Calcutta High Court
Union Of India (Uoi) vs Mahesh Kumar Goyal on 15 October, 2001
Equivalent citations: 2002(140)ELT35(CAL)
JUDGMENT Arun Kumar Mitra, J.
1. This appeal is directed against a judgment and order dated 10-9-99 passed by the ld. Single Judge in the writ petition being W.P. No. 2232/99. The writ petitioners who are respondents herein made prayers inter alia for issuance of writ in the nature of Mandamus commanding the respondents to release and/or return cash of Rs. 17 lakhs with interest (c) 30%, the security deposit of Rs. 10,000/- with interest @ 30% damages of Rs. 20 lakhs and the interest @ 30% on Rs. 80,000/-upto the date of return upto 19th May, 1997 and to cancel or rescind any notification, order of circular to that effect and also prayed for release of books of accounts and other documents seized on 15/16-1-1996. The writ petitioners also prayed for issuance of writ of certiorari for quashing the order/circular/notification issued relating to the said seizure of the cash amount of books of accounts. The writ petitioners also prayed for writ in the nature of prohibition prohibiting the respondents from withholding the amount of Rs. 17 lakhs security of Rs. 10,000/- and from retaining the books of accounts and cash seized on 16-1-96.
2. The ld. Single Judge by judgment and order which is impugned in this appeal directed the Commissioner of Central Excise to refund Rs. 17 lakhs together with interest @ 30% P.A. from the date of seizure till date of payment and also refund the security to the extent of Rs. 10,000/- together with interest @ 12% p.a. from the date of deposit of the said sum. The ld. Single Judge also directed the respondents to pay interest @ 12% P.A. on the sum of Rs. 80,000/-from the date of seizure till the date of refund. The ld. Single Judge also directed that on receipt of the aforesaid amount together with interest the writ petitioners shall keep the sum in a short term fixed deposit account with ANZ Grindlays Bank, Church Lane Branch and the same shall not be appropriate till 31st December, 1999 or until further direction which may pass by the Supreme Court if any action is taken. The Bank concerned shall not allow encashment before December 31, 1199. In the event no action is taken by December 31, 1999 or no restrain order is passed by the Supreme Court, then the writ petitioner would be at liberty to appropriate the aforesaid amounts. The writ petitioner shall also keep this security in their custody and shall not part with the sum to any third party until December 31, 1999, or until further order which may be passed by the Supreme Court.
3. The writ petitioner would be at liberty to take further action for damage since the Writ Court is not competent to pass any order on the question of damages allegedly suffered by the writ petitioner. This order was under challenged before the ld. Single Judge.
4. Facts relating to the appeal are more or less admitted which are inter alia as follows :
(a) Search was conducted by the Central Excise Dept. on 15/16-1-96 and a sum of Rs. 17.8 lakhs in cash was seized which was taken away under the custody of Central Excise Dept. Books of accounts and other documents were also seized and this seizure was made from the business premises of the respondents at 23A, N.S. Road, Calcutta-1. It may be noted in this context that the petitioners carried on business as a dealer of Iron and Steel goods.
(b) The Superintendent Central Excise, Calcutta-1 informed the respondents that the Commissioner-II Commissionerate passed an order refusing to release seized cash on adjudication proceeding, and he passed order imposing for a sum of Rs. 17 lakhs to be paid by the respondent/writ petitioners under the provisions of Central Excise Act. Adjudication order was passed firstly on 7-5-97 by the Commissioner of Central Excise, Calcutta in compliance with the direction of the Hon'ble High Court at Calcutta by order, dated 15-4-97 passed in Writ Petition No. 7464/97 and second order was passed 16-5-97.
(c) The gists of operative part of the said adjudication orders are inter alia as follow :
(i) As regards the seizure of Rs. 17,80/000/- alleged to be the sale proceeds to goods liable to confiscation, I find that the department has not conclusively established the charge that the said amount represents sale proceeds of excisable goods in relation to which the dealer has committed any breach of Central Excise Rules rendering such goods liable to confiscation, I hold that Section 101 to the Customs Act has no invokable in the present case.
(ii) Under Rule 173Q(bbb), I therefore, impose 209A of the said Act, Rs. 2 lakhs against the Respondent No. 2 herein.....
(iii) I also order recovery of the amount of penalty of Rs. 15 lakhs only and Rs. 2 lakhs only from the seized amount of Rs. 17,80,000/-. The balance amount of Rs. 80,000/- should be refunded to the dealer.
(d) Four appeals were preferred against the two orders dated 17-5-97 and 16-5-97 before the Customs, Excise & Gold (Control) Appellate Tribunal, Eastern Bench, Calcutta hereinafter referred to as "CEGAT".
16th May, 1997 :
......... Rs. 17 lacs ordered to be adjusted against the penalty of Rs. 17 lacs and the balance amount of Rs. 80,000/- ordered to be refunded to the dealer.
(e) By order dated 5-3-1998 dissenting orders were passed by the learned Technical Member and the learned Judicial Member. Learned Judicial Member rejected the four appeals and the learned Technical Member allowed the same. Four appeals were referred to the learned Third Member (Technical) and ultimately by majority order passed on 18-9-1998 all the four appeals were allowed and the impugned orders were set aside.
(f) On 2-12-1998 appellant filed applications for reference against the said order of CEGAT before the Tribunal and the said reference applications were dismissed by order dated 22-6-99. In this context it is to be mentioned that the Central Excise Dept. did not prefer any appeal against the finding of the Commissioner of Central Excise which was to the extent that the sum of Rs. 17.8 lakhs seized by the Central Excise Authorities does not represent the sale proceeds of any goods excisable under the Central Excise Act and thus the said finding became final.
(g) No application was filed under Section 35G(3) of the Central Excise Act by the Commissioner before the High Court, Calcutta requiring the Tribunal to refer any question of law. The Central Excise Dept. moved before the Division Bench of High Court at Calcutta an application under Article 226 read with Article 323B of the Constitution of India against the said order and the Division Bench of this High Court dismissed the said application of the department.
(h) The respondents, however, moved the instant writ petition with the aforementioned prayers on which the learned Single Judge passed judgment and order which is impugned in the instant appeal.
5. The submissions of the appellants in the instant appeal are :
(1) For refund of cash writ petition is not maintainable as has been held in the judgment , Sugan Mal v. State of Madhya Pradesh and Ors. and no interest is payable inasmuch as in the present case CEGAT was the only proper authority to decide on the question of return and/or refund of the said sum of Rs. 17.80 lakhs and the CEGAT has ordered refund of Rs. 17 lakhs but has not allowed any interest and the Writ Court could not and should not have awarded interest. The said sum of Rs. 17.8 lakhs was seized by the authority on the reasonable belief that they were the sale proceeds and/or result of dealing goods liable to confiscation. The learned Counsel for the appellant submitted that in similar circumstances the Hon'ble Supreme Court in the case of Union of India v. Orient Enterprises held that no right accrues entitling payment of interest on delayed refund unless statute provides.
It has also been submitted by the appellants that in this judgment Hon'ble Supreme Court held that if the statute for example Customs Act and Central Excise Act provides for payment of interest, only then interest can be paid. It has further been submitted that in this judgment also the Hon'ble Supreme Court followed the principle of Sugan Mal's case (supra) and observed that writ petition for only refund of money is not maintainable.
(2) It has also been submitted by the appellants that under Central Excise Act, Section 11BB, provides for payment of interest for delayed refund of duty which came into force on 26-5-1995 only and in view of the judgment of the Hon'ble Supreme Court and there being no provision for payment of interest for refund of money other than the duty the learned Single Bench should not have awarded any interest.
(3) It has been submitted by the respondents in their written submissions and also oral submissions that the submission made on behalf of the appellant that a writ will not lie on the refund of tax is not a sound principle.
6. Dr. Pal appearing for the respondents relied on several decisions of the Hon'ble Supreme Court and submitted that a writ will lie for the refund of tax, which has been illegally recovered. It has also been submitted by Dr. Pal that the interest has been awarded by the learned Single judge by way of compensation for the unauthorized dealing of money, which is retained, and in this regard reliance has also been placed by him on several decisions of the Hon'ble Supreme Court. It has been categorically submitted by the respondents that if any amount is refundable under the law the interest of amount so refundable is to be paid. It has also been submitted by the respondents that a writ of Mandamus is a discretionary remedy. If the Trial Court has exercised discretion on the question of refund of the amount, the appeal Court will not interfere with such discretion normally unless such discretion has been exercised arbitrarily and unreasonable and reliance have been placed on the decisions of the Hon'ble Supreme Court in this regard also. It has also been submitted on behalf of the respondents that in case no objection has been raised regarding the exercise of jurisdiction under Article 226 of the Constitution by the respondents and the discretion under Article 226 has been exercised by the Single Judge no objection can be raised in appeal. On behalf of the respondents it has been submitted that the Division Bench by order dated 10-3-2000 directed the learned Counsel for the appellant i.e. Central Excise Authority to show any authority in this regard but the learned Counsel for the appellant could not cite any decision and on the contrary reliance was placed on behalf of the respondents on the decisions of the Hon'ble Supreme Court in this regard. Conclusively, it has been submitted on behalf of the respondents that writ is very much maintainable for the refund of money when the seizure of money has been declared illegal and the interest should also be paid along with the refund and the appeal should be dismissed.
7. Considering the written and oral submissions made on behalf of the appellant and the written and oral submissions made on behalf of the respondents the facts being more or less admitted following points need be decided :-
(1) Whether the writ petition is maintainable which has been made for refund of money or whether in the instant case the issue should be relegated to the suit.
(2) Whether the interest should be paid on the refund amount and if so to what extent.
8. Now on the first point at issue referred to above it is the submission of Mr. Roy Chowdhury that no writ is maintainable for refund of money and the respondents should take the recourse of suit in the Trial Court. He relied on the decision , Sugan Mal v. State of Madhya Pradesh and Ors. In the said decision, the observation of the Hon'ble Supreme Court which is relevant for the purpose is as follows :-
"On the first point, we are of opinion that though the High Court have power to pass any appropriate order in the exercise of the powers conferred under Article 226 of the Constitution, such a petition solely praying for the issue writ of Mandamus directing the state to refund the money is not ordinarily maintainable for the simple reason that a claim for such refund can always be made in the suit against the authority which had illegally collected the money as a tax. We have been referred to case in which orders had been issued directing the state to refund taxes illegally collected, but all such cases had been those in which the petitions challenged the validity of the assessment and for consequential relief for the return of the tax illegally collected. We have not been referred to any case in which the courts were moved by a petition under Article 226 simply for the purpose of obtaining refund of money due from the state on account of its having made illegal exactions. We do not consider it proper to extend the principle justifying the consequential order directing the refund of amounts illegally realized. In the order under which the amount had been collected has been set aside, to cases in which only orders for the refund of money are sought. The parties had the right to question the illegal assessment of the order on the ground of this illegality or unconstitutionally and therefore, could take action under Article 226 for the protection of their fundamental right, and the Courts on setting aside the assessment orders, exercised their jurisdiction in proper circumstances to order the consequential relief for the refund of the tax illegally realized. We do not find any good reason to extend his principle and, therefore, hold that no petition for the issue of writ of Mandamus will be normally entertained for the purpose of merely ordering a refund of money to the return of the petitioners claim a right."
9. The Hon'ble Supreme Court further observed in this case :
"We, therefore, hold that normally petitions solely praying for the refund of money against the state by a writ of Mandamus are not to be entertained. The aggrieved party has the right of going to the Civil Court from claiming the amount and it is open to the State to raise all possible defences to the claim, defences which cannot in most case be appropriately raised and considered in the exercise of the writ jurisdiction".
10. The ratio of this judgment of the Hon'ble Supreme Court is very clear inasmuch as it has been observed that the writ is not "ordinarily maintainable" and it has also been observed that "normally" writ petition solely praying for refund of money will not be entertained inasmuch as in a Civil Court if such claim is made then the State will also be able to take all possible defences to the claim defences which cannot, in most cases be appropriately raised in the writ jurisdiction. It is, therefore, clear that the Hon'ble Supreme Court did not conclude that writ petition is not at all maintainable when there is prayer for refund of money and writ of Mandamus cannot be issued for giving directions on the authorities to grant refund of money and, in fact, what comes out from the decision that Hon'ble Supreme Court thought about possible defences to be raised on behalf of the State in the suit. But in the instant case admitted position is that there is no defences on behalf of authority in so far as the refund of money is concerned inasmuch as when it has been decided by the Central Excise Commission that the seizure of money in the instant case is illegal and no appeal as has been preferred against that order by the authorities concerned or by the department.
11. On the contrary, in the decision , Shri Anandi Mukta Sadguru S.M.V.S.J.M.S. Trust v. V.R. Rudani the Hon'ble Supreme Court observed :
"The duty must be judged in the light of positive obligation owed by the person or authority to the affected party. No matter by what means the duty is imposed. If a positive obligation exists Mandamus cannot be denied. It may be pointed out that Mandamus cannot be denied on the ground that the duty to be enforced is not imposed by the statute. The judicial control over the fast expanding maze of body affecting the rights of the people should not be put into water tight compartment. It should remain flexible to meet the requirements of variable circumstances. Mandamus is a wide remedy which must be easily available "to reach injustice wherever it is found". Technicalities should not come in the way of granting that relief under Article 226."
12. It will also appear from the judgments of the Hon'ble Supreme Court , Shiv Shankar Dal Mills v. State of Haryana and Ors. where it has been observed in the identical circumstances in Paragraph 1 of the said judgment :-
"Krishna Iyer, J.:- This big bunch of writ petitions shows how litigation has a habit of proliferation in our processual system since cases are considered in isolation, not in their comprehensive implications and docket management is an art awaiting its Indian dawn. The facts, being admitted, obviate debate. All these appellants and writ petitioners had paid market fees at the increased rate of 3 per cent (raised from the original 2 per cent) under Haryana Act No. 22 of 1977. Many dealers challenged the levy as unconstitutional, and this Court, in a series of appeals, C.A. No. 1083 of 1977 etc., Kewal Krishna v. State of Punjab, decided on May 4, 1979 , ruled that the excess of 1% over the original rate of 2% was ultra vires. This cast a consequential liability on the illegal portion. They were not so ordered probably because they could not straightaway be quantified. The petitioners who had, under mistake, paid larger sums which, after the decision of this Court holding the levy illegal, have become refundable, demand a direction to that effect to the market committees concerned. There cannot be any dispute against the obligation or the amounts since the market committees have accounts of collections and are willing to disgorge the excess sums. Indeed, if they file suits within the limitation period, decrees must surely follow. What the period of limitation is and whether Article 226 will apply are moot as it is evident from the High Court's judgment, but we are not called upon to pronounce on either point in the view we take. Where public bodies, under colour of public laws, recover people's money, later discovered to be erroneous levies, the Dharma of the situation admits of no equivocation. There is no law of limitation, especially for public bodies, on the virtue of returning what was wrongly recovered to whom it belongs. Nor is it palatable to our jurisprudence to turn down the prayer for high prerogative writs, on the negative plea of 'alternative remedy' since the root principle of law married to justice, is ubi jus ibii remedium. Long ago Dicey wrote :
"The law ubi jus ibi remedium, becomes from this point of view something more important than a mere tautological proposition. In its bearing upon constitutional law, it means that the Englishmen whose labours gradually formed the complicated set of laws and institutions which we call the Constitution, fixed their minds far more intently on providing remedies for the enforcement of particular rights or for averting definite wrongs, than upon any declarations of the Rights of Man or Englishmen...., The Constitution of the United States and the Constitution of the separate States are embodied in written or printed documents, and contain declaration of rights. But the statesmen of America have shown an unrivalled skill in providing means for giving legal security to the rights declared by American Constitutions. The rule of law is as marked a nature of the United States as of England".
13. The same view has been taken in the judgment of the Hon'ble Supreme Court (Salonath Tea Co. Ltd. v. Superintendent of Tax and Ors.), AIR 1990 SC 772 (CST v. Auriya Chambers of Commerce), (Orissa Cement Ltd. v. State of Orissa), and so may other decisions also which need not be quoted or rather the principle has not become well settled and quotation of all these decisions will only encumber this judgment unnecessarily. The seizure has admittedly been declared illegal, no appeal has been preferred against the said declaration and only consequence is this to return and/or refund the money seized illegally. In fact, Mr. Roy Chowdhury in his submission on behalf of the appellants also could not make out any defence regarding refunding excepting place reliance on the Sugan Mal case (supra) be submitted that the respondent should go to the Civil Court.
14. As stated earlier, Mr. Roy Chowdhury also relied on other decision and submitted that in this judgment same view has been reiterated as in Sugan Mal's case (supra) and since this relief is not consequential, writ petition is not maintainable. We are unable to accept this contention of Mr. Roy Chowdhury in view of the above discussion inasmuch as when admittedly the seizure of money has been declared illegal, what else can be the consequence but to refund the amount. This issue in Point No. 1 goes in the negative against the appellants.
15. In relevance to this context. Dr. Pal drew our attention that the order dated 10-3-2000 passed by the Division Bench directing the Central Excise Authority to show any authority in the case where no objection has been raised regarding the exercise of jurisdiction under Article 226 of the Constitution of India by the exercising by the Single Judge can be raised in appeal. Mr. Roy Chowdhury appearing for the appellant Central Excise Authority could not however place any decision of the Supreme Court in this regard in his support. On the contrary, Dr. Pal relied on the decision reported in AIR 1972 SC 973 (Municipal Corporation of Greater Bombay v. The Advance Builder India (P) Ltd. and Anr.) where it has been observed :-
"It is true that the writ of Mandamus is not a writ of course or a writ of right but as a rule, a matter for the discretion of the Court. But when the High Court has exercised its discretion in directing that which is in itself a lawful to be done, no other court can question that discretion by Special Leave, will not ordinarily question that discretion."
16. It is now well settled that wherever there is injustice the writ of Mandamus would reach and this is discretionary and in the instant case when admittedly the seizure of money is illegal and when admittedly there is no option but to refund the money and when admittedly the efficacious remedy is writ the appellant cannot challenge the jurisdiction of the ld. Single Judge in exercising his discretion directing the authorities to refund the amount illegally seized.
17. With regard to the second point which is to be decided is whether interest is to be paid when refunding the illegally seized amount, Mr. Roy Chowdhury placed reliance on the case of Union of India v. Orient Enterprises (supra) and submitted that when statute does not provide for any interest, no such interest can be awarded and the ld. Single Judge committed error in awarding the interest. He also submitted that in the present case CEGAT where the only proper authority to decide the question of return refund and also to decide whether any interest is to be paid and since the CEGAT has not allowed any interest the High Court should not have awarded interest.
18. Dr. Pal in his submission has placed reliance on the decision Union of India v. Justice S.S. Sandhawalia (Retd.) and Ors. where it has been observed :-
"Once it is established that an amount legally due to a party was not paid to it, the party responsible for withholding the same must pay interest at a rate considered reasonable."
19. It is admitted position that seizure of money was declared illegal, no appeal was preferred against that declaration of the illegality of the seizure and there is no restraint order by any Court of Law of which the Central Excise Authority can take advantage and withhold the amount. As a consequence of declaration of the seizure of money as illegal the Central Excise Authority cannot unlawfully detain the amount of money, and if there is withholding of any such money by any as illegal the Central Excise Authority cannot unlawfully detain the amount of money and if there is withholding of any such money by any authority, it is now settled by the several decisions of the Hon'ble Supreme Court, that in such a case the authorities are hound to pay interest though the quantum or amount of interest is upon the discretion of the Court. This issue in second part also, therefore, goes against the appellants and decided against the appellants.
20. The appeal fails and is dismissed, in the above view of the matter.
21. We, therefore, direct the appellant authorities to return the seized money of Rs. 17.80 lakhs forthwith to the respondents with interest, which has accrued, on the deposit from the date of deposit in the ANZ Grindlays Bank, Church Lane. We further direct to return the said amount with interest as mentioned above within a fortnight from date of communication of this order.
22. However, there will be no further order as to costs. All parties are to act on a xeroxed signed copy of the operative part of the judgment on usual undertaking.