer the decision of the Hon’ble Supreme Court in the case UMC Private Limited vs. Food Corporation of India and Another[5] where the Hon’ble Supreme Court observed that it is the first principle of civilized jurisprudence that a person against whom any action sought to be taken or whose right or interest are being affect should be given a reasonable opportunity to defend himself, which is one of the basic principle of natural justice to give the affected party a notice in this regard. The record bears out that such salutary requirement has been thrown to the winds by the respondents.

43. Before parting, we find it necessary to observe that the object, purpose and purport of the erstwhile and extant Regulations under Section 146 of the Customs Act providing for Customs Broker License, to the eligible applicants is to facilitate business in the designated areas. Here again, the policy of the Government emphasising the ease of doing business clearly manifests itself. Therefore, the Regulations ordinarily ought to inure to the benefit of the otherwise eligible applicants. In such cases, we cannot overlook the petitioner’s fundamental right to carry on business guaranteed under Article 19(1)(g) of the Constitution of India and that the State ought to act fairly in a manner confirming with such constitutional mandate under Article 21 and not to the contrary.. 2020 SCC online sc 934

44. Thus, for all the reasons as discussed herein above, the petition deserves to be allowed by passing the following order:- ORDER i) Rule is made absolute in terms of prayer clause ‘a’. ii) Writ Petition is allowed. iii) No order for cost.

45. The parties shall act on an authenticated copy of this order. (Advait M. Sethna, J) (M.S. Sonak, J)