Customs Housing Agent Can Be Made Liable For Wrongdoings Of Employees, Must Exercise Due Diligence: Delhi High Court

The Delhi High Court has made it clear that a Customs Housing Agent is responsible for the actions of its employees and it must exercise due diligence in supervising their activities.

A division bench of Justices Prathiba M. Singh and Shail Jain further held that a CHA may be held accountable for the wrongdoings of its employee but, the punishment in that regard has to be proportionate.

The observations come in an appeal preferred by a CHA against revocation of its license over misdeclaration in respect of a consignment of one of its customers.

The CHA argued that the employee was not authorised to undertake such illegal or out of the line business with any customer. Moreover, the errant employee had admitted his wrong dealings. Thus, it should not be penalised for the wrong doings of its employee, who stood terminated.

The Department on the other hand contended that Appellant-CHA had a duty to perform due diligence and supervise its employees properly. It cited Custom Broker Licensing Regulations, 2018 which impose stringent conditions upon CHAs.

The High Court agreed that Appellant had a responsibility, being a CHA, to exercise supervision and due diligence. However, it added, “the principle of proportionality would apply in such cases.”

In order to maintain proportionality and to ensure that the Appellant, which has its own reputation, is not permanently dissuaded from conducting its activities as a CHA, the Court restricted the period of revocation of its license to 4 years instead of perpetual revocation.

Appellant also volunteered to deposit ₹10 lakhs by way of retribution.

“Out of the said amount, Rs.5 lakhs shall be deposited with the Customs Department, Rs. 2 lakhs to be deposited with the Delhi High Court Bar Clerk Association and Rs. 3 lakhs with the Delhi High Court Bar Association,” the Court ordered.

It also directed the Appellant to submit a detailed Due Diligence Document as to the manner in which it intends to supervise its employees in future, the system and framework that is being put in place for ensuring adequate supervision and proper verification of documents, etc. and file the same with the Customs Department.

Appearance: Mr. Rupesh Kumar, Sr. Adv. with Mr. Prem Ranjan Kumar, Adv. for Appellant; Mr. Abhinav Kalia & Mr. Ajit Kumar Kalia, SSC.

Case title: Nitco Logistics Pvt Ltd v. The Commissioner Of Customs Airport And General

Citation: 2025 LiveLaw (Del) 1370

Case no.: CUSAA 56/2024

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