Madras HC Holds Civil Dispute Over Wharfage Refund Cannot Be Tried As Criminal Offence, Quashes CBI Case

The Madras High Court on 8 June quashed a CBI charge sheet, holding that authorities cannot convert a civil dispute relating to refund of wharfage charges into criminal proceedings alleging cheating, forgery, or corruption.

A Single-Judge Bench of Justice G.K. Ilanthiraiyan allowed the petition and quashed the criminal proceedings against all accused. He held:

“...it was found that there was no excess wharfage charges amount and as such requested the importer to return the same, on the said request the importer had returned the entire amount which was paid in favour of the importer as excess wharfage charges. Therefore, there is no loss to the exchequer and there is no gain to any accused.”

The case arose from import of medical equipment worth over Rs. 191 crore by Apollo Hospital Enterprises Limited from Belgium, which attracted wharfage charges of about Rs. 59.23 lakh at Chennai Port.

CBI alleged that a Customs Appraiser (A2), a Customs Broker (A3), and the Manager of the Customs Broker (A4), in collusion with customs officials, prepared a forged proforma invoice showing separate values for break bulk cargo and containerised cargo and used it to obtain a refund of Rs. 21.85 lakh from the Chennai Port Trust.

The accused contended that they did not retain the refund amount and that it ultimately reached the importer. They further submitted that once the authorities found no excess wharfage charges were payable, the importer returned the amount. They argued that no wrongful gain accrued to any accused and no loss occurred to the exchequer.

The High Court found no material showing that the accused fabricated documents or obtained any wrongful benefit. It noted that the quantity and value of the imported goods remained unchanged and that the refund amount had been reversed. It held that the dispute related to assessment and refund of charges and could not automatically give rise to criminal liability.

Reiterating Supreme Court precedents, the Bench observed that parties cannot use criminal law as a substitute for civil remedies and cautioned against converting commercial disputes into criminal cases to exert pressure. It also held that courts must not treat civil disputes as criminal offences.

Further, the Bench found no evidence of fabrication of records for claiming refund and held that the prosecution failed to establish the essential ingredients of cheating, forgery, and corruption offences. It noted:

“the claim was made with the knowledge of the importer which is also evident from the returning of excess wharfage amount which was paid to the importer.”

Accordingly, the High Court quashed the CBI case against all accused, holding that continuation of proceedings would amount to abuse of process of law.

For Petitioner: Mr. B. Sathish Sundar, Mr.R. Rajarathinam, Sc for Mr.S. Arunachalam

For Respondent: Mr. K. Srinivasan, Special Public Prosecutor