Glo Colour Labs Pvt. Ltd., v. The Commissioner Of Central
IN THE HIGH COURT OF JUDICATURE OF MADRAS
DATED: 30.07.2019
CORAM:
THE HONOURABLE MR. JUSTICE M.S. RAMESH W.P.No.22685 of 2017 W.M.P.No.23783 of 2017 Glo Colour Labs Pvt.Ltd., 112, Cross Cut Road, Gandhipuram, Coimbatore - 641012.
...Petitioner
Vs
1. The Commissioner of Central Excise, 6/7, ATD Street, Race Course Road, Coimbatore - 641018.
2. The Additional Director General, Directorate General of Central Excise Intelligence, Chennai Zonal Unit, C-3, C-Wing, II Floor, Rajaji Bhavan, Besant Nagar, Chennai - 600090.
...Respondents
PRAYER: Writ Petition filed under Article 226 of the Constitution of India, praying to issue a writ of Certiorari, calling for the records relating to the order passed by the first respondent in that portion of the order C.No.
V/PS/15/147/2015-ST.Adj./ Order SI.No.CBE/ST/29/2017-Commr dated 09.05.2017 of the first respondent herein, by which the respondent has, erroneously demanded service tax to the tune of Rs.1,54,87,994/- under photography service for the period from 01.04.2010 to 30.06.2012 and imposed further penalty of Rs.1,54,87,994/- Under Section 78 of the Finance Act, 1994 and imposed further penalty of Rs.10,000/- under Section 77(2) ibid.
For Petitioner : Mr.J.Shankarraman For Respondents: Mr.A.P.Srinivas, SSC for R1 Mr.V.Sundareswaran, SSC for R2
O R D E R
The grounds raised in the present writ petition may not fall under any of the exemptions provided for directly invoking Article 226 of the Constitution of India. In view of the appeal remedy available under Section 35(B) of the Customs Act, the Hon'ble Supreme Court in a decision reported in (2018) 3 SCC 85 in the case of Authorized Office, State Bank of Travancore and another vs Mathew K.C., has observed as follows:-
11. In Satyawati Tandon (supra), the High Court had restrained further proceedings under Section 13(4) of the Act. Upon a detailed consideration of the statutory scheme under the SARFAESI Act, the availability of remedy to the aggrieved under Section 17 before the Tribunal and the appellate remedy under Section 18 before the Appellate Tribunal, the object and purpose of the legislation, it was observed that a writ petition ought not to be entertained in view of the alternate statutory remedy available holding :- "43.
Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc.
the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasijudicial bodies for redressal of the grievance of any aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute.
55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Actand exercise jurisdiction under Article 226 for passing
orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection."
12. In Union Bank of India and another vs. Panchanan Subudhi, 2010 (15) SCC 552, further proceedings under Section 13(4) were stayed in the writ jurisdiction subject to deposit of Rs.10,00,000/- leading this Court to observe as follows :
"7. In our view, the approach adopted by the High Court was clearly erroneous. When the respondent failed to abide by the terms of onetime settlement, there was no justification for the High Court to entertain the writ petition and that too by ignoring the fact that a statutory alternative remedy was available to the respondent under Section 17 of the Act."
13. The same view was reiterated in Kanaiyalal Lalchand Sachdev and others vs. State of Maharashtra and others, 2011 (2) SCC 782 observing:
"23. In our opinion, therefore, the High Court rightly dismissed the petition on the ground that an efficacious remedy was available to the appellants under Section 17 of the Act. It is well settled that ordinarily relief under Articles 226/227 of the Constitution of India is not available if an efficacious alternative remedy is available to any aggrieved person. (See Sadhana Lodh v. National Insurance Co. Ltd.; Surya Dev Rai v. Ram Chander Rai and SBI v. Allied Chemical Laboratories.)"
14. In Ikbal (supra), it was observed that the action of the Bank under Section 13(4) of the ''SARFAESI Act' available to challenge by the aggrieved under Section 17 was an efficacious remedy the institution directly under Article 226 was not sustainable, relying upon Satyawati Tandon (Supra), observing :
"27. No doubt an alternative remedy is not an absolute bar to the exercise of extraordinary jurisdiction under Article 226 but by now it is well settled that where a statute provides efficacious and adequate remedy, the High Court will do well in not entertaining a petition under Article 226. On misplaced considerations,
statutory procedures cannot be allowed to be circumvented.
*** 28.......In our view, there was no justification whatsoever for the learned Single Judge to allow the borrower to bypass the efficacious remedy provided to him under Section 17 and invoke the extraordinary jurisdiction in his favour when he had disentitled himself for such relief by his conduct. The Single Judge was clearly in error in invoking his extraordinary jurisdiction under Article 226 in light of the peculiar facts indicated above. The Division Bench also erred in affirming the erroneous order of the Single Judge."
15. A similar view was taken in Punjab National Bank and another vs. Imperial Gift House and others, (2013) 14 SCC 622, observing:- "3. Upon receipt of notice, the respondents filed representation under Section 13(3-A) of the Act, which was rejected. Thereafter, before any further action could be taken under Section 13(4) of the Act by the Bank, the writ petition was filed before the High Court. 4. In our view, the High Court was not justified in entertaining the writ petition against the notice issued under Section 13(2) of the Act and quashing the proceedings initiated by the Bank."
16. It is the solemn duty of the Court to apply the correct law without waiting for an objection to be raised by a party, especially when the law stands well settled. Any departure, if permissible, has to be for reasons discussed, of the case falling under a defined exception, duly discussed after noticing the relevant law. In financial matters grant of ex-parte interim orders can have a deleterious effect and it is not sufficient to say that the aggrieved has the remedy to move for vacating the interim order. Loans by financial institutions are granted from public money generated at the tax payers expense. Such loan does not become the property of the person taking the loan, but retains its character of public money given in a fiduciary capacity as entrustment by the public. Timely repayment also ensures liquidity to facilitate loan to another in need, by circulation of the money and cannot be permitted to be blocked by
frivolous litigation by those who can afford the luxury of the same. The caution required, as expressed in Satyawati Tandon (supra), has also not been kept in mind before passing the impugned interim order:- "46. It must be remembered that stay of an action initiated by the State and/or its agencies/instrumentalities for recovery of taxes, cess, fees, etc. seriously impedes execution of projects of public importance and disables them from discharging their constitutional and legal obligations towards the citizens. In cases relating to recovery of the dues of banks, financial institutions and secured creditors, stay granted by the High Court would have serious adverse impact on the financial health of such bodies/institutions, which (sic will) ultimately prove detrimental to the economy of the nation. Therefore, the High Court should be extremely careful and circumspect in exercising its discretion to grant stay in such matters. Of course, if the petitioner is able to show that its case falls within any of the exceptions carved out in Baburam Prakash Chandra Maheshwari v.
Antarim Zila Parishad, Whirlpool Corpn. v. Registrar of Trade Marks and Harbanslal Sahnia v. Indian Oil Corpn. Ltd. and some other judgments, then the High Court may, after considering all the relevant parameters and public interest, pass an appropriate interim order."
17. The writ petition ought not to have been entertained and the interim order granted for the mere asking without assigning special reasons, and that too without even granting opportunity to the Appellant to contest the maintainability of the writ petition and failure to notice the subsequent developments in the interregnum. The opinion of the Division Bench that the counter affidavit having subsequently been filed, stay/modification could be sought of the interim order cannot be considered sufficient justification to have declined interference.
18. We cannot help but disapprove the approach of the High Court for reasons already noticed in Dwarikesh Sugar Industries Ltd. vs. Prem Heavy Engineering Works (P) Ltd. and Another, 1997 (6) SCC 450, observing :-
"32. When a position, in law, is well settled as a result of judicial pronouncement of this Court, it would amount to judicial impropriety to say the least, for the subordinate courts including the High Courts to ignore the settled decisions and then to pass a judicial order which is clearly contrary to the settled legal position. Such judicial adventurism cannot be permitted and we strongly deprecate the tendency of the subordinate courts in not applying the settled principles and in passing whimsical orders which necessarily has the effect of granting wrongful and unwarranted relief to one of the parties. It is time that this tendency stops."
2. In view of the observations made and also taking into account that the grounds raised in the present writ petition may not be an exemption for not availing an appeal remedy, the writ petition is liable to be rejected. Nevertheless, by taking a lenient view, this Court is of the view that the petitioner could be granted liberty to file an appeal against the order, within a stipulated time.
3. In the light of the above observations, the writ petition stands disposed of, with liberty to the petitioner to file an appeal against the Order-inOriginal dated 09.05.2017, within a period of 30 days from the date of receipt of copy of this order. No costs. Consequently, connected miscellaneous petition is closed. Sd/- Assistant Registrar(CS VIII) //True Copy// Sub Assistant Registrar hvk To
1. The Commissioner of Central Excise, 6/7, ATD Street, Race Course Road,Coimbatore - 641018.
2. The Additional Director General, Directorate General of Central Excise Intelligence, Chennai Zonal Unit, C-3, C-Wing, II Floor, Rajaji Bhavan, Besant Nagar, Chennai - 600090. (Note: Registry is directed to return the Order-inOriginal dated 09.05.2017 to the petitioner) +1cc to Mr.A.P.Srinivas,Advocate SR.No. 65075(03/10/2019) +1cc to Mr.V.Sundareswaran,Advocate SR.No.65161(03/10/19) W.P.No.22685 of 2017 W.M.P.No.23783 of 2017 ppa (CO)A.SK(05/09/2019)