Madras High Court
Union Of India vs Coromandel Prodorite Ltd. on 18 September, 1990
Equivalent citations: 1991(52)ELT165(MAD)
Author: A.S. Anand
Bench: A.S. Anand
JUDGMENT
1. A brief reference to the factual matter leading to the filing of this writ appeal needs notice at the initial stage.
2. The respondent-company markets a wide range of acid resisting cements. One of the products formulated by the respondent-company is "furacin Syrup". That syrup was sought to be classified under the Central Excise Tariff Item 15-A by the appellants herein as "artificial or synthetic resins". The classification was questioned by the respondent-company through Writ Petition No. 7254 of 1975, but the writ petition was dismissed. An appeal was preferred against the dismissal of writ petition No. 7254 of 1975. A Division Bench of this Court, after elaborate discussion, came to the conclusion that the respondent-company in producing 'furacin Syrup' was not engaged in the process of manufacture so as to attract levy under Section 3 of the Central Excise and Salt Act, 1944. Consequently, Writ Appeal No. 251 of 1978 was allowed. The appellants questioned the judgment in writ appeal No. 251 of 1978 through Special Leave Petition No. (Civil) 10150 of 1985 before the Supreme Court of India. The Special Leave Petition was, however, dismissed on 5-11-1985. Since the appellants had collected excise duty amounting to Rs. 34,61,711-66 on the classification of "furacin syrup" under tariff item 15-A, the respondent herein approached the appellants after the decision of the Division Bench of this Court in Writ Appeal No. 251 of 1978 for refund of the said amount vide communication dated 5th April, 1985. The appellants, however, did not made any refund, and on 22-8-1985 informed the respondent that they had filed Special Leave Petition in the Supreme Court. After the dismissal of the Special Leave Petition on 5-11-1985, the respondent again approached the appellants for processing of the refund claim. The refund, however, was not made and the respondent kept on making representations for the refund. But, for the reasons best known to the appellants, the amount which admittedly had been found to have been wrongfully collected as excise duty from the respondent was withheld and was not refunded to the respondent. The respondent had drawn the attention of the authorities to Section 11-B(3) of the Central Excises and Salt Act, 1944 which provides that where as a result of any order passed in an appeal or revision under that Act refund of any duty of excise becomes due to any person, the Assistant Collector of Central Excise may refund that amount to such a person without his having to make even a claim in that behalf. Despite the attention having been drawn to this position, the appellants did not relent and the refund was withheld. Subsequently, the appellants on 25-9-1986 refunded an amount of Rs. 32,75,720-91 and later on, on 10-7-1987 refunded a sum of Rs. 1,65,364-56. These refunds were, however, made during the pendency of the writ petition filed by the respondent, bearing No. 3267 of 1986. The respondent had sought a writ of mandamus directing the authorities to forthwith refund Rs. 34,61,711-66 on account of wrongly collected duty on "Furacin Syrup" for the period from 24-5-1972 to 21-1-1985 together with interest at the rate of 18 per cent. per annum from 5-11-1985 till the date of payment. A learned Single Judge of this Court, after hearing the parties and noticing that during the pendency of the writ petition refund of Rs. 34,41,085-47 had been made, directed that the appellants would be liable to pay interest at 12 per cent. per annum on the sum of Rs. 34,41,085-47 from 5-4-1985 till the respective dates of 25-9-1986 and 10-7-1987 when the amounts were refunded. The learned Single Judge noticed that though the application for refund had been filed on 5-4-1985 and that the amounts had been collected and kept by the appellants between 1972 and 1985, but since the respondent had claimed interest only from the date of the verdict of the Supreme Court on 5-11-1985, the interest was made payable from 5-11-1985 and not from any prior date. The aggrieved appellants have come up in appeal against the order of the learned Single Judge.
3. Learned Counsel for the appellants does not dispute that an amount of Rs. 34,41,085-47 had been collected by the appellants from the respondent by way of excise duty during 1972 and 1985. It also is not disputed that the right of the appellants to collect excise duty on "Furacin Syrup" has been negatived right upto the Supreme Court. It, therefore, obviously follows that the amount of excise duty had been wrongfully collected by the appellants. Though Section 11-B(3) of the Central Excises and Salt Act, 1944 would mandate that even without any application being filed for refund, the authorities are competent to make a refund, in this case the respondent had approached the authorities and kept continuously approaching them for refund of the amount; but without any justification, rhyme or reasons the appellants withheld the amount and did not refund it even on demand by the respondent. Undoubtedly there was no justification to withhold the amount after the judgment of the Supreme Court wherein the right to collect excise duty on "Furacin Syrup" had been negatived. In fairness, the appellants should have immediately made the refund. They did not do so. They withheld the amount unjustifiably and illegally.
4. The argument of the learned Counsel for the appellants, however, is that since the Central Excises and Salt Act, 1944 does not contain any provision for grant of interest on amounts wrongfully withheld by the department, the learned Single Judge should not have, in exercise of the writ jurisdiction, awarded interest at 12 per cent. per annum in favour of the respondent. We cannot agree.
5. There is no doubt that the Central Excises and Salt Act, 1944 does not in terms provide for any payment of interest on the amounts wrongfully withheld by the appellants. The absence of provision, however, cannot prevent a Court from, exercising its jurisdiction in exercise of the powers under Art. 226 of the Constitution of India so as to do justice between the parties and made an order in equity. As the Court of Equity, the High Court, while exercising powers under Art. 226 of the Constitution of India, has to reach out to undo injustice. There is no bar imposed upon the courts for granting to a citizen interest on the amounts which have been illegally and without any authority of law have been withheld from the citizen. There has been, indeed, culpable delay in making the refund on the part of the appellants and, therefore, the learned Single Judge was perfectly right and justified in directing the payment of interest on the amount wrongfully withheld. In Elpro International Limited and Others v. Joint Secretary, Government of India, Ministry of Finance and Others the apex Court opined that since the Excise duty in that case had been wrongly collected in 1966 and the amount was refunded only in May, 1977, it would be in the interest of justice to award interest to the appellant before the Supreme Court and accordingly interest was paid on the amount which had been wrongly collected and wrongfully withheld for the period when the amount was so withheld. Thus, in an excise matter itself, interest was directed to be paid on the wrongfully withheld amount.
6. In the instant case, we find on the admitted facts that the appellant had wrongfully withheld the refund of Rs. 34,41,085-47, the excess duty which it had collected by mistake. No justification has been offered for withholding the refund of the amount from the respondent. These circumstances clearly attract the equitable jurisdiction of this Court and there can, therefore, be no doubt that interest could be allowed to the respondent on the amount which was wrongfully withheld from it. The facts are not in dispute in the case. The circumstances are tell-tale. Of course, there is no express provision of law, authorising the award of interest under the Act, but that, however, would not affect the general equitable principle which is well recognised in law and is almost a part of the law of the land that for wrongful withholding of his money, a party may be relieved by payment of interest, particularly when the other party has been enjoying the benefit of the retained amount. The point for consideration in each case would depend upon the facts and circumstances of the case and no hard and general rule can be laid down but the Court's jurisdiction to undo injustice cannot be doubted. The unreasonableness of the attitude of the appellant, coupled with the nature of the claim made by the respondent for refund and the factum that the amounts were repaid, as noticed in the earlier part of the judgment, are relevant factors which have to be taken into consideration and, in our opinion, they sufficiently attract the principles of equity warranting and justifying the payment of interest on the money improperly withheld by the appellant. That the appellant is the Union of India, represented by the Chairman, Central Board of Excise & Customs and the money was collected by mistake by the Government and wrongfully retained by it would not make a difference where the question of payment of interest for the refusal to make refund is concerned. As a matter of fact, the Government ought to be more careful while dealing with its citizens and in fairness, it should have, if not before, at least soon after the judgment of the Supreme Court, itself refunded the amount wrongfully collected by it from the respondent. It chose not to do so without offering any justification for it and we are, therefore, of the opinion that substantial justice was done by the learned Single Judge in burdening the State with payment of interest for the money wrongfully withheld by it from the respondent.
7. In view of the aforesaid discussion, we find that the interest awarded at the rate of 12 per cent. per annum by the learned single Judge for the period during which the amount had been wrongfully withheld from the respondent is perfectly justified, fair, reasonable and equitable. No cause has been made out for interference by this Court. There is no merit in this writ appeal which is hereby dismissed. No costs.