Richa Shipping Pvt. Ltd. v. Union of India

What happened

Richa Shipping Private Limited, the charterer of the barge M.T. Bay III, saw the vessel seized on 15 June 2026 after Customs alleged that about 208 KL of very low sulphur fuel oil had been transferred from its tanks to the vessel M.V. Angara two days earlier. By an order of 9 September 2026 under section 110A, Customs agreed to release the barge provisionally on a bond of ₹12 crore, the value it placed on the barge, and a bank guarantee of ₹6 crore. The company did not contest release itself but said that its insurance valuation put the barge at about ₹2.90 crore and that the order gave no reason for the ₹6 crore figure.

Questions before the court

• Were the bond of ₹12 crore and the bank guarantee of ₹6 crore reasonable conditions for provisional release of the barge under section 110A?
• Should the High Court interfere although an appeal lay to the Commissioner (Appeals)?

Why the court ruled this way

The Court accepted that section 110A leaves the amount of security to the adjudicating authority and that an appeal was available, but it entertained the petition because the conditions were excessive on their face. M.V. Angara, from which the fuel had been seized, had been released on an e-bond of ₹16,12,03,600 with an e-bank guarantee of only ₹30 lakh, so the barge's terms should have been broadly similar. The valuation evidence conflicted: the department produced a certificate valuing the barge at ₹12 crore and the petitioner produced material valuing it at about ₹2.80 to ₹2.90 crore. The Court added that section 110A prescribes no uniform security and that the amount depends on the nature of the allegation, the goods and their value and the other circumstances.

Controlling point

The adjudicating authority has discretion over the security for provisional release, but it must exercise that discretion reasonably and on relevant material; a bank guarantee that is unreasonable and excessive can be modified by the High Court.

Order and next steps

The writ petition was partly allowed. The bank guarantee of ₹6 crore was modified to ₹50 lakh for the purpose of provisional release, the remaining conditions in the impugned order were left intact and there was no order as to costs.

Practical implications

An owner or charterer asked for a large bond or guarantee should place the valuation material before the officer and point to the security taken on related seizures, since the Court treated the terms given to M.V. Angara as a benchmark. A bank guarantee that is out of proportion to the value at risk can be challenged without first going through the appeal, but only where the excess is plain on the record.

Limits of this ruling

• The Court stated that section 110A fixes no uniform security, so the figure of ₹50 lakh rests on the valuation material and the comparison with M.V. Angara in this case and is not a ratio of guarantee to value.