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Union Of India (Uoi) vs Sir Shadi Lal Sugar And General ...

High Court Of Judicature at Allahabad|15 July, 1980

JUDGMENT / ORDER

JUDGMENT S.D. Agarwala, J.
1. This first appeal is directed against the judgment of the II Additional Civil Judge, Muzaffar-nagar dated 24th February, 1967, decreeing the suit of the plaintiff-respondent, Sir Shadi Lal Sugar and General Mills Ltd. Mansoorpur. The present appeal has been filed by the Union of India.
2. Sir Shadi Lal Sugar and General Mills Ltd. is a company registered under the Indian Companies Act carrying on the business of production and sale of Crystal Sugar in Mansoorpur, district Muzaffarnagar. The Company produces sugar by power using vacuum pan process. The excise duty leviable on the sugar prior to 4th of May, 1961 was Rupees 22.15 n. p. per quintal. On 4th May 1961 the Central Government by a notification issued under Rule 8 Sub-clause (1) of the Central Excise Rules, 1944 announced an exemption from the basic excise duty as is in excess of Rupees 11.08 n. p. per quintal in such quantity of sugar produced in a factory during the year commencing 1st November, 1960 as is in excess of the yearly average quantity of sugar produced in that factory during the preceding two years commencing on the 1st November, 1958 and ending with 31st October, 1960.
3. Subsequently on 9th of May, 1961 a Trade Notice No. 50/1961 was issued by the Collector, Central Excise, Allahabad clarifying the notice which was issued by the State Government on 4th May, 1961 and further laid down the manner in which the said exemption would be cal-culated.
4. The plaintiff-respondent's company filed the suit for recovery of Rs. 30,290/- with pendente lite and future interest at the rate of 9% per annum alleging that they were entitled to refund of the said amount in view of the notification dated 4th May, 1961.
5. The Union of India in defence took up the plea that by virtue of notification dated 4th May, 1961 read along with the Trade Notice No. 50/1961 the plaintiff-respondent was not entitled to any rebate of excise duty and as such was not entitled to the relief claimed in the plaint. It was further pleaded that the suit was not maintainable in the Civil Court, and the only remedy open to the plaintiff-respondent was to file an appeal or a revision under the provisions of the Central Excises and Salt Act, 1944.
6. The trial court held that the plaintiff-respondent was entitled to the rebate in pursuance of the notification dated 4th May, 1961 and that the Trade Notice No. 50/1961 was without jurisdiction and as such cannot have any effect on the notification dated 4th May, 1961. The trial court further held that the suit was maintainable in the civil court. In view of this finding, the suit was decreed by the trial court for a sum of Rupees 28,827.93 with pendente lite and future interest at the rate of 6% per annum on 24-2-1967.
7. This appeal came up for hearing before a Bench consisting of Hon'ble M. N. Shukla, J. and Hon'ble K. P. Singh, J. The Bench was of the opinion that the points arising in the case are of general importance and as such it was desirable that the case be heard by a larger Bench. On 22-1-78 the Bench, therefore, directed that the papers be laid before Hon'ble the Chief Justice for constituting a larger Bench for deciding the entire appeal.
8. The appeal, therefore, came up for hearing before this Bench.
9. Learned Standing Counsel appearing on behalf of the Union of India has urged that the present suit was not maintainable in the civil court in view of Sections 35, 36 and 40 of the Central Excises and Salt Act, 1944 hereinafter referred to as the Act. He has relied on two Division Bench authorities of this Court, Shabbir Hasan Khan v. Union of India AIR 1974 All 99 and the decision in First Appeal No. 287 of 1964, Union of India v. Delhi Cloth and General Mills Company Ltd. dated 1-12-1971.
10. Learned counsel appearing on behalf of the plaintiff-respondent, has however, urged that the provisions of the Act does not provide for an effective remedy to the plaintiff-respondent and further the appellate authority constituted under the Act has no jurisdiction to quash the Trade Notice dated 9th May, 1961 which had been issued under Rule 223 of the Central Excise Rules, and as such, the suit was clearly maintainable in the Civil Court and the view taken by the trial court is, therefore, in accordance with law. The sole question, therefore, for determination before us is as to whether the suit filed by the plaintiff-respondent is maintainable in the Civil Court or not.
11. It is well settled that the iurisdiction of the Civil Court is all-embracing except to the extent it is excluded by an express provision of law or by clear in-tendment arising from such law. In Dhulabhai v. State of M. P. AIR 1969 SC 78 the Supreme Court of India had occasion to consider in detail as to in which circumstances the suit would be maintainable in the Civil Court and in which not. After examining the various authorities the following propositions were laid down:--
"(1) 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 Court 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.
(2) Where there is an express bar of the jurisdiction of the court, an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is not decisive to sustain the iurisdiction of the civil Court.
Where there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the intendment becomes necessary and the result of the inquiry may be decisive. In the latter case it is necessary to see if the statute creates a special right or a liability and provides for the determination of the right or a liability and further lays down that all questions about the said right and liability shall be determined by the tribunals so constituted, and whether remedies normallv associated with actions in Civil Courts are prescribed by the said statute or not.
(3) Challenge to the provisions of the particular Act as ultra vires cannot be brought before Tribunals constituted under that Act. Even the High Court cannot go into that question on a revision or reference from the decision of the Tribunals.
(4) When a provision is already declared unconstitutional or the constitutionality of any provision is to be challenged, a suit is open. A writ of certiorari may include a direction for refund if the claim is clearly within the time prescribed by the Limitation Act but it is not a compulsory remedy to replace a suit.
(5) Where the particular Act contains no machinary for refund of tax collected in excess of constitutional limits or illegally collected a suit lies.
(6) 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. In either case the scheme of the particular Act must be examined because it is a relevant enquiry.
(7) An exclusion of the jurisdiction of the Civil Court is not readily to be inferred unless the conditions above set down apply."
12. The principles laid down in Dhula-bhai's case (AIR 1969 SC 78) (supra) were reaffirmed in two subsequent decisions of the Supreme Court, State of West Bengal v. Indian Iron and Steel Co., AIR 1970 SC 1298 and Raia Kandregula Srinivasa Jagannadharao Panthulu Bahadur Guru v. State of Andhra Pradesh, AIR 1971 SC 71. The propositions Nos. (1) and (6) are relevant for determination of the question under consideration before us. In order to determine whether these propositions apply to the present case, it is necessary to examine the relevant sections of the Act. Sections 35, 35-A, 36 and 40 of the Act are quoted below:
"35. Appeals.-(1) Any person deeming himself aggrieved by any decision or order passed by a Central Excise Officer under this Act or the rules made thereunder may, within three months from the date of such decision or order, appeal therefrom to the Central Board of Excise and Customs constituted under the Central Board of Revenue Act, 1963 (LIV of 1963), or, in such cases as the Central Government directs, to any Central Excise Officer not inferior in rank to an Assistant Collector of Central Excise and empowered in that behalf by the Central Government. Such authority or officer may thereupon make such further inquiry and pass such order as he thinks fit, confirming, altering or annulling the decision or order appealed against:
Provided that no such order in appeal shall have the effect of subjecting any person to any greater confiscation or penalty than has been adjudged against him in the original decision or order.
(2) Every order passed in appeal under this section shall, subject to the power of revision conferred by Section 36, be final.
35-A. Revision by Board.--The Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (LIV of 1963), may, of its own motion or otherwise, call for and examine the record of any proceeding in which any decision or order has been passed under this Act or the rules made thereunder (not being a decision or order passed on appeal under Section 35) for the purpose of satisfying itself as to the correctness, legality or propriety of such decision or order and may pass such order thereon as it thinks fit:
Provided that no decision or order shall be varied so as to prejudicially affect any person unless such person is given a reasonable opportunity of making a representation and, if he so desires, of being heard in his defence:
Provided further that no proceedings shall be commenced under this section in respect of any decision or order (whether such decision or order has been passed before or after the coming into force of this section) after the expiration of a period of one year from the date of such decision or order.
36. Revision by Central Government:--(1) The Central Government may on the application of any person aggrieved by any decision or order passed under this Act or the rules made thereunder by any Central Excise Officer or by the Central Board of Excise and Customs constituted under the Central Board of Revenue Act, 1963 (LIV of 1963), and from which no appeal lies, reverse or modify such decision or order.
(2) The Central Government may, of its own motion or otherwise, call for and examine the record of any proceeding in which any decision or order has been passed under Section 35 or 35-A of this Act for the purpose of satisfying itself as to the correctness, legality or propriety of such decision or order and may pass such order thereon as it thinks fit:
Provided that no decision or order shall be varied so as to prejudicially affect any person unless such person is given a reasonable opportunity of making a representation and, if he so desires, of being heard in his defence:
Provided further that no proceedings shall be commenced under this sub-section in respect of any decision or order (whether such decision order has been passed before or after the coming into force of this sub-section) after the expiration of a period of one year from the date of such decision or order.
40. Protection of action taken under the Act:-- (1) No suit, prosecution or other legal proceeding shall lie against the Cen-
tral Govt. or any officer of the Central Government or a State Government for anything which is done, or intended to be done, in good faith, in pursuance of this Act or any rule made thereunder.
(2) No proceeding, other than a suit, shall be commenced against the Central Govt. or any Officer of the Central Government or a State Government for anything done or purported to have been done in pursuance of this Act or any rule made thereunder, without giving the Central Government or such officer a month's previous notice in writing or the intended proceeding and of the cause thereof or after the expiration of three months from the accrual of such cause."
13. Section 35 of the Act empowers any person aggrieved by any decision or order passed by a Central Excise Officer under the Act and Rules framed thereunder to file an appeal before the Central Board of Excise and Customs or in such cases as the Central Government directs to any Central Excise Officer not inferior in rank to an Assistant Collector of Central Excise. The appellate authority has been given the power to make such a further inquiry and pass such orders as he thinks fit confirming, altering or annulling the decision or order appealed against. Section 35-A empowers revisional power to the Central Board of Excise and Customs to examine the validity of any decision or order passed by any authority under the Act. Section 36 gives power of revision to the Central Government to exercise re-visional power against any decision passed under the Act by any Central Excise Officer or by a Central Board of Excise and Custom. Section 40 provides that no suit, prosecution or other legal proceeding shall lie against the Central Government or any officer of the Central Government or a State Government or any thing which is done or intended to be done in good faith in pursuance of the Act and the Rules made thereunder.
14. Section 35(2) of the Act is significant which clearly lays down that every order passed in appeal under this Section subject to the power of revision conferred by Section 36 is final on a reading of this provision of the Act it is clear that the finality is attached to the orders passed in appeal under Section 35 of the Act. The powers given to the appellate authority are very wide. The ap-
pellate authority can make such further inquiry and pass such orders as he thinks fit. It can confirm or annul the decision or the order appealed against. The power of revision by the Board and by the Central Government are also very wide. From a reading of the abovementioned provisions it is clear that a complete code is provided by the Act to an aggrieved person to seek redress in case he is aggrieved by the decision of any officer or authority constituted under the Act. The provisions, therefore, in our opinion clearly intend that the iurisdiction of the civil court be excluded. The propositions Nos. 1 and 6 of Dhulabhai's case (AIR 1969 SC 78) (supra) fully apply. In our opinion, therefore, the jurisdiction of the Civil Court must be held to have been excluded by the provisions of the Act. In our opinion, the cases of Shabbir Hasan v. Union of India (AIR 1974 All 99) (supra) and Union of India v. Delhi Cloth & General Mills (F. A. No. 287 of 1964, D/- 1-12-1971) (All) (supra) were correctly decided.
15. Section 40 lays down that no suit, prosecution or other legal proceedings shall lie against the Central Government or any Officer of the Central Government or State Government or anything which is done, or intended to be done in good faith in pursuance of the Act, and Rules made thereunder. This Section 40 only restricts the filing of suits against the officers of the Central Government or State Government if they act in good faith. By a reading of this section it cannot be inferred that the suits other than those mentioned in Section 40 would lie in the Civil Court. The view taken in the Union of India v. Ghasi Ram, AIR 1967 All 546 by a learned single Judge of this Court, in our opinion, is not a correct view and cannot be sustained.
16. In the instant case the plaintiff-respondent is seeking a refund in view of the notification issued by the Central Government on 4-5-1961. In case such a refund is refused by the Central Excise Officer, the plaintiff-respondent could have filed an appeal under Section 35 of the Act. The powers of the appellate authority being very wide, the effective relief could be given to the plaintiff-respondent by the appellate authority. The Trade Notice dated 9th May, 1961 only explains the import and lays down the procedure for the enforcement of the notification dated 4th May, 1961. It is always open to the appellate authority constituted under the Act to interpret the notification as well as the Trade notice in order to give effective relief to the aggrieved person. The question of quashing of the Trade notice dated 9th May, 1961 does not arise. The appellate authority is empowered under the wide powers conferred upon it not to give effect to the Trade notice dated 9th May, 1961 in case it comes to the opinion that it destroys the effect of the notification dated 4th May, 1961. The appellate authority had, therefore, full iurisdiction to decide the question involved in the present suit.
17. Learned counsel for the respondent has relied in this connection on the case of K. S. Venkataraman and Co. (P.) Ltd. v. State of Madras, AIR 1966 SC 1089. In the case of K. S. Venkataraman and Co. (supra), the Supreme Court has held 'that an authority created by a Statute cannot question the vires of that Statute or any of its provisions thereof where-under it functions. It must act under the Act and not outside it. If it acts on the basis of the provisions of the Statute, which is ultra vires, to that extent, it would be acting outside the Act. In that event, a suit to question the validity of such an order made outside the Act would certainly lie in a Civil Court."
18. In the instant case there is no challenge to the validity of any provisions of the Act or the Rules. There is no challenge to the provisions under which the appellate authority is to act. The principle laid down in the case of K. S. Venkataraman & Co. (AIR 1966 SC 1089) (supra) therefore, does not apply to the present case.
19. In the result, we are of the opinion that the present suit was not maintainable in the Civil Court.
20. In view of our finding that the suit is not maintainable in the Civil Court, it is not necessary for us to go into the merits of the case. We, therefore, allow the appeal, set aside the judgment and decree dated 24-2-1967 and dismiss the suit with cost throughout.
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Title

Union Of India (Uoi) vs Sir Shadi Lal Sugar And General ...

Court

High Court Of Judicature at Allahabad

JudgmentDate
15 July, 1980
Judges
  • S Chandra
  • H Seth
  • S Agarwala