Galada Continuous Castings Ltd. Vs. Collector of Central Excise, Hyderabad and 2 ors. - Court Judgment

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excise - confiscation - central excise act, 1944 - appellant-assessee manufacturer of aluminium wire rods - assesee contravened of rule 173-q - records of seven gate passes were not properly recorded lead to deviation - having regard to this deviation penalty levied and confiscation of goods was also ordered - in impugned order penalty was held to be unjustified and redemption (fine) was passed - appellant contended that 'no intention to evade payment of duty' existed therefore impugned order cannot be sustained - clause (b) of rule 173q contravened - as per rule 173-q authorities have power to levy penalty as well as to order of confiscation - held, impugned order upheld by court. - motor vehicles act (59 of 1988)section 149 (2): [v. gopala gowda & jawad rahim, jj] insurers entitlement to defend the action joint appeal by insured and insurer - held, the language employed in enacting sub-section (2) of section 149 appears to be plain and simple and there is no ambiguity in it. it shows that when an insurer is impleaded and has been given notice of the case, it is entitled to defend the action only on grounds enumerated in sub-section (2) of section 149 of the act, and no other grounds are available to it. the insurer is not allowed to contest the claim of the injured or heirs of the deceased on other grounds, which are available to the insured. if insurer is permitted to contest the claim on other grounds it would mean adding more grounds of contest to the insurer and will be negation of the intention of the legislature and annihilate mandate of the provisions of sections 170 and 149 of the act. the insured can pursue appeal only after giving up the insurer as the appellant and not otherwise. in the instant case, the insurer has not withdrawn from party array but has remained prosecuting the appeal with the insured on the grounds which are available only to the insured. therefore, the joint appeal as filed by the insured and the insurer is not maintainable. section 166: [v. gopala gowda & jawad rahim, jj] claim for compensation accident due to mechanical defect in the vehicle held, it is not in dispute that the claimant suffered injuries in an accident, which occurred during the course of his employment, albeit due to his negligence but law does not render him remediless. statutory right is conferred on him, accruing by virtue of his employment under insured to claim compensation under workmens compensation act. the insurer is statutorily duty bound to discharge the liability of the owner of the vehicle, to pay such compensation to the employee, as mandated under the provisions of section 149 of the act. the right of an injured employee or his dependents as the case may be to be compensated, when injury is suffered or death occurs during his employment, is recognised not only under workmens compensation act, but also under benevolent provisions under section 166 and 167 of the m.v. act. the right of driver to seek compensation is not restricted only to the workmens compensation act, it has been enlarged to enable such person to seek just compensation (sections 166 and 168), conferring upon him the right of election engrafted under section 167 of the act to choose either of the two forum. the only defence which the insurer could take is limit of its liability as enumerated under section 147 of the act, leading to contest, inter alia, only between insured and insurer and does not impact claimants right to recover the compensation determined by the tribunal which crystallizes into enforceable right against both. in the instant case, the claimant/driver has exercised right of election under section 167 of the act to seek compensation under section 166 of the act resulting in award passed by the tribunal. therefore, the insured and the insurer have no escape but to discharge the said award as directed. undisputedly, in this case as deduced for proved facts, the vehicle in question was not properly maintained by the owner and despite faulty brake system, the claimant had undertaken the hazardous journey to his peril at the behest of and at the instruction of the owner. the owner is therefore, tortfeasor. section 168: [v. gopala gowda & jawad rahim, jj] insurers limit of liability - held, it is well settled that the liability of the insurance company for payment of compensation can be statutory or contractual. is for the insurance company to show that the insurance policy was a statutory policy and not a contractual policy to restrict its liability. that issue was neither raised before the tribunal nor is raised in this appeal requiring decision. thus, if at all the insurer has any valid ground to restrict its liability, it can proceed against the insured but firstly it has to discharge the award as required under section 149 (1) of the act. where the owner/insured has failed to maintain the vehicle as per prescribed safety standards and has caused the claimant to drive the vehicle with mechanical defects, the owner would be the tortfeasor and the claimant can maintain a petition seeking compensation under the provisions of the act, instead of seeking compensation under the workmens compensation act. on facts, held, the material evidence on record, particularly, with regard to the income of the claimant, his age, medical evidence and the evidence relating to pecuniary loss has not been considered by the tribunal in the correct perspective, which has resulted in passing of the impugned award, disproportionate to the pecuniary loss and the loss of future income of the victim. the settled principles governing determination of compensation has been given a go-bye. compensation of rs.4,15,150/- awarded by the tribunal was enhanced to rs.8,20,000/-. - on a reading of rule 173-q and other cognate rules, the authorities have power to levy penalty as well as to order confiscation.raghuvir, j.1. m/s. galada continuous castings limited (the firm) manufacture aluminium wire rods. this case relates to excise duty payable by them the firm under central excise act, 1944 and rules. the issue relates to seven gate passes 238 to 244 which were produced by the firm on march 1st, 2nd and 4th of that month in 1976. the seven passes were subject matter of an enquiry and in the impugned order on june 22, 1978 the special secretary to the government of india passed the redemption (fine) order. 2. the goods covered by seven gate passes 238 to 244 the issue was whether the firm made the debit entries in corresponding records referred as r.g. 23 records. the finding was the firm did not record in r.g. 23. in violation rules, therefore, penalty was levied and confiscation of goods was also ordered. in the impugned order the penalty was held to be unjustified and redemption (fine) was passed. the learned counsel for the firm argued placing reliance on words `no intention to evade payment of duty' contained in rules 226 and 173-q, the impugned order cannot be sustained. various circumstances were relied to show there was no intention to contravene any of the provisions of the act or the rules. the counsel summed up to conclude the reasons which prompted the authorities to quash the penalty on the same parity of reasoning the impugned order should be quashed. 3. we are unable to agree with this assertion of the firm. it is seen the firm did not account for the goods produced by him. in that seven gate passes 238 to 244 on march 19, 1976 are not properly recorded in r.g. 23 record. there was thus deviation of clause (b) of rule 173-q. having regard to this deviation the issue was whether the authorities were entitled to levy the redemption order. on a reading of rule 173-q and other cognate rules, the authorities have power to levy penalty as well as to order confiscation. in the instant case for one reason or the other, the authorities have found penalty is not sustainable. we do not wish to interfere with such a conclusion. the authorities held further goods were not appropriately accounted within the meaning of clause (b) of rule 173_q. therefore, the fine in the impugned order is passed. on the above conclusion the impugned order suffers from no vice, whatever. the writ petition for the aforesaid reasons fails and is dismissed. no costs.