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Hindusthan Sugar Mills and ors. Vs. Union of India (Uoi) and ors. - Court Judgment

LegalCrystal Citation
SubjectExcise;Constitution
CourtKolkata High Court
Decided On
Case NumberCivil Rule Nos. 12165(W) and 12166(W) of 1983
Judge
Reported inAIR1985Cal17
ActsConstitution of India - Article 226
AppellantHindusthan Sugar Mills and ors.
RespondentUnion of India (Uoi) and ors.
Appellant AdvocateD. Pal, ;Samir Chakraborty, ;A.K. De and ;Kusum Agarwalla, Advs.
Respondent AdvocateR.N. Das and ;Mihir Chakraborty, Advs.
Cases Referred(Union of India v. Hindusthan Aluminium Corporation Ltd.). There
Excerpt:
- .....has been stated in the application itself that the rule that has been issued on the basis of the writ application that was moved on behalf of the petitioners is not maintainable in this jurisdiction on two grounds. firstly, the impugned order that has been assailed in the writ petition is an order regarding the exemption of excise duty on the basis of the circulars that have been annexed as annexures a, b and c which were issued in 1981, 1982 and 1983 in respect of the sugar production made by the hindusthan sugar mills ltd for the relevant years the challenge that has been made or tried to be made by the excise authorities is not in accordance with the orders issued by the authorities concerned and that there has been a breach of the equality clause envisaged in article 14 as well as.....
Judgment:
ORDER

Bankim Chandra Ray, J.

1. This is an application for vacating the interim order passed by this Court on 12th December. 1983, which was in the following terms : --

'There will he an interim order in terms of prayer (e) of the petition till the disposal of the Rule upon the petitioner No. 1 furnishing a Bank guarantee for a sum of Rs. 38,67,578.58 as mentioned in paragraph 22 of the petition of any Nationalised Bank at Calcutta in favour of the Registrar. Appellate Side of this Court within two weeks after Christmas vacation. On furnishing such Bank guarantee the respondents are restrained from realising the said amount of Rs. 38,67,578.58 from the petitioner No. 1 and shall permit the petitioner No. 1 to have the said amount credited in the personal Ledger Account maintained for the purpose of Central Excise clearance'.

2. It has been stated in the application itself that the Rule that has been issued on the basis of the Writ application that was moved on behalf of the petitioners is not maintainable in this jurisdiction on two grounds. Firstly, the impugned order that has been assailed in the Writ petition is an order regarding the exemption of excise duty on the basis of the circulars that have been annexed as annexures A, B and C which were issued in 1981, 1982 and 1983 in respect of the sugar production made by the Hindusthan Sugar Mills Ltd For the relevant years the challenge that has been made or tried to be made by the Excise authorities is not in accordance with the orders issued by the authorities concerned and that there has been a breach of the equality clause envisaged in Article 14 as well as the fundamental rights guaranteed under Article 19(1)(g) of the Constitution of India inasmuch as by referring to the circular issued in 1982 it has been tried to submit that a sugar mill which has not produced any sugar at all and has produced for the first time sugar after the enforcement of the second circular in 1982 still gets the benefit of the amended circular, namely, it will be exempted totally in respect of the Excise duty as envisaged in the circular issued in 1981, annexure 'A' to the Writ application. The other attack was that it has thereby tried to make a discrimination that the object tried to be achieved by the amendment of the circular brought in 1982 between the Sugar Mill which has commenced production in 1982 for the first time after enforcement of the amended circular and the Sugar Mill which commenced production before the coming into force of the said amended circular. On hearing Dr. Pal, the instant. Rule was issued and interim order as quoted hereinbefore was granted by this Court. The application, as has been stated earlier, for variation or modification of the interim order has been made mainly on the ground that this Court has got neither any territorial jurisdiction nor any part of the cause of action has arisen within the territorial limits of this Court. It has, therefore, been pleaded in this application that on this preliminary ground the Rule should be discharged and the interim order should be vacated.

3. An affidavit-in-opposition to this application for variation of interim order has been filed sworn by one Sitaram Agarwal, the Sales Manager of the petitioner No. 1. In para 6 of the said affidavit-in-opposition it has been denied and/or disputed that this Court has not the territorial jurisdiction to entertain the Writ application as has been wrongly alleged in the said application. It has also been stated therein that the petitioner No. 2 is a shareholder of the petitioner No. 1 and the purported circular which has been challenged in the Writ application has vitally affected the interest of the petitioners, inasmuch as it will affect the price of sale of sugar in Calcutta where the respondent No. 1 has got selling centre for sale of free sugar. It has also been stated in the said paragraph 6 that if the exemption is not granted in accordance with the provision of the circular, then the petitioners will not be able to sell free sugar at a lower price and that will affect their business and will ultimately lead to prejudice the value of the shares of the company in the share market. Therefore, it has been tried to be pleaded in the said paragraph that a part of the cause of action has arisen within the territorial limits of this Court.

4. Mr. Das, learned Advocate appearing on behalf of the Revenue has submitted before this Court that the Writ application is not maintainable as this Court has neither any territorial jurisdiction to entertain the same nor any part of the cause of action arose within the territorial limits of the jurisdiction of this Court. It has been submitted therefore by Mr. Das that the Writ application should be rejected and the Rule should be discharged and the interim order should be vacated It has further been submitted in this connection by Mr. Das by referring to the respondents and their addresses that all the respondents reside and have their offices outside the territorial limits of the jurisdiction of this Court and as such this application is not also maintainable on this ground. In support of this submission Mr. Das has cited some decisions of this Court as well as of the Supreme Court.

5. Dr. Pal appearing in support of the Writ application and in 'opposing this application for variation of the interim order has contended in the first place that the subject matter of challenge in the Writ application is about the manner of imposing Excise duty and not giving the exemption which the petitioners are entitled to in respect of their produce, in accordance with the provision of the circular referred to hereinbefore. It has also been submitted in this connection by Dr. Pal that this company has got a selling centre in Calcutta and it has been pleaded in para-6 of the affidavit-in-opposition that free sugar is also sold in Calcutta from the said selling centre. If the exemption of the sugar produced in the said Mill of respondent No. 1 is not granted that will prevent the petitioners from selling sugar at a low price and will ultimately affect its business and will tell upon the shareholders thereby affecting the interest of the shareholders including that of the petitioner No. 2 who is also one of the shareholders of the company. It has also been submitted that on this ground it has to be taken into consideration that a part of the cause of action has arisen within the jurisdiction of this Court and as such the instant application is maintainable before this Court and the Rule that has been issued has been issued not without jurisdiction but with jurisdiction and the same as well as the interim order should be maintained by this Court. Some decisions have been cited at the Bar by Dr. Pal in support of his aforesaid submissions.

6. Before proceeding to consider the respective submissions advanced by the learned Advocates for both the parties. I make it clear that I am not considering the merits and de-merits of the submissions made in this Writ application because, if that is done at this interlocutory stage, then in my opinion, that will be doing injustice to the case and that will tantamount to prejudging the issue at this preliminary stage. Therefore, I shun to do so. I will confine my consideration only to the question of maintainability of the Writ application before this Court.

7. In order to deal with this question, it is necessary to consider in brief the averments made in the Writ application. In para 1 of the Writ petition, it has been stated that the petitioner No. 1, namely, Hindusthan Sugar Mills Ltd., which is a company has its factory situated at Golagokarannath, district Kheri in the State of Uttar Pradesh. It has also been stated in para-4 that to compensate the Sugar industry for lower recovery due to early start of crushing the Govt. of India has announced rebate of excise duty at the rate of Rs. 23.50 per quintal on free sale sugar and Rs. 15.30 per quintal on levy sugar on sugar produced during the period commencing from 20th October, 1981 and ending on 30th November, 1981 in excess of production during the corresponding period of 1980-81 season. It has also been stated therein that for the next year rebate of excise duty al the rate of Rs. 24.50 per quintal on levy sugar and Rs. 40/- per quintal on free sugar so that during the period commencing on 1st May, 1982 and ending on 30th September, 1982 in excess of the average production of the corresponding period of the preceding three years was declared. Similarly another notification also was issued on April 21, 1982. It has also been stated in the petition that if proper exemptions are not made in accordance with the provisions of the circular, the petitioners will be seriously prejudiced inasmuch as they will not be able to sell sugar at a lower price through their selling centre in Calcutta and this will also affect the price of the shares of the company in the share market which will ultimately affect the interest of the shareholders adversely. It has therefore been stated that a part of the cause of action arose within the limits of the jurisdiction of this Court.

8. The main question or rather the only question to be decided in deciding the application for variation of the interim order is whether the instant Writ application is maintainable in this jurisdiction. To decide that question it is pertinent to consider the terms of the provision of Article 226 of the Constitution. Clause (1) of Article 226 clearly provides that the High Court shall have power throughout the territory in relation to which it exercises jurisdiction to issue to any person or authority, including in appropriate cases any Government, within those territories directions, orders or writs, including writs in the nature of mandamus, habeas corpus, etc. or any of them, for the enforcement of any of the rights conferred by part III and for any other purpose.

9. Sub-clause (2) which is very relevant for our purpose enjoins that this power conferred by Sub-clause (1) to issue directions, orders or writs to any Government, authority or person may be exercised by this High Court (exercising jurisdiction in relation) to territory within which the cause of action wholly or in part arises for the exercise of such power. So under Article 226(2) this Court undoubtedly has got jurisdiction to issue appropriate Writs, directions or orders in respect of matters where the cause of action either wholly, or in part arose within the territorial limits of the jurisdiction of this Court. I have already considered what is meant by the words 'cause of action' in my earlier decision reported in : 1984(18)ELT725(Cal) (Bharat Sugar Mills Ltd.) and I have already held there that cause of action refers to the bundle of facts which require to be proved. Now judged by this test, it is to be seen whether part of the cause of action of the instant Writ petition has arises within the territorial limits of the jurisdiction of this Court. The subject-matter of challenge in the Writ application is about the gram of benefit of exemption under the notification issued by the respondent No. 1 in respect of the excess production for the year in question in accordance with the provision of the circular. These circulars have undoubtedly been issued by the Central Govt. whose office is at New Delhi. The question to be decided is undoubtedly whether the authorities concerned, namely, respondents Nos. 1 to 4 have duly and properly considered the purport of the circulars mentioned in annexures A. B and C to the Writ application in the matter of grant of exemption of excise duty with respect to the excess production of sugar for the years in question. The offices of these respondents are undoubtedly outside the territorial limits of the jurisdiction of this Court. Therefore the bundle of facts which are required to be proved in order to prove that the circular has not been properly followed by the authorities concerned in the matter of determination of the average production and also the further fact that the amended circular issued in 1982 annexed as annexure B to the Writ application is in breach of Article 14 and Article 19(1)(g) of the Constitution, undoubtedly has arisen outside the jurisdiction of this Court. That is. as I have said already the circular has been issued either from New Delhi where the seat of the Central Government is or in the matter of assessment by the Collector of Central Excise or by the Assistant Collector Central Excise. Sitapur Division or by the Supdt. of Central Excise. Golagokarannath, district Kheri. U. P. as well as by the Inspector. Central Excise. Hindusthan Sugar Mills Ltd., all situated within Uttar Pradesh, outside the territorial limits of the jurisdiction of this Court. The next question that is interlinked with this as has been urged by Dr. Pal that comes up for consideration is whether the petitioner No. 1 company, having its selling centre at Calcutta wherefrom sugar is being sold and the refusal to grant exemption in the matter of excise duty as envisaged under the aforesaid circulars affects the interests of the shareholders by reducing the value of the shares in the market and also rendering the company to sell its products, namely, free sale sugar at a higher price, shall be affecting its business can be treated as a part of the cause of action or not. In this respect, decisions have been cited by Dr. Pal.

10. Dr. Pal firstly cited the decision of this Court reported in : 1984(18)ELT725(Cal) . I In the matter of : Bharat Sugar Mills Ltd.). The attention of this Court was drawn specially to the passage that the levy sugar has to be sold only to the agencies to whom the Central Government would direct the same to be sold and that the mill had to dispose of the levy sugar at the gate of the mill premises. In that connection, this Court held that the sale of such sugar in the open market is not in the least affected by the impugned fixing of the price of levy sugar and the application was held not maintainable. Elaborating on this observation of this Court. Dr. Pal has very persuasively contended before this Court that in the instant case so far as regards sale of levy sugar is concerned, there is no such restriction and the sale can be made as is being done by the selling centre of this company at Calcutta. Therefore, this decision is not applicable to the instant case. Dr. Pal further submitted by referring to a decision of the Bombay High Court reported in : AIR1975Bom197 that as the impugned challenge in the matter of non-grant of exemption of excise duty will affect the price of sugar that will be sold from the selling centre in Calcutta of the petitioner No. 1 that will itself form a part of the cause of action and as the same has arisen within the territorial limits of the jurisdiction of this Court, this application is maintainable in this jurisdiction. In my opinion, the decision reported in : AIR1975Bom197 is not applicable to the instant case as the facts of that case are entirely different from the facts of the instant case. There the question was whether a suit for damages is competent in a Court other than in the territorial limits of the Court where the wrong was done. In that case it was held that such a suit is maintainable. In the instant case, I have already stated hereinbefore that there is no question of any action being brought in for damages for wrongful action. Therefore, this is, in my opinion, not applicable to the facts of the present case.

The next case that has been cited is a decision of the Division Bench reported in : AIR1983Cal307 (Union of India v. Hindusthan Aluminium Corporation Ltd.). There the subject-matter of challenge was a Control order fixing the retention price and selling price of ingots produced by the producer, Hindusthan Aluminium Corporation Limited by the Government under Section 3 of the Essential Commodities Act, and that was the subject-matter of challenge in the appeal before the Division Bench. While considering that, the Division Bench held that the fixation of price by the control order adversely affects the producer in selling their produce, so a part of the cause of action arises within the territorial limits of Calcutta where the Corporation has a selling centre and therefore it was held that on the basis of that pleading prima facie it appears that a part of the pause of action has arisen within the territorial limits of the jurisdiction of this Court and the appeal was held maintainable. The facts of this case also are, in my opinion, totally different from the facts of the present case because in the instant case, there is no question of fixation of any price. The subject-matter of challenge in the Writ application is about the non-action on the part of the Excise authorities concerned in the matter of grant of exemption of Excise duty in regard to excess production of sugar over the average production in accordance with the terms of the circular mentioned therein. In this connection. I cannot but refer to the observation that I made earlier in my judgment in the said decision in : 1984(18)ELT725(Cal) (In the matter of : Bharat Sugar Mills Ltd.). These observations are as follows : --

'The submission that the Company will sustain loss is in no way comprised of the part of the cause of action which needs to be proved in order to succeed in this application that the impugned order is bad, arbitrary, unreasonable and illegal being not in accordance with the norms laid down in Sub-section (3C) Section 3, Essential Commodities Act. Therefore, considering all these aspects I am unable to hold that any part of the cause of action arises within the territorial limits of the jurisdiction of this Court.'

In the instant case the aforesaid observations will apply with equal force inasmuch as I have made it clear hereinbefore that the subject-matter of challenge is only with regard to the non-application of the provision of the circular in the matter of exempting the Excise duty to the extent indicated in the circular, with regard to the excess production over the average production of the years in question in respect of sugar produced by the Company. There is no question of any challenge relating to the fixation of any price by the authorities concerned and as such the selling of the sugar at a low price being affected by the non-implementation of the circular in the matter of imposition of the provision of the circular by exempting the excess production from the imposition of excise duty to a certain extent as envisaged in the circular does not in any manner whatsoever arise and as such I am unable to hold that any part of the cause of action which is the subject-matter of challenge in this Writ application arises within the territorial limits of the jurisdiction of this Court. Giving my anxious consideration over the matters. I am constrained to hold that since the entire cause of action does not arise within the territorial limits of the jurisdiction of this Court and as all the respondents have their offices and the records of the case are also not within the territorial limits of the jurisdiction of this Court, this application does not satisfy the requirements provided under Sub-article (1) as well as Sub-article (2) of Article 226 of the Constitution of India and therefore, this application, in my opinion, is not maintainable in this jurisdiction. The application for variation of the interim order, therefore, succeeds. The interim order is vacated and the Rule is discharged and the application for contempt which has been filed is also disposed of on the above terms. There will however, be no order as to costs.

11. C. R. 12166(W) of 1983 (item No. 18) is also taken up on the consent of the learned Advocate for both the parties and is disposed of on the similar terms stated hereinbefore.

12. The Bank guarantee that was given by the petitioner Company in C. R. 12165(W) of 1983 pursuant to the order of this Court be returned to the petitioner forthwith by the Registrar. Appellate Side of this Court.


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