05.01.2012
1. Vide order dated 09.11.2009 the present writ petition was converted and has been numbered as an appeal under the Customs Act.
2. The order in original, i.e. first order, which was made the subject matter of challenge before the Customs Excise and Service Tax Appellate Tribunal was passed by the Commissioner of the Customs, Kanpur.
3. By order dated 22.09.2010 the Division Bench then hearing the matter, had raised the issue of territorial jurisdiction. In the case of Suresh Desai & Associates v. Commissioner of Income Tax, (1998) 230 ITR 912, it has been held that the appellate jurisdiction depends upon the location/ place of the authority which had passed the order in original.
4. Learned counsel for the appellant in these circumstances seeks permission to withdraw the present appeal with liberty to approach the jurisdictional High Court. He submits that the appellant is entitled to benefit of Section 14 of the Limitation Act, 1963.
5. This writ petition was initially entertained and a conditional stay order was passed, which has continued. Even after the order dated 22.09.2010, the appeal has remained pending and various orders/ directions have been issued, including direction to the respondent to file a copy of the enquiry report in respect of the customs officials involved.
6. It is for the jurisdictional High Court to decide the prayer for waiver/ exclusion. However, it does appear that the appellant in the present case had bona fidely filed the appeal in this Court and has been pressing the same, as the Tribunal is located in Delhi.
7. With the aforesaid observations, the present appeal is dismissed as withdrawn with liberty as prayer for.
Sanjiv Khanna, J.
R.V. Easwar, J."
9. Shri Shambhu Chopra submits that the appellant was diligently and in bonafide belief pursuing the remedy of filing appeal before the Delhi High Court. An interim order was also passed by the Delhi High Court and that an enquiry report was also summoned. Though an objection was taken on 22.9.2010 that the appeal is not maintainable in Delhi High Court, the High Court ultimately allowed the prayer to withdraw the appeal on 5.1.2012. It is submitted that Section 14 has to be construed literally and that this Court should take into consideration the observations made by the Delhi High Court that the appellant in the present case had bonafidely filed the appeal in the High Court at Delhi and has been pursuing the same as the Tribunal is located in Delhi.
10. Shri Shambhu Chopra submits that the goods were seized at Mumbai; the proceedings were initiated at Delhi; investigations were carried out at Delhi, and that the order imposing penalty were also passed at Delhi. The appellant was thus under bonafide belief that the Delhi High Court has jurisdiction to hear the appeal. The Delhi High Court being a civil court hearing the appeal and the cause of action being the same, the Court may condone the delay under Section 14 of the Limitation Act. He submits that delay in the case of Section 14, where the appellant was pursuing the remedy in wrong Court under bonafide belief and in good faith should be relaxed liberally and sympathetically vide Roshanlal Kuthalia v. R.B. Mohan Singh Oberoi, (1975) 4 SCC 628; CST v. Parson Tools and Plants, (1975) 4 SCC 22; Union of India & Ors. v. West Coast Paper Mills Ltd. & Anr. (III), (2004) 3 SCC 458 and Kusum Ingots and Alloys Ltd. v. Union of India & Anr., (2004) 6 SCC 254.
11. Shri S.P. Kesarwani, Addl. Chief Standing Counsel on the other hand submits that the appellant had wrongly filed a writ petition in the Delhi High Court in which before the writ petition was converted into appeal, an interim order was passed. The Delhi High Court observed that the appellant has deposited a sum of Rs.2 lac during the pendency of the appeal and on further deposit of Rs.3 lacs, there shall be stay of proceedings. The appellant had obtained extension of time for depositing Rs.3 lacs. On 22.9.2010 the department had taken an objection that the Delhi High Court did not have territorial jurisdiction to entertain the appeal as the initial order was passed by the authority at Kanpur. The counsel appearing for the department had relied upon the judgment of Supreme Court in Ambica Industries v. Commissioner of Income Tax (Supra). The appellant was assisted by the learned counsels regularly appearing in customs cases. They, however, took time to look into the matter to continue with the addition of the interim order and thereafter they continued to get the matter adjourned for 1 year and 4 months. Finally, without raising any objections or contesting the matter, the appellant withdrew the appeal observing that the issue of jurisdiction was raised on 22.9.2010 and making observations that the appellant was bonafidely pursuing the remedy in the Court.
12. It is further submitted by Shri Kesarwani that although the Delhi High Court permitted the appellant to withdraw the appeal on 5.1.2012, the appeal was filed with a further delay of about 20 days on 25.1.2012. The appeal is reported to be delayed by 1 year and 332 days for which the appellant is not entitled to take benefit of Section 14 of the Limitation Act. Shri Kesarwani submits that the appellant was not bonafidely pursuing the remedies with due diligence in the wrong Court. He and his counsels were fully aware that the Delhi High Court does not have jurisdiction in the matter. An objection was taken as early as on 22.9.2010. It was open to the appellant assisted by expert counsels to withdraw the appeal for filing appeal before the competent jurisdictional High Court. The appellant delayed the matter for 1 year and 4 months, to take advantage of the interim order passed by the Delhi High Court. Further there are no bonafides pleaded by the appellant in pursuing the remedy at Delhi. All that he has stated in his application for condonation of delay that he had filed appeal bonafidely in Delhi High Court and is entitled to benefit of Section 14 of the Limitation Act.
13. The Supreme Court held in Suresh Desai & Associates v. Commissioner of Income Tax, (1998) 230 ITR 912 that the appellate jurisdiction depends upon the location/ place of the authority, which had passed the order. In Ambica Industries v. Commissioner of Income Tax (Supra), the principles of law was upheld. The appellant has not pleaded in his application for condonation of delay that he or his counsel had no knowledge that the appeal has to be field in Allahabad High Court. Firstly he field writ petition in which liberty was given on oral prayer to be converted into appeal and on the same day an interim order was passed without converting the writ petition into appeal. The Delhi High Court extended the time to deposit Rs.3 lacs and inspite of objections taken by the counsel appearing for the department and noticing the judgment in Ambica Industries case, which is well known to the counsels appearing in the relevant branch of law, allowed the counsel appearing for the appellant some time to look into the aspect of jurisdiction of the Delhi High Court. From this date i.e. on 22nd September, 2010, when the counsel appearing for the appellant had taken time to look into the aspect of jurisdiction, it was open to them to withdraw the appeal at any time. They did not object or contest to maintain the jurisdiction of the Delhi High Court and continued to take adjournments. On 5.1.2012 no objection was raised that the Delhi High Court has jurisdiction in the matter. The appellant had after the Court pointed out to the order dated 22.9.2010, sought permission to withdraw the appeal with liberty to approach the jurisdictional High Court. The liberty was granted with an observation that the appellant in the present case had bonafidely filed the appeal in this Court and has been pressing the same as the Tribunal is located in Delhi.
14. We do not find that the Delhi High Court after entertaining the writ petition and giving liberty to convert it into appeal and granting interim order on the same day, and thereafter noticing the preliminary objections on 22nd September, 2010, had any occasion to recommend that the appellant was bonafidely pursuing the appeal in Delhi High Court. After having held that the Delhi High Court did not have territorial jurisdiction, as in accordance with the Suresh Desai and Associates (Supra) and Ambica Industries (Supra), it should have refrained to make any observations in favour of the appellant.
15. In Rabindra Nath Samuel Dawson v. Sivakasi & Ors., (1973) 3 SCC 381 the Supreme Court held that where the objection to maintain the previous suit was taken at the very initial stage, benefit of Section 14 of the Limitation Act is not available to the person.
16. In Consolidated Engineering Enterprises v. Principal Secretary, Irrigation Department & Ors., (2008) 7 SCC 169 the Supreme Court considered the scope of Section 14 of the Limitation Act and held in paragraphs 21 and 22 as follows:-
"21. Section 14 of the Limitation Act deals with exclusion of time of proceeding bona fide in a court without jurisdiction. On analysis of the said Section, it becomes evident that the following conditions must be satisfied before Section 14 can be pressed into service :
(1) Both the prior and subsequent proceedings are civil proceedings prosecuted by the same party;
(2) The prior proceeding had been prosecuted with due diligence and in good faith;
(3) The failure of the prior proceeding was due to defect of jurisdiction or other cause of like nature;
(4) The earlier proceeding and the latter proceeding must relate to the same mat ter in issue and;
(5) Both the proceedings are in a court.
22. The policy of the Section is to afford protection to a litigant against the bar of limitation when he institutes a proceeding which by reason of some technical defect cannot be decided on merits and is dismissed. While considering the provisions of Section 14 of the Limitation Act, proper approach will have to be adopted and the provisions will have to be interpreted so as to advance the cause of justice rather than abort the proceedings. It will be well to bear in mind that an element of mistake is inherent in the invocation of Section 14. In fact, the section is intended to provide relief against the bar of limitation in cases of mistaken remedy or selection of a wrong forum. On reading Section 14 of the Act it becomes clear that the legislature has enacted the said section to exempt a certain period covered by a bona fide litigious activity. Upon the words used in the section, it is not possible to sustain the interpretation that the principle underlying the said section, namely, that the bar of limitation should not affect a person honestly doing his best to get his case tried on merits but failing because the court is unable to give him such a trial, would not be applicable to an application filed under Section 34 of the Act of 1996. The principle is clearly applicable not only to a case in which a litigant brings his application in the court, that is, a court having no jurisdiction to entertain it but also where he brings the suit or the application in the wrong court in consequence of bona fide mistake or law or defect of procedure. Having regard to the intention of the legislature this Court is of the firm opinion that the equity underlying Section 14 should be applied to its fullest extent and time taken diligently pursuing a remedy, in a wrong court, should be excluded."
(Emphasis supplied).
17. The predominant judicial opinion on the interpretation of Section 14 of the Limitation Act is that though the benefit has to be granted if all the conditions given in para 21 are satisfied, the bar of limitation should not affect a person, who was honestly doing his best to get his case tried on merits but failed because the Court was unable to give him such a trial. The Court will condone the delay, if the litigious activity was bonafide, as the equity underline Section 14 should be applied to its fullest extent. The position, however, would be otherwise, where a person is not bonafidely pursuing the remedy in the wrong Court. In this case the appellant assisted and advised by the counsels expert in the subject first filed a writ petition, which he requested to be converted into appeal. He was granted an interim order for which he sought extension of time to deposit the amount. On 22nd September, 2010 an objection was taken by the department that the appeal does not lie in the Delhi High Court in view of the Ambica Industries case (Supra). It was open to the appellant to withdraw the appeal and to approach the Allahabad High Court. The counsels, however, took time to look into the aspects and thereafter took one year and three months, during which they went on getting the appeal adjourned to withdraw the appeal. They did not contest the matter and meekly surrendered, after having enjoyed the benefit of stay order for more than one year, in requesting to withdraw the appeal.
18. We find that the appellant's endeavour after 22nd September, 2010 in allowing the appeal to continue to be pending at Delhi High Court, was not in pursuing bonafide litigious activity. After 22.9.2010 the pursuit of appeal in Delhi High Court was not with bonafide intention.
19. In Ramji Pandey & Ors. v. Swaran Kali, (2010) 14 SCC 492 the Supreme Court upheld the order of the Allahabad High Court by which the High Court dismissed a writ petition arising out of the orders of the District Court rejecting application under Section 5 read with Section 14 of the Act on the ground that the appellants were not only negligent but were acting and pursuing the entire matter without due diligence. They failed to appear and contest the suit on which exparte decree was passed. Thereafter they failed to file appeal in the proper forum, which was brought to their notice at the initial stage by the respondents filing an objection. Despite the fact they did not take any step to withdraw the appeal and also did not appear in the High court on dates fixed in the matter. The observations of the Supreme Court are quoted as below:-
"15. Considering the entire records, we find that the appellants are not only negligent but have been acting and pursuing the entire matter without due diligence as would be apparent from the fact that they initially failed to pursue the suit in right earnest, having failed to appear and contest the suit, due to which an ex-parte decree had to be passed by the court. Even thereafter, they failed to file the appeal in the proper forum, which was brought to their notice right at the initial stage by the respondent's filing of an objection. Despite the said fact, they did not take any step to withdraw the same and continued with the proceedings which was void ab initio and without jurisdiction and also obtained an order in their favour. Even before the High Court, where the impugned order was passed the appellants did not appear on the date of arguments or even on the previous dates. Absence of due diligence in pursuing the matter is writ large on the face of the records. Suit of 1983 was decreed ex-parte in the year 1988 and thereafter the proceeding for setting aside the ex-parte decree is being dragged on one way or the other by filing application / appeal and is dragging the matter till date."
(emphasis supplied).
20. In Ketan V. Parekh v. Sepcial Director, Directorate of Enforcement, 2012 (275) E.L.T. 3 (S.C.) the Supreme Court held in paras 21 to 25 as follows:-
"21. The aforesaid three judgments do support the argument of Shri Ranjit Kumar that even though Section 5 of the Limitation Act cannot be invoked for condonation of delay in filing an appeal under the Act because that would tantamount to amendment of the legislative mandate by which special period of limitation has been prescribed, Section 14 can be invoked in an appropriate case for exclusion of the time during which the aggrieved person may have prosecuted with due diligence remedy before a wrong forum, but on a careful scrutiny of the record of these cases, we are satisfied that Section 14 of the Limitation Act cannot be relied upon for exclusion of the period during which the writ petitions filed by the appellants remained pending before the Delhi High Court. In the applications filed by them before the Bombay High Court, the appellants had sought condonation of 1056 days' delay by stating that after receiving copy of the order passed by the Appellate Tribunal, they had filed writ petitions before the Delhi High Court, which were disposed of on 26.7.2010 and, thereafter, they filed appeals before the Bombay High Court under Section 35 of the Act. Paragraphs 1, 2 and 3 of the applications for condonation of delay which are identical in all the cases were as under:
1. The Appellant above named has preferred an Appeal against the order dated 2nd August 2007 (hereinafter referred to as the "impugned order") passed by the Respondent No.1 against the Appellant above named. The Appellant states that the impugned order was received by the Appellant on 5th October 2007. The Appellant states that there is a delay of 1056 days in filing the above appeal, the reasons for which are being stated in detail hereunder and, therefore, the Appellant above named prays that the delay in filing the present appeal may please be condoned.
2. RELIEFS SOUGHT :
(a) That this Hon'ble Court be pleased to condoned the delay of 1056 days in filing the said Appeal;
(b) That such further and other reliefs as the facts and circumstances may require.
3. REASONS FOR THE DELAY :
3.1 The Appellant declares that there is delay of 1056 days in filing the appeal as prescribed in the Limitation Act, 1963.
3.2 The Appellant further states that the delay occurred as the Writ Petition was filed before Delhi High Court on 5th November, 2007. The said writ was filed under the provisions of Articles 226 and 227 of the Constitution of India seeking issuance of a writ order or direction in the nature of Mandamus or any other writ for setting aside the impugned order dated 2nd August, 2007, passed by the Appellate Tribunal for Foreign Exchange under Rule 10 of the Adjudicating Proceedings and Appeal, 2000 for Dispensation. In the said Writ proceedings Hon'ble High Court of Delhi had passed an order on 26th July 2010. Vide the said order dated 26th July, 2010, while relying on the judgment of the Hon'ble Supreme Court, it was held by the Hon'ble Delhi High Court that even an order passed by the Appellate Tribunal in an application seeking dispensation of pre-deposit of the penalty would be appealable under section 35 of the FEMA and that remedy under Article 226 is not available against such an order.
Further, Hon'ble Delhi High Court also held that the present petition cannot be entertained by this Court. It is, however, open to the Appellant's to avail of the appropriate remedy in terms of para 45 of the above judgment of the Supreme Court.
3.3 Hence, pursuant to the said order passed by Hon'ble Delhi High Court the Appellant above named prefers an appeal before this Hon'ble Bombay High Court.
3.4 Under the said circumstances the Appellant most humbly prays that this Hon'ble Court may be pleased to condone the delay.
3.5 It is submitted that the delay, in filing of the present Appeal has not prejudiced the Respondent in any manner, whatsoever, and, therefore, this Hon'ble Court be pleased to condone the said delay.
3.6 It is, further submitted that the delay of 1056 days in filing the present Appeal was bonafide, unintentional and inadvertent.
22. A careful reading of the above reproduced averments shows that there was not even a whisper in the applications field by the appellants that they had been prosecuting remedy before a wrong forum, i.e. the Delhi High Court with due diligence and in good faith. Not only this, the prayer made in the applications was for condonation of 1056 days' delay and not for exclusion of the time spent in prosecuting the writ petitions before the Delhi High Court. This shows that the appellants were seeking to invoke Section 5 of the Limitation Act, which, as mentioned above, cannot be pressed into service in view of the language of Section 35 of the Act and interpretation of similar provisions by this Court.
23. There is another reason why the benefit of Section 14 of the Limitation Act cannot be extended to the appellants. All of them are well conversant with various statutory provisions including FEMA. One of them was declared a notified person under Section 3(2) of the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992 and several civil and criminal cases are pending against him. The very fact that they had engaged a group of eminent Advocates to present their cause before the Delhi and the Bombay High Courts shows that they have the assistance of legal experts and this seems to the reason why they invoked the jurisdiction of the Delhi High Court and not of the Bombay High Court despite the fact that they are residents of Bombay and have been contesting other matters including the proceedings pending before the Special Court at Bombay. It also appears that the appellants were sure that keeping in view their past conduct, the Bombay High Court may not interfere with the order of the Appellate Tribunal. Therefore, they took a chance before the Delhi High Court and succeeded in persuading learned Single Judge of the Court to entertain their prayer for stay of further proceedings before the Appellate Tribunal. The promptness with which the learned senior counsel appearing for appellant - Kartik K. Parekh made a statement before the Delhi High Court on 7.11.2007 that the writ petition may be converted into an appeal and considered on merits is a clear indication of the appellant's unwillingness to avail remedy before the High Court, i.e. the Bombay High Court which had the exclusive jurisdiction to entertain an appeal under Section 35 of the Act. It is not possible to believe that as on 7.11.2007, the appellants and their Advocates were not aware of the judgment of this Court in Ambica Industries v. Commissioner of Central Excise (2007) 6 SCC 769 whereby dismissal of the writ petition by the Delhi High Court on the ground of lack of territorial jurisdiction was confirmed and it was observed that the parties cannot be allowed to indulge in forum shopping. It has not at all surprised us that after having made a prayer that the writ petitions filed by them be treated as appeals under Section 35, two of the appellants filed applications for recall of that order. No doubt, the learned Single Judge accepted their prayer and the Division Bench confirmed the order of the learned Single Judge but the manner in which the appellants prosecuted the writ petitions before the Delhi High Court leaves no room for doubt that they had done so with the sole object of delaying compliance of the direction given by the Appellate Tribunal and, by no stretch of imagination, it can be said that they were bona fide prosecuting remedy before a wrong forum. Rather, there was total absence of good faith, which is sine qua non for invoking Section 14 of the Limitation Act.
24. The issue deserves to be considered from another angle. By taking advantage of the liberty given by the learned Single Judge of the Delhi High Court, the appellants invoked the jurisdiction of the Bombay High Court under Section 35 of the Act. However, while doing so, they violated the time limit specified in order dated 26.7.2010 which, in turn, is based on paragraph 45 of the judgment of this Court in Raj Kumar Shivhare v. Assistant Director, Directorate of Enforcement (supra). Indeed, it is not even the case of the appellants that they had filed appeals under Section 35 of the Act within 30 days computed from 26.7.2010. Therefore, the Division Bench of the Bombay High Court rightly observed that even though the issue relating to jurisdiction of the Delhi High Court to grant time to the appellants to file appeals is highly debatable, the time specified in the order passed by the Delhi High Court cannot be extended.
25. In view of the above discussion, we hold that the impugned order does not suffer from any legal infirmity."
21. In the present case also as in the case of Ketan v. Parekh (Supra), the appellant was assisted and had the services of the counsel's, who are expert in the central excise and customs cases. They first filed a writ petition, and then without converting it into appeal obtained an interim order. They kept on getting the matter adjourned and thereafter inspite of specific objection taken, citing the relevant case law, which is well known, took time to study the matter. Thereafter, they took more than one year and three months, to study the matter to withdraw the appeal. They took a chance, which apparently looking to the facts in Ketan V. Parekh's case and this case appear to be the practice of the counsels appearing in such matters at Delhi High Court and succeeded in getting interim orders. The Supreme Court has strongly deprecated such practice of forum shopping. In this case also there is no pleading that the writ petition and thereafter appeal was filed in Delhi High Court, under bonafide belief that it had jurisdiction to hear the appeal and that the appellant was pursuing the remedies in wrong court with due diligence. The appellant, thereafter, caused a further delay of 20 days in filing this appeal, which he has not explained.
22. For the aforesaid reasons, we are of the opinion that the appellant is not entitled to the benefit of Section 14 of the Limitation Act. This appeal is barred by limitation by 697 days, which has not been sufficiently explained by the appellant.
23. The application for condonation of delay is rejected. The appeal is consequently dismissed as barred by limitation.
Dt.06.08.2012 SP/