1984 (11) TMI 63 - SC - Central Excise

Appeal allowed: interim release of goods on bank guarantees denied where prima facie case insufficient in public revenue matters

The SC allowed the appeal, holding the High Court's interim orders releasing goods on bank guarantees and granting exemption benefits were wholly ... Interim orders affecting public revenue - balance of convenience in grant of interim relief - interim relief under article 226 vis-a -vis statutory remedies - circumspection in granting ex parte and non speaking interim orders - binding effect of decisions of the Supreme CourtInterim orders affecting public revenue - balance of convenience in grant of interim relief - circumspection in granting ex parte and non speaking interim orders - Whether interim orders restraining recovery of excise duty and releasing goods on bank guarantees should have been granted by the High Court. - HELD THAT: - The Court held that interim orders which obstruct collection of public revenue or hamper governmental functioning ought not to be granted merely because a prima facie case is shown. Where public revenue and essential public administration are involved, the court must weigh the balance of convenience, public interest and risk of public mischief; mere furnishing of bank guarantees does not substitute for the need for liquidity in running government functions. Ex parte or non speaking interlocutory orders of a drastic character that effectively grant the main relief without hearing the opposite party are to be avoided, particularly where statutory powers are exercised in public interest. Prudence, discretion and circumspection are called for and the High Court must not short circuit these considerations when passing interim relief in revenue matters.Interim orders restraining recovery of excise duty and releasing goods on bank guarantees were wrongly granted and such orders should be confined to exceptional circumstances after due consideration of balance of convenience and public interest.Interim relief under article 226 vis-a -vis statutory remedies - binding effect of decisions of the Supreme Court - Whether the High Court should have exercised its extraordinary jurisdiction under article 226 to grant interim relief when statutory remedies and alternative procedures were available and when prior supervisory guidance condemned such practice. - HELD THAT: - The Court reiterated that article 226 is not intended to circumvent or short circuit established statutory remedies except in truly extraordinary situations where statutory remedies are manifestly inadequate or where public wrongs demand immediate redress. High Courts must respect the statutory machinery and exercise extraordinary jurisdiction only for good and sufficient reasons. The judgment also emphasised institutional discipline in the hierarchical judicial system and the binding nature of Supreme Court decisions on lower courts; lower courts must accept and follow higher court precedent rather than granting non speaking or repetitive interlocutory orders conflicting with earlier appellate rulings.The High Court erred in bypassing statutory and institutional considerations in granting interim relief; such practice is deprecated and lower courts must follow Supreme Court precedent and restrain from disproportionate interlocutory interventions.Final Conclusion: The appeal was allowed; the Supreme Court set aside the interim orders of the Calcutta High Court restraining recovery of excise duty and ordering release of goods on bank guarantees, reiterating that courts must be circumspect in granting interlocutory relief in matters affecting public revenue, give due weight to balance of convenience and public interest, and not bypass statutory remedies or higher court precedent. Issues Involved:1. Tendency of courts to grant interim orders.2. Interim orders in tax recovery cases.3. Alternative statutory remedies under Article 226.4. Interim orders granting principal relief.5. Jurisdictional issues in filing writ petitions.6. Impact of interim orders on public revenue and administration.7. Judicial hierarchy and adherence to higher court decisions.Detailed Analysis:1. Tendency of Courts to Grant Interim Orders:The court expressed concern over the increasing tendency of some courts to grant interim orders, often ex parte and non-speaking, which have the potential for public mischief. This practice was condemned in several cases, including Samarias Trading Company Pvt. Ltd. v. S. Samuel and others. The court emphasized the need for caution and restraint in granting such orders, especially when they could impair public interest.2. Interim Orders in Tax Recovery Cases:In Siliguri Municipality v. Amalendu Das, the court reiterated that High Courts should not, as a rule, grant stay of tax recovery in proceedings under Article 226 of the Constitution unless under very exceptional circumstances. The court highlighted the importance of ensuring that no prejudice is caused to taxpayers if they ultimately succeed, while also protecting the authority levying the tax to ensure the functioning of essential civic services.3. Alternative Statutory Remedies under Article 226:The court in Titaghur Paper Mills Co. Ltd. v. State of Orissa held that when a statute provides an efficacious alternative remedy, it is not for the High Court to exercise its extraordinary jurisdiction under Article 226. The court stressed that Article 226 should not be used to bypass statutory procedures unless there are extraordinary situations requiring such intervention.4. Interim Orders Granting Principal Relief:In Union of India v. Oswal Woollen Mills Ltd., the court criticized the practice of granting interim orders that practically allow the main relief sought in the writ petition without hearing the opposite parties. The court emphasized that such drastic interim orders should not be passed without at least hearing those who made the order, as it could lead to devastating consequences.5. Jurisdictional Issues in Filing Writ Petitions:The court addressed the issue of writ petitions being filed in far-away courts with doubtful jurisdiction, as seen in Union of India v. Oswal Woollen Mills Ltd. The court noted that such practices delay prompt return and contest, and often serve as a legal maneuver to make it difficult for officials to move applications to vacate stays.6. Impact of Interim Orders on Public Revenue and Administration:The court observed that interim orders have often jeopardized the collection of public revenue and prejudiced the budgets of governments and local authorities. The court cited examples where interim orders have led to administrative paralysis and disruption of essential services. The court emphasized the need for circumspection in granting interim relief, particularly against orders of public officials acting in discharge of their statutory duties.7. Judicial Hierarchy and Adherence to Higher Court Decisions:The court stressed the importance of maintaining judicial hierarchy and the need for lower courts to accept the decisions of higher courts. The court referred to the observations in Cassell and Co. Ltd. v. Broome, emphasizing that the judicial system only works if the decisions of the supreme appellate tribunal are loyally accepted by lower courts.Conclusion:The court concluded that the orders of the learned single judge and the Division Bench in the present case were unsustainable. The court emphasized that governments cannot be run on mere bank guarantees and that interim orders in matters of public revenue should not be granted merely because a prima facie case has been shown. The balance of convenience and public interest must be considered. The appeal was allowed with costs, and the interim orders were vacated.