Gujarat High Court
Essar Oil Ltd. & vs State Of Gujarat on 17 November, 2014
Author: Jayant Patel
Bench: Jayant Patel, C.L. Soni
C/SCA/16522/2014 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 16522 of 2014
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ESSAR OIL LTD. & 1....Petitioner(s)
Versus
STATE OF GUJARAT....Respondent(s)
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Appearance:
NANAVATI ASSOCIATES, ADVOCATE for the Petitioner(s) No. 1 - 2
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CORAM: HONOURABLE MR.JUSTICE JAYANT PATEL
and
HONOURABLE MR.JUSTICE C.L. SONI
Date : 17/11/2014
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE JAYANT PATEL)
1. The petitioner has preferred the petition for the relief at paragraph 16(A) and (B) as under:-
"16. (A) Your Lordships may be pleased to issue a writ of or in the nature of mandamus quashing and setting aside the stipulation contained in Clause 6.0(v) of the Resolution dated 11.9.1995 being the New Incentive Policy - Capital Investment Incentive Premier/Prestigious Unit Scheme, 1995 - 2000 to the effect that a unit would be permitted to go into commercial production only by or before 15.2.2003, and the extension thereof upto 15.8.2003 vide Notification dated 12.7.2001 and as contained in various Orders/Certificates, as being illegal, unconstitutional and void; and be further pleased to issue consequential directions upon the respondent to grant/restore the incentives available under the Resolution to the petitioner;Page 1 of 21 C/SCA/16522/2014 ORDER
IN THE ALTERNATIVE Your Lordships may be pleased to hold and declare that the stipulation contained in Clause 6.0(v) of the Resolution dated 11.9.1995 being the New Incentive Policy - Capital Investment Incentive Premier/Prestigious Unit Scheme, 1995 - 2000 to the effect that a unit would be permitted to go into commercial production only by or before 15.2.2003 and the extension thereof upto 15.8.2003 vide Notification dated 12.7.2001 is directory in nature and thereupon direct the respondent to consider and grant/restore the incentives available under the Resolution to the petitioner in the facts and circumstances of the case."
2. The aforesaid relief made by the petitioners shows that the petitioners are seeking prayer for quashing and setting aside stipulation contained in Clause 6.0(v) of the Resolution dated 11.9.1995 (hereinafter referred to as "the Stipulation of the Resolution), which provides for the outer date for commercial production and the discontinuation of the incentives as per the Resolution.
3. We have heard Mr.Mihir Joshi, learned Sr. Counsel appearing with Mr.Gandhi, learned Counsel for the petitioners.
4. It is an undisputed position that earlier the petitioners preferred Special Civil Application No.24233 of 2007 seeking continuation of the Page 2 of 21 C/SCA/16522/2014 ORDER incentives as per the Resolution and this Court, vide judgement dated 22.4.2008, granted the relief in favour of the petitioners holding that the time limit for commercial production shall stand extended from 15.8.2003 to 2.4.2007 and this Court also issued further consequential directions. It is also an admitted position that the State of Gujarat carried the matter before the Apex Court against the aforesaid judgement of the Division Bench of this Court in Civil Appeal No.599 of 2012 arising from SLP(C) No.17130 of 2008 and as per the judgement of the Apex Court dated 17.1.2012, the appeal of the State of Gujarat was allowed and the judgement of the High Court was set aside. It is also an admitted position that against the said order in appeal of the Apex Court, Review Application was preferred by the petitioners, which came to be dismissed vide order dated 3.4.2012 in Review Petition (C) No.604 of 2012 in Civil Appeal No.599 of 2012. It is also an undisputed position that thereafter the payment of tax, which was already collected by the petitioners was to be made, but as there was dispute on the aspect of computation and also Page 3 of 21 C/SCA/16522/2014 ORDER on the aspect of liability to pay interest SCA No.7067 of 2012 with MCA No.1649 of 2012 were preferred before this Court and the Division Bench of this Court, vide judgement dated 25.6.2012 dismissed the petition. It is also undisputed position that thereafter the petitioners further carried the matter before the Apex Court in Civil Appeal No.6539 of 2012 in SLP(C) No.20216 of 2012 and the Apex Court allowed the appeal to the extent that the balance amount of Rs.5169 crore as principal amount to be paid by the petitioners with interest at the rate of 10% per annum, effective from 17.1.2012 in eight equal instalments. Thereafter, another interim application being I.A. No.4 of 2004 in Civil Appeal No.6539 of 2012 was preferred for grant of extension of time for payment and the Apex Court vide order dated 23.9.2014 granted time of six months to the petitioners to pay last instalment of Rs.667.41 crore with the further observation that the petitioners shall not make any further application before this Court for extension of time. However, in the said order, it was lastly observed that the applicants shall Page 4 of 21 C/SCA/16522/2014 ORDER be at liberty to adopt such other recourse, which is permissible in law, insofar as other prayer of the application. Therefore, the petitioners herein consider that they are entitled to agitate more or less the same prayer as was prayed in SCA No.24233 of 2007 for striking off the date stipulation of the resolution for commencement of commercial production by the petitioners as arbitrary and unreasonable.
5. Mr.Joshi, learned Sr. Counsel appearing for the petitioners contended that the issue or the prayers made in the present petition can neither be said as barred by res judicata nor by constructive res judicata and, therefore, it is open to the petitioners to challenge the validity of the condition for outer limit for the commencement of the commercial production. He admitted that the prayer was made in the earlier round of litigation being SCA No.24233 of 2007, as per paragraph 38(C), but this Court examined prayer 38(A) and did not record any finding for prayer 38(C) and, therefore, even in the appeal before the Apex Court, there was no occasion to Page 5 of 21 C/SCA/16522/2014 ORDER consider the validity of the stipulation of the resolution providing for outer limit for the commencement of the commercial production. In the submission of Mr.Joshi, it is open to the petitioners to challenge the validity of the stipulation of the resolution for commencement of commercial production.
6. Mr.Joshi also submitted that in the appeal before the Apex Court, such aspect of validity of stipulation of the resolution could not be pressed in service, nor could be invoked, since the High Court had recorded no finding, nor any observation was made. He submitted that in the subsequent litigation of SCA No.7067 of 2012, the issue was pertaining to the payment by instalments and computation and also for the chargeability of interest and the prayers, which are made in the present petition were not adjudicated since the petitioners were pursuing the matter for the liability of the payment of amount as per the decision of the Apex Court. He submitted that, in any case, in the last order of the Apex Court dated 23.9.2014, it could be said Page 6 of 21 C/SCA/16522/2014 ORDER that the liberty was reserved for adjudication the other relief and hence, the relief prayed in the present petition could be said as the relief, which can be prayed by the petitioners. In his submission, even the conduct of the petitioners could not be said as dis-entitling the petitioners to invoke the jurisdiction of this Court under Article 226 of the Constitution of India. He submitted that if on merits, the validity of the stipulation of the resolution is examined by this Court as per the petitioners, there are various points which may arise for consideration before this Court. Hence, he submitted that the same may be examined by this Court.
7. We may, for ready reference, reproduce certain aspects, which are part of the earlier litigation and on the said aspects, rather a dispute cannot be raised:
(1) In SCA No.24233 of 2007, the prayers were made at paragraph 38, which reads as under:-
"38. The petitioners, therefore, pray that: [A] Your Lordships may be pleased to issue a Page 7 of 21 C/SCA/16522/2014 ORDER writ of mandamus or a writ in the nature of mandamus, or any other appropriate writ, order or direction mandating the Respondents that in the computation of the date of 15.8.2003 stipulated for the commencement of the commercial production by the Petitioner No.1 under the said Scheme, the period during which i.e. from 19.3.1999 to 19.1.2004 (4 years, 10 months and 1 day) the Petitioner No.1 was wrongfully stopped from carrying out the works relating to its Refinery Project shall be excluded and consequently, the petitioner No.1 shall be granted extension of time upto 16.6.2008 for the commencement of the commercial production under the said Scheme; [B] Your Lordships may be pleased to hold and declare that the time limit upto 15.8.2003 stipulated under the said Scheme for the commencement of commercial production is not applicable to the Petitioner No.1;
[C] Your Lordships may be pleased to strike down the date of 15.8.2003 stipulated under the said Scheme for the commencement of commercial production by the Petitioner No.1 as arbitrary, unreasonable and unfair; [D] Your Lordships may be pleased to direct the Respondents to grant to the petitioner No.1 all consequential and ancillary reliefs that the petitioner No.1 may become entitled to under the said Scheme;
[E] Pass such other and further orders as may be deemed just and proper in the facts and circumstances of the present case."
(2) In the judgement of this Court in SCA No.24233 of 2007, as observed earlier, this Court at paragraphs 22 and 23, following operative directions were issued:-
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"22. In view of the above discussion, we direct the respondents to consider, within one month from the date of receipt of this judgment, the petitioner's application for granting the benefits of deferment of sales tax/valued added tax under the Capital Investment Incentive Premier Prestigious Unit Scheme, 1995-2000 after proceeding on the basis that for the purpose of considering whether commercial production had commenced within the stipulated date, the period from 13.07.2000 upto 27.02.2004 shall be excluded; in other words, the time limit for commencement of commercial production shall stand extended from 15.08.2003 to 02.04.2007. We further direct that while considering the petitioner's application for the incentives as aforesaid, the State Government shall stipulate the following conditions, provided the final eligibility certificate is issued within one month from the date of receipt of the judgment :
(i) The petitioner shall not be given the benefit of deferment of Salestax/Value Added Tax beyond 14th August, 2020.
(ii) The amount of Salestax/VAT already paid/payable by the petitioner for the period upto today shall not be refunded to the petitioner.
(The above amount is stated by the petitioner Company to be above Rs.300 crores)
(iii) Without adjusting the Salestax/VAT paid for the period upto today as aforesaid, the amount otherwise computable under the Incentive Scheme on the basis of the eligible capital investment made by the petitioner in the unit under consideration shall be reduced by Rs.700 crores. While the above direction for consideration shall be complied with within one month from the date of receipt of this judgment, the State Government shall also consider issuance of Page 9 of 21 C/SCA/16522/2014 ORDER adhoc eligibility certificate in terms of clause 7(d) of the Incentive Scheme, if permissible under the Incentive Scheme.
23. It is clarified that the above directions are given in the peculiar facts and circumstances of the case where this Court had restrained the State Government from granting any permission under the Wild Life (Protection) Act, 1972 and the Apex Court reversed the decision of this Court and directed the State Government to issue the permission under the Act after considering the events commencing from 1990 onwards, including the observation made by the Apex Court in the judgment dated 19.01.2004 that while rejecting the present petitioner - company's review application in 2000, this Court did not avail of the opportunity for rectifying the error made by this Court earlier in deciding against petitioner Essar Oil Ltd. without hearing it."
8. The relevant aspect is that in the appeal before the Apex Court, no cross appeal was preferred by the petitioners herein, contending, inter alia, that even if the aspect of restitution or unjust enrichment is not considered, the stipulation putting outer limit of commencement of commercial production can be said as arbitrary, unreasonable or void or that such stipulation of the resolution be declared as ultra vires or unconstitutional or void. In the judgement of the Apex Court, some relevant observation can be extracted, which reads as under:-
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"42. ... One thing which is of some importance is that the dispute the stay of this Court and the Government letter dated 29.10.2001, Essar did not challenge the Government stand in the pending Special Leave Petition filed by it in this Court."
"44.Essar just requested by its letter dated 11.04.2002 the Industries Commissioner to extend the date of commercial production to 30.11.2004 instead of 15.08.2003 for the purpose of availing the incentive benefit under the Scheme and cited that the delay in completing the project and consequent delay in starting commercial production was due to the factors beyond the control of Essar. Further by letter dated 07.05.2002 Essar in continuation of the letterdated 11.04.2002 requested the Industries Commissioner to extend the date of commercial production to August 2006."
"45.The Industries Commissioner refused to grant any further extension of time vide its letterdated 28.05.2002 and also made it clear to Essar to go into commercial production within the specified time i.e. till 15.08.2003. ..."
"68. From the facts of the case which has been discussed above it is debatable whether the respondent's inability to avail benefit under the said Scheme is because of its own act or because of the act of the appellant. There is a reasonable basis in the argument of the appellant that after this Court granted the stay order on 11.5.2001 on the special leave petition filed by Essar, the respondents should have made an effort of obtaining the necessary licence by again coming to the Court. Admittedly Essar did not do it. Essar merely represented to the State for grant of licence. Assuming that the State had not responded favourably to the representation Page 11 of 21 C/SCA/16522/2014 ORDER of Essar by giving the clearance, it was open to Essar to approach this Court for some order as its special leave petition was pending before this Court. Essar did not do it. Therefore, the question remains whether Essar acted with due diligence in obtaining the equitable remedy of restitution. It is well known that due diligence must be exhibited by the party to seek equity.
69.Now, if we take the case of Essar on a higher plain that it has done its duty even then it has been denied of the benefit of the said scheme, even then there is no question of restitution by the State for the simple reason that it is nobody's case that State has received any unjust benefit or any unjust enrichment in view of stay order given by the High Court in the second PILs filed in the High Court. ... ...Therefore, the State has not at all gained or received any benefit as a result of the orders passed by the High Court on the second PILs...."
"84.In the instant case, no inaction on the part of appellant was pleaded by Essar. In fact before the High Court, Essar expressly gave up its plea of delay against the appellant. ..."
"85. ...But no question of issue estoppel was argued before the High Court and no such question actually has fallen for consideration in the course of argument before this Court. ..."
"88.This Court held that the principle that in case of ambiguity, a taxing statute should be construed in favour of the assessee, does not apply to the construction of an exception or an exempting provision, as the same have to be construed strictly. Further this Court also held that a person invoking an Page 12 of 21 C/SCA/16522/2014 ORDER exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision and in case of doubt or ambiguity, benefit of it must go to the State.
89.In this case, Essar was categorically told by letter dated 28.05.2002, which is much prior to the expiry of the period, that time for availing the exemption cannot be extended. Admittedly, Essar failed to meet the deadline. In that factual scenario, the exercise undertaken by the High Court in the impugned judgment by directing various adjustments which virtually rewrote the State's exemption scheme, is an exercise which is, with great respect, neither warranted in law nor supported by precedents. There is no question of equity here, an exemption is a stand alone process. Either an industry claiming exemption comes within it or it does not." (Emphasis supplied)
9. In view of the aforesaid reasons, ultimately, the Apex Court allowed the appeal and set aside the judgement of the High Court.
10. The aforesaid observations made by the Apex Court in the judgement shows that the aspect of stipulation of the resolution, its applicability, the circumstances under which the benefit of incentives ceased to be made available and the effect thereof in a taxing statute were considered by the Apex Court. Even if it is considered for the sake of examination that the relief for validity of the stipulation of the Page 13 of 21 C/SCA/16522/2014 ORDER resolution was not examined by the High Court and, therefore, the Apex Court had no occasion to consider the same, then also nothing prevented the petitioners to raise the contention in the appeal by way of cross appeal or otherwise for considering the alternative prayer for the validity of the stipulation in the resolution, but it appears that the petitioners at the relevant point of time did not press or rather abandoned the availability plea for the challenge to the stipulation of the resolution. Even in the Review Application after the judgement of the Apex Court the petitioner could have agitated the said point, but has not been agitated and, in any case, the review has been dismissed by the Apex Court vide order dated 3.4.2012.
11. The conduct of the petitioners thereafter shows that the petitioners accepted the judgement of the Apex Court for non-availability of the incentive on account of not satisfying the condition of the resolution and the liability to pay the amount of tax already collected by it from the public at large including the consumers. Page 14 of 21 C/SCA/16522/2014 ORDER After having accepted the judgement of the Apex Court when the dispute arose for quantum of amount and liability to pay the interest, the petitioners herein preferred petition being SCA No.7067 of 2012 and at that stage also, the petitioners did not challenge the validity of the stipulation of the resolution. Subsequently, even in the SLP before the Apex Court the aspect which has been pressed in service is for the payment by instalments and liability to pay interest, but not for the validity of the stipulation of the Resolution. Subsequently, when interim application was made, the prayer maintained is for extension of time to make the payment and the same is considered by the Apex Court. The last observation at paragraph 9, for liberty to adopt other course for the other prayers in the application, in our view, cannot be read to travel beyond the scope of the main petition before this Court being SCA No.7067 of 2012 and the SLP arising therefrom. When no prayer for challenging the validity of the stipulation of the resolution was made, but rather it was acquiesced and abandoned like the Page 15 of 21 C/SCA/16522/2014 ORDER earlier litigation in the proceedings before the Apex Court of SLP, the observations made in the order dated 23.9.2014 of the Apex Court cannot be read as sought to be canvassed by the learned Counsel for the petitioners.
12. In our view, three aspects may be required to be considered before entertainment of the present petition; one is the principles of constructive res judicata; second is the sanctity of the orders passed by the competent Court and; the third is the discretion to be exercised under Article 226 of the Constitution of India.
13. It is true that the CPC is not applicable in stricto sensu to the writ proceedings but it is by now well settled that normally the principles analogues to the provisions of CPC may be applied. Further the principles of res judicata and constructive res judicata are applied by the Courts even in writ proceedings, more particularly when the rights of the parties are governed by the judicial orders for their, inter se, liabilities and such is also applied in the larger public policy, in order to maintain the Page 16 of 21 C/SCA/16522/2014 ORDER sanctity of the orders of the competent Court. Section 11 and Explanation 4 and 5 CPC reads as under:-
"11. Res judicata. No Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a Court competent to try such subsequent suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court.
Explanation I.Xxx Explanation II. Xxx Explanation III. Xxx Explanation IV. Any matter which might and ought to have been made ground of defence or
attack in such former suit shall be deemed to have been a matter directly and substantially in issue in such suit.
Explanation V.Any relief claimed in the plaint, which is not expressly granted by the decree, shall for the purposes of this section, be deemed to have been refused." (Emphasis supplied)
14. In our view, the prayer when was expressly made in SCA No.24233 of 2007, if not entertained or granted by the Court, it could be said as deemed to have been denied and further, in any case, such could be agitated by the petitioners in the appeal before the Apex Court preferred by the State in view of the provisions of Order 41 Rules 23 and 23A of CPC.
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15. Mr.Joshi, learned Sr. Counsel for the petitioners made an attempt to rely upon the decision of the Apex Court in the case of Most Rev. P.M.A. Metropolitan and Others Vs. Moran Mar Marthoma and Another, reported in 1995 Supl. (4) SCC, 286 and more particularly the observations made at paragraph 59 in the said decision for contending that even the principles of res judicata would not apply, nor the petitioners could agitate such questions in the appeal before the Apex Court. He also relied upon the decision of the Apex Court in the case of State of Maharashtra and Another Vs. National Construction Company, Bombay and Another, reported in (1996) 1 SCC 735 and more particularly the observations made paragraph 6 for contending that the res judicata would not operate in the present case.
16. In the decision of the Apex Court in the case of Most Rev. P.M.A. Metropolitan and Others Vs. Moran Mar Marthoma and Another (supra), the question of the Apex Court did not expressly consider the explanations IV and V of Section 11 Page 18 of 21 C/SCA/16522/2014 ORDER of CPC. In another decision of the Apex Court in the case of State of Maharashtra (Supra), similar is the position, because the Apex Court after referring the explanation IV, only proceeded to interpret Section 11. In none of the said decisions, the Apex Court had an occasion to consider Section 11 with explanation IV and V of CPC read with Order 43 Rules 23 and 23A of CPC. Further, the facts of the present case cannot be equated with the facts of the matters before the Apex Court. Under these circumstances, both the said decisions are of no help to the petitioners.
17. If the sanctity of the orders passed by the Apex Court is to be considered, we are of the view that when the petitioners' liability to pay the amount of tax, for which the benefit by way of incentives is not available to the petitioners, such is required to be given effect. No party to the proceedings can be permitted to avoid the liability by an indirect manner, raising a new contention, which was earlier, though raised, which was not entertained or deemed as denied. If such the litigants are Page 19 of 21 C/SCA/16522/2014 ORDER permitted to re-agitate the questions, so as to avoid the consequential liability to pay the amount of tax or revenue, such would dilute the sanctity of the orders passed by the competent Court.
18. On the aspect of conduct of the petitioners, in view of the facts and circumstances mentioned herein above , we find that the present petition could be said as an ingenious device to avoid the liability to pay the tax or revenue to the State, which is already collected by the petitioners from the consumers and for which in the earlier round of litigation it has been concluded. Considering the facts and circumstances, we find that the conduct on the part of the petitioners to challenge the stipulation of the Resolution and consequently, an attempt to avoid liability to pay the amount of tax to the State, which is already collected by it from the consumers is sufficient in our view to dis-entitle the petitioners to invoke the jurisdiction of this Court under Article 226 of the Constitution of India. Hence, we find that the discretion does Page 20 of 21 C/SCA/16522/2014 ORDER not deserve to be exercised for allowing the petitioners to invoke the jurisdiction of this Court or to entrust the writ under Article 226 of the Constitution of India.
19. In view of the above, no interference deserves to be made. Hence, the present petition is dismissed.
(JAYANT PATEL, J.) (C.L.SONI, J.) vinod Page 21 of 21