NEW JUBILEE INSURANCE CO. LTD. vs THE COLLECTOR OF CUSTOMS, DRY PORT, LAHORE and others

ORDER

' SALEEM AKHTAR, J.---The petitioners seek leave to appeal against the judgment of the learned Judges of the High Court, whereby Constitution petition filed by the petitioners challenging the demand made by respondent No,1, was dismissed.

2. The petitioner is an Insurance Company which at the request of Big Mak Foods Limited, the owner of the goods, issued a policy of insurance in favour of respondent No,1 for a sum of Rs,2,25,00,000 in respect of customs duty, sales tax, other charges and bond interest which would be payable at the time of clearance of the stock of packing, wrapping material, chemicals essences, flavours and machinery spares. The goods were stored in a customs bonded warehouse in the industrial area Kot Lakhpat, Lahore. On or about 11-9-1989, a fire was alleged to have occurred at the aforesaid bonded warehouse in respect of which respondent No,1 lodged a fire claim dated 26-12-1989 with the petitioner claiming a sum of Rs,1,98,27,996 being the amount of duty and taxes allegedly payable in respect of goods allegedly destroyed by fire. The petitioner appointed Surveyors who demanded certain documents and as alleged in the petition, respondent No,1 did not supply the same. Before the Surveyors could have submitted their report, respondent No,1 issued a letter dated 1-2-1990 demanding the payment of the aforesaid amount of claim within 14 days of the receipt of the letter failing which coercive action would be taken against the petitioner under section 202 of the Customs Act, 1969 for recovery of the said amount. The petitioner challenged the action before the High Court in the Constitutional petition which was dismissed by the impugned judgment.

3. The main grounds on which the petition was dismissed were that the petition was premature, alternate remedy available under the Customs Act was not exhausted and that the High Court of Sindh did not have the territorial jurisdiction.

4. Mr. Fakhruddin G. Ebrahim, learned Senior Advocate Supreme Court contended that respondent No,1 was not entitled to take coercive measures under section 202 of the Customs Act for recovery of dues payable under the Insurance Policy. It was further contended that as section 202 of the Customs Act was not applicable, the question of exhausting remedy provided under the Customs Act did not arise.

5. The learned counsel further contended that as action taken by respondent No,1 against the petitioners was to be executed, recovery was to be made or coercive measures were to be taken against the petitioners at Karachi, the High Court of Sindh had the territorial jurisdiction to decide the case.

6. Mr. Farooq H. Naik, learned Deputy Attorney-General referred to Article 199 of the Constitution to contend that the High Court had no territorial jurisdiction as respondent No,1 did not perform function in connection with the affairs of the Federation within the territorial jurisdiction of the High Court of Sindh. However, in this regard, reference can also be made to Article 199(2) under which a High Court can make a declaration that any act done or proceedings taken within the territorial jurisdiction of the Court by a person performing function in connection with the affairs of the Federation is without lawful authority and of no legal effect. Although in clause (1) the restriction is provided that a person whom direction is to be issued should be performing duty within the territorial jurisdiction of the Court but so far clause (2) is concerned, such restriction is not provided.

It is attracted only if the act done or proceedings taken is within the territorial jurisdiction of the Court.

7. Mr. Farooq Naik further contended that under section 202 of the Customs Act, the Collector of Customs was authorised to recover the dues which may be payable under the policy of insurance.

8. The contentions raised by the learned counsel require consideration in which interpretation of the Constitution and the Customs Act is involved. Leave is granted. Respondent No,1 shall not take any coercive measure to recover the demand made by him. The petitioner shall execute a bond in favour of respondent No,1 for payment of the demand made by him in case the appeal is decided against it.