2007 (7) TMI 228 - HC - Central Excise

Dismissed writ petition due to alternative remedy under Section 35B Central Excise Act, 1944 & concealment of facts. Exemplary costs imposed.

The writ petition was dismissed by the court due to the availability of an alternative remedy under Section 35B of the Central Excise Act, 1944, and the ... Extraordinary jurisdiction under Article 226 - statutory alternative remedy and rule of relegation - doctrine of clean hands - availability of an efficacious remedy as a bar to writ relief - exceptions for fundamental rights, natural justice or vires challenges - interpretation of time-limit in Section 11A(2A)(a) - imposition of exemplary costs for suppression of material factsStatutory alternative remedy and rule of relegation - availability of an efficacious remedy as a bar to writ relief - Maintainability of the writ petition in view of the availability and subsequent invocation of the statutory appeal remedy under the Central Excise Act, 1944. - HELD THAT: - The Court held that where a complete statutory machinery for redress exists the High Court, in exercise of its discretionary jurisdiction under Article 226, will ordinarily refuse to entertain a writ petition and relegate the litigant to the statutory remedy unless exceptional circumstances are pleaded and proved. The petitioning company had a statutory right of appeal under Section 35B and, in fact, filed an appeal before the Tribunal. That change in circumstances after filing the writ altered the posture of the matter and, coupled with the petitioner's failure to disclose the pendency of that statutory appeal to the Court, disentitled the petitioner from seeking equitable writ relief. On the record there were no pleaded or proved extraordinary circumstances to justify bypassing the statutory remedy; the existence of common proceedings involving many persons explained the time taken by the authority and meant the one-year expectation in Section 11A(2A)(a) could not be treated as automatically rendering the impugned order void. Consequently the preliminary objection on maintainability was upheld and the writ petition was not entertained. [Paras 15, 16, 18, 19, 20]Writ petition not maintainable in view of the statutory alternative remedy; preliminary objection upheld and petition dismissed on that ground.Interpretation of time-limit in Section 11A(2A)(a) - exceptions for fundamental rights, natural justice or vires challenges - Whether the impugned order was void for being passed beyond the oneyear period prescribed by Section 11A(2A)(a). - HELD THAT: - The Court explained that the phrase 'where it is possible to do so' prefacing the oneyear expectation in Section 11A(2A)(a) indicates that the statutory timeline is not absolute in all circumstances. The petitioner did not plead that there was no reason to take more time; on the contrary the record showed common proceedings involving many persons with hearings and submissions extending beyond the petitioner's individual hearing, which justified additional time. Determination of whether there was unjustified delay would involve investigation of facts not before the Court, and no basis existed to treat the impugned order as ab initio without jurisdiction. Hence the contention that the order was void for being passed after one year was rejected on the material before the Court. [Paras 7, 10, 19]The one-year expectation in Section 11A(2A)(a) does not render an order automatically void where factual circumstances justify more time; petitioner's challenge on this ground was not accepted on the record.Doctrine of clean hands - imposition of exemplary costs for suppression of material facts - Whether the petitioner's concealment of the fact that a statutory appeal had been filed warranted denial of discretionary relief and imposition of costs. - HELD THAT: - The Court reiterated the settled equitable principle that a litigant seeking discretionary relief must come with clean hands. The petitioner failed to disclose to the Court that an appeal had been filed before the Tribunal and only admitted that fact in a supplementary affidavit after it was pointed out by the respondents. Such suppression of a material fact amounted to an attempt to mislead the Court and justified refusal to exercise discretionary jurisdiction. To deter misuse of the process and to penalise the suppression, the Court considered it appropriate to impose exemplary costs. [Paras 12, 18, 21, 25]Writ petition dismissed for want of equitable entitlement; exemplary costs ordered to be paid by the petitioner.Final Conclusion: The writ petition is dismissed because an efficacious statutory appeal remedy existed and was in fact invoked by the petitioner-whose failure to disclose that fact amounted to suppression of material information and disentitled it to equitable relief; the Court imposed exemplary costs and left the statutory appeal pending before the Tribunal to be decided on its merits without being influenced by the observations in this order. Issues Involved:1. Maintainability of the writ petition.2. Interpretation of Section 11A(2A)(a) of the Central Excise Act, 1944.3. Alleged concealment of material facts by the petitioner.4. Imposition of costs for misuse of the judicial process.Issue-wise Detailed Analysis:1. Maintainability of the Writ Petition:The respondent raised a preliminary objection regarding the maintainability of the writ petition due to the availability of a statutory alternative remedy under Section 35B of the Central Excise Act, 1944. The petitioner argued that the writ petition was maintainable despite the alternative remedy, citing the Supreme Court's decision in Whirlpool Corporation v. Registrar of Trade Marks, Mumbai, which allows for exceptions when there is a violation of fundamental rights, principles of natural justice, or when the order is wholly without jurisdiction. However, the court noted that the petitioner had already filed an appeal before the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) on 17-4-2007 but failed to disclose this fact to the court. The court held that the writ petition was not maintainable due to the availability of an alternative remedy and the petitioner's concealment of material facts.2. Interpretation of Section 11A(2A)(a) of the Central Excise Act, 1944:The petitioner contended that the impugned order was passed beyond the one-year period stipulated in Section 11A(2A)(a) of the Act, making it void and without jurisdiction. The court examined the provision, which states that the duty shall be determined within one year 'where it is possible to do so.' The court found that the phrase 'where it is possible to do so' implies that the one-year period is not rigid and can be extended if circumstances warrant. The court noted that the petitioner did not provide any pleading to show that the delay was unjustified. The court also considered that the proceedings involved multiple parties and concluded that the order was passed within a reasonable time after the hearings concluded.3. Alleged Concealment of Material Facts by the Petitioner:The court observed that the petitioner had failed to disclose the filing of an appeal before CESTAT, which was a material fact. The court emphasized that a party seeking relief under Article 226 must approach the court with clean hands and disclose all relevant facts. The petitioner's conduct of pursuing simultaneous remedies and not informing the court about the appeal was deemed reprehensible and amounted to an abuse of the judicial process.4. Imposition of Costs for Misuse of the Judicial Process:The court held that the petitioner's conduct warranted the imposition of exemplary costs to deter such behavior in the future. The court cited various precedents emphasizing that litigants must not misuse the judicial process and should be penalized for doing so. Consequently, the court dismissed the writ petition with costs of rupees two lacs, to be deposited with the Registrar of the court. The amount was to be divided equally between the Legal Aid Society of the High Court and the Mediation Center.Conclusion:The writ petition was dismissed due to the availability of an alternative remedy and the petitioner's concealment of material facts. The court imposed exemplary costs on the petitioner to deter misuse of the judicial process. The court also clarified that its observations should not influence the pending appeal before the Tribunal.