Sealing Of Premises Is Not Permitted U/s. 105 Of Customs Act, Has Direct Bearing On Legal Rights To Carry Business Under Art 300A: Bombay HC

While firmly establishing that the power to search under Section 105 of the Customs Act does not grant the authority to seal premises as sealing premises is considered a drastic action that significantly impacts an individual's property and business rights, requiring adherence to proper legal procedures and the opportunity to be heard, the Bombay High Court directed the Custom authorities (respondents) to unseal the petitioner's office premises, as the petitioner has shown a willingness to cooperate in the search operation.

The Division Bench of Justice G. S. Kulkarni and Justice Jitendra Jain observed that “the customs authorities would not have an explicit power under Section 105 of the Customs Act to seal the premises. This is also because the sealing of premises is a drastic action. It results in tinkering with substantive rights of a person to hold, use and occupy any immovable property”.

Stating that the property may be used for business purposes or otherwise, the Bench highlighted that any action to seal the premises would have a direct bearing and effect on the legal rights of the person to use and occupy the premises as guaranteed by Article 300A of the Constitution.

Advocate Dr. Sujay Kantawala appeared for the Petitioner, whereas Advocate Vijay Kantharia appeared for the Respondent.

The brief facts of the case are that the petitioner seeks urgent relief to unseal their office premises. The petitioner argued that the second respondent lacked authority and jurisdiction to seal the petitioner's premises under Section 105 of the Customs Act, 1962, without providing any notice. The investigation pertains to transactions involving goods sold by S. T. Electricals, the principal importer/supplier. The S.T. Electricals has filed a related case (D.B. Civil Writ Petition No. 10480/2023) before the High Court of Judicature for Rajasthan, Bench at Jaipur. The petitioner asserts that they are willing to cooperate in the investigation but pointed out that they did not directly purchase goods from S.T. Electricals. Instead, the goods were supplied to the petitioner via Pacific and M/s. Mayur Enterprises. Therefore the petitioner requested a specific search limited to the transactions with S.T. Electricals and not a broad fishing expedition. 

After considering the submission, the Bench observed that the action of sealing would amount to suspension or taking away of such legal right, which cannot be resorted unless the procedure in law is adopted.

The Bench further observed that sealing of the business premises would adversely affect the right to carry on a business which is a fundamental right as guaranteed under Section 19(1)(g) of the Constitution.

“It is for such reasons in providing for powers under Section 105 of the Customs Act of search, the legislature has kept out and/or has not included within its purview a power to seal, and has confined the power only to search the premises”, added the Bench.

The High Court stated that in so far as the facts of the case are concerned, it does not appear that the premises of the petitioner were not available for search and it appears that the customs authorities had straightaway resorted to taking drastic action against the petitioner to seal the premises to search the premises, which is certainly not permissible under the provisions of Section 105 of the Customs Act.

Accordingly, the High Court directed that the customs authorities need to unseal the office premises of the petitioner in the presence of the representatives of the petitioner so that the customs authorities can undertake a search of the office premises regarding the relevant material only.

Cause Title: Narayan Power Solutions v. Union of India and Anr.

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