Kerala High Court
V.K. Thampi vs Collector Of Central Excise on 1 February, 1996
Equivalent citations: 1996(87)ELT610(KER)
Author: G. Sivarajan
Bench: G. Sivarajan
ORDER V.V. Kamat, J.
1. As per the direction of this court 1989 (2) KLT 65 - Thampi v. Collector of Central Excise, by the reference order (Annexure N to this petition), the Appellate Tribunal has referred the following four questions which are required to be answered in this proceeding by us:-
"1. Whether, on the facts and in the circumstances of the case, is not the ex parte order under appeal liable to be set aside and the appellant given a fresh opportunity to file his written representation to the show cause notice, as the failure to submit the written representation in time was not due to any fault on the part of the appellant, but, if at all, was the result of the fault committed by his Counsel;
2. Whether, on the facts and in the circumstances of the case, is not the order under appeal bad for non-compliance with Rule 233A of the Central Excise Rules, 1944 by which a duty is cast on the respondent to afford the person proceeded against, a reasonable opportunity of being heard, over and above the opportunity of making a representation in writing?
3. Whether, on a perusal of the order under appeal, can it be said that the respondent has complied with the provisions of Rule 173Q of the Central Excise Rules, 1944 in as much as the respondent has ordered, the confiscation of the land, building, plant, machinery etc. used in the manufacture, storage etc.?
4. Whether, in the facts and circumstances of the case, is not the order under appeal incompetent and liable to be set aside for violation of the maxim nemo judex in re sua in as much as the adjudicating authority (respondent) was responsible for sanction order No. 3/86-87 dated 4-4-1986 distributing advance cash rewards to the various officers who participated in the detection/investigation of the case relating to . Vitco Rubber Industries, Kizhakkambalam and thereby prejudging the issues arising for adjudication?"
2. The answer to these questions requires to know the principles of natural justice in the context. The principles are founded on the bedrock of fairness and reasonableness. "Justice" implies consideration of the pros and cons of the problem under consideration. It necessitates what is known as "hearing" in the process. The postulate of adversary system of dispensation of justice presumes hearing the party seeking redress in the context. This hearing, if considered in terms of fairness and reasonableness enunciates basic and fundamental principle that as far as possible, depending on the facts and circumstances of the case under consideration, there has to be an end of solution on a context and this basic approach requires safeguarding of this aspect of hearing also in terms of fairness and reasonableness.
3. "Fairness and reasonableness" is recognised if certain requirements of adversary system are kept in mind because it is only as a result of hearing the person seeking redress that a fair and reasonable pathway could be understood and appreciated in the process of reaching the solution in record thereto.
4. The adversary system has also made it necessary to appreciate and understand participation of the members of the profession of law as representatives of the person seeking redress in the context. In this proceeding it will also be necessary to consider the place of importance of representatives in the process of hearing, again as a consequence of fairness and reasonableness.
5. With advantage certain observations of the referring judgment, as a floodlight to consider the question as a facet of the application of the principles of natural justice; it is observed that the concept of fairplay in action which is the basis of natural justice would have to depend upon the peculiar lis between the parties and in regard thereto rules and practices would have to be appreciated as constantly developing to ensure fairness in the making of decisions which affect persons in their daily lives and livelihood. When it is seen that the person seeking redress entrusted the matter to a member of the legal profession, and at all times he approached the advocate and bona fide acted depending on him, the impugned order undisputedly passed ex parte against him, adversely affecting him and resulting in disastrous civil consequence, serious consideration of the interplay of affording reasonable opportunity comes up for consideration before the court. In the context it becomes also to consider how the profession of law is looked upon by courts in the context.
6. Some thoughts become compelling and really relevant in the context. The idea of what is right and what is wrong in conduct is largely learnt and imbibed during upbringing, whether in a family or society or trade or even profession. This is the ethical essence. The personality of Advocate, both for the dignity of the profession and for better quality of service to the public is built up on certain standards. In the words of Lord Macmillan of the Privy Council, no other profession touches human life at so many points. The guardianship of two precious things in life - justice and liberty - vests in the legal profession and this makes the profession honourable with roots in its long and established traditions. The canons of conduct are traditionally vinderstood and wellknown. The court is also the firm supporter of the independence of the Bar and in the process treats an Advocate not as a subordinate officer of the court, but on a much higher level than that, and in a sense it is largely through the labours of counsel that the court is enabled to despatch the business of the court or to despatch its business. It is a relationship of best friendship in the administration of justice, with a spirit that let the system of law prevail though the heavens fall.
7. The relationship of an Advocate and his client is essentially of a fiduciary character - a representative and not as a mouth piece of the client. This rules out reckless and wild allegations even if suitable to the success of the litigation. The relationship is in the process of justice to uphold the dignity and decorum of the institution as well as to prevent its disrepute as a consequence.
8. In the process if any aspect of the situation demands, justice gets blended with temperance so that the blunder of a moment is prevented from its consequences and sorrow for the rest of the life of the profession, as well as the concerned litigation. The above observations which form part of the judgment Civil Revision Applications Nos. 1141,1096 & 1155/1992 of the Bombay High Court, Aurangabad Bench, delivered by one of us (Kamat, J.) could not be said to be inapt in the situation under consideration.
9. In a similar context the Allahabad High Court AIR 1960 Allahabad 164 - Harbans Lal v. Divl. Supdt. Central Rly, had an occasion to focus the responsibility of an Advocate emphasising that clients are guided by counsel and on occasions it becomes necessary for counsel to discharge his duty to the client and point out to the court that the action taken against him gets vitiated by a multiplicity of factors creating a situation that it is the function of the counsel to take every possible care and precaution in the matter and at times in the context it also becomes the duty of the court to enter into the arena to uphold the traditional dignity of the profession.
10. In our judgment the above observations would have to be borne in mind in the process of answering the questions under reference.
11. To come again to the initial thrust of emphasis, it would be seen that the main question relates to the decision as to whether there is violation of the principles of natural justice by a denial of opportunity to the petitioner to place his case on merits. In other words, we are required to consider as to whether what is done by the Advocate for the present petitioner could legitimately travel and reach the door steps of the petitioner who is being required to suffer consequence of the impugned ex parte order. Again, with advantage, the referring court has also spoken for us by placing reliance on the decision of the Supreme Court (1986) 3 SCC 454 - Sawai Singh v. State of Rajasthan, to observe that the concept of fair play in action is the basis of natural justice, and to proceed further to refer to yet another decision of the Supreme Court AIR 1981 SC 1401 - Rafiq v. Munshilal, to sum up the declaration of law in the context.
12. The requirements of natural justice depend upon the facts and circumstances of the case, the nature of the enquiry, the rules under which the Tribunal is acting, the subject matter to be dealt with and so on. The concept of fair play in action which is the basis of natural justice must depend on the peculiar lis between the parties. Rules and practices are constantly developing to ensure fairness in the making of decisions which affect people in their daily life and livelihood. It is not proper that an innocent litigant, after doing everything in his power to effectively participate in his proceeding by entrusting his case to the advocate, should be made to suffer for the inaction, deliberate omission or misdemeanour of his counsel. For whatever reason the advocate might have absented himself from the court, the innocent litigant could not be allowed to suffer injustice for the fault of his advocate.
13. Even the standard treatise on natural justice (Natural Justice - Principles and Practical Application by Geoffrey A Flick - Butterworths 1979) emphasises the importance of the role of the lawyer in Chapter VII thereof under the same caption to state that this role has to be as a representative and such a representative has to provide both emotional assistance and constructive advice to his client and it is one of the best means whereby unfairness can be checked by his active participation of course of the right quality.
14. A logical extension of above observations would be that the courts are traditionally equipped to recognise the importance of the role of lawyer in the context. It would not be out of place in this context commensurate with the recognition of the role of the lawyer to observe that as far as possible the lawyer should not immediately drive to file an affidavit on record. In consonance with the place that he gets as recognised, a mere statement or the letter would have synonymity of all the sanctity of an affidavit in the context. The practice by the members of the Bar to file affidavits in the context gets discouraged in the very nature of the situation recognising the member of the Bar in the above manner. Needless to state in the context that none should insist upon the members of the Bar to tender affidavit in the context of a situation emerging requirement to know as to what really happened. Needless also to emphasise that if in a situation the court has before it, although not expected and much less desirable an affidavit in the context, then in the natural process it would have its weightage much more against a bare denial of the other side.
15. To appreciate the controversy, spread over of the factual matrix would be inevitable because it is the lament of the situation of this proceeding that it comes before us in a situation where merits are totally untouched even though they were necessary and desirable especially in the context of the submission of denial of reasonable opportunity.
16. The proceeding commenced with a show cause notice dated January 29, 1986. The petitioner is the proprietor of Vitco Rubber Industries, Kizhakkambalam engaged in the manufacture of tread rubber. The commodity is an excisable item. It is the contention that the petitioner is entitled to exemption in force available to small scale industries as his factory was exempted from licensing control and also from payment of excise duty upto the specified turnover limit.
17. The officers of the Central Excise Wing, Cochin, on August 3,1985 visited the petitioner's factory on a surprise check, verified the stock and account of tread rubber. On the spot no discrepancy was detected as alleged by the petitioner; but registers and files were seized. His residence was raided and certain records were seized therefrom. The petitioner was arrested and detained. His statement was recorded. All these are the basis of the show cause notice (Annexure A to the petition).
18. A bare and cursory perusal of the contents of the show cause notice would show that the Excise Authorities collected voluminous material in the nature of statements and seizure of documents not only from the present petitioner, but also from other sources. Although for the purpose of this proceeding it would really not be necessary to go into the minute details of the contents of the show cause notice, it would be enough to state that the show cause notice itself runs into 35 pages and a further perusal to the list of records in support thereof would reveal in the same way that reliance is placed on 45 items in support of the contents of the show cause notice. Although with regard to the initial surprise visit it is averred that the tread rubber comes to Rs. 10,000/- and relates to consequential avoidance of duty of Rs. 3675/- approximately, probably on the basis of further probe in the matter consisting of the list of materials annexed to the show cause notice it is alleged that . Vitco Rubber Industries was required to show cause to the Collector of Central Excise, Cochin as to how duty amounting to Rs. 17,47,091.53 should not be demanded and also as to why the commodity - tread rubber - amounting to 441 Kgs. may not be confiscated under the provisions specified therein of Central Excise Rules, 1944.
19. The record further shows that the Collector of Customs and Central Excise (Central Excise Wing, Cochin) proceeded ex-parte and by an order dated June 19,1986 (Annexure D) demanded duty of Rs. 17,47,091.53 under Rule 9(2) of the Central Excise Rules, 1944 read with Section 11A of the Central Excises and Salt Act, 1944. A penalty of Rs. 5 lakhs is also imposed by the order under Rules 9(2), 52(A), 173Q and 226 of the said rules.
20. In addition, the land, building, plant, machinery used in the manufacture, storage etc. are also ordered to be confiscated under Rule 173Q of the Central Excise Rules, 1944 granting an option to redeem on payment of fine of Rs. 50,000/-. The seized tread rubber is also confiscated under the Rule 173Q, also granting option to redeem on payment of fine of Rs. 5000/-. Apart therefrom a personal penalty of Rs. 2000/- is also imposed on the present petitioner. It is necessary to mention that even this ex-parte order runs into 25 pages.
21. The travel of the proceedings takes us to the order of this court in O.P. No. 5638/1986 dated August 11, 1986 because the petitioner approached this court against this ex-parte order (Ext. P3 therein) being dated June 19,1986. In fact in the earlier judgment of this court the situation is crystal clear and feasible in the context of the problem at hand. This court (K. Sukumaran J.) has observed that the "petitioner has got into a difficult situation" for defaults not attributable with the Department, at any rate directly and substantially. The petitioner certainly has got severe handicaps in the resultant situation. That is apparently due to the fact that there has not been an effective or prompt attention paid by the person with whom the matter has been entrusted.
22. However, this court took the view that the petitioner must pursue his remedy before the Appellate Authority observing by way of a caution that the interest of the Revenue should not weigh with the Appellate Authority in the matter of waiving the deposit as a pre-condition for filing an appeal.
23. It is with this established situation as regards the predicament of the petitioner at the hands of his legal adviser, under the earlier orders of this court (supra), the proceeding reached the Appellate Authority.
24. It must be understood that the Appellate Tribunal was concerned with the ex parte order (Annexure B) based on the show cause notice (Annexure A) on the basis (as stated in paragraph 39) of the ex parte order) that the show cause notice was received on 31-1-1986 as per the signed acknowledgment and no reply was received in regard thereto with a further reiteration that chance was given on May 13, 1986 by a registered letter which was received by all parties on 20/21 May, 1986 clearly mentioning that in the absence of a reply within seven days the case would be decided ex parte on available records, strengthening the authority to proceed ex parte on the basis of the above referred material.
25. The relevant aspect in regard to the authority passing the ex parte order and reasons available in paragraph 39 thereof is taken up for consideration in paragraph 7 of the order of the Appellate Tribunal (Annexure K). So far as is relevant, it is as follows :-
"We have carefully considered the submissions made before us. The admitted fact remains that the show cause notice dated 29-1-1986 was received by the appellant on 31-1-1986. Since the appellant did not at all reply to the show cause notice, a reminder was also sent by the Collector under registered post on 13-5-1986 which was admittedly received by the appellant. The only plea of the appellant is that the appellant had entrusted the matter to an advocate at Cochin who would claim to have sent a communication to the adjudicating authority on 3-3-1986 asking for the copies of the documents referred to in the show cause notice. When the appellant received the original show cause notice in January, 1986 he did not respond to the same either himself or through the advocate. The present plea that a communication was addressed by an advocate on 3-3-1986 has not been in any way substantiated before us except the ipse dixit on the part of the appellant."
26. It is obvious as would be considered hereafter that tine observation that the plea that a communication was addressed by the Advocate on March 3,1986 has not been in any way substantiated before us except the ipse dixit on the part of the appellant. In our judgment it would have to be observed that this cannot be considered as ipse dixit. The use of the expression, to say the least, is uncharitable in the context. It is more so when in the next breath the Appellate Tribunal seized the document in the context. It is observed immediately thereafter as follows:-
"No doubt an affidavit has been filed by the advocate Shri Rajasekharan Nair that he prepared a letter addressed to the Collector of Central Excise, Cochin on 3-3-1986 requesting for the copy of the relevant documents and sent it by post along with his vakalat."
27. It is then seen that on the basis of oral query it was found out that the residence of the Advocate is at a distance of about 3 to 4 kms. and as a consequence the Tribunal inferred a natural expectation when there was no response to the communication from his counsel residing in the close vicinity of the office of the Central Excise, Cochin, also expecting the learned counsel to reach the office under the situational peculiarities.
28. The Appellate Tribunal also considered the fact that on May 13, 1986 a reminder was also sent to the appellant and was received by him which was also shown to the appellant's counsel. The Appellate Tribunal has observed that "even in such a situation neither the appellant nor his counsel would react and the advocate merely "advised him to wait till the documents were received"". It is in these circumstances the Appellate Tribunal reached factual conclusion that the adjudicating authority afforded enough opportunity to the appellant, when admittedly the appellant received two earlier communications as referred to above, justifying in the process that the adjudicating authority had no other alternative.
29. It becomes necessary at this stage to refer to the contents of the affidavit. Certain facts requires reference as they are ignored in the process of reasoning. The learned Advocate Sri Rajasekharan Nair, who is unfortunately, we are told, no more, was a practising advocate at Ernakulam and the petitioner had approached him with a copy of the show cause notice received by him for the purpose of defending him in the adjudication proceedings. The said advocate agreed to accept and obtained signature on the vakalathnama as the matter was entrusted to him. The petitioner was told that since copies of relevant documents were not furnished to him from the Excise Department along with the notice to show cause, a request for that would be made while filing the vakalath. It is then stated on affirmation that the advocate thought of entrusting of the vakalathnama the letter requesting furnishing of the copies of the documents in the office of the Central Excise, Broadway, Cochin-31 when he would go over there to attend to some case. He could not do so on account of personal inconvenience. He prepared a letter dated March 3,1986 addressed to the Collector of Central Excise, Broadway, Cochin-31 requesting to furnish the relevant documents and send the communication by post along with the vakalathnama accepted by him from the petitioner.
30. We have to consider this statement on oath because it has not been considered at all. We are told by the learned counsel appearing before us that the said advocate is retired employee of the office of the Collector of Central Excise itself. This fact, in our judgment, would lend assurance to the above statement of solemn affirmation.
31. It is stated thereafter that the advocate waited for some time to get the reply communication from the Department. During the third week of May 1986 the said advocate had gone to Madras in connection with the college admission of his son and was required to stay at Madras a few days for the said purpose. On return, the affirmation continues, he learnt that the petitioner had come to see him and had to return since he was not available entrusting one more communication (obviously dated May 13,1986). The petitioner again met him and he was advised to wait till the documents were received.
32. It is further averred that since there was no reply to the demand for the supply of the copies of the documents, the advocate despatched further communication dated June 20, 1986 by registered post with a simultaneous personal delivery in the office of the Collector of Central Excise, Broadway, Ernakulam.
33. A copy of the said letter is on record before us at Annexure B, perusal of which would reveal that there is a reference to the letter dated March 3,1986 enclosing the vakalathnama and demanding supply of documents.
34. The affidavit further proceeds with a reference to the visit of the petitioner on July 1,1986 to convey to him that ex parte final order was passed on June 19, 1986, received by the petitioner on July 1, 1986. We have seen the record and it is seen that the ex parte adjudication dated June 19, 1986 gets communicated to the petitioner by the communication dated June 30,. 1986 (Annexure C).
35. Careful examination and perusal of the material in this connection shows that the learned advocate demanded copies of the documents and was waiting for the copies to prepare a suitable reply in regard thereto. It is true that the copy of the communication dated March 3,1986 is not on record. What we have before us in an affirmed testimony of the professional as against a bare denial of the Department. Our anxiety and consciousness prompted us to see the original record file to know that this communication dated March 3,1986 or even the vakalath is not in the record. The question is whether by its absence we should disbelieve the sworn testimony of the learned advocate, who, as we are told as stated hereinbefore, retired from the very same Department and on probabilities must be understood to be conversant with the manner in which the office functions. The learned advocate has also stated on oath that initially he thought of entrusting the vakalath along with the letter demanding documents when he was to come over there to attend some other case. He could not and therefore sent it by post. The Appellate Tribunal, finding out the distance of 3-4 kms., expected somebody to walk down, if not the appellant before it, even the counsel. All that we can say is that we find it difficult to endorse this approach. This is in the light of what we understand in regard to the position of the advocate.
36. The learned counsel for the Department strenuously submitted that the letter must not have been posted. We are afraid that it is not possible for us to resort to speculative reasoning which is attempted to be submitted before us more so in the light of positive accepted position available from the earlier judgment of this court (O.P. No. 5638/1986 referred to above) that all this occurred because no effective or prompt attention was paid by the person with whom the matter was entrusted. This was a prima facie observation at that stage. We have already considered the manner in which the question was dealt with undesirably by the Appellate Tribunal.
37. In the context we are required to consider as to whether the said advocate would be blameworthy in expecting and consequently demanding copies of documents and as a consequence would have to be understood as more than casual in the process. The learned advocate had the experience of the Department as we have observed above. At the outset itself we have observed that the merits are left untouched. The material on record shows that the show cause notice as well as the ex parte order have their meaningful size having a baring on this question under consideration as to whether the advocate could be said to be casual in expecting copies of documents. The learned advocate was engaged to file a reply and contest the proceedings. The proceeding proposed imposition of duty of an enormous amount stated hereinbefore. Additionally it also proposed confiscation of the property. Even a bare perusal, as we have done, of the contents of the show cause notice shows the magnitude of the situation. The question is if an advocate, who has retired from the Department, feels that copies of documents are required, in our judgment, it is not possible to agree that the learned advocate was more than casual in the circumstances. The material on record also shows that he was out of station from 20/21 May, 1986, not for an excursion but for a serious cause of admission of his son. The chronology of events show that the petitioner received the communication dated May 13,1986 sometime on 20 or 21st which was left by him with one of the members of the family of the learned advocate. The record also shows that the petitioner contacted the learned advocate on his arrival from Madras. The material further shows that the ex parte order dated June 19, 1986 was communicated by the communication dated June 30, 1986 received by the petitioner on July 1, 1986. It would be seen that both the petitioner as well as his advocate could not be said to have known the ex parte order dated June 19, 1986. The submission of the learned counsel in this context that the petitioner must have known of the order which can be inferred from the fact that the communication dated June 20,1986 reiterating the demand for supply of copies should not be considered by us as a mere coincidence. The material that is available on record is not sufficient even for speculation in the context much less fertile imagination on the basis of the cold print record. An order dated June 19,1986, not with any comment, but only by way of an answer to the submission of the learned counsel gives the date '19' in ink in contrast with all other typed material of the entire order. We said all this only to record that we are not speculating in the similar manner in which the submission is made before us.
38. It must be made clear that all the above discussion requires careful examination to understand the said advocate taking a view of demanding copies to enable him to answer the show cause notice. At the same time we have also to bear in mind that it is because of this advocate that the petitioner is at peril. Although we have made attempt to understand the learned advocate, we are left with a feeling that much is desired in the context of the situation. The professional method of dealing with the situation requires certain expected standards of discipline and method. It has to be emphasised that it is the discipline and method continuously and properly inculcated that makes everyone concerned to understand and judge the concerned conduct. Although the advocate has a place of dignity and status in court in the professional conduct, expectation is in terms of purity of standards and transparency in the context. The conduct that gets displayed is expected to be above suspicion like Julius Caesor's wife. It is not unknown that there is something like a despatch book with regard to correspondence transmitted by personal delivery. It is also not unknown that the correspondence of the advocate by way of a habit of routine leaves his office to the post-office under certificate of posting. It is also not unknown that in the case file of the concerned client a copy of the correspondence also finds place. It is high time that all this is required to be conveyed to the new entrants to the profession. All this we can naturally expect from the said advocate who is the dramatis personae in this proceeding. It is for the above reason that we are required to record certain aspects so that the members of the Bar reach a place of worth in the process of their exalted status in the approach of the court specified herein before. We are left with a situation of an affirmed testimony of the advocate as against the bare denial and even on that count it would not be necessary to emphasise that the sworn testimony would have its own weightage much more so when the said sworn testimony is by a member of the profession. We can only record a hope in a similar situation that the court should not be required, firstly to expect an affidavit of the advocate and secondly be required to rely upon it as a sole piece of evidence in regard thereto. We have done it in the context of factual peculiarity of being required to waive the testimony as against a bare denial.
39. As observed above, the position with regard to the assumed fault of the counsel cannot justify reach of its consequence at the door steps of the party. The principle is obvious in the sense that the counsel is only in the nature of a representative and cannot be understood as has been understood by the Tribunal as an agent of the party. The Supreme Court in Rafiq's case (supra) has realised "the real position as a declaration of law in the context to pose a question". The problem that agitates us is whether it is proper that the party should suffer for the inaction, deliberate action, or misdemeanour of his agent. The answer obviously is in the negative. May be that the learned advocate absented himself deliberately or intentionally, the court concerned cannot be a party to an innocent party suffering injustice merely because his chosen advocate defaulted.
40. In this context we have considered the conduct of the learned counsel and have judged the situation concerned. Alternatively, even if we are required to proceed on the basis of an assumed situation that the learned advocate was at fault as much was desired from him as we have observed in the context, even then it is difficult to carry the disastrous consequence thereof to the door steps of the petitioner, either way. The Tribunal has referred to certain decisions in the context. We feel it unnecessary to burden this judgment with those decisions in the light of the clear cut observations referred to above.
41. Although this court (supra) in its reference order has referred the question observing that the main question of law raised related to the violation of the principles of natural justice, it is necessary to record that after the order of the Appellate Tribunal dismissing the appeal, the petitioner approached with an application for a reference to this court. This application with a prayer for reference of the questions framed has been rejected leaving the petitioner to approach this court by an original petition wherein there was a direction for a reference of the questions referred to above. In the process of reasoning, the Tribunal treated this question as a finding of fact in paragraph 4 of the said order rejecting reference. It is observed that the Tribunal has found as a fact that the applicant was given adequate opportunity of being heard and did not avail himself of the same and invited an order ex parte all by its recalcitrance and laches. In our judgment it has become necessary to say a few words as what would be a question of fact as against a question of law also in connection with a mixed question of law and fact. It is elementary that the legal system gets situation of relevance in the context of a legal right when it is violated making out a justification for redress of injury as a result of the violation. No. In the broader sense, legal right has a situation of assertion available to a person under the above situation in a legal system. Now this situation of assertion is placed before the court by a series of facts tested on touch of relevance. In the process various facts travel on record for the consideration of the judicial mind. For a particular situation of legal assertion, illu- stratively Fact A, Fact B, Fact C and Fact D may specify the test of relevance, on the consideration of which it is for the court to infer in the process. The law in regard thereto is more than crystallised in the decision of the Supreme Court 31 ITR 28 - Meenakshi Mills Ltd. v. C.I.T, establishing the situation that where an ultimate finding on an issue is an inference to be drawn from the facts found, on the application of any principle of law, a mixed question of law and fact emerges specifying a consequential situation that an inference from the facts found in such a case, a question of law would emerge and would become open to review by the court. Illustratively it will be seen that valuation of goodwill would be understood to involve a question of law. Even the material relating to the existence of the goodwill is a mixed question of fact and law. This is in contradistinction with a situation where the final determination of the conclusion does not involve the application of any principle of law, it would have to be termed as a pure inference from fact although emerging in the process as an inference from other basic facts. It is established a century over that an inference is always in the nature of a question of law. In our judgment even if it is assumed that the said advocate acted in such a way that much could be desired from him, what would be the conclusion therefrom in the light of the concept of reasonable opportunity with the bedrock of fairness and reasonableness as stated at the outset, there should be no hesitation that it would be a question of law in the nature of an inference from proved facts in the context. We have said all this to clear the ever persisting confusion or an undue haste to dismiss any situation with a brand that it is a question of fact. When inference creates a situation to be considered as a situation of law, it was an inferential hazard for the Tribunal to dismiss it as a question of fact. Nothing has happened, but this proceeding had a further life unnecessary in our judgment right from October 17,1988 because the position as to what is the question of law in the context of taxation province is more than emphasised in the standard book (Law of Income Tax by Kanga and Palkhivala page 1546).
42. It must be stated that throughout the hearing of this petition we had obsession of anxiety that a situation of 1985 has lingered well nigh more than ten years in this situation of determination ex parte against the present petitioner. It is always said that no party could be understood to have vested right in the life of the litigation. As a logical expression of this principle, no party can ever be told and even no court can even consider with hesitation as a result of the passage of time. When the proceeding of 1989 reaches herein in this court in 1996, this situation itself would not deter the court if somebody has been dealt with ex parte leading to disastrous consequences of imposition of duty to the tune of Rs. 17 lakhs and odd combined with order of confiscation of property with penalties in addition thereto. Even at the thought of reluctance by reason of this passage of time, we shudder and think that even this thought would be a passage to injustice as a result. This can never be an answer to one who has suffered ex parte and that too for no fault at his door step.
43. In view of the above discussion it is obvious that question No. 1 is answered in the affirmative in the sense that the ex parte order dated June 19, 1986 passed by the Collector of Customs and Central Excise (Annexure D) gets set aside and the present petitioner is given a fresh opportunity to file his written representation to the show cause notice on the basis that his failure to submit the written representation could not be said to be due to any fault on his part, but a situation which could be wholly attributable to the said advocate.
44. The next question relating to the situation available with regard to Rule 233(A) of the Central Excise Rules, 1944, in our judgment, is not required to be answered in view of answer to question No. 1 whereby we have set aside the impugned ex parte order itself.
45. With regard to the question relating to the compliance of the provisions of Rule 173Q of the Central Exise Rules, 1944, the consequence is similar that the question is not required to be answered in view of our answer to question No. 1. The situation with regard to question No. 4 (original question No. 7) the result would not be different from the earlier questions Nos. 2 and 3.
46. The result of the above discussion is that the questions referred are answered as above, the impugned order dated June 19,1986, as confirmed by the order dated 27-7-1987 of the Appellate Tribunal gets quashed and set aside and consequently the adjudicating authority (the Collector of Customs and Central Exise, Cochin - Respondent No. 1) is directed to proceed de now on the basis of the show cause notice dated 29-1-1986 (Annexure A to this petition). The petitioner is granted time to file a written representation within 30 days from the date of receipt of copies of the documents (SI. Nos. 1 to 44 as the list annexed to the said show cause notice). The Collector of Customs and Central Excise, Cochin - Respondent No. 1 is directed to supply the above copies to the petitioner on or before February 20, 1996 to enable the petitioner to file the representation within the period of 30 days granted to him from the date of receipt of the documents. In view of the period of ten years exhausted, the Collector of Customs and Central Excise, Cochin is further directed to proceed with the adjudication proceedings as expeditiously as possible and to complete the same, at any rate, on or before June 30, 1996. The earlier order passed by this court in O.P. No. 4630/1987 when the petitioner had approached at an interlocutory stage shows that the petitioner is restrained from dealing with his immovable properties by way of sale, mortgage, lease or otherwise or do anything with regard thereto which will diminish the value thereof. We do not see that the above order dated June 12, 1987 is set aside or cancelled in the meantime for all these years. Even if that be so, out of abundant caution we make it clear in a similar manner that the petitioner would be restrained.from dealing with his immovable properties by way of sale, mortgage, lease or otherwise or do anything with regard thereto which will diminish their value and in addition directed not to create third party interest of any character in regard thereto pending the completion of the adjudication enquiry ordered above. Both the parties will have liberty to apply for modification of this order in restraint. Order accordingly.