Reasonable-time limit on statutory recovery bars belated excise dues enforcement against an auction purchaser

Excise recovery against an auction purchaser was found unsustainable where the authorities sought to recover the erstwhile unit's dues and penalty nearly ten years after transfer. The governing principle applied was that a statutory recovery power, even without an express limitation period, must still be exercised within a reasonable time. Because the unit had been purchased through auction in 1995 and recovery was first initiated only in 2004, the inordinate unexplained delay barred enforcement against the transferees. The action was therefore treated as time-barred and invalid against the petitioners.

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Issues: Whether excise dues and penalty of the erstwhile unit could be recovered from the auction purchaser after nearly ten years, and whether such action was barred by limitation for want of exercise within a reasonable time.

Analysis: The transfer of the industrial unit in favour of the petitioners had taken place in March 1995, while recovery was initiated only by the impugned communication dated 10 December 2004. The governing principle is that where a statute confers power but prescribes no period of limitation, the power cannot be exercised at any indefinite time and must be used within a reasonable time. Applying that principle, the Court held that the authorities could not remain inactive for such a long period and then seek to recover the erstwhile unit's liabilities from the purchaser, particularly when the petitioners had acquired the unit through auction and had thereafter used it for their own business.

Conclusion: The recovery action was barred by limitation and was therefore unsustainable against the petitioners.

Ratio Decidendi: A statutory recovery power unaccompanied by a prescribed limitation period must still be exercised within a reasonable time, and recovery of a predecessor unit's dues from a transferee cannot be sustained after an inordinate unexplained delay.

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