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NaseeruddIn and Brothers Dosth Beedi Factory, Warangal Vs. Union of India and ors. - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtAndhra Pradesh High Court
Decided On
Case NumberSecond Appeal 624 of 1980
Judge
Reported in1984(17)ELT233(AP)
ActsCentral Excise Rules, 1944 - Rules 151 and 233A; Central Excise Act, 1944 - Sections 3, 12 and 33
AppellantNaseeruddIn and Brothers Dosth Beedi Factory, Warangal
RespondentUnion of India and ors.
Appellant AdvocateA.S. Prakasam, Adv.
Respondent AdvocateR. Sriramulu, Additional Standing Counsel for Central Government
Excerpt:
.....- sections 3, 12, and 33 of central excise act, 1944 and rules 151 and 233a of central excise rules, 1944 - penalty imposed on appellant for violation of rule 151 - appellant challenged imposition of such penalty on ground of violation of principles of natural justice - civil court set aside such order - appellant given all materials prior to imposition of penalty to defend its case - under provisions of act jurisdiction of civil court to interfere in such matters barred - in such circumstances suit filed by appellant not maintainable. - motor vehicles act (59 of 1988)section 149 (2): [v. gopala gowda & jawad rahim, jj] insurers entitlement to defend the action joint appeal by insured and insurer - held, the language employed in enacting sub-section (2) of section 149 appears to..........and if so to what extent. section 9 of the code of civil procedure postulates : 'courts to try all civil suits unless barred. - the courts shall (subject to the provisions herein contained) have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred. explanation i. - a suit in which the right to property or to an offence is contested is a suit of a civil nature, notwithstanding that such right may depend entirely on the decision of question as to religious rites or ceremonies; explanation ii. - for the purpose of this section it is immaterial whether or not any fees are attached to the office referred to in explanation i or whether or not such office is attached to particular place.' the exclusion of.....
Judgment:

1. Plaintiff is the appellant. He filed the suit for declaration that the adjudicatory order No. 61/69 dated August 16, 1969 marked as Ex. A-4 levying fine by the 3rd defendant and confirmed by the second defendant trial by order dated July 30, 1970 marked as Ex. A-5, as illegal and arbitrary. The trial court decreed the suit. On Appeal, it was reversed and the suit has been dismissed, against which the present appeal has been filed.

2. It is unnecessary to extract all the factual averments made in the plaint; Suffice to state that the trial court declared the Ex. A-4 order as illegal and arbitrary on the ground that it is violative of the principles of natural justice and also arbitrary. To come to the conclusion that is violative of principles of natural justice, it held that the third defendant ought to have examined one Syed Omer who has given the statement dated December 20, 1967 marked as Ex. B-11 and his non-examination is caught in the net of non-observance of the principles of natural justice. It also held on appreciation of the evidence, pointing out the circumstances obtained thereunder that the imposition of penalty is arbitrary. The appellate court held that the civil court is not an appellate forum against adjudicatory orders and it cannot go into the merits of the case. At the enquiry the appellant did not ask for an opportunity to examine Syed Omer and therefore the order is not violative of the principles of natural justice. Thus it allowed the appeal and dismissed the suit.

3. In this Appeal, Sri Prakasam, learned Counsel for the appellant contends that the approach of the appellate court is vitiated by error of law. The statement Ex. B-11 is not evidence unless Syed Omer who gave that statement is examined as a witness. Non-examination of this witness constitutes violation of principles of natural justice. Therefore the finding of the Trial Court that the adjudicatory order is violative of the principles of natural justice is perfectly legal. In support of his contention, he relied on a Division Bench decision of this court reported in Union of India v. Suryaprkasa Rao, (1) 1967-1 An. W.R. 20 and B., Poyrnaiah v. Union of India (Finance), (2) 1967 (2) A.D.T. 141. The order is arbitrary for the reasons set out by the trial court but not considered by the appellate court smacked of error of law.

4. Sri Sriramulu, learned Additional Standing Counsel for the Central Government, on the other hand, contended that after the statement of Syed Omer was recorded under Ex. B. 1, a supplemental show cause notice dated 13-11-1967 which is marked as Ex. A-3 in this case stating the circumstances under which the Department recorded that statement, has been issued and an opportunity was given. The copy thereof was also supplied. The appellant has given a reply which is marked as Ex. B-2. Therein while controverting all the allegations, he expressed absolute confidence of dispassionate approach in the adjudicating officer. He did not ask for examination, of Syed Omer nor himself produced him as a witness. Having failed to avail that opportunity at that stage, it is not open to the appellant to turn round and contend that the non-examination of Syed Omer constitutes violation of the principles of natural justice. The Civil Court has no jurisdiction to appreciate the case on merits and come to its own conclusion.

5. Upon these respective contentions, the question that arises for consideration is whether (1) the order is violative of principles of natural justice; (2) and whether the civil court has jurisdiction against the orders of the statutory authority and civil court has jurisdiction against the orders of the statutory authority and if so to what extent.

Section 9 of the Code of Civil Procedure postulates :

'Courts to try all civil suits unless barred. - The Courts shall (subject to the provisions herein contained) have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred.

Explanation I. - A suit in which the right to property or to an offence is contested is a suit of a civil nature, notwithstanding that such right may depend entirely on the decision of question as to religious rites or ceremonies;

Explanation II. - For the purpose of this section it is immaterial whether or not any fees are attached to the office referred to in Explanation I or whether or not such office is attached to particular place.'

The exclusion of jurisdiction of the civil court is not readily to be inferred but that such exclusion must either be expressed in the statute or clearly implied from a consideration of the entire provisions in the statute and the rules made thereunder. The court has to examine the scheme of the Act and the rules made thereunder to find whether the remedies provided thereunder are adequate or sufficient. Finding that such remedies are ensured under the statute is a relevant factor to be taken note of.

6. In this case, for contravention of rule 151(c) of the Central Excise Rules, 1944 (for short, 'the rules') admittedly a show cause notice was issued under Ex. A-2 and a reply was given under Ex. B-2. While the adjudication proceedings were pending, the Department came to know of certain circumstances in regard to the contravention and they recorded the statement of Syed Omer under Ex. B-11. Thereafter, a supplemental show cause notice under Ex. A-3 dated 3-7-68 was issued seeking explanation from the appellant. In reply thereto, he has given his statement under Ex. B-2. The material thus gathered has been supplied and considered and the impugned adjudicatory order Ex. A-4 has been passed and confirmed in appeal under Ex. A-5 and in revision under Ex. B-4.

7. Section 3 of the Central Excises and Salt Act, 1944 (for short 'the Act') is the charging section. Section 12 of the Act empowers by notification published in Official Gazette to creating 'warehousing, offences and penalties, confiscation.... obtainable in Customs Act (52 of 1962) be adoptable.' Section 33 of the Act empowers adjudication by Collector, Central Excise of specified officers in respect of anything liable for confiscation or penalty by the rules made under the Act. The rules were made from time to time.

8. Rule 151 of the Rules prescribes offences with respect to warehousing. It postulates :

'If the owner of goods, warehouse, or the warehouse-keeper, by himself or by any person in his employ or with his connivance, commits any of the following offences, namely :-

(a) x x x(b) x x x (c) warehouses goods in or, removes goods from, a warehouse otherwise than as provided by these rules, he shall be liable to penalty which may extend to two thousand rupees and all goods warehoused, removed or concealed in contravention of this rule shall be liable to confiscation.'

9. Rule 233-A prescribes procedure for enquiry and it says :

'233-A. Issue of show cause notice before confiscation of any property or imposition of any penalty. - No order confiscating any property or imposing any penalty on any person shall be made under these rules unless :

(a) a written notice stating the grounds on which it is proposed to confiscate such property or to impose such penalty; and

(b) a reasonable opportunity of making a representation in writing within such time as may be prescribed in the notice against the grounds of confiscation or imposition of penalty mentioned therein and of being heard in matter are given -

(i) (Omitted as not being relevant)

(ii) where the order relates to the imposition of any penalty, to the person on whom such penalty to be imposed;

provided that the notice referred to in clause (a) and the representation referred to in clause (b) may, at the request of the person or persons concerned, be oral.'

10. It is alleged that the appellant has committed the offence of removing the tobacco from the warehouse in contravention of Rule 151 and thereby he became liable to the penalty. The procedure to enquire into those offences or penalties are to be enquired into in the matter prescribed in rule 233A. The liability to penalty is the creature of the Act and the Rules devised its own machinery for adjudication thereof. One of the classic statement of law by Willes, J. in Wolver Ampton Wew Water Works Compay case, (3) 1859 C.B. (SN) 336 that 'where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it' would apply to the facts in this case. Therefore, the adjudicating authority is conferred with exclusive jurisdiction to adjudicate upon the liability and to decide the penalty to be imposed. These circumstances hold the key to the question posed for consideration.

11. The object of Rule 233-A is to comply with fair play in action i.e. to give a reasonable opportunity to disprove the allegations made against the party to be proceeded against. The Department is free to collect any relevant material evidence. It is not evidence in the strict sense of the Evidence Act. It is now well settled that the Evidence Act has no application to the proceedings before the quasi-judicial tribunals unless it is expressly made applicable. It applies only to all judicial proceedings in or before any court including those mentioned thereunder in section 1 of the Evidence Act. The evidence even illegally collected is still evidence and cannot be excluded from consideration as laid down in Pooran Mal v. Director of Inspection etc. (4) AIR 1974 S.C. 384, followed in A.P.S.E. Board v. Subhadramma (5) 1983 (1) A.P.L.J. 114. But, however, the material thus collected must be supplied and an opportunity be given to the party to refute the allegations made or the evidence to be relied upon and it need be to rebut the same by adduction of evidence. The entire tardy process of trial in the suit in an established civil court is excluded by necessary implication. Yet it does not absolve the authority under Rule 233-A to give any reasonable opportunity when requested for either to summon any other relevant evidence in the custody of the Department to disprove the allegations or to summon the person that gave the statement to cross-examine to ascertain the truth or otherwise or the relevancy of the statement before relying upon the same. After complying with the principle of fair play in action and dispassionate consideration of all the relevant evidence, when an order on merits is passed, the party aggrieved is to work out the rights in the appellate and revisional forums created under the Act and the Rules. The orders thereon are conclusive as far as those authorities are concerned.

12. It is apposite here to extract the pertinent law laid down by the Supreme Court in Kamala Mills v. Bombay State (6) : [1965]57ITR643(SC) that :

'... there can be little doubt that the clause 'assessment made, cannot mean the assessment property or correctly made. The said clause takes in all correctly assessments made or purported to have been made under the Act.... An order of assessment though erroneous and though based on an incorrect finding of fact, is nevertheless an order of assessment within the meaning of section 20 and section 20 in terms, provides that it will not be called in question in any civil court.'

It is held that civil court has no jurisdiction to try the suit.

13. A Division Bench of this court (to which I am a party) in A.P.S.E, Board v. Subhadramma (5). Supra 1983 (1) A.P.L.J. 114 has considered the entire case law regarding the jurisdiction of the civil court and held :

'Where the Authority or the Tribunal constituted under a particular statute has been given exclusive jurisdiction in respect of the specific matter or subject to try or decide exclusively for itself, even in such cases, the nature and character of the Tribunal constituted, the nature of jurisdiction conferred, the circumstances enumerated in the statute conferring such jurisdiction, are to be examined. If the exercise of the jurisdiction of the tribunal is dependent upon the existence of a particular state of facts and the Tribunal or the Authority constituted assumes the existence of such state of facts, and then proceeds to make an enquiry, in such an event, it is necessary to find the purpose of the statute, its general scheme taken in conjunction with scope of the enquiry entrusted to the tribunal set up and other relevant factors. The civil courts have jurisdiction to examine the case in which the authority has made an order which is not within its competence or authority to impose the liability or is unconstitutional or the order is alleged to be mala fide. A civil suit to obtain the relief on the aforesaid grounds is certainly available.

Where the liability is created under a particular statute and the remedy is also provided by creating a forum therein to work out the rights and to ventilate the grievance of an injured party the liability not being pre-existing at common law it has to be worked out only under the forum provided under the statute. To that extent the remedy is exclusive and the jurisdiction of the civil court by necessary implication is ousted.

It would also be kept in mind that, when the legislature intended to create a liability and also a forum for adjudication, it manifests its intention that the rights and liabilities have to be worked out only in the forum prescribed under the statute. While interpreting the provisions, it is the duty of the court to see that the provisions of the Act are allowed to have their full play to achieve the desired objectives; otherwise, the efficacy of the provisions is robbed off and render them ineffectual or otiose. It should be the endeavour of the court to see that such a result would not ensue.'

14. In Munshi Ram v. Chheharta Municipality : [1979]118ITR488(SC) the question arose was whether the Municipality has power to assess profession tax against individual partners when they are members of the firm. The contention therein was that since the firm has been assessed to profession tax, the individual partners are not liable to profession tax and that therefore the authorities have no jurisdiction under the Municipal Act to assess profession tax. The other question raised therein was whether the civil court has got jurisdiction to go into the assessment made of the profession tax. Their Lordships, speaking through Sarkaria, J. considered the provisions of Sections 84 and 86 of the Municipal Act and held :

'It is well-recognised that where a Revenue statute provides for a person aggrieved by an assessment thereunder, a particular remedy to be sought in a particular forum, in a particular way, it must be sought in that forum and in that manner, and all other forums and modes of seeking it are excluded. Construed in the light of this principle, it is clear that Sections 84 and 86 of the Municipal Act bar, by inevitable implication, the jurisdiction of the civil court where the grievance of the party relates to an assessment or the principles of the assessment under this Act is excluded.'

While thus laying down the law it was held that the Municipality did not commit any act outside or in abuse of the power under the Act and that the civil court has no jurisdiction to decide the assessment on merits and the suit is barred even if the dispute raised therein relating to the assessment or the principle to be followed in making the assessment. It is held that by necessary implication the jurisdiction of the civil court is excluded.

15. The result of the above consideration leads to the following conclusions :-

(1) The court has to find whether the jurisdiction of the civil court is excluded either expressly or by necessary inference; the exclusion of the jurisdiction need not readily be assumed;

(2) Whether the liability is the creature of the statute, which otherwise not available at common law; the statute prescribes its own forum and the remedies have been provided for directing the parties to redress the injury thereat. If the answers are in the positive, the power and jurisdiction of the civil court to the gamut of the field occupied by the statute are denuded to embark upon re-opening the entire issue, and adjudicate upon de novo and come to its conclusion as in the case of an ordinary suit at common law.

(3) When the authorities have been conferred with exclusive jurisdiction the order may be erroneous or incorrect but it should be redressed before the forums created under the statute.

(4) Whether the remedies provided are adequate

(5) The Court has to respect the legislative mandate and should make every endeavour to allow the statute to have its full play and operation; lest the efficacy of the conclusiveness attached to the orders would be robbed off and the remedies remain mere surplusage or otiose.

(6) By necessary inference it is enjoined on the Court to keep back its hands directing the parties to work out the rights and to avail of the remedies provided under the statute.

(7) The orders of the authorities are conclusive as far as those authorities are concerned.

16. Under certain circumstances, civil court yet has jurisdiction to entertain the suit. But it is not a second chamber nor an appellate authority to sit over the orders to review the findings recorded by those authorities on merits. Its jurisdiction is a limited one to enquire whether -

(1) The adjudicating officer is competent to seisin of the matter;

(2) Whether the essential requisites postulated under the Act and the rules are present

(3) Whether on the facts found and accepted, the offence complained of is established

(4) Whether the procedure prescribed has been adhered to

(5) Whether reasonable opportunity has been afforded

(6) Whether the order impugned is outside the authority or is vitiated by abuse of power or extraneous or irrelevant consideration has been weighed with the authorities which goes to the root of the matter;

(7) Such other analogous situations.

17. In this case, admittedly defendants 1 to 3 have the exclusive jurisdiction to deal with the matter, the remedies provided are statutory and efficacious remedies. They have all the powers of the original authority. Admittedly, the appellant has not been given any reasonable opportunity but the entire statement was supplied to him. It is open to him at the stage of enquiry to seek an opportunity to call the person who gave that statement if he so chooses for cross-examination, but he did not make avail thereof. In his reply he expressed complete satisfaction in the impartiality of the adjudicating officer. Therefore it is not open to him to turn round after an adverse order was made to contend that the adjudicatory order is vitiated for non-examination of the person. The order is not violative of the principles of natural justice. The civil court has no jurisdiction to go into the merits of the case and come to its own conclusion. The trial court went into the question on merits and held that the order is arbitrary which is beyond its power and by implication it is excluded. Considered from this perspective, the approach adopted by the appellate court is correct and the appellate court rightly set aside the decree of the trial court and dismissed the suit. Therefore it does not warrant interference in this appeal. Accordingly, the second appeal is dismissed with costs.


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