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Shabbir Hasan Khan vs Union Of India (Uoi) And Ors.

High Court Of Judicature at Allahabad|30 March, 1973

JUDGMENT / ORDER

JUDGMENT K.N. Seth, J.
1. The learned Civil Judge, Budaun, under the proviso to Section 113 of the Code of Civil Procedure, has referred the following question for the opinion of this Court:--
"Whether provisions of Section 11 of the Central Excises and Salt Act, 1944 are viola-tive of Article 14 of the Constitution."
2. Shabbir Hasan Khan brought a suit for an injunction restraining the defendants from selling and auctioning the movable properties detailed in annexure 'A' of the plaint and from taking any coercive action against the plaintiff for recovery of excise duty etc. It was alleged that the plaintiff cultivated tobacco in the year 1965-66 and the produce was stored by him in a godown. The tobacco got somewhat deteriorated and the plaintiff applied to the Central Excise Department for its disposal. The application remained pending for a long time. The Deputy Superintendent, Central Excise Department at Budaun, harboured some grudge against the plaintiff and maliciously reported that he had removed the tobacco from the premises. The departmental officials, without any enquiry and without adopting the prescribed procedure, issued a certificate to the Collector, Budaun, to realise a sum of Rs. 11,016.72 on account of excise duty as arrears of land revenue. On the basis of the recovery certificate, movable properties of the plaintiff detailed in annexure 'A' to the plaint were attached on or about 10th of September, 1967. It was alleged that the tobacco in question was still in existence and the defendants had no jurisdiction or justification to attach and sell the properties without first taking steps to recover the excise duty by attachment and sale of the excisable goods. It was further alleged that Section 11 of the Central Excises and Salt Act, 1944, (hereinafter referred to as the Act), under which action was taken, was ultra vires and illegal as violative of Article 14 of the Constitution of India, Section 11 of the Act was also bad for the reason that it afforded no opportunity to the growers to have their say in the matter of determination of excise duty. The attachment of the movable properties of the plaintiff was illegal and without jurisdiction and hence the suit.
3. Defendant No. 1 contested the suit and alleged that the plaintiff was a habitual defaulter and always avoided payment of excise duty on one pretext or the other. It was asserted that in the year 1965-66 the excise duly amounting to Rs. 11,016.72 was assessed on the plaintiff and he was served with a copy of the assessment order. On his failure to pay the excise duty assessed, a recovery certificate under Section 11 of the Act was issued which was perfectly legal. It was also pleaded that the Civil Court had no jurisdiction to try tbe suit.
4. On behalif of defendant No. 2 it was pleaded that on receipt of the certificate under Section 11 of the Act the Collector was under an obligation to recover the amount due as arrears of land revenue and the proceedings taken were valid and in accordance with law.
5. The learned Civil Judge was impressed with the argument that Section 11 of the Act provides a remedy, in addition to that available under the ordinary law, for recovery of excise duty from defaulters and an unfettered discretion was conferred on the Central Board of Revenue to recover the amount from a person liable to pay excise duty either by taking recourse to the remedy provided by Section 11 of the Act or by way of a suit under the ordinary law of the land. The remedy under the Act being more drastic and there being no guideline provided under the Act it was within the unfettered discretion of the authority to proceed to recover the amount due either by issuing a certificate to the Collector under Section 11 of the Act or to recover it by means of a suit. It was thus possible to discriminate between persons by whom excise duty was payable. Reliance was placed on the case of Northern India Caterers (P) Ltd. v. State of Punjab, AIR 1967 SC 1581. In the aforesaid case the validity of Section 5 of the Punjab Public Premises and Land (Eviction and Rent Recovery) Act was challenged on the ground that it was discriminatory and violative of Article 14 of the Constitution. Shelat, J., speaking for the majority, laid down the principle thus.--
"If the ordinary law of the land and the special law provide two different and alternative procedures, one more prejudicial than the other, discrimination must result if it is left to the will of the authority to exercise the more prejudicial against some and not against the rest. A person who is proceeded against under the more drastic procedure is bound to complain as to why the drastic procedure is exercised against him and not against the others, even though those others are similarly circumstanced. The procedure under Section 5 is obviously more drastic and prejudicial than the one under the Civil P. C. where the litigant can get the benefit of a trial by an ordinary Court dealing with the ordinary law of the land with the right of appeal, revision, etc, as against the person who is proceeded against under Section 5 of the Act as his case would be disposed of by an executive officer of the Government, whose decision rests on his mere satisfaction, subject no doubt to an appeal but before another executive officer, viz., the Commissioner. There can be no doubt that Section 5 confers an additional remedy over and above the remedy by way of suit and that by providing two alternative remedies to the Government and in leaving it to the unguided discretion of the Collector to resort to one or the other and to pick and choose some of those in occupation of public properties and premises for the application of the more drastic procedure under Section 5, that section has lent itself open to the charge of discrimination and as being violative of Article 14. In this view Section 4 must be declared to be void."
The principle laid down in Northern India Caterers case (supra) was followed by a Division Bench of this Court in Deep Chand Agarwal v. Director of Industries, 1969 All WR (HC) 689. In this case the vires of Section 3 of the Public Moneys (Recovery of Dues) Act, 1965 was challenged on the ground that it was violative of Article 14 of the Con-stitution. Under Section 3 of the aforesaid Act it was provided that this mode of recovery was without prejudice to any other mode of recovery under any other law for the time being in force. It was held by this Court that there was nothing in Section 3 or in any other provisions of the law which furnished any guideline to the authorities concerned in the matter of making a choice as to whether the mode of recovery provided by the said Act should be adopted or the one permissible under any other law and in these circumstances Section 3 of the said Act must be struck down as violative of Article 14 of the Constitution.
6. The principle on which these cases proceeded was that if the remedy provided under a special law is more drastic and prejudicial than the one under the Civil P. C., discrimination must result if it is left to the will of the authority to resort to the more prejudicial procedure against some and not against the rest. In both the cases referred to above it was found that apart from the re-medy provided under the Act, remedy by way of a suit was also available to the authorities concerned.
7. The crucial question for determination, therefore, is whether a remedy by way of suit is also available for recovery of excise duty or the only remedy is as provided by Section 11 of the Act. If a suit is either expressly or impliedly barred for recovery of excise duty, no question of discrimination would arise on the ground that the remedy provided under the Act is more drastic and prejudicial. Section 35 of the Act provides for an appeal against any decision or order passed by a Central Excise Officer under the Act or the rules made thereunder. The appellate authority is empowered to make such further enquiry and pass such order as he thinks fit, confirming, altering or annulling the decision or order appealed against. Subsection (2) of Section 35 of the Act lays down that every order passed in appeal shall, subject to the powers of revision conferred by Section 36, be final. Under Section 36 the Central Government is competent, on the application of any person aggrieved by any decision or order passed under the Act or the rules made thereunder or by any Central Excise Officer or by the Central Board of Revenue and from which no appeal lies, to reverse or modify such decision or order. These provisions clearly indicate that the Act provides a machinery for the determination and adjudication of all disputes in respect of rights and liabilities created under the Act. The order of the appellate authority has been made final subject only to the revisional power of the Central Government. The appellate and the revisional authorities function as Tribunals and must act quasi judicially. The parties have every opportunity to establish their case by such evidence as they may desire to produce. A hierarchy of Tribunals is thus provided under the Act to settle the disputes that are brought before them acting in a quasi judicial manner. An order passed or any decision made under Section 11 of the Act is also open to challenge by way of appeal or revision by the person aggrieved by such an order or decision. On the principles laid down in the case of Dhulabhai v. State of M.P, AIR 1969 SC 78 the provisions of the Act impliedly exclude the remedy by way of a suit to recover the duty and other sums payable to the Central Government under any of the provisions of the Act or of the rules made thereunder. In the words of Hidayatullah, C. J. :--
"Where the statute gives a finality to the orders of the special tribunals the Civil Court's jurisdiction must be held to be excluded if there is adequate remedy to do what the Civil Courts would normally do in a suit. Such provision, however, does not exclude those cases where the provisions of the particular Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure."
Another principle enunciated in the aforesaid case is:--
"Questions of the correctness of the assessment apart from its constitutionality are for the decision of the authorities and a civil suit does not lie if the orders of the authorities are declared to be final or there is an express prohibition in the particular Act....."
The principles laid down in Dhulabhai's case have been affirmed by the Supreme Court in State of West Bengal v. Indian Iron and Steel Co. Ltd., AIR 1970 SC 1298 and Srinivasa v. State of Andhra Pradesh, AIR 1971 SC 71. These principles are fully applicable to the present case. Section 35(2) attaches finality to the appellate orders and the Civil Court's jurisdiction must be held to be excluded if there is adequate remedy provided under the Act to do what the Civil Court would normally do in a civil suit Under Section 11 of the Act the Officer empowered by the Central Board of Excise and Custom is authorised to deduct the amount payable by a person from any money owing to such person which may be in his hands or under his disposal or control. Another mode of recovery provided is by attachment and sale of excisable goods belonging to such person. If the amount is not recovered by the aforesaid modes, the Officer is empowered to prepare a certificate signed by him and send it to the Collector of the district who, on receipt of such certificate, shall proceed to re-
cover the amount specified therein as if it were an arrear of land revenue. The mode of recovery of the amount due as arrears of land revenue can be resorted to if the amount is not recoverd by the other two modes referred to above.
8. The first proposition enunciated in Dhulabhai's case AIR 1969 SC 78 (Supra) makes an exception in those cases where the provisions of particular Act have not been complied with or the statutory Tribunal has not acted in conformity with the fundamental principles of the Code of Civil Procedure. In judging the question whether remedy by way of a suit is available to the Central Government for recovery of excise duty or any other sum payable to it this exception would not be attracted. The Central Government can proceed only on the basis that the duty has been imposed after duly complying with the provisions of the Act and the Tribunals have acted in conformity with the fundamental principles of judicial procedure.
9. In First Appeal No. 287 of 1964--Union of India v. Delhi Cloth and General Mills Co. Ltd. decided by a Bench of [his Court on 1-12-1971, a question arose whether the suit filed by the Delhi Cloth and General Mills Companv Limited against the Union of India for refund of a certain sum of money on the ground that the company was entitled to rebate and the disputed amount was wrongly adjusted towards excise duty was maintainable. After an analysis of the provisions of the Act, and relying on the principles laid down in Dhulabhai's case AIR 1969 SC 78 (supra), it was held that the correctness of the assessment of the excise duty could not be questioned in a Civil Court. We are in respectful agreement with the view expressed in that case.
10. Another ground on which the learned Civil Judge found the provisions of Section 11 of the Act discriminatory was that against one person the Officer may choose to proceed to recover dues from him out of the amounts in his hands owing to such person or by attach-ment or sale of excisable goods belonging to him and against another person he may recover such dues as an arrear of land revenue by issuing a recovery certificate against him to the Collector. As observed earlier, the mode of realising the amount as an arrear of land revenue can be resorted to only if the amount is not recovered by deducting the amount from any money owing to such person or by attachment or sale of excisable goods belonging to him. It is not open to the Officer to take direct recourse to recovery as arrear of land revenue and no question of discrimination can possibly arise.
11. In our opinion the only remedy available to the Central Government for recovery of excise duty or any other sum payable under the provisions of the Act is to take recourse to the remedies provided under Section 11 of the Act and a civil suit is impliedly barred.
12. In this view of the matter Section 11 of the Act cannot be held to be viola-tive of Article 14 of the Constitution on the ground that it provided an alternative procedure more drastic and prejudicial and conferred an unfettered discretion on the authorities.
13. Our answer to the reference made is, therefore, in the negative.
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Title

Shabbir Hasan Khan vs Union Of India (Uoi) And Ors.

Court

High Court Of Judicature at Allahabad

JudgmentDate
30 March, 1973
Judges
  • A Kirty
  • K Seth