S.N. Sapra J.
1. In the present suit for declaration and permanent injunction, filed against defendants, plaintiff, M/s. Somany Pilkington's Ltd., has claimed the following reliefs :
(a) Decree for declaration be passed in favor of plaintiff and against the defendants declaring that the whole proceedings, search notice dated 27-3-1986, Order dated 9th December, 1986, passed by defendant No. 2's CBEC and impugned ex parte order dated 29th January, 1988 are without jurisdiction, null and void, illegal, void ab initio and a nullity and quashing the same and directing the Defendant No. 2's Assistant Collector to finalise/approve the price-lists and finalise the assessment according to law.
(b) Permanent injunction restraining the defendants from taking any action in respect of or on the basis of the notice dated 27-3-1986 and in respect of or on the basis of impugned ex parte order dated 29th January, 1988 and restraining the defendants from taking any action pursuant to or on the basis of the notice dated 27th March, 1986 and impugned ex parte order dated 29th January, 1988, and/or the operation of the notice and the impugned ex parte order be stayed.
2. For better appreciation of respective contentions of the learned counsel for parties, it is necessary to refer to, in brief, the facts of the case.
3. Plaintiff is a public limited company, incorporated under the Companies Act, 1956, having its registered office in New Delhi. Plaintiff entered into a collaboration agreement with M/s. Pilkington Tiles, U.K., for the manufacture of glazed tiles in India. In the year 1969, plaintiff was granted industrial license and in the year 1971, plaintiff obtained excise license for the manufacture of glazed tiles, from the Government of India in a backward area in Haryana.
4. The authorised capital of the plaintiff company is Rs. 1 Crore 50 lakhs. The major shareholding is held by M/s. Pilkington Tiles, U.K. and by the public in India. Shri H. L. Somany is the Chairman of the Company and the Board of Directors consists of the Government nominated Directors, reputed advocates, industrialists and also foreigners.
5. Plaintiff has about 200 dealers throughout India, in almost all the States. Plaintiff is also exporting its goods to various countries of the world and has been earning huge foreign exchange for the Government of India and has received export awards. Plaintiff pays Government revenue of crores of rupees annually and it has followed all the laws with due care and caution. Plaintiff has a clean record since its very inception and has never been fond guilty of any offence.
6. For the determination of the price of any goods, the manufacturer is required to furnish/submit a price list, thereby showing the prices of the goods, manufactured by it, to a proper officer, as required under Rule 137C of the Central Excise Rules, 1944 (hereinafter called the Rules). On receipt of the price list, the proper officer is required to determine/approve the prices of the goods so manufactured by the manufacturer, after making such modification, as the proper officer may consider, so as to bring the value shown in the price list to the correct value for the purposes of assessment, as provided in Section 4 of the Central Excises and Salt Act, 1944 (hereinafter called the Act). The proper officer, before approving the prices, is authorised to make such enquiry, as he deems fit in connection with the approval of the prices of the goods. However, if the proper officer is of the opinion that enquiry into the approval/finalisation of the prices is likely to take sometimes and/or there will be delay in approving the prices, then in that case, proper officer may, by virtue of Rule 173C read with Rule 9B of the Rules, order that pending the approval/finalisation of the prices, the manufacturer can clear the goods on provisional basis and also direct the manufacturer to execute a bond for such amount and with such security, as the proper officer may deem fit. After the final approval of the prices, the proper officer shall make a final assessment and the amount payable, shall be adjusted against the amount/duty finally assessed by the proper officer. As required under the Rules, it is alleged in the plaint, that plaintiff for the period 1981-82 filed the price list for the approval of the prices with the proper officer. The price list was not accepted and plaintiff approached the High Court of Delhi, by way of a writ petition. The High Court permitted the plaintiff to clear its products on provisional basis, upon plaintiff's submitting a bond under B-13, supported by a bank guarantee, to the satisfaction of the Registrar of this Court.
7. Plaintiff was clearing the goods on provisional basis and was also submitting the bond, supported by bank guarantee, to the satisfaction of defendants' department and the High Court of Delhi.
8. Plaintiff has followed strictly all the terms of the bond and there is no dispute. Plaintiff has paid the duty, as demanded by the proper officer, from time to time and submitted the bond along with bank guarantee. The huge payment has been made by plaintiff on the basis of provisional assessment, which is to be adjusted/refunded after the final approval of the price list/final assessment, till date.
9. Till the filing of the suit, it is alleged, that the assessment was still provisional.
10. On January 13, 1981, in the writ petition, this Court recorded the statements of the parties and directed the plaintiff to file fresh statement/amendment in the price list, submitted by plaintiff, from time to time, with the authorities, by March 31, 1981 along with documentary evidence. The proper officer was further directed to approve/finalise the price list within 7 weeks thereafter, after giving an opportunity to plaintiff of being heard. It was further ordered that the status quo would be maintained in all manners. The original/provisional assessment made by the proper officer and the show cause notice, issued by the Department stood set aside.
11. According to plaintiff, some oral complaints were received by Mr. M. K. Daga, President of plaintiff company, about Mr. M. L. Vyas, the then Sales Executive regarding delay in delivery of goods and favor to certain dealers and giving quick supply of materials of choice goods. In the absence of any definite material, in support of such complaints, plaintiff could not imitate any disciplinary action against Mr. Vyas, but immediately in view of the complaints, he was shifted from the Sales Department to the Project Division of the plaintiff company, to overcome any such complaint by the dealers. The transfer of Mr. Vyas was made on November 9, 1984. Before his appointment as Sales Executive, and after his transfer, no such complaints were, however, received against Mr. Vyas from any one of the dealers.
12. On October 2, 1985, when Mr. Daga, President of the plaintiff company, was to proceed on a foreign tour for about 10/15 days, along with his wife, in connection with some business, one Mr. S. K. Gupta, who was the then Depot-in-charge of Ghaziabad, came to his residence with some papers, indicating that Mr. Vyas was demanding and accepting certain illegal gratification in the past, when he was in the Sales Department. As Mr. Daga was preparing himself to leave for foreign tour, he, thereforee, told Mr. Gupta to leave those papers on the table of the room, adjacent to the main entrance, which is the open hall, and that he would take appropriate action on his return.
13. October 2, 1985 was holiday and factory was not working. Mr. Vyas had already been transferred to the Project Division, so no time was available to Mr. Daga to initiate any action. Afterwards, Mr. Daga along with his wife, left his residence for foreign tour, leaving those papers on the table, lying in the open room. The bed-room was locked and no family member was residing after Mr. Daga left India. On October 8, 1985, the officers of the department of defendant No. 2 i.e., D.R.I. conducted search in the various offices of the plaintiff, located at various places in India as well the residential premises of the Chairman and other senior officers/executives of the plaintiff company. During these searches, no incriminating material was found. The residential premises of Mr. Daga was also searched on the same day, in his absence. The documents, left by Mr. Gupta, on October 2, 1985 were taken into possession by the officers. In these searches, it is alleged, no material could be found by the officers, indicating either directly or indirectly any involvement of the company, in any act with the acts of Mr. Vyas. The bed-room of Mr. Daga was locked and the same was sealed with the condition that the room would be searched when Mr. Daga returned to India.
14. On October 20, 1985, Mr. Daga returned to India and immediately on his return, plaintiff informed the officer of defendant No. 2's department, about the return of Mr. Daga. Immediately, the bed-room was searched and no incriminating material was found.
15. The officers of the department of defendant No. 2, contacted various dealers/persons, out of 200 dealers of the plaintiff all over India, behind the back of plaintiff. Among these dealers, none stated having given any extra money to plaintiff company or to Mr. Daga. Only 7 dealers referred to in the show cause notice, out of 200 dealers made statement that they had given extra money to Mr. Vyas, ex-employee of the company, on ad hoc basis and that these amounts were not paid on each and every consignment.
16. Plaintiff has challenged the aforesaid searches, as well the statements recorded by the officials of Department of defendant No. 2, on the ground that the officers were not the proper officers for recording the statements, under Section 14 of the Act. The other ground is that entire searches and the proceedings have been initiated by officers, with the mala fide intention and ulterior motives of conferring upon such officers pecuniary benefits in terms of the reward scheme, which had been propounded by defendant No. 2. In order to get the benefit under the reward scheme, cases of evasion have been made out against plaintiff, without proper and factual justification.
17. In the present case, according to plaintiff, advance rewards have already been paid to the officers of the Department, implying thereby, that there had been a pre-determination of the case at the high level, before such cash reward was ordered to be paid. In this view of the matter, the scheme of rewards, itself violates the Rules of law and the entire proceedings, in the present case, are vitiated on account of departmental bias.
18. Plaintiff received a show cause notice dated March 27, 1986, from the Collector to the effect that M/s. Somany Pilkington's Ltd., allegedly contravened the provisions of Rule 173C, 173F, 173G read with Rule 9(1) of the Rules on the following allegations :
(i) they failed to submit correct price list from time to time in respect of the glazed tiles manufactured in their factory, as required under Rule 173C of the said rules;
(ii) plaintiff failed to determine correct duty liability on the said goods, cleared from their factory, as required under Rule 173F, ibid;
(iii) they cleared the said goods from their factory without discharging correct duty liability as required under Rule 9(1) and Rule 173G of the said Rules.
Plaintiff was required to show cause as to why the duty amounting to Rs. 82,20,802.10 (basic duty) and Rs. 4,11,040.35 (special duty) total Rs. 86,31,847.45 should not be demanded from them under Section 11A of the Act, and further why the penalty be not imposed upon plaintiff under Rule 173Q(1) of the Rules.
19. According to plaintiff, the aforesaid notice has been issued by the Collector without applying his mind. Before issuing a notice, the Issuing Authority should examine the facts properly, by applying his mind, whether a prima facie case has been made out or not. In the present case, it is alleged that the Authority had not examined the facts of the case, nor the Authority had considered the matter, whether any prima facie case was made out or not.
20. Since the final assessment was yet to be made, so no notice under Section 11A of the Act could be issued. As in the plaintiff's case, the duty of excise was provisionally assessed in accordance with the Rule 9B, so the case fell under Section 11A(3)(ii)(b). The relevant date, not having come into existence because of the final assessments, have not been initiated, so the provisions of Section 11A and the limitations of time, given there under, were totally inapplicable to the demand in dispute.
21. As the price list, filed by plaintiff, was still pending final approval as required under Rule 173C of the Rules, so the Collector has no power under Rule 173C to finally approve the price list and to modify the price list, submitted before the Assistant Collector by the assessed. The Collector also did not have any power under Rule 5 of the Rules to take over that power from the Assistant Collector of Central Excise. Hence the notice is without jurisdiction.
22. It is again alleged that out of 200 dealers, only 7 dealers appeared to have paid the alleged extra payment to Mr. Vyas, as per the notice. Statements of about 62 dealers/persons were recorded by the officers. All these statements were recorded behind the back of plaintiff. Hence, the act of issuing the notice is illegal, mala fide and against the principles of natural justice and fair play.
23. After the receipt of the notice, plaintiff addressed various letters to the authority, thereby informing that large number of files and documents were taken in possession by the Department and it was not practically possible for plaintiff to file reply to the show cause, unless these documents and records were made available to plaintiff. No action was taken by the Department on the request of plaintiff. The Department on many occasions, did not allow inspection of files/documents and plaintiff was directed to come some other day. The inspection was allowed on piecemeal basis and after a gap of about 2-3 months.
24. Plaintiff came to know for the first time in June, 1987, that the case was fixed before defendant No. 1 i.e., Director to Publication, although, plaintiff was not given any notice nor there was any gazette notification for such illegal transfer of the case from defendant No. 2's Collector to defendant No. 1. It is alleged that the transfer of the case is illegal, mala fide and without jurisdiction. On enquiry, it was revealed that defendant No. 1 had been appointed on or about December 9, 1986 as the Central Excise Officer, under Rule 4 of the Rules, by the Central Board of Excise and Customs and has been invested with the powers of a Collector of Central Excise, for a limited purpose of investigation and adjudication of such cases, as may, from time to time, be assigned to him by the Board, throughout the territory of India.
25. The power vested in defendant No. 1, have been challenged by plaintiff on various grounds, as mentioned in the plaint. According to plaintiff, the notification conferred on defendant No. 1, both the powers of investigation adjudication. He was thus constituted both the prosecutor and the judge of the cause. The Board, without hearing the plaintiff, transferred the case of plaintiff from the Collector of Defendant No. 2 to defendant No. 1. The transfer is illegal and without jurisdiction.
26. Plaintiff has not been given any proper opportunity to file reply to the show cause notice. Plaintiff had been demanding the inspection of various documents and files, relating to the branch offices of the plaintiff. On January 13, 1988, this Court passed an order in the writ petition, filed by plaintiff for quashing the original/provisional assessment. In the order, it is alleged, that the original/provisional assessment made by the Assessing Authority Along with the show cause notice, was set aside by virtue of the order and fresh assessment was directed to be made. Despite this, plaintiff received an ex parte order dated January 29, 1988, passed by defendant No. 1. In the order, plaintiff has been directed to pay forthwith an amount of Rs. 86,31,847.45 of Central Excise duty, as demanded in the show cause notice, under Section 11A of the Act. For the alleged offence on the part of plaintiff for evading the payment of Central Excise duty, defendant No. 1 imposed penalty of Rs. 80 lakhs under Rules 173Q of the Rules. In the order, it was also stated that reply to the notice had not been filed for the reason, that plaintiff was having a strike in the factory, which according to defendant No. 1, was not a reasonable and sufficient cause for not submitting the reply. Defendant No. 1 failed to disclose in the order and did not take into account the order, passed on January 13, 1988.
27. As no personal hearing was given by defendant No. 1, so, there was violation of Rule 233A of the Rules. Since no opportunity of hearing and/or for cross-examination has been granted to plaintiff by defendant No. 1, so the order passed by him is liable to be quashed/set aside. The whole proceedings from the very beginning are illegal, mala fide, void ab initio and nullity. Plaintiff gave notice under Section 80 of Civil Procedure Code on January 5, 1988, but to reply was received by plaintiff.
28. In their written statement, defendants have raised preliminary objections, such as, that the suit filed by plaintiff is not maintainable, as the remedy, if any in the present matter, can be taken under the Act and the Rules; suit is liable to be dismissed for non-joinder of proper and necessary parties, as Collector of Central Excise, New Delhi, who issued the show cause notice dated March 27, 1986, and the Directorate of Anti Evasion, New Delhi, against whom various allegations have been made, have not been imp leaded as defendants and that the virus of notification dated December 9, 1986 was challenged in the writ petition No. 2198 of 1987 and the Division Bench of this Court, vide order dated October 12, 1987, has upheld that notification.
29. On merits, it is alleged that the orders passed by the High Court in the writ petition are not relevant to the facts, stated in the show cause notice dated March 27, 1986. Besides the price, approved in the earlier case, as per orders of the Court, plaintiff was recovering additional amount from the dealers over and above the declared price. The goods of plaintiff were being cleared by way of provisional assessment, in terms of the orders, passed in civil writ No. 1862 of 1982.
30. According to defendants, the statement of Mr. M. L. Vyas and certain other documents, clearly show that plaintiff had been charging amounts from the dealers over and above the declared price. The alleged transfer of Mr. Vyas has got no relevance to the facts of the present case. Some dealers were contracted by the officers of the Department and in their statements, they pointed out that the amount over and above the declared price, was paid to the plaintiff company. by virtue of the notification, issued from time to time, offices of the Directorate of Revenue Intelligence, are duly empowered by the Central Board of Excise and Customs, as Central Excise Officers, to exercise the powers of a Central Excise Officer, under the provisions of the Act and the Rules. As such, the officers, who conducted the searches, were duly authorised to do so and further to record the statements under Section 14 of the Act. Scheme of reward has also been mentioned in the written statement. As regards Rule 9(1) of the Rules defendants have alleged that the same has not been relied upon in the final order of adjudication.
31. Under Rule 173C of the Rules, as assessed is required to pay the duty, so determined by him, for each consignment, but this determined duty has to be based on the actual price, charged by the assessed. In the present case, plaintiff had been charging over and above the declared prices and accordingly, plaintiff was issued show cause notice dated March 27, 1986. Defendants have also disputed the allegation that plaintiff was not charging the extra amount. The show cause notice was issued after examining all the relevant records. There was no non-application of mind. Similarly, the adjudication order was passed, after examining all the evidence on record.
32. The appointment of defendant No. 1 by the Central Board of Excise and Customs, was made in exercise of the powers under Clause (b) of Section 2 of the Act and he was vested with the power of the Collector of Central Excise. These powers were to be exercised by defendant No. 1 throughout the territory of India for the purpose of investigation and adjudication of such cases, as may from time to time, be assigned to him. The Board was fully competent to transfer the case from the Collector of Excise to the Director of Publications. Plaintiff was given reasonable opportunity to file reply to the show cause. Notice was issued on March 27, 1986 and adjudication order was passed on January 29, 1988. During the intervening period of about 21 months, plaintiff was given innumerable opportunities for filing reply and for appearing in the person before the Authority. In spite of that, plaintiff continued to delay the proceedings on one pretext or the other. Number of opportunities were given to plaintiff for inspection of documents, starting from April 30, 1986, but plaintiff completed the inspection only on August 16, 1987. The order dated January 13, 1988, passed by the Court, has no bearing on the facts of the present case. Defendants have also denied that any notice under Section 80 of Civil Procedure Code has been received by defendant No. 1.
33. Plaintiff filed replication, thereby reiterating the facts, as alleged in the plaint. Plaintiff has denied that one of the dealers, stated that he used to pay the additional amount to the company. Statements of the dealers, who allegedly paid the extra amount to the company, had not been referred to or filed along with the show cause notice. The name of said dealer has not so far been disclosed. It has been further alleged that the statements of M/s. Hindustan Trading Co., M/s. Bir Sein Anand & Co. and M/s. Gaylord Stores & Agencies had not been admittedly recorded by the Department.
34. On the pleadings of the parties, following issues were framed :
1. Whether the suit is maintainable because of the provisions of the Central Excises and Salt Act, 1944, and the Rules framed there under OPP
2. Whether the suit is bad for non-joinder of necessary and proper parties, namely, Collector of Central Excise, New Delhi and Directorate of Anti-Evasion, Mew Delhi OPD
3. Whether the show cause notice dated March 27, 1986 and the order dated January 29, 1988, are liable to be set aside on the grounds, as mentioned in plaint OPP
4. Relief.
35. Before coming to the issues, it is necessary to refer to the objection, taken by defendants, with regard to the notice under Section 80 of Civil Procedure Code. In para 70 of the plaint, plaintiff alleged that a notice dated January 5, 1988, under Section 80 C.P.C. was given, but no reply was received from defendants.
36. In reply, defendants alleged that no such notice was received by defendant No. 1. In other words, service of notice on defendant No. 2 has not been denied.
37. In fact, there was no serious contest to this, so, no issue was framed on this point.
38. Plaintiff filed an affidavit to the effect that notice under Section 80 of Civil Procedure Code was also served upon defendant No. 1. No doubt, that the notice dated January 5, 1988 was given, prior to the order dated January 29, 1988. It is not necessary to go into details, because along with plaint, plaintiff filed an application, being I.A. No. 1552 of 1988, under Section 80(2) of Civil Procedure Code, thereby seeking leave of this Court to institute the suit, without serving notice under Section 80, C.P.C. Notice was issued to defendants. No reply was filed. As already stated, there was serious contest. Under these circumstances, the application, thereby seeking leave to institute the suit without notice stands allowed. Even otherwise, plaintiff has filed the copy of the notice dated January 5, 1988, though it is prior to the order dated January 29, 1988.
39. At the time of framing the issues on July 13, 1988, learned counsel for parties agreed that the evidence could be led by means of affidavits, as the questions involved therein, were substantially the legal questions and that the suit could be disposed of accordingly.
40. Accordingly, parties have filed affidavits by way of evidence.
41. Prior to the framing of issues, both the parties filed various documents. The documents, filed by plaintiff, are Exhibits P. 1 to P. 58. The documents, filed by defendants prior to the framing of issues, are Exhibits D. 1 to D. 41.
42. Along with affidavits, filed by way of evidence, parties have also filed various documents.
Issue No. 1
'Whether the suit is maintainable because of the provisions of the Central Excises and Salt Act, 1944, and the Rules framed there under ?'
43. Mr. R. K. Anand, learned counsel for plaintiff, urged that the present suit is maintainable, because all the proceedings, beginning from search, show cause notice and the order dated January 29, 1988, are without jurisdiction, illegal, mala fide, void ab initio and nullity. If any action is taken or order is passed without an authority of law, then, the same can be challenged, either by way of a suit or by means of a petition under Article 226 of the Constitution of India. He has placed reliance upon the Judgment in cases H.C. Darbara Singh v. The Punjab State, P.L.R. 1967 page 179; Dhulabhai etc. v. State of Madhya Pradesh and Another; : [1968]3SCR662 ; The Siemens Engineering and . v. The Union of India and Another, : AIR1976SC1785 ; Scientific Instruments Co. Ltd. v. Collector of Customs and Another : 1980(6)ELT89(Cal) ; Gwalior Rayon Mfg. (Wvg.) Co. v. Union of India and Ors, : 1982(10)ELT844(MP) and Union of India v. Tarachnd Gupta & Bros. : 1983(13)ELT1456(SC) .
44. Mr. Sat Pal, learned counsel for defendants, on the other hand, urged that this Court has no jurisdiction to go into the various allegations, as Excises and Salt Act, 1944, is a complete code and all the remedies are made by plaintiff in the suit. There was no lack of jurisdiction on the part of any of the Authorities, while initiating the action against defendants. Under Section 35, an appeal can be filed to the Collector (Appeals). Under Section 35B, appeals can be filed before the Appellate Tribunal. Mr. Sat Pal has further contended that in case of non-application of mind, on the part of an Authority or lack of jurisdiction, then, the same can be challenged by way of writ petition, under Article 226 of the Constitution of India.
45. He has placed reliance upon judgments in cases Dhulabhai etc. v. State of Madhya Pradesh and Another, : [1968]3SCR662 and Madras Rubber Factory Ltd., Madras v. Union of India and Another 1981 (8) E.L.T. 879 (Delhi).
46. In H. C. Darbara Singh (supra), it was held :
'I may also mention that on the finding of the learned Subordinate Judge that the proper remedy of the plaintiff was to move this Court under Article 226 of the Constitution of India, the conclusion that the suit was not competent is not justified. It seems, the learned Subordinate Judge is not aware that the scope of the proceedings under Article 226 of the Constitution and by a regular suit does not differ. Proceedings under Article 226 of the Constitution are proceedings by way of an alternative remedy which is more efficacious than the ordinary remedy of a suit. In both civil rights are enforced or their protection is sought. In fact, they are remedies in the alternative with this difference only that the remedy under Article 226 by way of a writ is discretionary whereas that is not the case in a suit.'
47. In Dhulabhai etc. (Supra), the Supreme Court laid down the following principles regarding the exclusion of jurisdiction of civil court :
'(1) Where the statute gives a finality to the orders of the special tribunals the civil courts' jurisdiction must be held to be excluded if there is adequate remedy to do what the civil court would normally do in a suit. Such provision, however, does not exclude those cases where the provisions of the particular Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure.
(2) Where there is an express bar of the jurisdiction of the court, an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is not decisive to sustain the jurisdiction of the civil court. Where there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the intendment becomes necessary and the result of the inquiry may be decisive. In the latter case it is necessary to see if the statute creates a special right or a liability and provides for the determination of the right or liability and further lays down that all questions about the said right and liability shall be determined by the tribunals so constituted, and whether remedies normally associated with actions in civil courts are prescribed by the said statute or not.
(3) Challenge to the provisions of the particular Act as ultras virus cannot be brought before Tribunals constituted under the Act. Even the High Court cannot go into that question on a revision or reference from the decision of the Tribunals.
(4) When a provision is already declared unconstitutional or the constitutionality of any provision is to be challenged, a suit is open. A writ of certiorari may include a direction for refund if the claim is clearly within the time prescribed by the Limitation Act but it is not a compulsory remedy to replace a suit.
(5) Where the particular Act contains no machinery for refund of tax collected in excess of constitutional limits or illegally collected, a suit lies.
(6) Questions of the correctness of the assessment apart from its constitutionality are for the decision of the authorities and a civil suit does not lie if the orders of the authorities are declared to be final or there is an express prohibition in the particular Act. In either case, the scheme of the particular Act must be examined because it is a relevant enquiry.
(7) An exclusion of jurisdiction of the Civil Court is not readily to be inferred unless the conditions above set down apply.'
On the facts and circumstances of the case, it was held that the suit was not barred.
48. In Scientific Instruments Co. Ltd. (supra), the Calcutta High Court held that if an order is clearly bad for lack of proper jurisdiction, or the order is erroneous in law and the error is apparent on the face of the order, petitioner is justified in invoking the jurisdiction of the High Court under Article 226 of the Constitution, without filing any appeal against the order.
49. In Gwalior Rayon Mfg. (Wvg.) Co. (supra), the Division Bench of Madhya Pradesh High Court was considering various rules under the Rules, particular, Rules 173C, 173Q and the show cause notice, issued under Section 11A of the Act. It was held that the initiation of the penalty proceedings against the petitioner, under Rule 173Q(1)(d) read with Rule 173Q(2) of the Central Excise Rules, 1944, was in excess of authority and to the extent alone, the show cause notice was quashed.
50. In Madras Rubber Factory Ltd., Madras, (supra) this Court has held under :
'Issue No. 2. Now turning to the question whether the Customs Act bars the suit which is the subject matter of second issue, I may state that reliance has been placed on the judgment of the Supreme Court in Union of India v. A. V. Narasimhalu, : 1983(13)ELT1534(SC) , in which it was held that an erroneous decision of the Customs authorities cannot be said to be without jurisdiction merely because it may be shown to be wrong. It was observed :
'Normally an action of an administrative authority interfering with the right to property may be challenged by resort to a civil court. yet in the case of a right which depends upon a statute, the jurisdiction of the civil court to grant relief may by express provision or by clear implication of the statute be excluded. Where a statute re-enacts a right or a liability existing at common law, and the statute provides a special form of remedy, exclusion of the jurisdiction of the civil court to grant relief in the absence of an express provision, will not be readily inferred. Where, however a statute creates a new right or liability and it provides a complete machinery for obtaining redress against erroneous exercise of authority, jurisdiction of the civil court to grant relief is barred. Liability to pay a duty of customs is not a common law liability; it arises by virtue of the Sea Customs Act in respect of any grievance arising in consequence of enforcement of that liability machinery has been provided by the Act. Having regard to the complicated nature of the questions which arise in the determination of liability to pay duty of customs the Legislature has invested the power of determining liability and the manner of enforcement thereof upon a specifically authorised hierarchy of tribunals. An appeal lies against the order of the Assistant Collector of Customs against an order imposing duty as well as an order refusing to refund duty, and the grievance may be carried to the Central Board of Revenue. In our judgment, the jurisdiction of the Civil courts is by dear implication of the statement excluded.'
There is then a further observation that in certain cases a civil suit will lie, but that is when the provisions of the statute have not been acted upon or the authority has acted in violation of the fundamental principles or judicial procedure etc. That no doubt is not the case in the present case. I would, thereforee, come to the conclusion that the present suit is not maintainable unless it is shown that there has been a breach of the procedure prescribed by the Customs Act, 1962. It is not sufficient to say that the order imposing excessive customs duty was wrong. I would accordingly decide the second issue in favor of the defendants.'
51. In Union of India v. Tara Chand (Supra), the Supreme Court was considering the question regarding the jurisdiction of civil courts, in Excise and Customs matters. It was held :
'The principle thus is that exclusion of the jurisdiction of the Civil Courts is not to be readily inferred. Such exclusion, however, is inferred where the statute gives finality to the order of the tribunal on which it confers jurisdiction and provides for adequate remedy to do what the Courts would normally do in such a proceeding before it. Even where a statute gives finality, such a provision does not exclude cases where the provisions of the particular statute have not been complied with or the tribunal has not acted in conformity with the fundamental principles of judicial procedure. The word 'jurisdiction, has both a narrow and a wider meaning. In the sense of the former, it means the authority to embark upon a enquiry, in the sense of the latter it is used in several aspects, one of such aspects being that the decision of the tribunal is in non-compliance with the provisions of the Act. Accordingly, a determination by a tribunal of a question other than the one which the statute directs it to decide would be a decision not under the provisions of the Act, and thereforee, in excess of its jurisdiction.'
52. From the aforesaid judgments, it is thus concluded that this Court has no jurisdiction to go into the merits of the case. If an Authority or the Tribunal acts within the ambit of its jurisdiction and in exercising such power or jurisdiction, an error of judgment is committed or wrong order is passed, then, same cannot be challenged by way of a suit. In that case, the only remedy available to an aggrieved party is to challenge that order or action, in accordance with a particular statute.
53. With regard to the order dated January 29, 1988, allegations have been made that plaintiff was given a piecemeal inspection of the documents, reasonable opportunity was not given to plaintiff to inspect the records and copies of all the documents were not supplied to plaintiff to enable it to file reply to the show cause notice. It is further alleged that the reasonable opportunity of being heard was not granted to plaintiff and that the order was ex parte. Defendant No. 1 failed to consider the order dated January 13, 1988, passed by the High Court of Delhi and the reply filed by plaintiff. In my view, the order cannot be challenged on these allegations by way of a suit.
54. However, the jurisdiction of the civil court is not excluded in those cases where the provisions of the particular Act have not been complied with, or the statutory Tribunal has not acted in conformity with the fundamental principles of judicial procedure. If the Authority or Tribunal acts without jurisdiction, or the order is clearly bad for lack of proper jurisdiction, then, the same can be challenged, either by invoking the jurisdiction of the High Court, under Article 226 of the Constitution or by filing a suit, even though, the alternate remedy of filing an appeal is provided under a Special Act.
55. In the plaint, plaintiff has alleged that the show cause notice an the impugned order are without jurisdiction, illegal, mala fide, void ab initio and nullity. However, I am not deciding this issue on the mere allegations, having been made by plaintiff in the plaint. In view of my decision, which I am going to give on the show cause notice, I hold that the present suit is maintainable.
56. Issue No. 1 is thus decided in favor of plaintiff.
Issue No. 2
'Whether the suit is bad for non-joinder of necessary and proper parties, namely, Collector of Central Excise, New Delhi and Directorate of Anti-Evasion, New Delhi ?'
57. Mr. Sat Pal, learned counsel for defendants, has urged that as the show cause notice dated March 27, 1986, has been challenged by plaintiff, so, the Authority, which issued this notice, is a necessary party and ought to have been imp leaded. Notice to show cause was issued by Collector of Central Excise, New Delhi.
58. Mr. Sat Pal has further contended that various allegations have been made against Directorate of Anti-Evasion, New Delhi. This Directorate also ought to have been imp leaded. Suit is thus bad for non-joinder of parties.
59. In the present suit, plaintiff has imp leaded Shri B. P. Verma, as defendant No. 1, who is Director of Publications, New Delhi. Defendant No. 1 has passed the order dated January 29, 1988. Vide order dated December 9, 1986, defendant No. 1 was appointed as a Central Excise Officer and was further invested with the power of Collector of Central Excise for the purpose of investigation and adjudication of such cases, as may, from time to time, were assigned to him by Central Board of Excise and Customs throughout the territory of India. In pursuance thereof, the case of plaintiff was transferred to defendant No. 1. No doubt, the show cause notice was given by Collector of Central Excise, New Delhi. But, I am of the view that Collector, Central Excise, New Delhi, is not a necessary party, who ought to have been joined. Nor it is a proper party, because his presence before the Court is not necessary to enable it to effectually and completely adjudicate upon all the questions, involved in the suit.
60. Moreover, Collector, Central Excise, New Delhi, is an officer in the Department, which is under the Ministry of Finance, Government of India, New Delhi. Union of India has been imp leaded as defendant No. 2. So, I am of the view that Collector, Central Excise, New Delhi, is not necessary party. For the same reasons, Directorate of Anti-Evasion, New Delhi is also not a necessary party.
61. Issue No. 2 is decided against the defendants.
Issue No. 3
'Whether the show cause notice dated March 27, 1986 and the order dated January 29, 1988 are liable to be set aside on the grounds, as mentioned in the plaint
62. In the first place, Mr. Anand has raised the following three grounds of challenge, to the entire proceedings of defendants, including the search, show cause notice and the Order dated January 29, 1988 :
(i) Defendant No. 2 has propounded a reward scheme, for the officials of the Central Excise Departments. Mr. Anand has urged that in order to get the benefits under the scheme, cases of evasion were sought to be made out against plaintiff, without proper and factual justification. Under the scheme, a reward up to 20 per cent of the duty and penalty levied and realised, is payable to the officials. Out of this amount, a reward to the tune of 25 per cent of the expected final reward, can be paid as soon as the show cause notice is issued and even before the Explanationn of the assessed. In the present case, advance reward has already been paid to the officers of the defendant No. 2, thereby implying the pre-determination of the case at the high level. The scheme of reward itself violates the Rule of law and the proceedings in the present case are vitiated on account of departmental bias.
(ii) The Central Board of Excise and Customs could not invest in the Director of Publications, the power of a Collector of Central Excise, for the purposes of Section 11A of the Act.
Director of Publications, defendant No. 1, is not a Collector of Central Excise. The notification purports to have been issued under the power conferred by Section 2(b) of the Act read with Rule 4 of the Rules. The contention is that where the power is conferred on a named officer by the Act, nowhere do the Rules authorise such a power, being transferred to and conferred upon any other Authority or officer. The adjudication embarked upon by defendant No. 1 is without jurisdiction.
(iii) The unilateral order, without notice to plaintiff, of the Central Board of Excise and Customs, thereby transferring the case of plaintiff, from the Collector of Central Excise, New Delhi to defendant No. 1, was illegal, without jurisdiction and against the principles of natural justice and fair play.
63. Similar grounds of challenge were raised in C.W.P. No. 1039 of 1987, Duncan's Agro Industries v. Union of India & Others. By judgment dated August 12, 1988, the Division Bench of this Court, comprising S. S. Chadha, J. and myself, repelled all the aforesaid contentions. For this reason, the aforesaid grounds of challenge have no force.
64. The next contention of Mr. Anand is that Section 11A of the Act, could not be invoked, as the final assessment was yet to be made. As the goods were being cleared on the provisional assessment basis, so the Collector had no jurisdiction to issue a show cause notice, under Section 11A of the Act. The scope under Section 11A of the Act is very limited. This, in fact, is a review of the assessment, already made final. Levy is complete only when there is a final assessment. When the final assessment is made, only then, it can be known as to what is the short levy. In other words, the provisions of Section 11A cannot be invoked in those cases, where duties are paid under provisional assessment, made under Rule 9(b) of the Rules, without first finalising the assessment. Provisional assessment is not an assessment at all, but is merely a provision for payment of some amount by way of central excise duty, pending the determination of the assessable value, after taking into consideration all the elements, including additions and deductions. Hence, according to Mr. Anand, there cannot be any levy or non-payment or short levy or short payment of central excise duty, unless there is a final determination of the assessment value. Section 11A applies to reopening of the assessment for recovery of the duty, which has escaped assessment.
65. Mr. Anand has placed reliance on the judgments in cases Ghanshyam Dass v. Regional Asstt. Commissioner of Sales Tax, : [1964]51ITR557(SC) , Binny Ltd., Madras v. Superintendent, Central Excise, Guindy and Others : 1979(4)ELT65(Mad) , International Computers Indian . and Another v. Union of India & Others, : 1981(8)ELT632(Del) , and Andhra Re-Rolling Works, Hyderabad v. Union of India and Others, : 1986ECR344(SC) . Mr. R. K. Anand has further urged that the cause of action for invoking Section 11A of the Act, accrues only from the relevant date, as defined under Section 11A, which in case of provisional assessment means the date of adjustment of duty after final assessment under Rule 9B.
66. All these submissions were considered at length by the Division Bench in Duncan's Agro Industries Ltd. v. Union of India, C.W. 1708 of 1987. It is however not disputed that the goods were cleared on the basis of provisional assessment. The final assessment was made after the filing of the suit and on August 8, 1988. In that case, the Division Bench left many contentions for investigation, entered into by the Authority under the Act. However, it was held that there was no inherent lack of jurisdiction on the allegations. It was further held :
'There is also no merit in the submission that the cause of action for invoking Section 11A of the Act would accrue only on the 'relevant date' defined under Section 11A which in case of provisional assessment means the date of adjustment of duty after final assessment under Rule 9B. Section 11A was inserted by Section 21 of the Amendment Act No. 25 of 1978 with effect from November, 17, 1980. It is in substitution of Rule 10 of the Rules which was omitted with effect from November 17, 1980. Rules 10 and 11-A (operative prior to August 6, 1977) also provided for recovery of duties and charges short levied or erroneously refunded. The period of issue of show cause notice was only three months and it could be issued by the Assistant Collector, Central Excise. Rule 10 which was operative from August 6, 1977 to November 16, 1980 provided a period of six months and the show cause notice could be issued by the proper officer. It was also provided that in cases where any duty had not been paid by reason of fraud, collusion or any willful mis-statement or suppression of facts by such person or erroneously refunded etc. the period was five years instead of six months. Section 11A was inserted by Amendment Act No. 25 of 1978 and came into force on the appointed date i.e. November 17, 1980. Further amendments were made in 1985. By Section 3 of the Amendment Act of 1985, the words 'as if' for the words 'Central Excise Officer' the words Collector of Central Excise' were substituted in the proviso to Section 11A(1) after the words 'as if'. In sub-section (2) of Section 11A for the words 'the Assistant Collector of Central Excise' the words 'The Assistant Collector for Central Excise or, as the case may be, the Collector of Central Excise' were substituted. Prior to the amendment of 1985, the institution of the proceedings by issue of show cause notice could be by any Central Excise Officer but the determination had to be by the Assistant Collector of Central Excise. The result of the amendment is that the excise duty short levied or short paid or erroneously refunded by reason of fraud, collusion or any willful mis-statement or suppression of facts or contravention of any of the provisions of the Act or the Rules with intent to evade payment of duty could be the subject matter of proceedings for levy and collection. These provisions show that Rule 10 and 10A as originally enacted did not create a right to levy the excise duty. It merely laid down a rule of limitation. The statute of limitation assumes the existence of a cause of action and does not define it or create one (see 'R.C. Jall v. Union of India', : AIR1962SC1281 ). The intention of the law of limitation is, not to give a right where there is none, but to interpose a bar after a certain period to enforcer an existing right (See 'Hari Nath Chatterjee v. Madhur Mohan Goswami' I.L.R. 20 Cal 8 (PC). The cause of action for invoking the provisions of Section 11A is the fraudulent evasion of excise duty and not a right created by any provision relating to limitation'.
Hence the arguments, advanced by Mr. Anand, have no force.
67. The next contention of Mr. Anand is, that the show cause notice dated March 27, 1986, is illegal, mala fide, against the principles of natural justice and fair play and without jurisdiction. There was total non-application of mind on the part of the Collector of Central Excise in issuing the notice, as there was no material before him to suggest any involvement of the plaintiff company in receiving the extra amount from any of the dealers. If any extra amount was received that received illegally, exclusively by Mr. Vyas and that too without the knowledge of the plaintiff company or its Chairman, Directors/President.
68. In the show cause notice dated March 27, 1986, it is alleged that the Company had contravened the provisions of Rules 173C, 173F and 173G read with Rule 9(1) of the Rules on the grounds that the Company failed to submit correct price list from time to time, in respect of the glazed tiles; further failed to determine the correct duty liability on the goods and cleared the goods from the factory, without discharging correct duty liability.
69. Rules 173C, 173F and 173G read as under :
* * * *
70. Section 4 of the Act provides that where duty of excise is chargeable on any excisable goods, with reference to value, such value shall, subject to the other provisions of this Section, be deemed to be the normal price, at which such goods are ordinarily sold, by the assessed to a buyer, in the course of wholesale trade, for delivery at the time and place of the removal.
71. Section 4(1) of the Act reads as under :
'4. Valuation of excisable goods for purposes of charging of duty of excise. -
(i) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to value, such value shall, subject to the other provisions of this section be, deemed to be -
(a) the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessed to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale :-
Provided that -
(i) where, in accordance with the normal practice of the wholesale trade in such goods, such goods are sold by the assessed at different prices to different classes of buyers (not being related persons), each such price shall, subject to the existence of the other circumstances specified in clause (a), be deemed to be the normal price of such goods in relation to each such class of buyers;
(ii) where such goods are sold by the assessed in the course of wholesale trade for delivery at the time and place of removal at a price fixed under any law, for the time being in force or at a price, the maximum fixed under any such law, then, notwithstanding anything contained in clause (iii) of this proviso, the price of the maximum price, as the case may be, so fixed, shall, in relation to the goods so sold, be deemed to be the normal price thereof.
(iii) Where the assessed so arranges that the goods are generally not sold by him in the course of wholesale trade except to or through a related person, the normal price of the goods sold by the assessed to or through such related person shall be deemed to be the price at which they are ordinarily sold by the related person in the course of wholesale trade at the time of removal, to dealers (not being related persons) or where such goods are not sold to such dealers (being related persons) who sell such goods in retail;
(b) Where the normal price of such goods is not ascertainable for the reason, that such goods are not sold or for any other reason, the nearest ascertainable equivalent thereof determined in such manner as may be prescribed.'
72. Plaintiff has proved that it has about 200 dealers, throughout India. The supplies of the tiles were being made to all the dealers. Mr. M. L. Vyas was the Sales Executive from August 24, 1981 to November 9, 1984, when he was transferred. The payments used to be received by plaintiff, by means of payees account cheques or drafts from the various dealers. Put of 200 dealers, statements of about 62 dealers/persons were recorded by the officials of defendant No. 2. Out of these 62 dealers/persons, 5 dealers/persons, in their statements alleged that they paid extra money to Shri M. L. Vyas, on his demand as he was helping them in giving quick supplies out of turn and also was giving choice/quality goods.
73. Now, the question, which arises for consideration is whether plaintiff company, which is a public limited Company, can be made liable for an act of the Sales Executive in receiving the extra amount from certain dealers.
74. In the plaint, a specific plea has been taken that plaintiff company has reputed persons on its Board of Directors. One Shri H. L. Somany is the Chairman of the Company. The Board of Directors of the Company consists of Government nominated Directors, reputed Advocates, Industrialists and also foreigners. The names of some Directors have been given in the plaint. These allegations have not been disputed by defendants, in their written statement. So, these facts are admitted. No doubt, a public limited company functions through, either its Board of Directors or one or two Directors or the Managing Director. In order to fix liability on the Company as a whole, it is necessary to lift the corporate veil, in case of fraud to find out, as to who in fact, was managing the affairs of the company. In the present case, no attempt was made by defendants to lift the corporate veil, nor there is any allegation that Mr. Vyas was an agent of the Company.
75. The second question, which arises for consideration is whether there was any material before the Authority to warrant the issue of show cause notice and in doing so, whether the provisions of law were complied with.
76. Under Section 4 of the Act, duty of excise chargeable on the excisable goods, is with reference to the value and this value is the normal price, at which the goods are ordinarily sold by the assessed, to the buyer, in the course of wholesale trade for delivery at the time and place of removal.
77. The word 'ordinarily', has been interpreted, in several cases. The word 'ordinarily' means 'in the majority of cases', but not invariably.
78. As already stated above, plaintiff has proved that it has about 200 dealers all over India. The officials of the Department recorded the statements of about 62 dealers/persons out of 200 dealers. It is also on record that out of 62 dealers, only 5 dealers alleged extra payment to Shri Vyas.
79. Defendants have filed the copies of the statements of 5 dealers, recorded by the officials of the Department.
80. In his statement, Shri T. V. L. Santhanam, partner of M/s. Lakshmi Trading Corporation, stated that his firm used to place orders with plaintiff for supply of tiles and the payment used to be made to plaintiff by means of Demand Drafts. With regard to the extra payments, he stated that these extra payments were made to Shri M. L. Vyas, who was the Sales Executive of the plaintiff Company. These payments were made upon the direction of Mr. Vyas. This amount of extra money was paid by means of Demand Draft, sent to Mr. Vyas, at his residential address. He has also stated that these extra payments were made to Mr. Vyas, because he told them that no supplies would be made, unless extra amount was paid to him.
81. Another statement is that of one Shri M. G. Menokke. He is the manager of M/s. Chakiat Corporation. In his statement, Shri Menokke alleged that M/s. Chakiat Corporation used to purchase glazed tiles from plaintiff, after placing the orders in writing. Along with goods, his concern used to receive bills/invoices, central excise gate pass and lorry receipt from plaintiff. The payments used to be made to plaintiff through bank. No payment in cash was made to plaintiff. Besides invoice value, certain extra money was paid to Shri M. L. Vyas, Sales Executive of plaintiff, during the years 1983-84 and 1984-85. The amount was paid at the instance of Mr. Vyas. He used to telephone the dealer and tell them that unless this extra money was paid, the supply of glazed tiles would not be effected. This extra amount was paid by means of Demand Draft to Mr. Vyas at his residential address. He has also stated that his concern was not aware whether the extra money was passing on the Management, as no enquiry was made by them in this regard.
82. Shri A. R. Balakrishnan, Managing Director of M/s. girl Nath Agencies (P) Ltd. alleged in his statement that he had been dealing with the plaintiff company. His company used to place orders for purchase of glazed tiles from plaintiff. The Company used to get bills, delivery challans, central excise gate pass etc. The payments used to be made to plaintiff through bank. He has stated that the company paid extra money to Mr. Vyas, who was the Sales Executive of the Company, during the year 1983-34, though no accounts of such payment has been maintained. The purpose of making these payments was to meet the specific requirements and demands. Mr. Vyas used to tell the company on telephone. The payments were made by means of Demand Drafts, which were sent to Mr. Vyas, at his residential address.
83. To similar effects, are the statements of Shri N. Santhanam and K. P. Narendran. In these statements, it is also alleged that there was generally short supply of tiles and demand was high, thereforee, Mr. Vyas, who was the Sales Executive, was taking advantage of his position for supplies to them.
84. From the statements of these dealers, it is clear that none alleged that any extra payment over and above the invoice price was made to plaintiff or its Directors.
85. Statement of Mr. Vyas was also recorded under Section 14 of the Act. In his statement, Mr. M. L. Vyas admitted that he was the Sales Executive of plaintiff and he had started a side business during his tenure as Sales Executive. He admitted that he was not getting extra money from all the dealers but only from some of the dealers. He has also stated that he did not share this extra amount with anyone and that the Company was not aware of it.
86. Mr. Vyas has categorically denied that either the Company or any of its Directors or officials, was involved in the collection of extra money by him. The money, so received by him, was deposited in his or his wife bank account or in a joint account. This he did in his personal capacity.
87. It appears that Mr. Vyas was getting the extra money from certain dealers by misusing his position as Sales Executive, as there was a short supply of the glazed tiles.
88. Plaintiff has also placed on record the statements of certain dealers, whereby the dealers have specifically stated that no extra amount was paid. Out of 200 dealers, only 5 dealers have alleged extra payment to Mr. Vyas.
89. There was no material before the Collector to suggest that either the Company or any of its Directors was collecting extra money, over and above the invoice price, towards the cost of glazed tiles, during the period covered by the show cause notice.
90. Out of 200 dealers, D.R.I. Officers, recorded the statements of 62 dealers under Section 14 of the Act. Except 5, the other dealers, appear to have denied payment of any extra amount to even Mr. Vyas or plaintiff. In the show cause notice, the Department did not rely upon the statements of all the 62 dealers, but relied only on the statements of 7 dealers. This, in my view, not only violated the legal procedure, but resulted in grave injustice to plaintiff.
91. There is no material on record to suggest that the money collected by Mr. Vyas was paid to the plaintiff or to any of its Directors, or it was credited in the account of the Company. Payment should be from buyer to the assessed.
92. In other words, there was no material before the Authority, to indicate the involvement of plaintiff or any of its Directors, either directly or indirectly, with any act of Mr. Vyas.
93. From the perusal of the admitted facts and documents, it is evident that the total number of transactions involving the alleged payment of extra money over the invoice price, constituted less than 1% of the total sales/transaction alone, during the period in question. In other words, in the substantial majority of transactions, dealers paid the price, as indicated in the invoices. Thus, this price, alone constituted the normal price, at which the goods were ordinarily sold. By the show cause notice, the Department sought to recover excise duty, on the additional amount, allegedly received by Mr. Vyas. This, in my view, is contrary to Section 4 of the Act. So, the Department did not follow the provisions as contained in Section 4 of the Act.
94. Plaintiff had been submitting the price list under Rule 173 of the Rules for the approval of the proper officer. The goods were cleared for the relevant period, on the basis of provisional assessment. These price lists were approved after filing of the suit on August 8, 1988.
95. Plaintiff has placed materials, on the record to show that the prices, shown in column 3 of the price list, filed during the relevant period, were the prices, at which plaintiff sold the goods at the factory gate, in the course of wholesale trade.
96. Under Section 4 of the Act, duty of excise is chargeable on the excisable goods with reference to their values such value is the normal price at which the goods are ordinarily sold by assessed to a buyer in the course of the wholesale trade.
97. In my view, there was non-application of mind, on the part of the Authority, issuing the show cause notice.
98. Thus, the provision of the Act have not been complied with. In issuing the show cause notice, fundamental principles of judicial procedure were also not complied with, as there was no material before the Collector to suggest any involvement of the Company.
99. For this reasons, the show cause notice dated March 27, 1986 is illegal and without jurisdiction and is liable to be set aside.
100. As the show cause notice dated March 27, 1986 is illegal and without jurisdiction, so, on this ground alone, the order dated January 29, 1988, cannot be sustained.
101. Issue No. 3 is decided accordingly.
102. Under the facts and circumstances of the case, I grant the following reliefs :
(i) I pass a decree for declaration in favor of plaintiff and against defendants, thereby declaring the notice dated March 27, 1986, as illegal and without jurisdiction and the same is set aside. Consequently, on this ground, the order dated January 29, 1988, is also set aside.
(ii) I also pass a decree for permanent injunction, restraining defendants from taking any action, in pursuance to the notice dated March 27, 1986. Parties are left to bear their own costs.
103. In I.A. No. 1551 of 1988, I directed plaintiff to deposit a sum of Rs. 65 lakhs with the concerned Authority. Subject to this deposit, the stay was to continue till the decision of the suit. This amount was deposited by plaintiff. I am not making any order for the refund of this amount, but this amount, be accounted for in the records of the defendants.