2008 (11) TMI 249 - SC - Customs

Recall power required to revisit merits despite s.129B(2) time-bar label; labels not decisive, matter remitted

SUNITADEVI SINGHANIA HOSPITAL TRUST Versus UNION OF INDIA

SC held that the Tribunal erred by refusing to consider merits and by treating the application as time-barred under s.129B(2) of the Customs Act without ... Power of Court's for extraordinary jurisdiction - Rectification of mistake - time-barred - effect of provisions of limitation specified in sub-section (2) of Section 129B of the Customs Act - Held that:- It is true that the period of limitation specified in terms of Sub-Section (2) of Section 129(B) of the Customs Act is required to be observed but the Tribunal failed to notice that it has inherent power of recalling its own order if sufficient cause is shown therefor. The principles of natural justice, which in a case of this nature, in our opinion, envisage that a mistake committed by the Tribunal in not noticing the facts involved in the appeal which would attract the ancillary and/or incidental power of the Tribunal necessary to discharge its functions effectively for the purpose of doing justice between the parties, were required to be complied with. While the judges' records are considered to be final, it is now a trite law that when certain questions are raised before the Court of law or Tribunal but not considered by it, and when it is brought to its notice, it is the only appropriate authority to consider the question as to whether the said contentions are correct or not. We may place on record that for all intent and purport, this Court had granted liberty to the appellants to take recourse to the remedies suggested by its counsel as the word 'accordingly' has been used before the words 'the appeal is dismissed as withdrawn'. The Tribunal did not consider the matter on merit. The Tribunal failed to take into consideration that, ipso facto, in a case of this nature provisions of Section 129B of the Customs Act as such has no effect. Label of an application is not decisive for consideration by the Tribunal as to whether a case has been made out to hear the application on merit, particularly, having regard to the grounds set out therein. Appeal allowed in favour of assessee. ISSUES PRESENTED AND CONSIDERED 1. Whether a Tribunal has inherent power to recall/rectify its own final order in the interest of justice notwithstanding the limitation prescribed under Sub-section (2) of Section 129B of the Customs Act, when a mistake is shown that material contentions were not considered. 2. Whether an application filed and labelled as one for 'rectification of mistake' but which in substance seeks review/recall/re-consideration of a Tribunal's order may be entertained on merits despite being filed after the statutory period, where the applicant acted bona fide and the Court had earlier granted leave to withdraw appeal with liberty to file such an application. 3. Whether a Tribunal erred in law by deciding a party's appeal on a common factual matrix without considering the distinct facts and contentions actually raised by the party, thereby breaching principles of natural justice and rendering its order vitiated by an apparent error on the face of the record. 4. Whether the Court may, in exercise of its constitutional power (Article 142), set aside an impugned order and direct the Tribunal to re-hear the matter on merits where the Tribunal failed to exercise its ancillary/incidental powers necessary to do justice between the parties. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Inherent power of Tribunal to recall/rectify notwithstanding statutory limitation Legal framework: Sub-section (2) of Section 129B of the Customs Act prescribes a period within which certain applications to the Tribunal must be filed. Separately, courts and tribunals possess inherent/incidental powers to do justice, subject to statutory fetters. Precedent treatment: The Court relied upon Grindlays Bank Ltd. v. Central Government Industrial Tribunal (Industrial Tribunal can set aside ex parte award until publication), followed in Sangham Tape Co. v. Hans Raj (limited time frame until award becomes enforceable). Rabindra Singh v. Financial Commissioner was cited for the proposition that the source of power matters more than the exact provision named and that principles of natural justice permit setting aside ex parte orders subject to statutory interdicts. Jet Ply Wood was noted for the principle that inherent power can permit recalling withdrawal of suit in appropriate circumstances. Interpretation and reasoning: The Tribunal's limitation provision cannot be read to oust entirely the Tribunal's incidental/inherent power to recall or rectify its order where a party shows sufficient cause and the contention was not considered, especially when the Court's own order had granted liberty to the party to file an appropriate application. The judges' record principle does not immunize a decision where material contentions were not considered; the Tribunal is the proper authority to examine such omissions. The Court emphasised that allowance of inherent power is not unbounded - applications must be filed within a reasonable time and not at any time. Ratio vs. Obiter: Ratio - Tribunals possess an inherent power to recall/rectify their own orders in appropriate cases despite statutory limitation, provided the application is filed within a reasonable time and prima facie grounds exist to justify recall/rectification. Obiter - references to specific time-limits applicable in other statutes (e.g., 30 days in labour law context) serve illustrative purposes. Conclusion: The Tribunal's absolute rejection of jurisdiction on ground of limitation, without considering its inherent power and the merits of the contention that material points were not considered, was incorrect. Issue 2 - Substance over label: rectification application amounting to review/recall; effect of prior liberty from Court Legal framework: Procedural rules permit correction of clerical mistakes and, in addition, courts/tribunals have inherent powers to do justice. The form or label of an application is not decisive; substance governs jurisdictional consideration. Precedent treatment: The Court relied on the proposition in Rabindra Singh that the source of power is controlling and on Jet Ply Wood on recall of withdrawal orders; Grindlays and Sangham demonstrate the temporal limits in analogous contexts but do not extinguish inherent power before statutory bar takes effect. Interpretation and reasoning: Where a party was granted liberty by the higher court to withdraw an appeal and file an appropriate application before the Tribunal, the Tribunal ought to have treated an application styled as 'rectification of mistake' but containing grounds tantamount to review/recall as entertainable in substance. Registry practice that does not accept certain labels cannot be allowed to deprive a litigant of remedy. The Court noted the appellants were bona fide pursuing remedies before the Court; the Tribunal should have considered the application on merits rather than dismissing it as time-barred without addressing the substance. Ratio vs. Obiter: Ratio - an application cannot be dismissed purely on the basis of its label where the substance shows a case for recall/reconsideration and prior liberty to file such application was granted by the appellate Court; label is not decisive. Obiter - commentary on registry practices and their effect. Conclusion: The Tribunal erred in treating the application as barred merely because it was labelled rectification; it should have considered the substance and the fact of prior liberty granted by the Court. Issue 3 - Failure to consider distinct facts and breach of natural justice Legal framework: A tribunal as final fact-finder must consider the contentions and evidence presented in respect of each party; principles of natural justice require an opportunity to have material points considered. Judges' records are final but not sacrosanct where the record omits consideration of contentions actually urged. Precedent treatment: The Court invoked general principles and prior authority showing tribunals retain jurisdiction to correct earlier orders in limited circumstances (Grindlays, Sangham Tape, Rabindra Singh). These authorities inform but do not directly govern customs limitation provisions; they support the proposition that omission to consider contentions can be remedied by the same forum. Interpretation and reasoning: The Tribunal heard a batch of appeals and, according to the applicants, adopted findings relevant to one appellant without appreciating distinguishing facts and evidence of the other appellant(s). Such omission resulted in an error apparent on the face of the record. Where continuous/continuing obligations are concerned, compliance may require assessment over the useful life of the goods and in light of events (e.g., destruction in riots) - facts that the Tribunal failed to consider. Principles of natural justice and the Tribunal's ancillary powers required consideration of whether the law as laid down applied to the distinct facts of the appellant. Ratio vs. Obiter: Ratio - a Tribunal's failure to consider distinct facts and contentions of a party, especially in a composite hearing, constitutes an omission that may be corrected by the Tribunal in exercise of its inherent/ancillary powers; such omission vitiates the order to that extent. Obiter - discussion on measurement of continuing obligations over the useful life of equipment. Conclusion: The Tribunal's determination without addressing the specific factual matrix of the applicant was legally infirm; the matter should be re-heard on merits so that distinct facts and contentions are considered. Issue 4 - Relief under constitutional powers to set aside impugned order and remit for fresh hearing Legal framework: The Court may exercise broad remedial powers under Article 142 to do complete justice between parties where necessary. Precedent treatment: The Court relied on its constitutional remit and prior decisions permitting exercise of inherent jurisdiction to set aside or recall orders in appropriate circumstances. Interpretation and reasoning: Given (a) the higher Court had permitted withdrawal of appeal with liberty to file application before the Tribunal, (b) the Tribunal dismissed the application on limitation without addressing its inherent power or merits, and (c) material contentions were not considered, the Court concluded that equitable relief was warranted. The Tribunal must be directed to hear the application afresh on merits within the bounds of reasonableness and in accordance with law. Ratio vs. Obiter: Ratio - the Court may, under constitutional powers, set aside the impugned judgment and direct re-hearing by the Tribunal where the Tribunal failed to exercise its ancillary powers and did not consider material contentions; such direction is appropriate where necessary to secure justice. Obiter - observations on non-application of Section 14 Limitation Act due to Customs Act regime. Conclusion: The Court set aside the impugned judgment and directed the Tribunal to hear the appellants afresh on merits; no order as to costs.