Omwati v. Union of India (UOI) — 1971 DIGILAW 509 (ALL)

ORDER D.D. Seth, J. - This is a Plaintiff's appeal and arises out of a suit for permanent injunction restraining the Defendant, the Union of India representing the Central Excise Department, from realising Rs. 2,000/- , imposed as penalty on Jai Narain Paliwal, as arrears of land revenue through the Collector as per order passed by the Asstt. Collector, Central Excise, Fatehgarh on 13-11-1962. The order of the Asstt. Collector, Central Excise, dated 13-11-1962, is Ex. A-17 on record and is addressed to the Tahsildar, Kaimganj and reads as follows: A certificate action for realisation of Rs. 2000/- as arrears of land revenue from Shri Jai Narain Paliwal of Kaimganj was issued by this office but later on you were requested to pend the realization of dues as the party had filed a civil suit and thereafter gone in Civil Appeal No. 149/57 which has been dismissed by Distt. and Sessions Judge, Farrukhabad on 5-11-1962. You are therefore, requested to realise the dues from the assets left by Shri Jai Narain Paliwal immediately. 2. The plaint case was that Jai Narain Paliwal was dealing in tobacco business in the name of the firm Jai Narain Sant Kumar. It was alleged that on 25-3-1949 and 28-5-1949 Jai Narain Paliwal brought 125 bags and 120 bags of unmanufactured tobacco from Kanpur and Mau Ranipur respectively. According to the Plaintiff both the consignments were duty paid. It was alleged that the Collector, Central Excise, Allahabad, illegally, by his order dated 1-3-1952 imposed two penalties of Rs. 1,000/- each on the aforesaid two consignments for contravention of Rules 40, 42 and 226 of the Central Excise Rules. Against the order of the Collector, Central Excise, Jai Narain Paliwal preferred an appeal which was dismissed by the Central Board of Revenue. Thereafter Jai Narain Paliwal filed a suit, challenging the imposition of two penalties, for an injunction in the court of the Civil Judge, Farrukhabad. That suit was dismissed and an appeal preferred by Jai Narain Paliwal was also dismissed by the learned Distt. Judge, Farrukhabad. The suit filed by Jai Narain Paliwal was suit no. 80 of 1955 while the appeal preferred by Jai Narain Paliwal was pending in the court of the Distt. Judge, Farrukhabad. Jai Narain Paliwal died and his widow, Smt. Omwati, the present Appellant, was substituted in his place. Judge, Farrukhabad. The suit filed by Jai Narain Paliwal was suit no. 80 of 1955 while the appeal preferred by Jai Narain Paliwal was pending in the court of the Distt. Judge, Farrukhabad. Jai Narain Paliwal died and his widow, Smt. Omwati, the present Appellant, was substituted in his place. The appeal filed by Jai Narain Paliwal was dismissed by the learned Distt. Judge on 5-11-1962 Thereafter the Asstt. Collector, Centra Excise, Farrukhabad, passed the order dated 13-11-1962, which has been quoted in full above and which is Ex. A-17 of record. By that order the Tahsildar Kaimganj, was directed to realise the amounts of the two penalties from the assets left by Jai Narain in the hands of his wife, Smt. Omwati. Thereupon, Smt. Omwati filed the present suit in the court of learned Munsif Hawaii Farrukhabad, for a perpetual injunction restraining the Defendant from realising the amount of Rs. 2,000/- imposed as penalty on Jai Narain Paliwal. It was alleged by the Plaintiff that the two penalties had been imposed without giving an opportunity to Jai Narain Paliwal to contest the penalties and it was further alleged that the penalties were imposed after the period of six months prescribed by Section 60 of the Central Excise and Salt Act, 1954, hereinafter called the Act. The Plaintiff's case was that the order imposing penalty was without jurisdiction and illegal. The Plaintiff further contended that in the appeal filed by Jai Narain Paliwal before the learned Distt. Judge. Farrukhabad, the learned Judge had decided that the imposition of penalty was illegal and without jurisdiction. The Plaintiffs case was that the penalty could not be recovered from her as it was personal in character and could be recovered only from Jai Narain Paliwal. The relief claimed by the present Appellant in the plaint was as follows: That the Defendant be restrained by means of a permanent injunction from realising from the Plaintiff the total penalty of Rs. 2000/- as per order of the Asstt. Collector, Central Excise, Fatehgarh dated 13-11-1962 referred to above. 3. The suit was contested by the Union of India and in defence bar of Section 11 of the CPC was pleaded. It was also pleaded that the Plaintiff's suit, not having been brought within six months of the imposition of penalty, was barred by Sub-section (2) of Section 40 of the Act. 3. The suit was contested by the Union of India and in defence bar of Section 11 of the CPC was pleaded. It was also pleaded that the Plaintiff's suit, not having been brought within six months of the imposition of penalty, was barred by Sub-section (2) of Section 40 of the Act. It was denied that Jai Narain Paliwal was not given an opportunity to be heard or that the penalty was imposed without hearing him. It was also denied that the two consignments were duty paid. It was further pleaded that since Jai Narain Paliwal was liable to pay the penalty and the Plaintiff, being the heir of Jai Narain Paliwal, was also liable to pay the penalty and was not entitled to get an injunction. It was denied that a valid notice u/s 80 CPC was served. 4. It was held by the trial court that the notice u/s 80 of the CPC served by the Plaintiff was invalid. The trial court also held that the suit was barred by Section 11 of the Code of Civil Procedure. It further held that the order imposing the penalty was not time barred. The trial court was of the opinion that in the appeal preferred by Jai Narain Paliwal it was held by the learned Distt. Judge that the suit was barred by Sub-section (2) of Section 40 of the Act and that finding operated as res judicata. The trial court further held that the amount of the two penalties imposed on Jai Narain Paliwal could be realised from his heirs and on these findings dismissed the Plaintiff's suit. 5. In appeal by the Plaintiff it was held by the lower appellate court that the Plaintiff's cause of action was based on the order of the Asstt. Collector dated 13-11-1962. The lower appellate court further held that in view of Sub-section (2) of Section 40 the Plaintiff could not challenge the legality of imposition of penalty but she could assert that the assets in her hands were not liable to be proceeded with. As regards the bar of Section 11 of the CPC the lower appellate court held that the decision of the previous suit filed by Jai Narain Paliwal could not stop the Plaintiff from asserting that she was not liable to pay the penalties at all. As regards the bar of Section 11 of the CPC the lower appellate court held that the decision of the previous suit filed by Jai Narain Paliwal could not stop the Plaintiff from asserting that she was not liable to pay the penalties at all. On the question whether the penalties could be recovered from the assets of Jai Narain Paliwal in the hands of the Plaintiff the lower appellate court held that the amount sought to be realised from the Plaintiff was not in the nature of fine but was an excise duty. In other words, according to the lower appellate court 'it can be described as a tax' and as such could be recovered from the assets in the hands of his heirs. The lower appellate court held that the Central Excise Department was entitled to recover the penalties imposed on Jai Narain Paliwal through the Collector of the District from the assets of the deceased. Accordingly the lower appellate court dismissed the Plaintiff's appeal. 6. Feeling aggrieved by the judgments and decree of the courts below the Plaintiff has come up in second appeal to this Court. 7. I have heard Sri Deoki Nandan, learned Counsel appearing for the Appellant and the learned Counsel representing the Union of India. Sri Deoki Nandan, learned Counsel appearing for the Appellant, has contended that the demand in the instant case, being in the nature of a penalty, was a personal liability of the Appellant's husband, which abated with his death and was not realisable from the Plaintiff as arrears of land revenue through the Collector. According to Sri Deoki Nandan the remedy of the Defendant was to file a suit for recovery of the amount due from Jai Narain Paliwal from the Plaintiff. 8. The learned Counsel for the Union of India, on the other hand, contended that the Plaintiff's suit was barred by Sub-section (2) of Section 40 of the Act and that the amount could be realised from the Plaintiff as arrears of land revenue as the Plaintiff, being the heir of Jai Narain Paliwal, was in possession of his assets. The learned Counsel appearing for the Union of India also contended that the suit was bad as the notice u/s 80 CPC was invalid. 9. As regards the contentions raised by the learned Counsel for the Respondent I do not find any force in them. The learned Counsel appearing for the Union of India also contended that the suit was bad as the notice u/s 80 CPC was invalid. 9. As regards the contentions raised by the learned Counsel for the Respondent I do not find any force in them. I have gone through the notice u/s 80 of the CPC and no illegality in that notice has been pointed out to me by the learned Counsel. The notice complies with all the requirements of Section 80 of the CPC and it must, therefore, be held that the notice was valid. 10. As regards the bar of Section 40 of the Act there is no force in the submission of the learned Counsel for the Respondent. Section 40 of the Act deals with bar of suits and limitation of suits and other legal proceedings and reads as follows: (1) No suit shall lie against the Central Govt. or against any officer of the Govt. in respect of any order passed in good faith or any act in good faith done or ordered to be done under this Act. (2) No suit, prosecution or other legal proceeding shall be instituted for anything done or ordered to be done under this Act after the expiration of six months from the accrual of the cause of action or from the date of the act or order complained of. 11. The learned Counsel appearing for the Union of India strenuously placed reliance on Sub-section (2) of Section 40 of the Act. In the instant case the Plaintiff's cause of action arose on 13-11-1962 when Ex. A-17 was passed by the Asstt. Collector directing the Tahsildar, Kaimganj, to realise the amount of penalties from the Plaintiff as arrears of land revenue. The suit having been filed on 14-2-1963, i.e., within six months of 13-11-1962, was obviously within limitation and Sub-section (2) of Section 40 of the Act cannot be said to be a bar for the maintenance of the suit. 12. As regards the contention of Sri Deoki Nandan that the demand, in the instant case, being in the nature of penalty, was a personal liability of Jai Narain Paliwal and could be realised, if at all, from the Plaintiff from the assets of Plaintiff's husband only by way of regular suit and not through the Collector as arrears of land revenue I find force in it. Section 11 of the Act deals with recovery of sums due to the Govt. and reads as follows: In respect of duty and any other sums of any kind payable to the Central Govt. under any of the provisions of this Act or of the rules made thereunder, the officer empowered by the Central Board of Revenue to levy such duty or require the payment of such sums may deduct the amounts so payable from any money owing to the person from whom such sums may be recoverable or due which may be in his hands or under his disposal or control, or may recover the amount by attachment and sale of excisable goods belonging to such person; and if the amount payable is not so recovered he may prepare a certificate signed by him specifying the amount due from the person liable to pay the same and send it to the Collector of the district in which such person resides or conduces his business and the said Collector on receipt of such certificate, shall proceed to recover from the said person the amount specified therein as if it were an arrear of land revenue. 13. The words 'said person' occurring in Section 11 of the Act are very relevant for the purpose of the decision of this appeal. u/s 11 the amount of penalty could be recovered from the 'said person' through the Collector as arrears of land revenue but the provisions of Section 11 could not be invoked in the case of the Plaintiff as she is not covered by the words 'said person'. There is no provision in the Act for recovery of the amount of penalty from any body else except the 'said person' which in the instant case was Jai Narain Paliwal. u/s 11 of the Act the obligation was of personal nature which died with the offender, i.e. Jai Narain Paliwal. The proceedings contemplated by Section 11 of the Act are in the nature of summary proceedings and do not survive the offender on whom the penalty was imposed, as is clear from Section 11. It is well established that penal statutes must be construed strictly. (See Craies on Statute Law 6th Edn. p. 520). It is not denied that the amount sought to be realised from the Plaintiff was in the nature of penalties imposed on Plaintiff's husband. It is well established that penal statutes must be construed strictly. (See Craies on Statute Law 6th Edn. p. 520). It is not denied that the amount sought to be realised from the Plaintiff was in the nature of penalties imposed on Plaintiff's husband. It is obvious that the demand was penal in nature. 14. Section 11 of the Act is a procedural section and the procedure prescribed in that section cannot be applied against the person representing the estate of the deceased Jai Narain Paliwal except by way of a regular suit. Proceedings contemplated by Section 11 of the Act are intended to apply only to the defaulter and lot to his representative because right to bring summary proceedings does not survive against the personal representative or heir of the defaulter. Section 11 of the Act does not embrace within its ambit the heirs and legal representatives of the said person, who alone could be proceeded against under that section. The liability which is enforced u/s 11 of the Act is a liability in the nature of a tort or a quasi criminal responsibility and hence the Plaintiff was not liable to be proceeded against in a summary manner through the Collector. 15. Vide application dt. 20-9-1963 filed in the court of the learned Munsif Hawali, Farrukhabad the learned Counsel for the Plaintiff desired the Defendant to produce the copies of certain circulars issued by the Central Board of Revenue, Govt. of India, stating the policy of the Govt. on the subject of imposition of penalties and how it is to be realised. Accordingly, the DGC on 21-10-1963 filed an attested copy of the circular No. 40/16/56 CX and No. 40-141-56-CX dt. 20-8-1957 for the perusal of the court. The learned Counsel appearing for the Union of India has produced before me the compilation of rulings in Central Excise cases, issued by the Central Board of Revenue and Govt. of India and para. 32 of that compilation deals with legal heirs and legal representatives and reads as follows: It is well-settled that any proceedings taken against a dead person is void and of no legal effect. There can be, therefore, no question of adjudicating a case 'posthumously' against the deceased. No demand for duty can also be raised against the legal heir or the legal representative. There can be, therefore, no question of adjudicating a case 'posthumously' against the deceased. No demand for duty can also be raised against the legal heir or the legal representative. Their liability arises under the bond executed by them and not in respect of any duty etc. recoverable under the Act or Rules made thereunder. The Deptt. can only sue the legal representative on the bond for recovering the stipulated amount and then proceed to execute the decree against the assets of the deceased in the hands of the legal representative. 16. For the reasons mentioned above, I allow the appeal, set aside the judgment and decree of the courts below and decree the Plaintiff's suit for a permanent injunction restraining the Defendant from realising the amount of Rs. 2,000/- from the Plaintiff as per order passed by the Asstt. Collector, Central Excise, Fatehgarh dated 18-11-1962 with costs throughout. It will be open to the Defendant to persue such remedy as may be available to it underlie law.