2008 (11) TMI 249 - SC - Customs

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

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 ... Inherent power to recall orders - principles of natural justice - finality of judges' record - limitation under Section 129B of the Customs Act - exercise of Article 142 powers to do complete justiceInherent power to recall orders - principles of natural justice - finality of judges' record - limitation under Section 129B of the Customs Act - Whether the Tribunal was obliged to entertain and decide on the appellants' application (labelled as rectification of mistake) which alleged that material contentions were not considered and whether the Tribunal could refuse to do so on the ground of limitation. - HELD THAT: - The Court held that while judges' records are ordinarily final, where a tribunal has failed to consider contentions actually raised before it, the tribunal is the appropriate forum to consider those contentions when they are pointed out and, in that context, the tribunal possesses an inherent power to recall or set aside its own order so as to do justice between the parties. The obligation of a tribunal to exercise such ancillary or incidental powers arises from the principles of natural justice and the necessity of enabling the tribunal to discharge its functions effectively. Consequently, the limitation period in sub-section (2) of Section 129B of the Customs Act would not automatically bar consideration of an application of this nature; the statutory limitation regime does not preclude exercise of the tribunal's inherent power where an application is filed within a reasonable time and the tribunal is prima facie satisfied that the contention raised is correct. The Court emphasised that this is not a licence to file such applications at any time: the application must be brought within a reasonable period and the tribunal must be satisfied on a prima facie basis before reopening its order. The label given to the application is not decisive; substance and grounds must govern whether the tribunal hears the matter on merits. [Paras 19, 20, 21, 29, 30]The Tribunal's refusal to entertain the appellants' application on the ground of limitation was erroneous; the matter is to be heard afresh on merits by the Tribunal, which has inherent power to recall its order and must consider the application if filed within a reasonable time.Final Conclusion: The appeal is allowed; the impugned judgment is set aside and the matter is remitted to the Tribunal to hear the appellants' application on merits (the Tribunal to exercise its inherent power, if satisfied the application is filed within a reasonable time), with no order as to costs. Issues: Whether the Tribunal erred in dismissing an application labelled as one for rectification of mistake on the ground of limitation without exercising its inherent power to recall or re-open its order and whether the matter should be heard afresh on merits.Analysis: The issue required examination of whether an application that effectively sought review/recall of the Tribunal's order filed within a reasonable time and after the appellant had pursued remedies before higher fora could be entertained despite the limitation bar in Section 129B. The reasoning applied the principle that tribunals possess ancillary inherent powers to recall or set aside their own orders where a mistake or failure to consider contentions is shown and where justice so requires. It was noted that judges' records are final but where material contentions were not considered, the appropriate authority must be permitted to consider them. Authorities recognising inherent jurisdiction to set aside ex parte or final orders within a limited timeframe and the primacy of natural justice in ensuring disputes are decided on merits were treated as applicable. The label of the application was held not to be decisive; the Tribunal was required to look at substance and to hear the applicant on merits if the application was filed within reasonable time and prima facie made out.Conclusion: The Tribunal acted incorrectly in treating the application as barred by limitation without exercising its inherent power to recall or re-open its order and without considering the merits; the matter is to be remitted to the Tribunal to be heard afresh on the application.Ratio Decidendi: A tribunal has inherent power to recall or re-open its own order and must, in the interest of justice, consider an application filed within a reasonable time that prima facie shows that material contentions were not considered, notwithstanding the limitation bar in the statute, and the substantive label of the application is subordinate to its substance.