A. Srinivas Rao Vs. Commr. of Cus. and Central Excise - Court Judgment

Excerpt:
- cantonments act[c.a. no. 41/2006]. section 346 & cantonment fund (servants rules, 1937, rules 13, 14 & 15: [h.l. gokhale, ag. cj, p.v. hardas, naresh h. patil, r.m. borde & r.m. savant, jj] jurisdiction of school tribunal constituted under maharashtra employees of private schools (conditions of service) regulations act, (3 of 1978) held, school run by the cantonment board is a primary school and it is not a school recognised by any such board comparable to the divisional board or the state board. the school tribunal constituted under section 8 of the maharashtra act cannot entertain appeals filed under section 9 by the employees working in schools which are established and administered by the cantonment board. teacher employed in the school run by cantonment board being covered under rule 2 (f) of the cantonment fund servants rules, 1937 can file appeal under rules 13, 14 and 15 to authorities provided therein against any order imposing any penalties etc. [deolali cantonment board v usha devidas dongre, 1993 mah. lj 74; 1993 lab ic 1858 overruled]. -- maharashtra employees of private schools (conditions of service) regulations act, 1978 [act no. 3/1978]. sections 9 & 2(21): jurisdiction of school tribunal whether a school run by cantonment board is not a recognised school within the meaning of section 2(21)? - held, the act is enacted to regulate recruitments and conditions of employees in certain private schools and provisions of the act shall apply to all private schools in the state whether receiving any grant-in-aid from the state government or not. private school is defined in section 2(2) of the act as a recognised school established or administered by a management other than the government or a local authority. recognised means recognised by director, the divisional board or state board. thus as far as the first part of the definition of being recognised is concerned, it includes, as stated above, four directors, the divisional boards and four state boards. the second part of this definition which comes after the comma refers to any officer authorised by director or by any of such boards. the question to be examined is whether school run by the cantonment board could be said to be one run by any such boards. a private school has to be recognised by the state or the divisional board or by any officer authorised in that behalf. when this phrase namely: recognised by any officer authorised by the director or by any such boards, is included in the latter part of section 2(21), such boards will be of the level of the state board or the divisional board. the boards referred to in the definition of the word recognised means the boards which deal with education at levels other than that of the level at which primary schools are operating. thus for being recognised, the school has to be recognised by the board and therefore, it has to be operating at a higher level i.e., secondary level. section 2(21) of the act defines the term recognised. the last clause therein is by any of such boards. the term such is defined in oxford dictionary as of the kind or degree indicated or implied by the context. therefore, the term such board will have to mean a divisional board of or the level of divisional board or the state board. the divisional board holds the examination and issues certificates after 10th and 12th standard examinations. the state board advises the state government on policy matters, ensures uniform pattern of secondary and higher secondary education, lays down principles for determining syllabi, prescribes text books, etc. the cantonment board does not discharge any of such duties nor is there any other board or body under the cantonments act discharging any such duties. the duties of the cantonment board are laid down in section 62 and amongst others, clause (xiv) lays down the duties of establishing and maintaining or assisting primary schools only. the cantonment board is not required to enter into the area of secondary education. therefore, school run by the cantonment board is a primary school and it is not a school recognised by any such board comparable to the divisional board or the state board. that being the position, it is not possible to accept it to be a recognised school for being a private school under the act. for the reasons state above, the school tribunal constituted under section 8 of the act cannot entertain appeals filed under section 9 by the employees working in schools which are established and administered by the cantonment board. [deolali cantonment board v usha devidas dongre, 1993 mah.lj 74; 1993 lab ic 1858 overruled]. - the case of the petitioner is that since he had no knowledge that the property was liable to be auctioned for collection of the dues from the company, therefore, he was a bona fide purchaser and the notice although issued on 28-12-2006 was only served on him on 13-1-2007, whereas the sale was effected on 5-1-2007. the property purchased by the petitioner did not belong to any company, but it belongs to an individual, as such the impugned notice is bad and is liable to be struck down. rajashekar reddy, the learned assistant solicitor general, appearing for the respondents relied on the proviso to section 11 of the central excise act, 1944 (for short 'the act') to suggest that even purchaser of the property, which had cloud, is liable for making good the dues to the department.orderbilal nazki, j.1. heard learned counsel for the parties.2. this writ petition is filed seeking a direction that the respondents should not give effect to the notice dated 28-12-2006 served on the petitioner on 13-1-2007.3. the admitted facts of the case are that the property, which is sought to be attached and the notice which is issued pertains to the property, which was not the property of the company, but was the personal property of one of the directors by name amarnath, from whom the petitioner purchased it. the notice was issued admittedly on 28-12-2006, which was received by the petitioner, who is the subsequent purchaser of the property, on 13-1-2007. the petitioner purchased the property on 5-1-2007 from its erstwhile owner. the case of the petitioner is that since he had no knowledge that the property was liable to be auctioned for collection of the dues from the company, therefore, he was a bona fide purchaser and the notice although issued on 28-12-2006 was only served on him on 13-1-2007, whereas the sale was effected on 5-1-2007. the property purchased by the petitioner did not belong to any company, but it belongs to an individual, as such the impugned notice is bad and is liable to be struck down.4. mr. a. rajashekar reddy, the learned assistant solicitor general, appearing for the respondents relied on the proviso to section 11 of the central excise act, 1944 (for short 'the act') to suggest that even purchaser of the property, which had cloud, is liable for making good the dues to the department.5. proviso to section 11 of the act reads as under-provided that where the person (hereinafter referred to as predecessor) from whom the duty or any other sums of any kind, as specified in this section, is recoverable or due, transfers or otherwise disposes of his business or trade in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in such business or trade by any other person, all excisable goods, materials, preparations, plants, machineries, vessels, utensils, implements and articles in the custody or possession of the person so succeeding may also be attached and sold by such officer empowered by the central board of excise and customs, after obtaining written approval from the commissioner of central excise, for the purpose of recovering such duty or other sums recoverable or due from such predecessor at the time of such transfer or otherwise disposal or change.6. on bare perusal of the proviso, it becomes clear that where a person from whom duty or any other sum of any kind is recoverable disposes of his business or trade in whole or in part, the subsequent owner shall be equally responsible for its payment. there can be no other interpretation to this proviso that it applies only where the transfer is of business or trade in whole or in part. it is an admitted case that there was no transfer of business or trade and the petitioner had only purchased the personal property of one of the directors of the company. the company being in arrears according to the respondents, as such, in our view, the proviso to section 11 of the act would not come to the rescue of the respondents since the private property has been sold by one of the directors of the company and has been purchased by the petitioner bonafidely, without knowing that the director had any liability on account of the arrears of the company of which he was the director. therefore, the impugned notice cannot be sustained.7. the writ petition is allowed and the impugned notice is set aside. no order as to costs.

Judgment:
ORDER

Bilal Nazki, J.

1. Heard learned Counsel for the parties.

2. This writ petition is filed seeking a direction that the respondents should not give effect to the notice dated 28-12-2006 served on the petitioner on 13-1-2007.

3. The admitted facts of the case are that the property, which is sought to be attached and the notice which is issued pertains to the property, which was not the property of the Company, but was the personal property of one of the directors by name Amarnath, from whom the petitioner purchased it. The notice was issued admittedly on 28-12-2006, which was received by the petitioner, who is the subsequent purchaser of the property, on 13-1-2007. The petitioner purchased the property on 5-1-2007 from its erstwhile owner. The case of the petitioner is that since he had no knowledge that the property was liable to be auctioned for collection of the dues from the Company, therefore, he was a bona fide purchaser and the notice although issued on 28-12-2006 was only served on him on 13-1-2007, whereas the sale was effected on 5-1-2007. The property purchased by the petitioner did not belong to any Company, but it belongs to an individual, as such the impugned notice is bad and is liable to be struck down.

4. Mr. A. Rajashekar Reddy, the learned Assistant Solicitor General, appearing for the respondents relied on the proviso to Section 11 of the Central Excise Act, 1944 (for short 'the Act') to suggest that even purchaser of the property, which had cloud, is liable for making good the dues to the department.

5. Proviso to Section 11 of the Act reads as under-

Provided that where the person (hereinafter referred to as predecessor) from whom the duty or any other sums of any kind, as specified in this section, is recoverable or due, transfers or otherwise disposes of his business or trade in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in such business or trade by any other person, all excisable goods, materials, preparations, plants, machineries, vessels, utensils, implements and articles in the custody or possession of the person so succeeding may also be attached and sold by such officer empowered by the Central Board of Excise and Customs, after obtaining written approval from the Commissioner of Central Excise, for the purpose of recovering such duty or other sums recoverable or due from such predecessor at the time of such transfer or otherwise disposal or change.

6. On bare perusal of the proviso, it becomes clear that where a person from whom duty or any other sum of any kind is recoverable disposes of his business or trade in whole or in part, the subsequent owner shall be equally responsible for its payment. There can be no other interpretation to this proviso that it applies only where the transfer is of business or trade in whole or in part. It is an admitted case that there was no transfer of business or trade and the petitioner had only purchased the personal property of one of the directors of the Company. The Company being in arrears according to the respondents, as such, in our view, the proviso to Section 11 of the Act would not come to the rescue of the respondents since the private property has been sold by one of the directors of the Company and has been purchased by the petitioner bonafidely, without knowing that the director had any liability on account of the arrears of the Company of which he was the director. Therefore, the impugned notice cannot be sustained.

7. The writ petition is allowed and the impugned notice is set aside. No order as to costs.