B.P. Beri, J
1. This is a special appeal directed against the judgment of the learned Company Judge in the matter of Udaibhan Industries Ltd., Dholpur (in liquidation) in regard to the recovery of the dues of the State of Rajasthan by way of customs duty.
2. The facts which we might notice for the disposal of this appeal are these, Between the erstwhile State of Dholpur and M/s Khemsingh and Co. an agreement was made on 30.11.1945 for starting an oil mill at Dholpur. The State granted an exemption to the proposed mill from payment of customs duty. It was, however, added that the concession was not transferable without the permission of the State. In November 1947 Shree Udaibhan Industries Ltd., was incorporated and by virtue of an agreement between this company and M/s Khem Singh & Co. the concession relating to the exemption from customs duty was transferred. It is not in dispute that this transfer had the concurrence of the State of Dholpur and Shri Udaibhan Industries Ltd. (hereinafter called 'the Company) continued to enjoy the exemption. In between the period of 28 10 50 and 17 8 51 large quantities of oil and oil cakes were exported as products of the Company to M/s Narain Das & Co., Delhi. Since the goods wers declared to be that of the Company no customs duty was levied by the State & if leviable it would have amounted to Rs 1, 55,189 9-9. Complaints were made to the State by Hari Chand Kalra and Dharam Datt Sidhwani to the effect that from 1.7.50 the Company had been crushing oil seeds belonging to M/s Narain Das & Co. under an agreement between them and oil and oil cakes which really belonged to M/s Narain Das and Company were being exported without payment of customs duty and Company was thus fraudulently evading the customs duty. An enquiry was held by the officer of the State of Rajasthan and the complaint was found to be correct. On the foundation of this report the Commissioner of Customs and Excise passed an order on 80.7.53 adjudging customs liability in the sum of Rs. 1,55,189-9-9-. The order of the Commissioner was sent to the Assistant Commissioner, Customs and Excise Dholpur for realisation. The Assistant Commissioner sent a requisition to the Collector, Bhartpur' under Section 3 of the Rajasthan Public Demands Recovery Act (hereinafter referred to 'the Act'). The Collector issued a certificate dated 29th September, 1953 for the recovery of the aforesaid amount under Section 4 of the Act. Notice under 6 of the Act was sent to the Company and it denied its liability by filing an objection under Section 811) of the Act. The objection was forwarded by the Collector to the Customs Department under Section 8(2) for disposal on 16.11.53. I was rejected on 15-5-54. The Collector Bharatpur the reupon passed another order on 19th July, 1955 directing the recovery of the amount from the Company and the movable and immovable properties of the Company were attached.
3. On 2 11.56 a resolution for the voluntary winding up of the Company was passed and Shri Hardit Sir ah was appointed as liquidator with a direction under Section 522 of the Companies Act for winding up the Company subject to the supervision of the Court. An application was filed by the liquidators on 31.1.57 and the learned Company Judge held that the resolution of the voluntary winding up was not valid. Eventually a proper resolution was passed on 8th March, 1958 and the learned Company Judge by his order dated 28th April 58 passed an order under Section 522 of the Companies. Act for the winding up of the Company under the supervision of the court. While the appointment of Hardit Singh as Liquidator was confirmed, the Official Receiver, Bharatpur, was appointed as an Additional Liquidator under Section 524. This office came to be occupied latter by Shri J M. Budhanja.
4. The Liquidator filed a petition (D.B. Writ Petition No. 156B/1957) under Article 226 of the Constitution of India on 30 8.57. The writ application has not been brought on record but from the judgment where by the application was dismissed it appears that the Liquidator did not raise any controversy regarding the validity or propriety of the certificate or the Company's liability for the customs duty. He merely contended that as notice under Section 6 of the Act was not served on the company and as the procedure presescribed by the Act was not followed the seizure of the Company's property was not legal. This Court held that the service of the notice on the Manager was sufficient and it dismissed the petition on 17-12-58.
5. On 15-1-60 the State filed a claim before the Liquidator under Section 528 of the Companies Act claiming customs duty in the sum of Rs. 1,55,189-9-9, electric charges Rs. 2,500/- and writ petition's costs awarded Rs. 65/-, total Rs. 1,57,754-9 9, together with interest at 6 per cent per annum till the date of recovery. In support of the claim a certified copy of the certificate under the Act issused by the Collector and a memorandum of costs awarded to the State in the writ petition No. 156 B/57 were submitted. The Liquidator demanded proof from the State as to how their customs duty accrued and on what goods were exported by the Company. The Director of Industries then forwarded the copy of the order of the Commissioner of Customs and Excise dated 30-7-53. The Liquidator further required the State to explain the circumstances in which the liability of customs duty, which was primarily levied & imposed upon the lease holder firm M/s Narain Dass & Co., shifted to the Company. The State contested the Liquida:or's competence to go behind the certificate issued by the Collector under Section 4 of the Act which had become final as no suit for the cancellation or modification had been brought within the time prescribed under Section 20 of the Act. It was further pointed out that the validity of the certificate had been upheld by this Court in writ petition No. 156-B/57 decided on 17-12-58. The copy of the judgment was also filed. The Liquidator, however, by his order dated 14th September, 1960 rejected the claim with regard to the sum of Rs, 1,55,189-9 9, on the ground that the amount was recoverable from M/s Narain Dass and Co. and not from the Company viz. Shri Udiaibhan Industries Ltd. (in liquidation). The claim for Rs. 2,500/ by way of electric charges was also rejected on the ground that the Superintendent, Power House, Dholpur had submitted his claim on that account. The claim for costs of the writ petition amounting to Rs.65/-, was allowed. The Additional Liquidator expressed a dissenting opinion in regard to the claim for Rs. 1,55,189-9 9. He maintained that it was not open to the Liquidator to go behind the certificate issued under the Act which had become final as no civil suit was filed within 6 months from the date of the certificate. Due to the divergence of of opinion between the two Liquidators the matter was placed before the learned Company Judge. The State also preferred an appeal under Rule 164 of the Companies (Court) Rules, 1959 on 23-12-60 against the order of the Liquidator rejecting its claim with regard to Rs. 1,55,189-9-9. A preliminary objection was taken on behalf of the Company that the appeal was barred by limitation having been preferred more than 120 days after the date of the service of the notice of decision of the Liquidator on the State An affidavit was filed on behalf of the State by Shri I.K. Sharma, Assistant Director of Industries and Commerce, Bharatpur, saying that the order was received on 2-12-60. The learned Company Judge without deciding the question held that in view of the diverg:nce of opinion between the two Liquidators with regard to the claim it was for him to decide the dispute on merits.
6. Shri Budhsingh Bapna filed an application for permission to intervene under Rule 165 (2) of the Companies (Court) Rules, 1959 The application was allowed. He was director of the Company and was partner in the managing agency firm of M/s Khemsingh & Co. The learned Company Judge held that it was possible to go behind a judgment provided the Liquidator had reasons to suspect that the liability of Rs 1,55, 189-9-9, for which the certificate under Section 4 of the Act had been issued, was fictitious. The learned Judge found on examining the record that was placed before him by the learned Advocate General that the company entered into an agreement with M/s Narain Dass & Co. to defraud the State customs revenue and it was specifically mentioned in Clause 11 that the remuneration for this fraud was included in the crushing charges and he further found that it was the Company which was liable to pay the customs duty under the Matsya Customs Ordinance, 1948 because it was the Company which has got the products of M/s Narain Dass & Co, cleared through the customs fraudulently showing it to be its own product. He further found that under Section 10 of the Matsya Customs Ordinance duty was recoverable by coercive process under the Rajasthan Public Demands Recovery Act. He accordingly allowed the claim of the State Government.
7. Shri Budh Singh Bapna has preferred an appeal against that judgment dated 19-11-63. Mr M.B.L Bhargava, learned Counsel for appellant, argued that the learned Company Judge had no jurisdiction to resolve the difference between the two Liquidators and to function as a Liquidator himself. He also contested that the appeal under Rule 164 was barred by time as it was presented after 210 days. He submitted that the learned Company Judge could not call for additional evidence either functioning as a Liquidator or sitting in an appeal and there was no case for taking fresh evidence on record much less base his decision thereon. Exhibits 3 and 4, namely, the agreement between Director, Shri Udaibhan Industries Ltd and M/s Narain Diss & Co. dated 4 7-50 and the report of the pint enquiry could not be taken into consideration as they were inadmissible in evidence and the finding of the Company Judge is vitiated on that account. And he finally submitted that having regard to the facts of this case the order of the Liquidator was correct in law and ought not to have been interfered with by the learned Company Judge.
8. Mr. Raj Narain Munshi, Additional Advocate General submitted that the notice of demand was given under Section 6 in the name of the Company, the Company denied its liability and the Assistant Commissioner rejected the Company's claim and the certificate was given thereafter. He also submitted that the powers of the Liquidator and Additional Liquidator are equal under Sections 424 and 425 of the Companies Act. A perusal of the decision of the Liquidator would show that the two liquidators differed in substance. No machinery having been provided by the Companies Act to resolve this difference the learned Company Judge had jurisdiction to determine the same because the winding up was done under his supervision. Moreover he submitted that an appeal was competent under Rule 647 (1). He next submitted that Shri Budh Singh Bapna had no right to prefer this appeal. He also raised an objection that the contention of the Company that it was not liable to pay the demand was barred by the principles of the res judicata, in view of the decision of this Court in writ petition No. 156B/57 dated 17-12-58.
9. Mr. Bhargava rejoined that the High Court exercising its jurisdiction under Article 226 of the Constitution could not decide disputed questions of fact and the plea of res judicata was inapplicable in liquidation proceedings. The judgment of the High Court only decided the question whether the notice under Section 6 of the Act was or was not served and no question whether the liability was of the Company or M/s Narain Dass & Co. was ever raised before the High Court.
10. It is not necessary to consider all the arguments or to examine the authorities relied upon by the learned Counsel for the parties because we are inclined to accept the argument of the learned Additional Advocate General that the principles of res judicata bar the agitation of the question whether the State was or was not entitled to recover the sum of Rs. 1,55, 189-9 9 by way of customs duty.
11. It is true that the question of res judicata was not specifically raised before the learned Company Judge but this plea is available to the State in this appeal if it does not involve fresh investigation of facts. That it was in the mind of the parties is clear from the following observations of the Liquidator:
A good deal of argument has been built on behalf of the Claiment (Govt) or, the judgment of the Rajasthan High Court dated 17-12-58 in Civil Writ No.156/B of 1957. It may be here by pointed out that the said judgment was given in exercise of Extraordinary Original Jurisdiction of the High Court under Article 226 of the Constitution. The proceedings under Article No. 226 of the Constitution are not for determination of Civil disputes or contractual disputes between two parties, even if one of them happens to be the State....
The question whether the amount was against the Company or not was neither raised nor decided in the Writ Proceedings..
Had the question of demand against the Company itself or against M/s. Narain Dass and Co, or against any other person been before the High Court, there is no doubt, their Lordships would have found by a mere perusal of the judgment of the Commissioner dated 30-7-53, that there was no demand against the Company now in liquidation.
A perusal of the above observations of the High Court clearly shows that even in those proceedings, reliance was placed on behalf of the Government on the judgment of the Commissioner Customs and Excise dated 30-7-53 (Ex. 3), which as it appears, was never read before their Lordships in the High Court.
12. These observations in the decision of the Liquidator dated 14-9-60 clearly indicate that the judgment was very much in controversy before the Liquidators. It is correct that it was not pointedly agitated before the learned Company Judge by way of res-judicata but he also took cognizance of the fact that a writ petition was filed by the Liquidator in the High Court. It has been held in Narayan Chandra Dutta v. Nath Bank Ltd. : AIR1967Pat124 that the question of res judicata is a mixed question of law and can be agitated at any stage of the proceedings even in second appeal if it does not involve fresh investigation of facts. We are in respectful agreement with this principle.
13. In essence the plea of the learned Additional Advocate General is one of constructive res-judicata. In other words, he has urged that it might or ought to have been agitated before the learned Judges of the High Court in D.B. Writ Petition No. 156B/57 that the Company was not liable and it was only M/s Narain Dass & Co. who was liable and, therefore, the demand of the State against the Company was invalid.
14. There can be no doubt that Section 11 of the Code of Civil Procedure as such is inapplicable to the circumstances of this case. We have to fall back on the general principles of the resjudicata to examine whether the decision in the writ petition No. 156B/57 operates as a bar against the Liquidator representing the Company that he cannot now say that the State of Rajasthan is not entitled to recover the customs dues from the Company. It has been held in innumerable decisions that when Section 11 CPC in terms does not apply to some proceedings the general principles of res judicata are applicable. It is equally well settled that the principles of res-judicata apply to execution proceedings. Reference may be made to Mohanlal Goenka v. Benoy Kishna Mukherjee and Ors. AIR 195S SC 65. The doctrine of res judicata is based on the principle that no man should be vexed twice over the same cause. The principle of constructive res judicata is merely an extension of this principle. It provides that if a person has several grounds of attack against the validity of a transaction then he must bring forward all those grounds because a second legal action would be violating the principle as due to this omission the party would be twice vexed over the same question. The principle of constructive res judicata is also a step to advance the second foundational principle of the concept of res judicata that there should be an end to litigation. Repetition of the same controversy is contrary to public policy.
15. The question which now emerges for consideration is whether the doctrine of constructive res judicata would be applicable to writ proceedings. Reference in this connection may be made to the State of Punjab v. Dau Das Kaushal AIR 1971 SC 1576. In this case a Head Constable in the Punjab Police Force was dismissed from service. He filed a writ petition in the Punjab High Court challenging his order of dismissal. It was dismissed. He preferred an appeal under Clause 10 of the Letters Patent to a Division Bench which was also dismissed. The Bench decided the case on merits and held that the respondent had been given a reasonable opportunity to show cause as required under Article 311(2) of the Constitution. Ha asked for leave to Appeal to the Supreme Court which was refused. After the decision of Division Bench the Head Constable instituted a suit for declaration that the order of dismissal was violative of Article 311 of the Constitution. The suit was contested by the State of Punjab but it was decreed by the trial court on May 19, 1960. The Additional District Judge affirmed the decree of the trial court and the matter was taken up in second appeal in the High Court. Two additional issues were framed. They were whether the decisions of the Letters Patent Bench in D.W. 185 of 1956 operated as res judicata in the suit, and whether the plea of res judicata had been waived by the State? The High Court held that the State has waived the plea of res judicata and the High Court also held that the order of dismissal was illegal and wrongful. The matter came up to the Supreme Court and their Lordships found:
The question whether the decision in a writ petition operates as res judicata in a subsequent suit filed on the same cause of action has been settled by the court in Union of India v. Nanak Singh : (1970)ILLJ10SC . It has been observed that there is no good reason to preclude decisions on matters in controversy in writ proceedings under Article 226 or Article 32 of the Constitution from operating as res judicata in subsequent regular suits on the same matters i1n controversy between the same parties and thus to give limited effect to the principle of finality of decision after full contest.
Their Lordships also held that the plea of res judicata was not waived if necessary facts were present in the minds of parties and gone into by the court.
16. It was open to the Liquidator acting on behalf of the Company (in liquidation) to agitate before the High Court in writ petition No. 156B/57 that it was not the Company which was liable in the circumstances of this case. The Liquidator neglected to raise the point. The Liquidator or any one interested in the Company cannot now agitate the question that the claim of the Government of Rajasthan in the sum of Rs. 1,55,193-9-9 is not correct and is unenforceable.
17. The Liquidator when he challenged the seizure of the property & notice in D.B. Writ Petition No. 156B/57 before the Division Bench of this Court was representing the Company and it was open to him to challenge the Company's liability and the validity of the certificate on all available grounds. Having neglected to raise those points before the Court and having been unsuccessful there he took upon himself to bye-pass the judgment of the High Court given on his own application and decided that the. Company was not liable and now as Intervenor is supporting his action. This is what the principles of resjudicata precisely forbids.
18. This appeal can be disposed of on this single point and it is not necessary to examine other matters raised before us.
19. The appeal is accordingly dismissed with costs.