IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated: 23/12/2005 Coram The Hon'ble Mr. Justice P. SATHASIVAM CRP No. 4113 of 2002 and CRP Nos., 4128, 4138 of 2001 and 57 of 2002 and C.M.P.No. 516 of 2002. C.R.P.No. 4113/2001 1. The Assistant Commissioner of Central Excise, Commissionerate III, Incharge of Kancheepuram District. 2. The Commissioner of Central Excise, 121, Mahatma Gandhi Road, Nungambakkam, Chennai-34. .. Petitioners/Respondents/Defendants.
-Vs-
M/s. Diamond Engineering (Chennai)
Private Limited,
represented by its Managing Director,
P. Mohanraj, 179, Old Mahalipuram Road,
Sholinganallur, Chennai-119. .. Respondent/Petitioner/Plaintiff.
C.R.P.No.4128/2001
The Additional Director General,
Directorate General of Central Excise
Intelligence, C-3, C-Wing, II Floor,
Rajaji Bhawan, Chennai-90.
.. Petitioner/Respondent.
Vs.
1. M/s. Kiran Machines,
represented by its Managing Partner
Mohanraj. P, S.F.No. 602, Old Mahalipuram
Road, Sholinganallur, Chennai-119.
2. M/s. Denesh Metal Corporation,
Linghy Chetty Street,
Chennai-1.
3. Dinesh R. Shah,
Partner, M/s. Dinesh Metal Corporation,
Linghi Chetty Street, Chennai-1.
4. M/s. Salem Stainless Steel Suppliers,
No.8, Ekambareswarar Agraharam,
Park Town, Chennai-3.
5. M/s. Mahendra Metal Corporation,
5,Ravanier Street, Chennai-3.
6. M/s. S.C. Shah Enterprises,
315, Mint Street, Chennai-3.
7. M/s. Salem Steel Suppliers,
No.12/1, Mooker Nallamuthu Street,
Chennai-1.
8. M/s. Bhandari Foils Pvt. Ltd.,
27/B, Mooker Nallamuthu Street,
Chennai-1.
9. M/s. Bhandari Foils Pvt., Ltd.,
52/52A, Nanubai Desai Road,
Shop No.13, Islampuram Street,
Mumbai-4.
10. M/s. Sidhi Foils Pvt. Ltd.,
16/10, Ekambareswarar Agraharam,
Vittal Market, Chennai-3.
11. M/s Bhawarlal Metals,
No.27, Edapalayam Road, Chennai-3.
12. M/s. Ganapathy Agencies,
4, Nattu Pillaiyar Koil Street,
Chennai-1.
13. M/s. Team Trading Corporation,
29/1, Ekambareswarar Agraharam,
Park Town, Chennai-3.
14. M/s. Bhansali Steels,
48, Ponnappa Chetty Street, Chennai-3.
.. Respondents/Petitioners.
C.R.P.No. 4138/2001
The Additional Director General,
Directorate General of Central Excise
Intelligence, C-3, C-Wing, II Floor,
Rajaji Bhawan, Chennai-90.
.. Petitioner/Respondent.
Vs.
M/s. Diamond Engineering (Chennai)
Pvt. Ltd., represented by its
Managing Director Mohanraj. P,
159, Old Mahabalipuram Road,
Sholinganallur, Chennai-119.
.. Respondent/Petitioner.
C.R.P.No. 57/2002.
1. Union of India,
represented by its Secretary to
Government, Ministry of Finance,
New Delhi.
2. The Commissioner of Central Excise
(Chennai III), Chennai-600 034.
.. Petitioners/Defendants.
Vs.
M/s. Diamond Engineering
(Chennai) Pvt. Ltd.,
Sholinganallur,
represented by its Managing Director.
.. Respondent/Plaintiff.
Civil Revision Petitions have been filed under Article 227 of the
Constitution of India, against (i) orders passed on 25-9-2001 in I.A.No. 1182
of 2001 in O.S.No. 317 of 2001 by the Subordinate Judge, Poonamallee; (ii)
order passed on 9-8-2001 in I.A.No. 11797/2001 in O.S.No. 4177 of 2001 by
the XV Assistant Judge, City Civil Court, Chennai; (iii) order passed on
9-8-2001 in I.A.No. 12061/2001 in O.S. No. 4259/2001 by the XV Assistant
Judge, City Civil Court, Chennai; and (iv) to call for the records pertaining
to O.S.No. 129 of 2001 and I.A.No. 477 of 2001 on the file of Principal Sub
Judge, Chengalpattu filed by the respondent herein/plaintiff and to strike
down the plaint filed by the plaintiff/respondent herein respectively.
!Mr. K. Kumar, Senior Advocate for Mr. M.Dhandapani,
Addl. Central Govt., Standing counsel for petitioners
in C.R.P.No.4128, 4138/2001.
Mr. R. Santhanam, Senior Central Govt., Standing
counsel for petitioner in C.R.P.Nos.4113/2001 and
57/2002.
^Mr. R. Muthukumarasamy, Senior counsel for Mr.
J. Pothiraj in C.R.P.Nos. 4129 and 4138/2001, and
for Mr. C. Kasirajan in C.R.P.No. 4113/2001, 57/2002.
:COMMON ORDER
In all the Civil Revision Petitions, the petitioners are Secretary to the
Government, Ministry of Finance, Union of India and Commissioner of Central
Excise, Chennai. The issue raised in all these petitions is common, they are
being disposed of by the following common Order.
2. C.R.P.No. 4113/2001 is filed against order dated 25-9-2001 of the
Subordinate judge, Poonamallee made in I.A.No. 1182/2001 in O.S.No.317/2001
in and by which the learned Judge allowed the said application and granted
injunction restraining the respondents/ defendants therein from proceeding in
terms of show cause notice No.SCN 31 /95 dated 31-8-95 and amended by addendum
dated 15-9-95 pending disposal of the suit.
3. C.R.P.No. 4128/2001 is against order dated 9-8-2001 of the XV Assistant
Judge, City Civil Court, Chennai made in I.A.No. 1 1797/2001 in O.S.No.
4177/2001 in and by which the learned Judge after setting the first respondent
therein-Department ex parte, allowed the application granting injunction
restraining the first respondentDepartment from initiating any further
proceedings pursuant to the show cause notice dated 28-5-2001.
4. C.R.P.No. 4138 of 2001 is against order of the XV Assistant Judge, City
Civil Court, Madras dated 9-8-2001, made in I.A.No. 12061 of 2001 in O.S.No.
4259 of 2001 in and by which the learned Judge after setting the first
respondent therein-Department ex parte, allowed the application and granted
injunction from proceeding pursuant to the show cause notice dated 1-3-2001.
5. In C.R.P.No. 57 of 2002, the petitioners seek to call for the plaint in
O.S.No. 129 of 2001 and I.A.No. 477 of 2001 pending on the file of the
Principal Subordinate Judge, Chengalpattu and strike down the plaint.
6. Heard Messrs. K. Kumar and R. Santhaman, learned Senior Central
Government Standing counsel for petitioners-Department and Mr. R.
Muthukumarasamy, learned Senior counsel for the contesting respondents.
7. It is seen from the materials placed the contesting respondents namely,
Diamond Engineering (Chennai) Private Limited and Kiran Machines, aggrieved by
the show cause notices dated 31-8-95, 1 5-9-95 and 28-5-2001 issued by the
Central Excise Department, approached the Civil Courts by filing Civil Suits
namely, O.S.No. 317/2001 on the file of Subordinate Judge, Poonamallee,
O.S.No.4177 and O.S.No. 4259/2001 on the file of XV Assistant Judge, City
Civil Court, Chennai and O.S.No. 129/2001 on the file of Principal
Subordinate Judge, Chengalpattu. In the plaint, the respective plaintiff has
raised several contentions questioning the issuance of the show cause notices
on the grounds of limitation as well as their validity by pointing out various
infirmities. In the first case namely, O.S.No. 317/2001, the plaintiff also
filed I.A.No. 1182/2001 under Order 39, Rules 1 and 2 C.P.C. praying for an
order of injunction restraining the defendants-department and their men from
proceeding in te rms of show cause notice dated 31-8-95 and 15-9-95. The said
application was resisted by the department by filing counter. The main
contention of the department urged before the Court below is that the suits
are not maintainable, since they are barred under Section 40 of the Central
Excise Act, 1 944. The other objection was the plaintiff can very well submit
his objections to the show cause notices and depending on the order of the
original authority, they can avail the opportunity of filing appeal and
revision before the appellate and revisional authorities. By order dated
25-9-2001, the learned Subordinate Judge, Poonamallee, after finding that
there is prima facie in their case, accepted the claim of the plaintiff,
allowed the application and granted injunction restraining the department from
proceeding with the show cause notice dated 31-8-95 and 15-9-95, against which
the Department has filed C.R.P. No. 4113/2001.
8. Coming to the other C.R.Ps., namely, C.R.P.Nos. 4128 and 4138 of 2001,
questioning the show cause notices dated 28-5-2001 and 1-3-2001, Kiran
Machines have filed O.S.No.4177/2001 and 4259/2001 on the file of XV Assistant
Judge, City Civil Court, Chennai. They also filed I.A.No. 11797/2001 and
12061/2001 praying for an order of injunction restraining the Department from
proceeding with the show cause notice dated 28-5-2001 and 1-3-2001
respectively. The plaintiff/petitioner has raised similar contention like
that raised by Diamond Engineering Private Limited in the former C.R.P
(C.R.P.No. 4113/2001 ). Since the Department did not appear and contest the
said injunction application by filing counter, after setting them ex parte, by
separate order dated 9-8-2001, the learned Assistant Judge allowed the
applications and granted injunction from proceeding with the show cause
notices dated 28-5-2001 and 1-3-2001.
9. In the last Revision, namely, C.R.P.No. 57 of 2002, the Department seeks
to strike of the plaint in O.S.No. 129 of 2001 filed by Diamond Engineering
Private Limited. Here again, the Department has urged the very same
contentions as stated in other C.R.Ps., particularly C.R.P.No. 4113/2001,
namely, the Civil Court has no jurisdiction and the plaintiff has effective
remedy by way of departmental appeal and revision.
10. Now I shall first consider the main issue namely,
i) Whether the plaintiffs are justified in approaching the Civil Courts
questioning the issuance of show cause notices? and
ii) Whether the Courts below are right in allowing the Interlocutory
Applications and granting injunction in favour of the plaintiffs?.
11. At the foremost Mr. K. Kumar, learned senior counsel for the Department
by drawing my attention to Section 40 of the Central Excise Act, 1944, would
submit that the suits as framed in all these cases are not maintainable and
the Courts below ought to have rejected the plaints. Section 40 of the
Central Excise Act, 1944 reads as under:
“40. Protection of action taken under the Act.-(1) No suit, prosecution or
other legal proceeding shall lie against the Central Government or any officer
of the Central Government or a State Government for anything which is done, or
intended to be done, in good faith, in pursuance of this Act or any rule made
thereunder.
(2) No proceeding, other than a suit, shall be commenced against the Central
Government or any officer of the Central Government or a State Government for
anything done or purported to have been done in pursuance of this Act or any
rule made thereunder, without giving the Central Government or such officer a
month’s previous notice in writing of the intended proceeding and of the cause
thereof or after the expiration of three months from the accrual of such
cause.”
As rightly pointed out by Mr. R. Muthukumarasamy, learned senior counsel for
the contesting respondents, a reading of the above provision shows that there
is no specific bar in proceeding against the orders of the Customs
officers/authorities in a Civil Court. As rightly contended, the said
provision is a protection against the officers at the Central or State
Government from implementing the provisions of the Central Excise Act. Though
Mr. K. Kumar as well as Mr. R. Muthukumarasamy cited several decisions of
this Court and the Apex Court in support of their respective claim, the fact
remains that the Department i.e., petitioners/defendants have not filed
separate petition under Order 7 Rule 11 (d) of C.P.C. for rejection of plaint
on the ground that the suit is not maintainable in view of various provisions
of the Central Excise Act. It is also not in dispute that if a specific issue
regarding jurisdiction is framed, the Court is bound to decide the issue first
before going into other issues while pronouncing its Judgment. This is clear
from Order 14, Rule 2 (2) of Code of Civil Procedure. It is also brought to
my notice by Mr. R. Muthukumarasamy, learned senior counsel for the
contesting respondents, that Section 9 C.P.C. enables the Courts to try all
suits of a Civil nature excepting suits of which their cognizance is either
expressly or impliedly barred. According to him, in the absence of specific
bar in the Act (Central Excise Act) questioning the show cause notice, the
suits as laid are maintainable and the concerned Civil Courts have to decide
the issue on merits.
12. As said earlier, on behalf of both sides, several decisions have been
cited, including a leading judgement of the Supreme Court on the point of
jurisdiction in Dhulabhai v. State of Madhya Pradesh, reported in AIR 1969 SC
78 in support of their respective claim. In the light of the order to be
passed hereunder, I am of the view that it is unnecessary to refer the same in
this common order for the present. As far as O.S.No. 317/2001 pending on the
file of Subordinate Judge, Poonamallee is concerned, though the plaintiff has
prayed for an injunction in I.A.No. 1182/2001 and the Department has filed a
counter opposing the same, the learned Subordinate Judge has not framed any
specific issue regarding the jurisdiction before considering prima facie case.
13. In so far as the suits in O.S.Nos. 4177/2001 and 4259 /2001 pending on
the file of XV Assistant Judge, City Civil Court, Chennai are concerned, in
the applications for injunction, namely, I.A.Nos. 11797/2001 and 12061/2001
respectively, admittedly, the Department did not file counter affidavit
conveying their stand and they were set ex parte. Unfortunately, the learned
trial Judge without giving any reason much less giving attention to the
jurisdictional aspect, particularly taking note of the failure on the part of
the Department in filing counter, passed a non-speaking order and granted ex
parte injunction. Inasmuch as the respondents/defendants are none-else than
the Central Government Department, I am of the view that the trial Court ought
to have granted one more opportunity before setting them ex parte and thus
committed an error in granting ex parte order of injunction without assigning
any reason. In other words, I am satisfied that the order of the XV Assistant
Judge does not disclose any reason, particularly whether it has focussed its
attention on the point of jurisdiction and whether a prima facie case is made
out and balance of convenience is found in granting injunction in favour of
the petitioner/plaintiff. Courts have repeatedly held that merely because the
respondent/defendant is absent, interim order cannot be granted without
considering and satisfying itself with regard to the plaint averments. The
recourse adopted by XV Assistant Judge cannot be accepted.
14. Coming to the last case i.e., O.S.No. 129 of 2001 on the file of Prl.
Subordinate Judge, Chengalpattu, the plaintiff has furnished necessary details
how the suit is maintainable irrespective of remedy by way of filing objection
to the show cause notice and further remedies by way of appeal and revision.
As said earlier, the Department has not filed separate application under Order
7 Rule 11 ( d) of C.P.C. questioning maintainability of the suit and without
doing so, they straight away filed Revision, viz., C.R.P.No. 57 of 2002 for
striking down the plaint under Article 227 of the Constitution of India.
15. On going through the averments made in the plaint in O.S.No. 317/2001,
the order passed by the Sub Court, Poonamallee in I.A.No. 1182/2001 dated
25-9-2001, the ex party non-speaking order of the learned XV Assistant Judge,
City Civil Court, Chennai in I.A.Nos. 11797/2001 and 12061/2001 dated
9-8-2001 as well as the plaint averments in O.S.No. 129/2001 of Sub Court,
Chengalpattu, I am of the view that it is not desirable for this Court to go
into the jurisdictional issue in these Revision Petitions. It is not in
dispute that only in C.R.P.No. 57/2002, the Department has prayed for
striking down the plaint in O.S.No. 129/2001 of Sub Court, Chengalpattu. In
other Revision Petitions, the Department mainly challenges the order passed in
the Interlocutory Applications. In such circumstances, particularly taking
note of the rival contentions raised relating to jurisdiction with reference
to the provisions of the Act as well as judicial pronouncements of this Court
and the Apex Court, it is but proper for the respective Courts to frame
specific issue relating to jurisdiction and try the same after affording
opportunity to both parties. Though the Court is expected to consider all
issues both of law and of fact, in view of the serious objections raised by
the Department, I am of the view that while framing issues pertaining to the
claim made in the suit, the respective Courts are directed to frame a specific
issue relating to jurisdiction of the Court/to the suit as a first issue and
after deciding the said issue (relating to jurisdiction), depending on the
outcome of the said issue, they will be permitted to proceed further to decide
other issues on merits. As said earlier, in view of the fact that the
relevant issue relating to jurisdiction is to be specifically tried and
decided by the Courts below, I am not referring to any of the decisions cited
on either side, however, both parties are free to place all the relevant
materials, evidence both oral and documentary, in support of their respective
claim. It is needless to mention that the Courts below are duty bound to
consider the same and pass a full-fledged/reasoned order supported by
decisions that may be placed before them. Considering the fact that the suits
are of the year 2001, the Subordinate Judge, Poonamallee, the XV Assistant
Judge, City Civil Court, Chennai, and the Subordinate Judge, Chengalpattu are
directed to give priority to these suits and pass orders one way or other in
accordance with law on or before 28th April, 2006, after affording full
opportunity to both parties. Till such final decision being taken, both
parties are directed to maintain status-quo prevailing as on date. Civil
Revision Petitions are disposed of on the above directions. No costs.
Consequently, connected C.M.P., is closed.
23-12-2005.
Index:- Yes.
Internet:- Yes.
R.B.
To:-
1) The Subordinate Judge, Poonamallee.
2) The XV Assistant Judge, City Civil Court, Chennai-104.
3) The Prl. Subordinate Judge, Chengalpattu.