Compulsory acquisition and prior excise liabilities: statutory liability allocation prevails over departmental agreement.

Compulsory acquisition of an undertaking under the U.P. Sugar Undertaking (Acquisition) Act, 1971 did not, on the statutory scheme of Sections 3 and 15, shift prior central excise liabilities to the acquiring corporation. The acquisition law governed allocation of liabilities, and preserved other legal remedies only where the claim was enforceable against the proper person in the manner contemplated by that statute. A private agreement with excise could not enlarge the corporation's liability or override the statutory position. The prior-period excise demand was therefore not recoverable from the acquiring corporation, and rejection of the refund claim was unsustainable.

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Issues: Whether central excise dues relating to the period prior to acquisition of the undertaking could be recovered from the acquiring corporation, and whether a private agreement with the department could override the statutory position under the acquisition law.

Analysis: The undertaking stood acquired under the U.P. Sugar Undertaking (Acquisition) Act, 1971, and the dispute turned on the effect of Sections 3 and 15 of that Act vis-a -vis the Central Excises and Salt Act, 1944. The statutory scheme showed that liabilities of the erstwhile owner did not automatically transfer to the acquiring corporation, while Section 15 preserved remedies under other laws and did not bar recovery only if the claim was legally enforceable against the proper person and in the manner contemplated by the acquisition statute. The reasoning adopted by the appellate authority, based on Article 246 and Article 254 of the Constitution of India, could not displace the binding effect of the acquisition statute as interpreted in the analogous Gujarat decision, which held that compulsory acquisition does not create a general successor liability for prior dues unless the statute so provides. The existence of an agreement with excise authorities could not enlarge the corporation's statutory liability or override the clear legal position.

Conclusion: The excise demand for the prior period was not recoverable from the acquiring corporation, and the refund claim ought not to have been rejected.

Ratio Decidendi: In cases of compulsory acquisition, prior liabilities do not pass to the acquiring body unless the acquisition statute expressly so provides, and a departmental agreement cannot override the statutory allocation of liabilities.

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