HON’BLE SRI JUSTICE A.V.SESHA SAI WRIT PETITION No.20495 of 2002
Date :01-07-2014
Between:
Neuland Laboratories Limited, a company incorporated under the Companies Act, 1956, having its registered office at Flat No.204, 2nd Floor, Meridian Plaza, Ameerpet, Hyderabad – 500 016, represented by its Chairman and Managing Director Dr. D.R. Rao and another.
… Petitioners and The Deputy Director, Enforcement Directorate, (Foreign Exchange Management Act, 1999). Government of India, No.9/1, Madras Bank Road (Behind India Garage), Bangalore – 560 001.
… Respondents
HON’BLE SRI JUSTICE A.V.SESHA SAI WRIT PETITION No.20495 of 2002
O R D E R:
This writ petition, under Article 226 of the Constitution of India, is filed, seeking a Writ of Certiorari to call for the records pertaining to the Order No.DD/15/B2/HYD/2002 (DD-VS) dated 22.08.2002 passed by the respondent herein and to quash the same.
2. Heard Sri C.R.Sreedharan, learned counsel appearing for the writ petitioners and Sri P.S.P Suresh Kumar, learned Additional Standing Counsel for the Union of India apart from perusing the material available on record.
3. The pleaded case of the petitioners, in brief, is as under:
First petitioner is an Export House, engaged in the business of manufacture and export of bulk drugs, pharmaceuticals and chemicals. In the course of business, the first petitioner supplied material to M/s. OLD-PHARMA SRL, ITALY and the said firm went into deep financial problems which resulted in initiation of bankruptcy proceedings against the same and the first petitioner could not recover the outstanding amounts against the supplies made which compelled the first petitioner to make a claim before the Export Credit Guarantee Corporation of India Limited (hereinafter called ‘the ECGC'). The ECGC vide letter dated 15.11.1999 admitted the claim to an extent of 85% of Rs.39,79,368/- i.e., 37,96,118/- outstanding from M/s. OLD- PHARMA SRL, ITALY and Rs.1,83,250/- incurred by the first petitioner company towards legal expenses for recovering the outstanding amount.
In the above backdrop, the respondent issued a memorandum dated 23.02.1002, alleging contravention of Section 18 (2) and 18 (3) of the Foreign Exchange Regulation Act, 1973 (hereinafter called ‘the Act’) and calling upon the petitioner company to show cause, in writing as to why adjudication proceedings as contemplated under Section 51 of the Act should not be held. In response to the same, petitioner company submitted a letter dated 25.07.2002, denying the allegations. The respondent vide Order No.DD/15/B2/HYD/2002 (DD-VS) dated 22.08.2002 held the petitioner company guilty of contravening Sections 18 (2) and 18 (3) of the Act jointly and severally and imposed penalty of Rs.5,00,000/- to be deposited in his office within 45 days from the date of receipt of the said order.
4. Calling in question, the validity and the legal acceptability of the said order dated 22.08.2002, the present writ has been instituted. This Court, on 11.10.2002 granted stay of operation of the impugned order subject to the condition of the petitioner company depositing Rs.2,50.000/- within a week. The said order was set aside in W.A.No.1659/2002 dated 22.10.2002 filed by the petitioners herein and subsequently on 11.11.2002 this Court passed an order, directing the respondent not to take any coercive steps for recovery of the penalty.
5. Contentions of the learned counsel for the petitioners, Sri C.R.Sreedharan:-
a) The order impugned is patently erroneous and perverse and not in conformity with the provisions of Sections 18 (2) and 18 (3) of the Act as the petitioners did take reasonable steps to receive or recover the payment for the goods.
b) The penalty can be imposed only if the party acts in defiance of law or guilty of contumacious conduct or dishonesty which is lacking in the case of the petitioners and the impugned action is contrary to the law laid down by the Hon’ble apex Court in the case of HINDUSTAN STEEL LIMITED v. STATE OF
[1]
ORISSA .
c) The respondent did not properly consider the efforts made by the petitioners to recover the amount.
d) Having noticed the receipt of substantial amount i.e., 85% of the amounts from the ECGC, the respondent went wrong and acted perversely in imposing penalty.
e) The adjudication made and findings recorded by the respondent are not inconsonance with the provisions of Sections 18 (2), 18 (3), 68 (1) and 68 (2) of the Act and as per the language employed therein, there should be a failure to take action before a person is found guilty of the contravention and there is no finding by the respondent in the instant case to the said effect.
f) The impugned order is vitiated by total non-application of mind and percentage of failure ranges from 0.2% to 2.21% only of the total value of the exports made before 1998 and 2002.
g) The impugned order is contrary to the law laid down by the Hon’ble apex Court in the judgments relating to penal proceedings.
h) Having given benefit of doubt in respect of items 4, 5 and 7 and having dropped the further proceedings as against the same, the respondent grossly erred in refusing the same for items 1 and 2.
6. In support of his submissions and contentions, the learned counsel for the writ petitioners places reliance on the judgments in HINDUSTAN STEEL LTD., v. STATE OF ORISSA (1 supra),
[2]
CUSTOMS COLLECTOR, BOM. v. SHANTILAL & CO. , M/S.
FILTERCO v. SALES TAX COMMISSIONER
[3]
, J.M.BAXI AND CO v.
COMMISSIONER OF CUSTOMS, NEW KANDLA
[4]
, HINDUSTAN
[5]
COCA-COLA BEVERAGES (P) LIMITED v. A.C.L. RR DISTRICT
and SHANTI PRASAD JAIN v. THE DIRECTOR OF
ENFORCEMENT, FOREIGN EXCHANGE REGULATION ACT
[6]
.
7. Contentions of Sri P.S.P. Suresh Kumar, learned Additional Standing Counsel for the Union of India:-
1. Present writ petition is not maintainable in view of the availability of alternative remedy under Section 19 read with Section 49 (5) of Foreign Exchange Management Act, 1999.
2. In view of the admission made by the petitioners that the amounts could not be recovered in their reply dated 25.07.2002, the claim of the petitioners is unsustainable and the petitioners herein are not entitled for any relief from this Court.
3. The impugned order is in conformity with the provisions of Section 18 of the Act and the same does not warrant any interference by way of judicial review under Article 226 of the Constitution of India.
4. In view of the involvement of disputed questions of facts writ petition is not maintainable.
5. There is no order from the Reserve Bank of India in the direction of writing off and the Reserve Bank of India is the competent authority to waive as per Section 8 of the Act and the respondent has no authority nor it is within the domain of the respondent.
6. There is not even a single piece of paper to demonstrate that M/s. OLD-PHARMA SRL, ITALY went into liquidation.
7. Under Section 18 of the Act there is a presumption in favour of the department and it is incumbent on the part of the petitioners to prove contra.
8. In support of his contentions and submissions, the learned counsel for the respondent relies upon the order of this Court in CMA.No.47/2012 dated 10.07.2013 and UNITED BANK OF INDIA v.
SATYAWATI TONDON AND OTHERS
[7]
.
9. In the light of the above pleadings, submissions and contentions, now the issues which this Court is called upon to deal with are, as under:
1. Whether the writ petition is maintainable before this Court under Article 226 of the Constitution of India in view of the availability of alternative remedy to the petitioners?
2. Whether the order impugned is in conformity with the provisions of the Act?
3. Whether the impugned order is inconsonance with the law laid down by the Courts in the judgments referred to above?
4. Whether the imposition of penalty by the respondent by way of the impugned order is sustainable in the light of the reasons assigned by the petitioners?
5. Whether the presumption as stipulated under Section 18 of the Act ennures to the respondent authority and whether the petitioners herein are successful in rebutting the said presumption to prove contra?
10. In the instant case, alleging violation of the provisions of Section 18 (2) and 18 (3) of the Act, the respondent issued show cause notice vide Memorandum dated 23.01.2012, calling upon the petitioners to show cause as to why adjudication proceedings as contemplated under Section 51 of the Act should not held. At this juncture, this Court deems it necessary and appropriate to refer to the provisions of Sections 18 and 51 of the Act, which reads as under:-
1 8 . Payment for exported goods - (i) (a) The Central Government may, by notification in the Official Gazette, prohibit the taking or sending out by land, sea or air (hereafter in this section referred to as export) of all goods or of any goods or class of goods specified in the notification from India directly or indirectly to any place so specified unless the exporter furnishes to the prescribed authority a declaration in the prescribed form supported by such evidence as may be prescribed or so specified and true in all material particulars which, among others, shall include the amount representing -
(ii) the full export value of the goods; or
(iii) if the full export value of the goods is not ascertainable at the time of export, the value which the exporter, having regard to the prevailing market conditions, expects to receive on the sale of the goods in the overseas market, and affirms in the said declaration that the full export value of the goods (whether ascertainable at the time of export or not) has been, or will within the prescribed period be, paid in the prescribed manner.
(b) If the Central Government is of opinion that it is necessary or expedient in the public interest so to do, it may, by notification in the Official Gazette, specify any goods, from among those goods to which a notification under clause (a) applies, and direct that in respect of the goods so specified, where an exporter makes a declaration under sub-clause (ii) of clause (a) of the value which he, having regard to the prevailing market conditions expects to receive on the sale of such goods in the overseas market, he shall not, except with the permission of the Reserve Bank on an application made to the Reserve Bank by the exporter in this behalf, authorise or permit or allow or in any manner be a party to, the sale of such goods for a value less than that declared:
Provided that no permission shall be refused by the Reserve Bank under this clause unless the exporter has been given a reasonable opportunity for making a representation in the matter: Provided further that where the exporter makes an application to the Reserve Bank for permission under this clause and the Reserve Bank does not, within a period of twenty days from the date of receipt of the application, communicate to the exporter that permission applied for has been refused, it shall be presumed that Reserve Bank has granted such permission.
Explanation - In computing the period of twenty days for the purposes of the second proviso, the period, if any, taken by the Reserve Bank for giving an opportunity to the exporter for making a representation under the first proviso shall be excluded.
(2) Where any export of goods, to which a notification under clause (a) of sub-section (1) applies, has been made, no person shall, except with the permission of the Reserve Bank, do or refrain from doing anything, or take or refrain from taking any action, which has the effect of securing -
(A) in a case falling under sub-clause (i) or sub-clause (ii) of clause (a) of sub-section (1),-
(a) that payment for the goods -
i. is made otherwise than in the prescribed manner, or
ii. is delayed beyond the period prescribed under clause (a) of sub- section (1), or
(b) that the proceeds of sale of the goods exported do not represent the full export value of the goods subject to such deductions, if any, as may be allowed by the Reserve Bank; and
(B) in a case falling under sub-clause (ii) of clause (a) of sub- section (1), also that the sale of the goods is delayed to an extent which is unreasonable having regard to the ordinary course of trade: Provided that no proceedings in respect of any contravention of the provisions of this sub-section shall be instituted unless the prescribed period has expired and payment for the goods representing the full export value has not been made in the prescribed manner within the prescribed period.
(3) Where in relation to any goods to which a notification under clause (a) of sub-section (1) applies the prescribed period has expired and payment therefor has not been made as aforesaid, it shall be presumed, unless the contrary is proved by the person who has sold or is entitled to sell the goods or to procure the sale thereof, that such person has not taken all reasonable steps to receive or recover the payment for the goods as aforesaid and he shall accordingly be presumed to have contravened the provisions of sub-section (2).
(4) Where in relation to any goods to which a notification under clause (a) of sub-section (1) applies the prescribed period has expired and payment therefor has not been made as aforesaid, the Reserve Bank may give to any person who has sold the goods or who is entitled to sell the goods or procure the sale thereof, such directions as appear to it to be expedient for the purpose of securing -
(i) if the goods have been sold, the payment therefor, or
(ii) if the goods have not been sold, either the sale of the goods and payment therefor as aforesaid, or the re-import of the goods into India as the circumstances permit, within such period as the Reserve Bank may specify in this behalf and without prejudice to the generality of the foregoing provision, may direct that the goods, the right to receive the payment therefor or any other right to enforce such payment shall be transferred or assigned to the Central Government or to a person specified in the directions.
(5) Where any goods or a right to receive payment or any other right to enforce such payment, are or is transferred or assigned in accordance with sub-section (4), the Central Government shall pay to the person transferring or assigning the same, the amount recovered by or on behalf of the Central Government in respect of the goods, after deducting all costs, charges and expenses incurred by the Central Government in selling the goods or in recovering or realising the amount in respect of such goods.
(6) Without prejudice to the provisions of sub-section(1), where the value of the goods specified in the declaration furnished under that sub-section is less than the amount which in the opinion of the Reserve Bank, in a case falling under sub-clause (i) of clause (a) of that sub-section, represents the full export value of those goods, or in a case falling under sub-clause (ii) of that clause, the value which the exporter can, having regard to the prevailing market conditions, expect to receive on the sale of the goods in the overseas market, the Reserve Bank may issue an order requiring the person holding the shipping documents to retain possession thereof until such time as the exporter of the goods has made arrangements for the Reserve Bank or a person authorised by the Reserve Bank to receive on behalf of the exporter payment in the prescribed manner of an amount which in the opinion of the Reserve Bank represents the full export value of such goods or the value which the exporter, having regard to the prevailing market conditions, can be expected to receive on the sale of the goods in the overseas market.
(7) For the purpose of ensuring compliance with provisions of this section and any order or direction made thereunder, the Reserve Bank or the prescribed authority referred to in sub- section (1) may require any person making any export of goods to which a notification under clause (a) of that sub- section applies to exhibit contracts with his foreign buyer or other evidence to show that the full export value of the goods, or, as the case may be, the value which the exporter, having regard to the prevailing market conditions, expects to receive on the sale of the goods in the overseas market, has been, or will within the prescribed period be, paid in the prescribed manner.
(8) Without prejudice to the provisions of sub-section (1), where the Reserve Bank has permitted any authorised dealer to accept for negotiation or collection of shipping documents covering exports from his constituent [not being a person who has signed the declaration in terms of sub-section (1)], such authorised dealer shall, before accepting such documents for negotiation or collection, require the constituent concerned also to sign such declaration and thereupon such constituent shall be bound to comply with such requisition and the original declarant and such constituent signing the declaration shall each be considered to be the exporter for the purposes of this section, and shall be governed by the provisions thereof accordingly.
(9) Without prejudice to the provisions of sub-section (1), in relation to export of goods to which a notification under clause (a) of that sub-section applies, the Reserve Bank may, for the purpose of ensuring that the full export value of the goods or, as the case may be, the value which the exporter, having regard to the prevailing market conditions, expects to receive on the sale of the goods in the overseas market, is received in proper time or without delay, by general or special order, direct from time to time, that in respect of export of goods to any destination or any class of export transactions or any class of goods or class of exporters, the exporter shall, prior to the export of the goods, comply with any or all of the following conditions as may be specified in the order, namely:-
a. that any contract or other arrangement for the sale of the goods shall be registered in such manner and with such authority or organisation as may be specified in the order;
b. that the payment for the goods is covered by an irrevocable letter of credit or by such other arrangement or document as may be specified in the order;
c. that a copy of the declaration to be furnished to the prescribed authority under sub-section(1) shall be submitted to such authority or organisation as may be specified in the order for certifying that the value of the goods specified in such declaration represents the proper value thereof;
d. that any declaration to be furnished to the prescribed authority under sub-section (1) shall be submitted to the Reserve Bank for its prior approval, which may, having regard to the circumstances, be given or withheld or may be given subject to such conditions as the Reserve Bank may deem fit to impose: Provided that no approval shall be withheld by the Reserve Bank under this clause unless the exporter has been given a reasonable opportunity for making a representation in the matter.
(10) Where the Central Government is of opinion that, in respect of any goods or class of goods or class of exporters, or in respect of export to any destination, the practice of exporting goods in accordance with any term to the effect that the goods will be sold on account of the exporter and the account of such sales rendered to the exporter has resulted or is likely to result in the full export value of the goods not being brought into India in the prescribed manner or within the prescribed period, it may, by general or special order, prohibit the export, in accordance with such term, of such goods or class of goods or by such exporters or to such destination.
51. Power to adjudicate.—For the purpose of adjudging under section 50 whether any person has committed a contravention of any of the provisions of this Act (other than those referred to in that section) or of any rule, direction or order made thereunder, the adjudicating officer shall hold an inquiry in the prescribed manner after giving that person a reasonable opportunity for making a representation in the matter and if, on such inquiry, he is satisfied that the person has committed the contravention, he may impose such penalty as he thinks fit in accordance with the provisions of that section.”
11. As per sub-Section (2) of Section 18 of the Act no person except with the permission of the Reserve Bank of India do or refrain from doing anything or take or refrain from taking any action as stipulated therein. In sub-Section (3) of Section 18 of the Act there is a presumption in favour of the failure to take all reasonable steps to receive or recover the payment for the goods unless the contrary is proved.
12. In the present case, vide Memorandum in File No.T-4/1- BZ/HYD/2002 (DD-VS)-FERA/692 dated 23.01.2002, the respondent required the petitioners to show cause as to why adjudication proceedings as contemplated under Section 51 of the Act should not be held while alleging violation of the provisions of Section 18 (2) read with Central Government notification dated 01.01.1974 and Section 18 (3) of the Act which resulted in failure to recover the export proceeds to a tune of US $ 1,16,519. In response to the said show cause notice, the petitioners submitted an explanation dated 25.07.2002 and with regard to items 1 and 2 the petitioners stated that they received US $ 22,975 out of US $ 1,40,000 and for the balance amount they received Rs.33,82,463/- from the ECGC by way of claim settlement and G.Rs were released by their bankers i.e., State Bank of India Overseas Bank, Hyderabad on 07.01.2002. With regard to item No.3 pertaining to G.R.No.AN 210319 dated 15.11.1997 and AN 210320 dated 17.11.1997 for US $ 58,500, petitioners stated in their explanation that they received US $ 48,426 and the balance is only US $ 10,074 and also stated that they received a message through their agent that the party agreed to pay US $ 2,000 per month to settle the dues and that they submitted ETX in respect of the above, seeking permission to extend the period up to 31.01.2003 to their bankers i.e., State Bank of India Overseas Bank, Hyderabad. On item No.6 pertaining to GR.No.AT 131295 dated 17.01.2000 for US $ 1,845, the petitioners stated in their explanation that due to financial problems, the customer requested for extension of time for payment till September, 2002 and they submitted ETX in respect of the above, seeking permission to extend the period up to 31.01.2003 to their bankers i.e., State Bank of India Overseas Bank, Hyderabad. In the said explanation eventually the petitioners requested to waive the amounts indicated at Sl.Nos.1, 2, 4, and 5 annexures.
13. The respondent herein, by virtue of the Order No.DD/15/B2/ HYD/2002 (DD-VS) dated 22.08.2002 found the petitioners herein guilty of contravention of the provisions of Sections 18 (2) and 18 (3) of the Act by holding that the company failed to take efforts to realize the value of the consignments pertaining to items 1, 2, 3 and 6 to a tune of US $ 1,28,944 while dropping further proceedings in respect of item Nos.4, 5 and 7 by giving benefit of doubt.
14. Aggrieved by the said order to the extent the same went against, the present writ petition has been filed.
15. A reading of the impugned order makes it very much manifest that the respondent herein meticulously and thoroughly scanned and considered all the factual aspects and the ground realities in the light of the provisions of the Act and the object and intention behind the said legislation and the explanation offered by the petitioners and eventually came to a well reasoned conclusion and found the petitioners guilty in respect of items Nos.1, 2, 3 and 6 and dropped further proceedings in respect of items 4, 5 and 7.
16. While dealing with the item Nos.1 and 2, the respondent recorded a categorical finding that the exporter totally failed to see that sale value of the exports is received from the place of destination and out of US $2,40,000 only US $ 22,975 has been received and the entire balance is still outstanding. The respondent also recorded a finding in the impugned order that even according to the petitioners, their importer became bankrupt in 1997 where as the exports were made in 1996 and the respondent also found that there is nothing to prove the efforts made by the exporter during the intervening period and the respondent also found that there is no evidence to show that the petitioners were pressurizing the buyers and the respondent also recorded a finding that the receipt of balance from ECGE is of no consequence since the same is only the amount on the account of the claim made by the petitioners and does not represent the proceeds of the exports made by the buyer in Italy. On items No.3 also the respondent in the impugned order categorically recorded a finding that the contention that the petitioners’ customer went into deep financial problems is not supported by any evidence. There is also a categorical finding in the impugned order on item No.6 against the petitioners herein.
17. Coming to the judgments cited by the learned counsel for the petitioners in the case of CUSTOMS COLLECTOR, BOM. (supra 2), the Hon’ble apex Court at paragraph 15 held as under:
“15. Lastly, it was argued that the High Court should not have exercised its jurisdiction under Art. 226 of the Constitution, as the respondents had an effective remedy by way of appeal to Higher Customs Authorities. But High Court rightly pointed out that the respondents had no effective remedy, for they could not file an appeal without depositing as a condition precedent the large amount of penalty imposed on them. That apart, the existence of an effective remedy does not oust the jurisdiction of the High Court, but it is only one of the circumstances that the Court should take into consideration in exercising its discretionary jurisdiction under Art. 226 of the Constitution. In this case, the High Court thought fit to exercise its jurisdiction under Art. 26 of the Constitution and we do not see any exceptional circumstances to interfere with its discretion. In the result, Civil Appeals Nos. 376 and 377 of 1963 are dismissed with costs.”
18. The above case arose under the Customs Act, 1878. In the present legislation i.e., Foreign Exchange Regulation Act, 1973 also under Section 52 (2) there is such provision which mandates the deposit of penalty as a condition precedent for filing appeal.
In the case of M/S. FILTERCO (supra 3), the Hon’ble apex Court at paragraph 11 held as under:
"11. We are of opinion that the High Court should have examined the merits of the case instead of dismissing the Writ Petition in limine in the manner it has done. The order passed by the Commissioner of Sales Tax was clearly binding of the assessing authority under Section 42B(2) and although technically it would have been open to the appellants to urge their contentions before the appellate authority namely, the Appellate Assistant Commissioner, that would be a mere exercise in futility when a superior officer namely, the Commissioner, has already passed a well considered order in the exercise of his statutory jurisdiction under Sub-section (1) of Section 42-B of the Act holding that 21 varieties of the compressed woolen felt manufactured by the appellants are not eligible for exemption under Entry 6 of Schedule I of the Act. Further Section 38(3) of the Act requires that a substantial portion of the tax has to be deposited before an appeal or revision can be filed. In such circumstances we consider that the High Court ought to have considered and pronounced upon the merits of the contentions raised by the parties and the summary dismissal of the Writ Petition was not justified. In such a situation, although we would have, ordinarily, set aside the judgment of the High Court and remitted the case to that Court for fresh disposal, we consider that in the present case it would be in the interests of both sides to have the matter finally decided by this Court at the present stage itself especially since we have had the benefit of elaborate and learned arguments addressed by the counsel appearing on both sides.”
In the case of J.M. BAXI AND CO. (supra 4), the Hon’ble apex Court at paragraph 3, held as under:
“3. Normally, the High Court ought not to interfere in exercise of its jurisdiction under Article 226 when adequate alternative remedy is available, but in the special facts of this case when the demand was raised and the same had been challenged on the ground that it was barred by time and where the demand is nearly of 46 lakhs of rupees which will have to be deposited before any appeal can be filed, we are of the opinion that the High Court ought to have exercised its jurisdiction and determined the questions which were raised in the writ petition on merits. In dealing with the contentions raised by the appellant, the High court would necessarily have to consider the contentions of the respondents as well.”
In the case of HINDUSTAN COCA-COLA BEVERAGES (P) LTD (supra 5), this Court at paragraphs 36, 39 and 40 held as under:
“36. In K. Gopala Krishna Murthy v. Banda Krishna Vijaya Bhaskara Rao 2001 (1) LS 63, this Court while dealing with the question of maintainability of the writ petition vis-a-vis existence of an alternative remedy held:
"The learned counsel then contended that the writ petitioner has an alternative remedy of appeal under the Licensing Order; consequently, the impugned order is not sustainable. We find no force in the submission of the learned counsel. It is well established principle of law that alternative remedy of appeal is not an absolute bar to approach this Court and this Court in exercising the extraordinary writ jurisdiction under Article 226 of the Constitution is well within its limits to pass appropriate orders in the facts and circumstances of a case especially in a case where the facts are not in dispute and on the face of the order itself, it suffers from the infirmity of being without jurisdiction."
39. In J.M Baxi and Co. v. Commissioner of Customs, New Kandla 2000 AIR SC W 1871, it was held:
"Normally the High Court ought not to interfere in exercise of its jurisdiction under Article 226 when adequate alternative remedy is available. But in the special facts of this case when the demand was raised and the same had been challenged on the ground that it was barred by time and where the demand is nearly 46 lakhs of rupees which will have to be deposited before any appeal can be filed, we are of the opinion that the High Court ought to have exercised its jurisdiction and determined the questions which were raised in the writ petition on merits. In dealing with the contentions raised by the appellant, the High Court would necessarily have to consider the contentions of the respondents as well.
40. Yet again, in Filterco v. Sales Tax Commr., M.P. 1986(24)ELT180(SC) it was held:
"We are of the opinion that the High Court should have examined the merits of the case instead of dismissing the Writ Petition in limine in the manner it has done. The order passed by the Commissioner of Sales-tax was clearly binding on the assessing authority under Section 42-B(2) and although technically it would have been open to the appellants to urge their contentions before the appellate authority namely, the Appellate Assistant Commissioner, that would be a mere exercise in futility when a superior officer namely, the Commissioner, has already passed a well considered order in the exercise of his statutory jurisdiction under Sub-section (1) of Section 42-B of the Act holding that 21 varieties of the compressed woolen felt manufactured by the appellants are not eligible for exemption under Entry 6 of Schedule I of the Act. Further Section 38(3) of the Act requires that a substantial portion of the tax has to be deposited before an appeal or revision can be filed. In such circumstances we consider that the High Court ought to have considered and pronounced upon the merits of the contentions raised by the parties and the summary dismissal of the Writ Petition was not justified. In such a situation, although we would have, ordinarily, set aside the judgment of the High Court and remitted the case to that Court for fresh disposal, we consider that in the present case, it would be in the interests of both sides to have the matter finally decided by this Court at the present stage itself especially since we have had the benefit of elaborate and learned arguments addressed by the counsel appearing on both sides."
This aspect of the matter has also been considered in Anisminic Ltd. v. Foreign Compensation Commission, 1962 Appeals Cases 147.
In the case of BHADRACHALAM PAPER BOARDS LTD. v. UNION
OF INDIA
[8]
, this Court at paragraph 6 held as under:
“6. We shall first take up the contention of the learned Standing Counsel that the petitioner has an effective alternative remedy. We may observe that the rule that before invoking extraordinary jurisdiction of the High Court alternative remedy should be exhausted, is a rule of convenience and discretion and not a rule of law. This rule has no application if the impugned act is without jurisdiction. Further in exercise of its jurisdiction under Article 226, the High Court will ordinarily reject a Writ Petition on the ground of alternative remedy at the earliest stage at the time of admission. But where it was admitted on merits and the matter is taken up after seven years, in our view, it will not be just and proper exercise of discretion to non-suit the petitioner on the ground of not availing the alternative remedy, particularly when the questions of fact are not in dispute.”
In the case of RECKITT & COLAMAN OF INDIA LTD. V. ASSISTANT
COLLECTOR OF CENTRAL EXCISE, HYDERABAD
paragraph 8, held as under:
[9]
, this Court at
“8. The learned counsel for the respondents raised a preliminary objection that there being an alternative remedy which had also been resorted to by the petitioner, this writ petition should not be carried through. Reliance was placed on the decision of this Court in Procter & Gamble India Ltd. v. Union of India. We are unable to accept this objection for two reasons. The first is, the question of the existence of an alternative remedy has been already considered by the Bench while admitting the writ petition and they have decided to entertain this writ petition and therefore, it is not proper for us to review that decision and reject it after keeping the matter pending for three years. Secondly, the proceedings of the Appellate Collector related to subsequent period and not to the period with which this writ petition is concerned. Therefore, the argument of the learned counsel that the petitioner is maintaining parallel proceedings, is not correct on facts.”
19. In view of the law laid down in the above referred judgments and in view of the reason that this writ petition was admitted as long back as in the year 2002, now this Court in the name of availability of alternative remedy of appeal, cannot relegate the petitioners to such alternative remedy. Therefore, the contention contra advanced by the counsel for the respondent herein with regard to maintainability on the ground of alternative remedy is hereby rejected.
20. To support his contentions on merits, the learned counsel for the petitioners places reliance in the case of HINDUSTAN STEEL LIMITED (supra 1). In the said judgment, the Hon’ble apex Court at paragraph 7 held as under:
“Under the Act penalty may be imposed for failure to register as a dealer: Section 9(1) read with Section 25(1)(a) of the Act. But the liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Those in charge of the affairs of the company in failing to register the Company as a dealer acted in the honest and genuine belief that the Company was not a dealer. Granting that they erred, no case for imposing penalty was made out”.
21. The above case arose under Orissa Sales Tax Act. In the considered opinion of this Court the said judgment would not render any assistance to the petitioner in view of the reasons assigned by the respondent herein while passing the impugned order and in view of the discretion exercised by the respondent herein in accordance with the provision of the Foreign Exchange Regulation Act, 1973 while adjudicating the issue. It is also significant to note at this juncture that there is a presumption under Section 18 of the Act against the exporter and in the considered opinion of this Court the petitioners herein did not place any evidence to rebut such a statutory presumption, as rightly contended by the learned counsel for the respondent.
22. The judgment of the Hon’ble apex Court in the case of SHANTI PRASAD JAIN (supra 6) cited on behalf of the petitioners herein, in the facts and circumstances of this case and in view of the factual variation, would not render any help to the petitioners herein. The respondents herein having found fault with the petitioners to an extent of US $ 1,28,944 imposed penalty of only Rs.5,00,000/- and in the considered opinion of this Court the same cannot be found fault with nor it can be said unreasonable one.
23. Therefore, this Court is not inclined nor finds any justification or reason to interfere with the impugned order passed by the respondent herein in exercise of powers conferred under Article 226 of the Constitution of India.
24. For the aforesaid reasons and having regard to the object and intention of the legislature behind the Foreign Exchange Regulation Act, 1973 and keeping in view the nature of controversy, this Court is of the opinion that there are absolutely no merits in the present writ petition and the writ petition is liable to be dismissed.
25. Accordingly, the writ petition is dismissed. As a sequel, miscellaneous petitions if any, also stand disposed of. No costs.
A.V.SESHA SAI, J Date: 2.07.2014 grk
HON’BLE SRI JUSTICE A.V.SESHA SAI
WRIT PETITION No.20495 of 2002
Date :2-7-2014
grk
[1] 1978 E.L.T. (J 159)
[2] AIR 1966 SC 197
[3] AIR 1986 SC 626
[4] 2000 AIR SCW 1871
[5] 2001 (4) ALD 518 (DB)
[6] AIR 1962 SC 1764
[7] (2010) 8 SCC 110
[8] 1993 (1) AnWR 139
[9] 1994 (72) ELT 263 (A.P.)