Punjab-Haryana High Court
M/S Vijay K. Jairath & Co vs Union Of India And Another on 1 May, 2012
Author: Ajay Kumar Mittal
Bench: Ajay Kumar Mittal
CWP No. 12420 of 2008 -1-
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
CWP No. 12420 of 2008
Date of Decision: 1 .5.2012
M/s Vijay K. Jairath & Co.
....Petitioner.
Versus
Union of India and another
...Respondents.
CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.
PRESENT: Mr. Jagmohan Bansal, Advocate for the petitioner.
Mr. HPS Ghuman, Advocate for the respondents.
AJAY KUMAR MITTAL, J.
1. At motion stage, learned counsel for the respondents raised an objection regarding the territorial jurisdiction of this Court for entertaining the writ petition on the ground that order dated 18.3.2008 (Annexure P-9) had been passed by the Commissioner of Customs (Import) at Mumbai and, therefore, territorial jurisdiction of the Court at Mumbai would be there to adjudicate the dispute. It was also urged that the order was an appealable order.
2. In view of the difference of opinion among the members of the Division Bench which had heard the matter at motion stage, this petition has been listed before me in pursuance of order passed by Hon'ble the Chief Justice.
CWP No. 12420 of 2008 -2-
3. Briefly stated the facts as narrated in the petition are that the petitioner is aggrieved by the order dated 18.3.2008 (Annexure P-9), passed by the Commissioner of Customs (Import), Mumbai-II whereby penalty of Rs.50,00,000/- under Section 112(b) of the Customs Act, 1962 (in short "the Act") was imposed on the petitioner. The petitioner, a proprietorship concern, having factory premises within the jurisdiction of this Court, has invoked the writ jurisdiction of this Court as all communications have taken place within the jurisdiction of this Court. The petitioner is a manufacturing unit situated at Ludhiana and is exporting its products for the last more than 10 years. In the year 2001, the petitioner with an intent to manufacture a good quality of finished goods imported 48590 meter polyester fabric valued at Rs.9,54,396/-. At the time of filing of bill of entry, the custom duty involved was found to be Rs.16,15,418/-. Since the petitioner was not having funds to get the material cleared, the material was kept in bonded warehouse. The petitioner came in contact with a Delhi based broker who showed his willingness to buy the goods on high sea sales basis and such goods were sold to M/s Tirupati Exports. The said unit got its goods cleared without payment of duty against an advance licence. The Directorate of Revenue Intelligence, Surat (Gujarat), initiated its investigation against the said unit and it was revealed that the said unit had got cleared goods involving duty of Rs.2.60 crores without payment of duty against four advance licenses. The said unit had bought goods on high sea sales basis from a number of importers, including the petitioner. The Directorate of Intelligence issued a show cause notice dated 29.11.2004 to the said unit raising a demand of CWP No. 12420 of 2008 -3- customs duty of Rs.2.60 crores and as to why the goods be not confiscated under Section 111(o) of the Act. However, the goods were not available for confiscation. In addition thereto, the notices were issued to the petitioner along with other persons to show cause as to why penalty should not be imposed on them under Section 112 of the Act. The petitioner filed reply to the notice. The Commissioner of Customs (Adjudication), Mumbai vide order dated 31.12.2007 imposed a penalty of Rs.7,50,000/- on the petitioner. After the said order was passed, another order dated 18.3.2008, Annexure P-9, has been passed by the Commissioner of Customs (Import), Mumbai-II imposing penalty of Rs.50,00,000/- in pursuance of the show cause notice issued earlier.
4. Learned counsel for the petitioner submitted that under Section 153 of the Act, the service of order, decision etc. is mandatory and, therefore, the service of notice would form integral part of cause of action. According to the learned counsel, the notice having been served at Ludhiana, this Court would have the territorial jurisdiction to adjudicate the dispute. Reliance was placed on State of Rajasthan and others v. M/s Swaika Properties and another, AIR 1985 SC 1289, Kusum Ingots & Alloys Ltd. v. Union of India 2004(168) ELT 3 (SC) and Dowsyl Polymers Pvt. Ltd. and another v. M.G. Abrol, Special Secretary, Ministry of Finance and others, 1987 (31) ELT 895 (Bom) in support of his submissions.
5. On the other hand learned counsel for the respondent- revenue submitted that service of notice was not integral part of cause CWP No. 12420 of 2008 -4- of action. According to him, no cause of action has arisen within the limits of this Court and as the notice was issued by the authorities at Mumbai, the Mumbai Court had the jurisdiction and there is lack of territorial jurisdiction of this Court.
6. I have heard the learned counsel for the parties and perused the record.
7. Before entering into the controversy in the present reference, it would be appropriate to examine the legal position. Clause (2) of Article 226 of the Constitution of India defines the jurisdiction of the High Court to issue writ. The aforesaid clause was originally inserted as clause (1A) by the Constitution (Fifteenth Amendment) Act, 1963 and was renumbered as clause (2) by the Constitution (Forty Second Amendment) Act, 1976. It reads thus:-
"226. Power of High Courts to issue certain writs.-
(1) XX XX XX
(2) The power conferred by clause (1) to issue
directions, orders or writs to any Government, authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories.
(3) XX XX XX
(4) XX XX XX"
CWP No. 12420 of 2008 -5-
8. The term 'cause of action' as indicated in Article 226(2) of the Constitution has reference in Section 20(c) of the Code of Civil Procedure (in short "the Code") as well. In view of Explanation to Section 141 of the Code, the provisions thereof would not apply to the writ proceedings, however, the phraseology used in Section 20(c) of the Code and Article 226(2) of the Constitution is similar. Under Section 20
(c) of the Code, the Court is vested with the jurisdiction to adjudicate a lis in respect of which the cause of action, wholly or in part arises within its local limits. Section 20(c) of the Code is in following terms:-
"20. Other suits to be instituted where defendants reside or cause of action arises.- Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction-
(a) XX XX XX
(b) XX XX XX
(c) the cause of action, wholly or in part, arises.
Explanation.- A corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place."
9. It would be apt to examine what is a cause of action or integral part of cause of action? Cause of action has not been defined in any statute. It has, however, been judicially interpreted inter alia to mean that every fact which, if traversed, would be necessary for the plaintiff/petitioner to establish in order to support his right to the CWP No. 12420 of 2008 -6- judgment of the court. Cause of action is a bundle of facts when taken together gives the plaintiff/petitioner a right to sue against the defendant/respondent. Cause of action implies a right to sue. The material facts which are imperative for the suitor to allege and prove constitutes the cause of action.
10. Under Clause (2) of Article 226 of the Constitution, the High Court is empowered to issue writs, orders or directions to any Government, authority or person exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within these territories. In other words, the High Court may exercise its power conferred by clause (1), where the cause of action, wholly or in part, arises within the territory over which it exercises jurisdiction. High Court must be satisfied from the entire facts pleaded in support of the cause of action that these facts do constitute a cause so as to empower the court to decide a dispute which has, at least in part, arisen within its jurisdiction.
11. Dealing with the expression "cause of action", the Hon'ble Apex Court in State of Rajasthan and other v. M/s Swaika Properties and another, AIR 1985 SC 1289 had in para 8 observed as under:-
"The expression 'cause of action' is tersely defined in Mulla's Code of Civil Procedure:
"The 'cause of action' means every fact which, if traversed, it would be necessary for the plaintiff to prove in order to support his right to a Judgment of CWP No. 12420 of 2008 -7- the Court."
In other words, it is a bundle of facts which taken with the law applicable to them gives the plaintiff a right to relief against the defendant."
12. The question of jurisdiction was considered in considerable detail in Oil and Natural Gas Commission v. Utpal Kumar Basu (1994) 4 SCC 711. In this case, the writ petitioner had submitted the tender and made representations from Calcutta in response to an advertisement inviting tenders which were to be considered at New Delhi whereas the work was to be performed in Hazira (Gujarat) and had received replies to the fax messages at Calcutta, it was held that these could not constitute facts forming an integral part of cause of action. It was further held that the Calcutta High Court could not assume jurisdiction on the ground that the writ petitioner resides in or carries on business from a registered office in the State of West Bengal.
13. In Union of India v. Adani Exports Ltd. and another (2002) 1 SCC 567 the issue which came up for discussion was relating to territorial jurisdiction of the writ court. The writ petition was filed in the High Court of Gujarat claiming the benefit of the Passport Scheme under the Exim Policy. The passport was issued by the Chennai office and the entries were made therein by that office. The respondents were not stationed within the State of Gujarat. The High Court at Gujarat entertained the writ petition holding that it had territorial jurisdiction to assume jurisdiction. The writ petitioner had sought to justify the territorial jurisdiction with the following pleas:-
"(i) the respondents carry on their business of CWP No. 12420 of 2008 -8- export and import from Ahmedabad;
(ii) their orders of export and import are placed from and are executed Ahmedabad;
(iii) documents and payments for export and
import are sent/made at Ahmedabad;
(iv) the credit of duty claimed in respect of exports
were handled from Ahmedabad since export orders were received at Ahmedabad and payments also received at Ahmedabad;
(v) non-granting and denial of utilization of the credit in the passbook will affect the business of the respondents at Ahmedabad;
(vi) the respondents have executed a bank guarantee through their bankers at Ahmedabad as well as a bond at Ahmedabad."
Negating the contention of the writ petitioner, while allowing the appeal and setting aside the order of the High Court, the Hon'ble Supreme Court held as under:-
"It is seen from the above that in order to confer jurisdiction on a High Court to entertain a writ petition or a special civil application as in this case, the High Court must be satisfied from the entire facts pleaded in support of the cause of action that those facts do not constitute a cause so as to empower the court to decide a dispute which has, at least in part, arisen within its jurisdiction. It is clear from the above CWP No. 12420 of 2008 -9- judgment that each and every fact pleaded by the respondents in their application does not ipso facto lead to the conclusion that those facts give rise to a cause of action within the court's territorial jurisdiction unless those facts pleaded are such which have a nexus or relevance with the lis that is involved in the case. Facts which have no bearing with the lis or the dispute involved in the case, do not give rise to a cause of action so as to confer territorial jurisdiction on the court concerned. If we apply this principle then we see that none of the facts pleaded in para 16 of the petition, in our opinion, falls into the category of bundle of facts which would constitute a cause of action giving rise to a dispute which could confer territorial jurisdiction on the courts at Ahmedabad."
14. National Textile Corpn. Ltd. and others v. M/s Haribox Swalram and Ors, JT 2004(4) SC 508 was a case where the writ petitioner was carrying on business at Calcutta and the reply to the correspondence made by it was received at Calcutta. It was held that this would not form an integral part of the cause of action which could confer territorial jurisdiction on the Calcutta High Court to entertain the writ petition. The view to the contrary taken by the Division Bench of the High Court was set aside.
15. In Kusum Ingots & Alloys Ltd. v. Union of India (UOI) & Anr., (2004) 6 SCC 254 : JT 2004 (Supp. 1) 475, the Head Office of the Company which was registered under the Indian Companies Act was at CWP No. 12420 of 2008 -10- Mumbai. It obtained a loan from the Bhopal Branch of the State Bank of India. The Bank issued a notice for repayment of loan from Bhopal under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The writ petition was filed in the High Court of Delhi which was dismissed on the ground of lack of territorial jurisdiction. The contention raised before the Hon'ble Supreme Court was that as the constitutionality of a Parliamentary legislation was questioned, the High Court of Delhi had the requisite jurisdiction to entertain the writ petition. The Apex Court did not accept the plea of the company and while upholding the order passed by the High Court ruled that passing of a legislation by itself does not confer any such right to file a writ petition in any Court unless a cause of action arises therefor. Referring to its earlier decision in Oil and Natural Gas Commission's case (supra), it was held that all necessary facts must form an 'integral part' of the cause of action. The fact which is neither material nor essential nor integral part of the cause of action would not constitute a part of cause of action within the meaning of Clause (2) of Article 226 of the Constitution.
16. In Om Praksh Srivastava v. Union of India (2006) 6 SCC 207, the Hon'ble Supreme Court delving into the question as to what constitutes 'cause of action' for filing a writ petition in paras 7 and 8 noticed as under:-
"7. The question whether or not cause of action wholly or in part for filing a writ petition has arisen within the territorial limits of any High Court has to be CWP No. 12420 of 2008 -11- decided in the light of the nature and character of the proceedings under Article 226 of the Constitution. In order to maintain a writ petition a writ petitioner has to establish that a legal right claimed by him has prima facie either been infringed or is threatened to be infringed by the respondent within the territorial limits of the Court's jurisdiction and such infringement may take place by causing him actual injury or threat thereof.
8. Two clauses of Article 226 of the Constitution on plain reading give clear indication that the High Court can exercise power to issue direction, order or writs for the enforcement of any of the fundamental rights conferred by Part III of the Constitution or for any other purpose if the cause of action wholly or in part had arisen within the territories in relation to which it exercises jurisdiction notwithstanding that the seat of the Government or authority or the residence of the person against whom the direction, order or writ is issued is not within the said territories. (See ONGC v. Utpal Kumar Basu)."
17. Enunciating the principle relating to territorial jurisdiction of writ court under Article 226 of the Constitution of India, the Hon'ble Apex Court in Alchemist Ltd. And other v. State Bank of Sikkim, (2007) 11 SCC 335 observed as under:-
"From the aforesaid discussion and keeping in view CWP No. 12420 of 2008 -12- the ratio laid down in catena of decisions by this Court, it is clear that for the purpose of deciding whether facts averred by the petitioner-appellant, would or would not constitute a part of cause of action, one has to consider whether such fact constitutes a material, essential, or integral part of the cause of action. It is no doubt true that even if a small fraction of the cause of action arises within the jurisdiction of the Court, the Court would have territorial jurisdiction to entertain the suit/petition. Nevertheless it must be a 'part of cause of action', nothing less than that."
18. From the above, it emerges that each and every fact pleaded in the writ petition does not ipso facto lead to the conclusion that those facts give rise to a cause of action within the court's territorial jurisdiction unless those facts pleaded are such which have a nexus or relevance with the lis that is involved in the case. Further, it is clear from reading of Article 226(2) of the Constitution that a High Court can exercise the jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises. The High Court would have territorial jurisdiction wherever there is integral part of cause of action arising within its local limits.
19. Having examined the legal position, the core question in this reference would be whether service of notice as required by Section 153 of the Act would constitute cause of action, wholly or in part, so as to confer territorial jurisdiction upon this Court. CWP No. 12420 of 2008 -13-
20. Before proceeding further, it would be expedient to reproduce Section 153 of the Act as the case of the petitioner revolves on the interpretation of the aforesaid provision. Section 153 of the Act reads thus:-
"153. Service of order, decision, etc.- Any order or decision passed or any summons or notice issued under this Act, shall be served,-
(a) by tendering the order, decision, summons or notice or sending it by registered post to the person for whom it is intended or to his agent;
or
(b) if the order, decision, summons or notice cannot be served in the manner provided in clause (a), by affixing it on the notice board of the customs house."
21. The aforesaid provision specifies the manner in which any order, decision, summons or notice may be served. In terms of Clause
(a) of Section 153 of the Act, the service of the order/decision/ summons/notice shall be by tendering the same to the assessee. The other mode contemplated is by sending it by registered post. The methods indicated in Section 153(a) are alternative modes of service and anyone could be attempted in the first instance.
22. Under clause (b) of Section 153, it is provided that where the order/decision/summons/notice cannot be served in the manner specified in clause (a), it shall be served by affixing it on the notice board of the customs house.
CWP No. 12420 of 2008 -14-
23. Service of notice confers a right of action on a party to enforce cause of action. The actual service of notice is only a mode of conveying it. Service of notice can constitute integral part of cause of action only in one exceptional situation, where it is a sine qua non for assumption of jurisdiction by an authority. To establish that it would form integral part of cause of action, it is required to be shown that failure of service of notice would result in initiation of proceedings being rendered void abinitio. To put it differently, it shall not form integral part of cause of action where non-service of notice shall render the proceedings only illegal and not void abinitio.
24. The question of territorial jurisdiction with reference to service of notice was examined in extenso by the Hon'ble Supreme Court in Swaika Properties' case (supra). In this case, certain properties belonging to a company which had its registered office in Calcutta were sought to be acquired in Jaipur. A notice under Section 52 of the Rajasthan Urban Improvement Act was served upon the company at Calcutta. The question which arose for determination in such circumstances was whether the service of notice at the head office of the company at Calcutta could give rise to a cause of action within the State of West Bengal to enable the Calcutta High Court to exercise jurisdiction in a matter where challenge to acquisition proceedings conducted in Jaipur was made. It was held that the entire cause of action culminating in the acquisition of the land under Section 152 of the aforesaid Act arose within the territorial jurisdiction of the Rajasthan High Court. It was also observed that it was not essential for the company to plead the service of notice upon them at Calcutta for grant CWP No. 12420 of 2008 -15- of appropriate writ, order or direction under Article 226 of the Constitution for quashing the notice issued by the Rajasthan Government under Section 52 of the said Act. It was thus concluded that the Calcutta High Court had no jurisdiction to entertain the writ petition.
Discussing whether service of notice would confer territorial jurisdiction on a Court, it was noticed that:-
"The mere service of notice under S. 52(2) of the Act on the respondents at their registered office at 18-B, Brabourne Road, Calcutta i.e. Within the territorial limits of the State of West Bengal, could not give rise to a cause of action within that territory unless the service of such notice was an integral part of the cause of action. The entire cause of action culminating in the acquisition of the land under S. 52 (1) of the Act arose within the State of Rajasthan i.e. within the territorial jurisdiction of the Rajasthan High Court at the Jaipur Bench. The answer to the question whether service of notice is an integral part of the cause of action within the meaning of Art. 226 (2) of the Constitution must depend upon the nature of the impugned order giving rise to a cause of action. The notification dated February 8, 1984 issued by the State Government under S. 52(1) of the Act became effective the moment it was published in the official Gazette as thereupon the CWP No. 12420 of 2008 -16- notified land became vested in the State Government free from all encumbrances. It was not necessary for the respondents to plead the service of notice on them by the Special Officer, Town Planning Department, Jaipur under S. 52(2) for the grant of an appropriate writ, direction or order under Art. 226 of the Constitution for quashing the notification issued by the State Government under S. 52(1) of the Act. If the respondents felt aggrieved by the acquisition of their lands situate at Jaipur and wanted to challenge the validity of the notification issued by the State Government of Rajasthan under S. 52(1) of the Act by a petition under Art. 226 of the Constitution, the remedy of the respondents for the grant of such relief had to be sought by filing such a petition before the Rajasthan High Court, Jaipur Bench, where the cause of action wholly or in part arose."
25. In Harvinder Singh v. Food Corporation of India 2003(2) SCT 706, the issue before the Division Bench of this Court was whether receipt of communication of the order at Kapurthala by the petitioner would mean that the cause of action in part had accrued within the territorial jurisdiction of this Court. The Division Bench noticed that the petitioner was charge sheeted and was being proceeded by way of department enquiry. The charge memo was issued from New Delhi which was addressed to the petitioner through its Senior Zonal Manager, North East Guwahati. The enquiry was being CWP No. 12420 of 2008 -17- conducted at Gawahati. The reply was submitted to authority at Shillong for forwarding to New Delhi. The various transfer orders relating to the petitioner therein were in West Bengal region or North East region. The impugned order was issued from New Delhi addressed to the petitioner through Guwahati office but none of the offices were situated within the territorial jurisdiction of the Court except an order addressed by District Office at Kapurthala to the petitioner at his Kapurthala address which was within the territorial jurisdiction of the Court. It was an intimation relating to serving of office order issued from New Delhi. The petitioner had sought to invoke the jurisdiction of this Court by urging that since the impugned order was actually received by him within the territorial jurisdiction of this Court, therefore, this Court had territorial jurisdiction to resolve the lis.
The Division Bench holding that this Court was not having territorial jurisdiction and rejected the plea of the petitioner with the following observation:-
"As already noticed above, the petitioner had not served within the territorial jurisdiction of this Court during his service of about two years with the FCI and remained posted in North East Zone of Food Corporation of India a Gangtok (Sikkim) or Siliguri etc. The impugned order dated 4.4.2002 of his discharge from respondent-Corporation was issued from New Delhi and was addressed to the petitioner through the Zonal Manager (NF), FCI, Guwahati.
The order, therefore, is deemed to have been CWP No. 12420 of 2008 -18- communicated to the petitioner at Guwahati inasmuch as it was out of the reach of the Managing Director, FCI Headquarters New Delhi, after it was sent out and whatever action that was required to be taken by the petitioner was at the office of Zonal Manager, FCI, Guwahati. Even the relinquishment of charge and handing over the same was to be done by the petitioner at Guwahati. In these circumstances, the addressing of letter dated 12.4.2002 Annexure P-6/A by the District Office of FCI Kapurthala does not per see confer any cause of action on the petitioner within the territorial jurisdiction of this Court. It would at the most only confer a right action. The right of action is a right to enforce cause of action. It is a remedial right for affording redress for the infringement of a legal right. The right of action is a right which gives rise to enforce a cause of action. The actual service of notice is only a mode of conveying the order."
26. Reference is now made to judgment of the Bombay High Court in Dowsyl Polymers Pvt. Ltd.'s case (supra) on which heavy reliance has been placed by the learned counsel for the petitioner. The issue before the Bombay High Court was whether service of notice under Section 124 of the Act on the petitioner therein was an integral part of cause of action or not. The learned Single Judge recorded that the petitioner therein had imported a consignment which arrived in CWP No. 12420 of 2008 -19- Cochin and the bill of entry was also presented to Collector of Customs at Cochin. According to the revenue, no part of the act had arisen in Bombay. However, the petitioner contended that the registered office of the petitioner was in Bombay and they had received the show cause notices in Bombay and were affected in Bombay. The learned Single Judge held that the judgment of the Apex Court in Swaika's case (supra) was distinguishable for the reason that the Apex Court therein had held the service of notice under Section 52(1) of the Rajasthan Act not to be integral part of cause of action whereas service of notice under Section 124 of the Act would form integral part of cause of action, as no order confiscating any goods or imposing any penalty can be passed unless the notice contemplated under the Act is served upon the owner of the goods or on such person who is made liable for the same.
27. In my opinion, in view of the clear enunciation of law by the Hon'ble Apex Court in Swaika's case (supra) and Division Bench of this Court in Harvinder Singh's case (supra), the contrary view by the learned Single Bench of Bombay High Court in Dowsyl Polymers Pvt. Ltd.'s case (supra) would not come to the rescue of the petitioner.
28. Now, taking up the facts in the present case, herein the impugned order dated 18.3.2008 (Annexure P-9) has been passed by the Commissioner of Customs (Import), Mumbai imposing penalty of Rs.50,00,000/-. It was the Directorate of Revenue Intelligence (DRI), Surat, Gujarat who had initiated its investigation against the petitioner. The entire proceedings relating to the sale of the goods by the petitioner CWP No. 12420 of 2008 -20- and the evasion of duty had occurred outside the limits of this Court. A show cause notice was issued by DRI on 29.11.2004 in pursuance to which penalty was imposed by authorities at Mumbai. The respondents who had taken action against the petitioner, do not fall within the territorial jurisdiction of this Court. Thus, taking totality of facts and circumstances and also the averments made in the writ petition, it cannot be said that an integral part of cause of action arose within the territorial jurisdiction of this Court.
29. In view of the above, the reference is answered against the assessee and it is held that this Court has no territorial jurisdiction to entertain the writ petition. The matter be listed as per roster after obtaining appropriate order from Hon'ble the Acting Chief Justice.
May 1 , 2012 (AJAY KUMAR MITTAL) gbs JUDGE