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N. Nagamanickam Setty and anr. Vs. Collector of Central Excise, Bangalore and ors. - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtKarnataka High Court
Decided On
Case NumberW.P. No. 1774 of 1980
Judge
Reported inAIR1983Kant193; 1986(23)ELT75(Kar)
ActsConstitution of India - Article 226; Gold Control Act, 1968 - Sections 79 and 80(2)
AppellantN. Nagamanickam Setty and anr.
RespondentCollector of Central Excise, Bangalore and ors.
Appellant AdvocateG. Chander Kumar, Adv.
Respondent AdvocateK. Shivashankar Bhat, Central Govt. Pleader
Excerpt:
.....majority judgment rendered by rajagopala ayenger, j. both these principles enunciated by the supreme court in the context of civil cases or proceedings are really general principles applicable to all legal proceedings, whether the same is before a court or an authority like government under any enactment......court in the context of civil cases or proceedings are really general principles applicable to all legal proceedings, whether the same is before a court or an authority like government under any enactment.42. on the above principles, it follows that under section 82 of the act, government was exercising its appellate jurisdiction which was inextricably connected with the original proceeding initiated against the petitioners.43. as yet the proceedings are pending before government. on examining the records and hearing the petitioners, if they claim an oral hearing, what view government would take in the matter, cannot be predicted at this stage.44. as revisional authority, it was open to government to stay the proceedings even in the absence of an express provision thereto under the act......
Judgment:
ORDER

1. Sri N. Nagamanickam Shetty of Mysore, petitioner No. 1 is a dealer in gold in accordance with a licence issued to him by the authority under the Gold Control Act, 1968 (Central Act 45 of 1968) (hereinafter referred to as the Act). Sri Sambhaji Siddhu Jadhav of Mysore, petitioner No. 2 is a refiner in gold in accordance with a licence issued to him by the authority under the said Act.

2. On 5-6-1973 the then Superintendent of Central Excise, Preventive, Mysore - M. Indulal Shah - (hereinafter referred to as the Superintendent) searched the residential and business premises of petitioner No. 2 with his staff and seized gold ornaments weighing 3,962.700 grams. At the said search and seizure and in the statement drawn up thereto, petitioner No. 1 claimed that he was the owner of the said ornaments.

3. On 17-11-1973 the Collector of Central Excise Bangalore (hereinafter referred to as the Collector) issued a show cause notice (Exhibit B) to the petitioners and two other persons called Shankararao Jadhav and Ananda Rao Shinde of Mysore proposing to confiscate the aforesaid gold for the contraventions of the Act detailed in the respective notices and levy personal penalties also. In response to the said show cause notice, the petitioners filed their detailed objection denying any contravention, justifying the actions proposed therein. On an examination of the material placed before him and the objections urged, the Collector by his order dated 3-5-1976 (Exhibit C) made an order against the petitioners in these terms:

'In view of the foregoing findings, I pass the following order:

One pellet of gold with foreign markings which is clearly liable to confiscation under the Gold Control Act 1968 as discussed above having already been confiscated under the Custom Act, 1968 by an order passed by the Assistant Collector of Central Excise, Mysore, earlier vide C. No. VIII/10/16/73 Cus. dated 31-5-1974, I do not pass an order of confiscation in relation to the said gold under Gold Control Act, 1968.

As the gold and gold ornaments contained in two boxes are liable to confiscation under Gold Control Act as discussed in the foregoing findings. I order the out-right confiscation of 3962.700 gms. Gross of Gold and gold ornaments including the primary gold piece weighing 2,400 grams to Government under Section 71(1) of the Gold Control Act, 1968. I also order absolute confiscation of 2 boxes under seizure used for concealing the aforesaid gold and gold ornaments under Section 71(2) of the Gold Control Act, 1968.

Further I impose the following personal penalty under Section 74 of the Gold Control Act, against each of the persons as indicated below:

4. Against the said order of the Collector, the petitioners and Ananda Rao Shinde filed three separate appeals under Section 80 of the Act before the Gold Control Administrator, New Delhi (hereinafter referred to as the administrator). On consolidating those three appeals, the Administrator by his order dated 15-1-1979 reversed the order of the Collector and made an order (Exhibit D) in these terms:

'I observe that in the show cause notice there was no charge for contravention of Section 16 (1) of the Gold (Control) Act, 1968 and therefore, the conclusion arrived at by the Collector that all the three appellants have contravened Section 16 (1) of the Gold (Control) Act, 1968 is in violation of principles of natural justice. There was no charge for contravention of Section 8 (1) against Sri Jadhav and Shinde. Imposition of penalty on them for contravention of Section 8 (1) is against the principle of natural justice. No findings have been given by the Collector on the alleged contravention

Name of the Party Section contravened. Penalty amount1. Shanker Rao 8 Rs. 1000/- (Rupees oneJadhav thousand only).2. Sambaji Siddu I) 16 (1) Rs. 5000/- (Rupees fiveJadhav thousand only).ii) 8 Rs. 1000/- (Rupees onethousand only).3. Ananda Rao I) 16 (1) Rs. 1000/- (Rupees one Shinde thousand only)ii) 8 Rs. 100/- (Rupees onehundred only)4. Nagamanickam I) 16 (1) Rs. 50,000/- (Rupees Shetty fifty thousand only)ii) 8 Rs. 5,000/- (Rupeesfive thousand only)of Section 16 (1) of the Gold Control Act. I, therefore, set aside the order in original passed by the Collector. This does not debar the Collector from proceeding against the parties concerned de novo.'

This order made by the Administrator was not an order of remand but only reserved liberty to the Collector to initiate fresh proceedings against the petitioners and Ananda Rao Shinde, if he so decided. But, for reasons with which we are not concerned, the Collector neither initiated fresh proceedings against the petitioners and Ananda Rao Shinde not returned the gold to any of them.

5. On 18-7-1979 petitioner No. 1 moved this Court in Writ Petition No. 11540 of 1979 under Article 226 of the Constitution impleading the Collector and the Superintendent as party respondents to that writ petition seeking for a wait in the nature of mandamus to return the gold to him on the ground that on the expiry of 6 months from the date of the order of the Administrator he was entitled for its return.

6. In answer to the said claim of the petitioner, the respondents in that case stated that the Union Government respondent No. 3 had initiated suo motu revisional proceedings against the petitioner and had issued a show cause notice to him on 10-12-1979 (Annexure E) and, therefore, he was not entitled for the mandamus claimed by him. On that statement, petitioner No. 1 sought leave of this Court to withdraw that writ petition with liberty reserved to challenge the suo motu revisional proceedings and for the return of the gold in a separate proceeding. On 3-1-1980 Srinivasa Iyengar, J, made an order permitting petitioner No. 1 to withdraw that writ petition reserving the liberty sought by him (Exhibit F).

7. With that liberty, the petitioners moved this Court on 24-1-1980 challenging the show cause notices issued to them by Government under Section 82 of the Act and have sought for a mandamus to return the gold to petitioner No. 1.

8. The show cause notice issued by Government is challenged by the petitioners principally or solely on the ground that it suffers from 'legal mala fides' in that the revisional authority proposes to revise on charged that had not been framed by the Collector.

9. Petitioner No. 1 claims that he is entitled for the immediate return of gold on the ground that the collector had not initiated fresh proceedings within a period of six months from the date of the order of the Administrator. He also claims that the pendency of the suo motu revision before Government and the stay order issued thereto does not enable the Collector to retain the gold any longer.

10. In their joint return, the respondents while justifying the show cause notice issued by Government on the very grounds stated therein, have urged that before the proceedings are completed under Section 82 of the Act, it would not be proper for this Court to interfere with the same on any ground.

11. On the claim of petitioner No. 1 for return of gold, the respondents have urged that he is not entitled for the same on the grounds that would be noticed by me when I deal with that part of the case of the petitioners.

12. Sri. G. Chander Kumar, learned counsel for the petitioners, has contended that the suo motu revisional proceedings initiated by Government suffers from 'legal mala fides' in that (I) the proceedings have been initiated at the instance of and to oblige the Collector and (ii) that some of he grounds or charges stated in the show cause notice, had not been stated by the Collector and was liable to be interfered with by this Court even before the proceedings are completed by Government.

13. Sri. K. Shivashankar Bhat, learned Central Government Senior Standing Counsel, appearing for the respondents has urged that Government acting on the information imparted by the Collector does not commit any illegality and the grounds stated in its show cause notice were not new grounds justifying this Court's interference even before the proceedings are completed by Government.

14. Section 82 (2) of the Act empowers the Central Government to suo motu call for the records and revise the decision or order made on appeal to satisfy itself as to the correctness, legality or propriety of such a decision or order and pass such order thereon as it may think fit. Sub-Section (3) of Section 82 sets out the manner and method of dealing a suo motu revision and the period with which the proceedings should be initiated by Government. The manner and method and the period within which the power should be exercised, do not tough on the power of Government to suo motu revise the decision or order made on appeal, if all or any one of the circumstances provided by Section 82 (2) of the Act exists.

15. It is not even the case of the petitioners that Government had proposed to revise the order beyond the period of limitation provided by the Act.

16. A show cause notice is normally interfered with by a High Court under Article 226 of the Constitution only if it is found that the authority that had issued the show cause notice had no jurisdiction to issue the same or that the notice issued is itself barred by time and not on other grounds. Both these grounds are absent in the present case. On this short ground, it would be proper to decline to interfere with the impugned show cause notice.

17. In the show cause notice Government has stated that it has tentatively found that the order made by the Administrator was not proper, legal and correct and in support of the same, it has set out various reasons in order to enable the petitioners to effectively lodge their objections and urge their cases.

18. On the very terms of the show cause notices, as also in law, it is open to the petitioners to urge the very objections they have urged in this petition and such offer objections that are available to them before Government which is bound to examine them and decide without in any way being influenced by the tentative decision it had earlier reached. Apart from filing their objections the petitioners are entitled to claim an oral hearing under the Act. At the oral hearing also, it is open to the petitioners to urge before Government to drop the proceedings on the very grounds urged before this Court and such other grounds that are available to them.

19. If Government accepting the case of the petitioners were to drop the proceedings, then their challenging that order would not at all arise. But, if Government repelling their objections were to make an adverse order against them, in such an event it is open to them to challenge the same before this Court. On these grounds also, I consider it proper not to interfere with the impugned show cause notices or adjudicate on the claim of the petitioner No. 1 for the return of the gold. But, still as the questions have been fully argued and my order is subject to appeal. I consider it proper to examine them fully.

20. The term 'legal mala fides' or fraud on power has acquired a definite meaning by judicial pronouncements. The term connotes a decisions rendered by an authority in good faith but on irrelevant or extraneous considerations to the decision rendered under the relevant law (vide paras 5 and 6 of the majority judgment rendered by Rajagopala Ayenger, J. in S. Pratap Singh v, State of Punjab, : (1966)ILLJ458SC . With this brief background of the meaning of the term 'legal mala fides' it is necessary to examine whether there is any merit in the grounds urged by the petitioners.

21. In the return, as also at the hearing, it was not disputed before me that after the Administrator made his order, the Collector wrote to Government and that on receipt of such letter, after obtaining the records and examining them, Government has issued the show cause notice to the petitioners.

22. The Act or any other law does not prevent the Collector from writing to Government to which he is subordinate and Government getting the records examining them and issuing a show cause notice.

23. The suo motu power of revision conferred by Section 82 (2) of the Act can be exercised by Government on the information imparted by the Collector or by any other person or on the basis of any information that comes to its own notice in any manner as such. On any legal principle, it is difficult to hold that because of this fact, the notice issued suffers from legal mala fides.

24. The plea of the petitioners that Government has suo motu sought to revise the order to oblige the Collector has only to be stated to be rejected. In the vast army of civil servants employed by the Union of India, the Collector occupies an insignificant position. It is even wild to suggest that Government has initiated the proceedings to oblige the collector.

25. In its show cause notice, Government proposes to revise the order of the Administrator and restore the order of the Collector and the notice issued must be read in that way only.

26. An appellate or a revisional authority can uphold an order of the subordinate authority on different grounds can hardly be doubted. But, on the terms of the show cause notice, whether Government has set out 'new charges' as pleaded by the petitioners or has only sought to affirm the order of the Collector on different grounds or has sought to affirm the same on the very charges and grounds found by him are not free from doubt. All these questions will really become relevant only after Government makes its order and not before.

27. As stated earlier, it is open to the petitioners to urge this ground also before Government which is bound to examine the same and decide it. For all these reasons, I decline to examine this contention and leave open the same to be agitated after the decision is rendered by Government.

28. Sri Kumar has next contended that on the expiry of six months from the date of the order of the Administrator, petitioner No. 1 had become entitled for the return of the gold notwithstanding the pendency of the suo motu revision and the stay order made thereto and any ultimate order to be made thereto Cen-Cusrnment. In support of his contention Sri Kumar has strongly relied on the rulings of the Supreme Court in Assistant Collector of Customs v. Charanadas Malhotra : 1973ECR1(SC) , a ruling rendered by Amiya Kumar Mookerji, of the Calcutta High Court in Uma Rajeswar Rao Patra v. Union of India, (Civil Rule No. 860 (W) of 1973). ((1972) 2 Cal LJ 266) reported in Concuss Manual of Gold Control 1982 Edn. at pages 506 to 512.

29. Sri Bhat has urged that on the strict construction and interpretation of the second proviso to Section 79 of the Act as also on the legal principle of an original proceeding, appeal and revision being one intrinsic unity, the claim of petitioner No. 1 after the return of gold before the proceedings are completed by Government, was ill conceived. In support of his contention Sri. Bhat has strongly relied on the rulings of the Supreme Court in Garikapati Veeraya v. N. Subbiah Choudhary : [1957]1SCR488 and Shankar Ramachandra Abhyankar v. Krishnaji Dattatraya Babat : [1970]1SCR322 .

30. If petitioner No. 1 is right in his contention on merits, then he has a civil and legal rights for the return of gold, is not rightly disputed by Sri Bhat and that position is also concluded by the ruling of the Supreme Court in Charandas Malahotra's case : 1973ECR1(SC) . But, the question is whether there is merit in the contention of the petitioners.

31. Earlier, I have set out the operative portion of the order made by the Administrator and its true legal effect. The Administrator did not remand the case to the Collector for a fresh adjudication. But, he only reserved liberty to the Collector to initiate fresh proceedings, if he so decided.

32. The Act was enacted to provide, in the economic and financial interests of the community, for the control of the production, manufacture, supply, distribution, use and possession of, and business in, gold, ornaments and articles of gold and for matters connected therewith or incidental thereto. The object of enacting the Act must always be kept in view in interpreting the Act and any of its provisions also. The Act must be read as a whole and in the guise of interpretation, it is not open to this Court to legislate. Bearing these and all other relevant principles, it is necessary to examine the scope of the second proviso to Section 79 of the Act, which reads thus:

'Provided further that where no such notice is given within a period of six months from the date of the seizure of the gold, conveyance, or animal or such further period as the Collector of Central Excise or of Customs may allow, such gold, conveyance or animal shall be returned after the expiry of that period to the person from whose possession it was seized.

Explanation :- Where any fresh adjudication is ordered under this Act, the period of six months specified in the second proviso shall be computed from the date on which such order for fresh adjudication is made.'

33. Section 78 of the Act provides for adjudication by the authorities and their powers. Section 79 provides for the manner and method of adjudication. But, the second proviso to Section 79 directs the original authority to return any gold conveyance or anumal seized if that authority does not initiate proceedings with a period of six months from the date of seizure or within such further period to be extended by the competent authority. The second proviso that applies to cases of the original proceedings initiated and pending before the original authority on the very first occasion has no application to the cases, is not disputed by Sri Kumar.

34-35. But, he has strenuously contended that the explanation to the second proviso should be read as applicable to all orders made by the appellate or revisional authorities against an original order made under the Act.

36. The meaning to be given to an explanation must depend on its terms and no theory of its purpose can be entertained unless it is to be inferred from the language used (vide Krishna Ayyengar v. Nallaperumal Pillai, (1920) ILR 43 Mad 550 at p. 564: (AIR 1920 PC 56 at p. 59). An explanation appended to a section or clause gets incorporated into it and becomes an integral part of it, and has no independent existence apart from it. There is, in the eye of law, only one enactment, of which both Section and the Explanations are two inseparable parts. 'They move in a body if they move at all' (vide Bengal Immunity Co. Ltd. v. State of Bihar : [1955]2SCR603 ). The explanation should be read so as to harmonise with and clear up any ambiguity in the main section. It should not be so construed as to widen the ambit of the section (vide : 1957CriLJ567 ). Bearing in mind all these principles, it is necessary to ascertain the true scope of the explanation to the second proviso to S. 79 of the Act.

37. In the context and on the application of the above principles the explanation to the second proviso cannot be construed as an independent provision. But, the same has to be so construed as to harmonise with and clear up the ambiguity if any of the second proviso only. When so construed, the explanation applies to a case of remand and a fresh adjudication to be made thereto and not to all cases as urged by Sri kumar.

38. The order made by the Administrator was not one of remand and the explanation to the second proviso has no application to sustain the claim of the petitioner No. 1 for return of gold.

39. The ratio in Charan Das Malahotra's case : 1973ECR1(SC) and in Uma Rajeswarao Patra's case (1977-2 Cal LJ 266) in so far as they relate to the claim for return, does not really bear on the point and assist the petitioners.

40. Let me now examine whether on any legal principle the claim of the petitioners is justified.

41. In Garikapati Veeraya's case : [1957]1SCR488 dealing with the case of appeal arising in a civil suit S. R. Das, C. J. speaking for the majority has ruled that the legal pursuit of a remedy, suit, appeal and a second appeal are really but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceeding. In Ramachandra's case : [1970]1SCR322 dealing with the powers of a revision by a High Court, under Section 115 of the Civil P. C., the Supreme Court has ruled that that power is exercised by a High Court in exercise of its appellate jurisdiction. Both these principles enunciated by the Supreme Court in the context of civil cases or proceedings are really general principles applicable to all legal proceedings, whether the same is before a Court or an authority like Government under any enactment.

42. On the above principles, it follows that under Section 82 of the Act, Government was exercising its appellate jurisdiction which was inextricably connected with the original proceeding initiated against the petitioners.

43. As yet the proceedings are pending before Government. On examining the records and hearing the petitioners, if they claim an oral hearing, what view Government would take in the matter, cannot be predicted at this stage.

44. As revisional authority, it was open to Government to stay the proceedings even in the absence of an express provision thereto under the Act. But, sub-section (3) of Section 83 of the Act expressly empowers the appellate or the revisional authorities to stay the operation of any decision or order. In exercise of those powers Government has stayed the operation of the order of the Administrator which necessarily means that the Collector cannot initiate proceedings, if not already initiated and cannot continue the proceedings if he had already initiated till the disposal of the revisional proceedings before Government.

45. On any legal principle, the claim of petitioner No. 1 for the return of gold before the revisional proceedings are completed by Government cannot be upheld. Even on facts also, it is hazardous to return the gold to petitioner No. 1 before the proceedings are completed by Government. For all these reasons, I see no merit in this contention of Sri Kumar and I reject the same.

46. On the above discussion, it follows that this will writ petitions is liable to be dismissed. But in view of the order of stay granted by this Court, the petitioners have not filed their objections to the show cause notice. In this view, it is necessary for this Court to grant a reasonable times to the petitioners to file their objections before Government and I consider it proper to grant at least one month's time from this day for the said purpose.

47. In the light of my above discussion, I hold that this writ petition is liable to be dismissed. I, therefore, dismiss this writ petition and discharge the rule issued in the case. But, the petitioners are granted one month's time from this day for filing their objections to the show cause notices before Government.

48. In the circumstances of the case, I direct the parties to bear their own costs.

49. Let copies of this order be communicated to the respondents within 10 days from this day.

50. Petition dismissed.


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