PACKWEL ASSOCIATES v. UNION OF INDIA — 1997 DIGILAW 564 (KAR)

( 1 ) AGGRIEVED by three different orders of adjudication passed against it, the petitioner has filed appeals before the Commissioner of Central Excise and Customs (Appeals), Bangalore. These appeals were accompanied by applications seeking waiver of pre-deposit in terms of proviso to section 35f of the Central Excises and Salt Act, 1944. While the Appeals and the applications were pending consideration coercive proceedings for the recovery of the amount held recoverable from the petitioner appear to have been started against it. Aggrieved the petitioner filed W. P. Nos. 12728-30/1997 in this Court, inter alia seeking a mandamus directing the appellate Authority to hear and dispose of its interim application for waiver of pre-deposit. These writ petitions were together with a bunch of similar other cases disposed of by this Court by a common order dated 30th of June, 1997, with a general direction to the Appellate Authority to dispose of the interim applications filed in the Appeals preferred before it expeditiously and within a period of two months from the date the same are filed if it was for any reason not possible to dispose of the appeal itself. The Adjudicating Authorities were on the other hand directed not to initiate any recovery proceedings against the assessees for a period of three months from the date of the passing of the adjudication orders except in cases where the applications made by the assessee seeking stay/waiver of deposit had been dismissed by the appellate authority. In so far as the interim applications made by the petitioners and others similarly situated with it were concerned, the Appellate Authority Was directed to dispose of the same within a period of four months from the date of the said order. The petitioners were in that connection, directed to appear before the Appellate Authority on the 7th of July 1997 on which date the Appellate Authority was to fix specific dates for hearing of the applications filed by them. Pending disposal of the applications, the interim orders granted against recovery of the debt from the petitioners, were directed to continue. ( 2 ) THE petitioner's case in the present writ petitions is that it appeared before the Appellate authority on the 7th of July 1997 pursuant to the order of this Court mentioned above, for getting specific dates fixed for the hearing of the waiver/stay applications made by it. ( 2 ) THE petitioner's case in the present writ petitions is that it appeared before the Appellate authority on the 7th of July 1997 pursuant to the order of this Court mentioned above, for getting specific dates fixed for the hearing of the waiver/stay applications made by it. According to the petitioner, no dates of hearing were actually fixed by the Appellate Authority on the 7th of july 1997, on the ground that the same would be fixed and conveyed to the petitioner separately. Its further case is that the petitioner did not receive any intimation about the date of hearing fixed by the Appellate Authority till the 1st of August 1997 when it received from the Appellate authority three different orders all dated 17th of July 1997, disposing of the applications filed by the petitioner and directing it to make pre-deposits in the manner and to the extent indicated in each one of those orders. Aggrieved, the petitioner has assailed the said orders in these writ petitions. ( 3 ) MR. Rajesh Chander Kumar learned Counsel for the petitioner raised a short point in support of these petitions. He urged that the impugned orders of the Appellate Authority were in violation of the principles of natural justice inasmuch as the authority had not afforded to the petitioner any opportunity of being heard in support of its applications for waiver of the deposit. He contended that such a hearing was essential not only by reason of the application of the audi alteram partem Rule to proceedings before the Appellate Authority but also because this Court had while disposing of the previous writ petitions, filed by the petitioner directed such a hearing to be granted. He urged that consequent upon the said direction, the Appellate Authority had issued a Notice, fixing the date of hearing in the applications for the 17th of July 1997, but the notice had for some reason been returned by the Postal Authorities with an endorsement that the same did not carry the correct address of the petitioner. No effort thereafter, argued the learned counsel, was made by the Appellate Authority to either issue a fresh notice or re-direct the one issued earlier. The ex parte disposal of the applications filed by the petitioner, it was submitted, had caused prejudice to the petitioner sufficient to vitiate the impugned orders. ( 4 ) MR. Haranahalli, learned Sr. No effort thereafter, argued the learned counsel, was made by the Appellate Authority to either issue a fresh notice or re-direct the one issued earlier. The ex parte disposal of the applications filed by the petitioner, it was submitted, had caused prejudice to the petitioner sufficient to vitiate the impugned orders. ( 4 ) MR. Haranahalli, learned Sr. Standing Counsel for the Central Government, on the other hand contended on the authority of a decision of the Supreme Court in Union of India and Another v. M/s. Jesus Sales Corporation - 1996 III AD (SC )497 , AIR1996 SC 1509 , 1996 (55 )ECC51 (SC ), 1996 (83 )ELT486 (SC ), JT1996 (3 )SC 597 , 1996 (3 ) SCALE103 , (1996 )4 SCC69 , [1996 ]3 SCR894 , 1996 (2 )UJ409 (SC ) that the grant of a personal hearing to the petitioner in support of its applications seeking waiver of the pre-deposit was not an essential requirement of a valid order in terms of proviso to Section 35f, of the Act. He contended that proviso to Section 35f of the Central Excises and Salt Act was in pari materia with Section 4m of the Imports and Exports Act, 1947 and empowered the Appellate Authority to dispense with pre-deposit either unconditionally or subject to such condition as it may impose in cases where it was in its discretion necessary to do so to avoid undue hardship to the appellant. Inasmuch as the appellate Authority had not granted a personal hearing to the petitioner in support of its application seeking waiver of pre-deposit, contended Mr. Haranahalli, the Appellate Authority committed no illegality to warrant interference from this Court. ( 5 ) I have given my anxious considerations to the submissions made at the Bar. In Jesus Sales corporation's case relied upon by Mr. Haranahalli, the Supreme Court has in no uncertain terms repelled the contention that a personal hearing is an essential requirement for a valid order disposing of an application seeking waiver of pre-deposit under the proviso to Section 4m of the act, afore-mentioned, which is undoubtedly in pari materia with the provisions with which we are concerned in the instant case. Haranahalli, the Supreme Court has in no uncertain terms repelled the contention that a personal hearing is an essential requirement for a valid order disposing of an application seeking waiver of pre-deposit under the proviso to Section 4m of the act, afore-mentioned, which is undoubtedly in pari materia with the provisions with which we are concerned in the instant case. It is clear from a reading of the decision that the Court considered the practice of granting a hearing in such matters widely prevalent in the country to be insufficient to create an enforceable right in a litigant to demand a personal hearing in support of an interim application seeking waiver of pre-deposit or even an order by way of condonation of delay in filing of an appeal. In the light of the said pronouncement it may no longer be possible for a litigant to canvass that the denial of a personal hearing in support of an interim application seeking a discretionary order like the one envisaged by the proviso to Section 35f, would be sufficient to vitiate the order made by the authority. The position in the instant case, however is slightly different. Here the parties were engaged in an earlier round of litigation involving the same proceedings which had culminated in a direction from this Court to the appellate Court to hear and dispose of the applications filed by the petitioner and others within the time stipulated by this Court after fixing appropriate dates of hearing in that regard. Direction no. 3 given in the order of this Court dated 30th of June 1997 passed in the earlier batch of cases is in this regard relevant. "the applications for waiver/stay filed by the petitioners in their respective. appeals shall be disposed of by the appellate authority within a period of 4 months from the date of this order. The petitioners shall either themselves or through authorised agents appear before the appellate authority on 7th of July 1997 for fixation of dates of hearing on which the said applications shall be taken up for hearing preferably in batches of five or more applications a day. While fixing the dates of hearing, the appellate authority shall give preference to cases, in which the adjudicating authorities have already detained goods or plant and machinery of the assessees concerned. While fixing the dates of hearing, the appellate authority shall give preference to cases, in which the adjudicating authorities have already detained goods or plant and machinery of the assessees concerned. " ( 6 ) IT is not in dispute that the above order has attained finality having accepted by both the sides. In the circumstances therefore and to the extent the said order recognised a right of hearing in favour of the petitioners in support of the applications made by it, the direction would hold good the flaw in the legal premise on which the same proceeded notwithstanding. Having failed to question the order in appeal, it is not open to the appellate Authority to contend that notwithstanding the direction for a hearing in support of the applications, no such hearing in support of the applications, was essential or that an order disposing of the applications without such a hearing could be justified or sustained by it in the present proceedings. It is fairly well settled that the principle of finality of judicial orders and determinations applies even to decisions that may after they have attained finality inter se parties be declared to have been erroneously decided either by reference to the law that existed on the date the orders were made or by subsequent pronouncement of a higher Court. In fairness to Mr. Haranahalli, I must say that he did not either dispute this position nor made any effort to sustain the order in the light of the directions already issued. ( 7 ) THERE is yet another reason which is in my opinion sufficient to render the orders in question legally bad. The view expressed by the Supreme Court in Jesus Sales Corporation's case, does not debar the appellate authority from deciding in its discretion to grant an opportunity of being heard to the party applying for an order under Section 35f of the Act. This is apparent from the following passage from the said decision : "of course, if in his own discretion if he requires the appellant or the applicant to be heard because of special facts and circumstances of the case, then certainly it is always open to such authority to decide the appeal or the application only after affording a personal hearing. But any order passed after taking into consideration the points raised in the appeal or the application shall not be held to be invalid merely on the ground that no personal hearing had been afforded. " ( 8 ) THE question then is whether the appellate Authority can in the instant case be deemed to have exercised its discretion in favour of the petitioner and decided to grant a hearing in support of the applications. My answer would be in the affirmative. The Appellate Authority had admittedly issued notices fixing the 17th of July 1997, as the date of hearing for the disposal of the applications filed by the petitioner. In the absence of any material to show that the said notices were either an idle formality or never really intended to be acted upon it must be presumed that the notices were issued with a view to afford to the petitioner a real and effective hearing in support of its applications. Once that is so, the appellate authority, could not have except for cogent reasons dispensed with such a hearing. That is because if having regard to the nature of the controversy the facts and the circumstances of the case, the appellate authority decides to exercise its discretion in favour of granting a personal hearing, it would require weighty considerations to be disclosed by the Authority, before it can take a somersault and refuse what it had decided to grant. There is nothing before me to suggest that the appellate authority did have any such reasons for reversal of its earlier view. As a matter of fact the order does not even proceeded on the basis that there was any change in the situation that existed on the date of the issue of the Notices. The order on the other hand proceeds on the basis that the notices should be deemed to have been received by the petitioner since they had been sent on a correct address. The Appellate Authority has in fact disbelieved the postal report made on the notices sent by it, and implied due service of the same, for which, I find no valid ground or justification. ( 9 ) IN the totality of the above circumstances therefore, the impugned orders passed by the appellate Authority cannot be sustainable. These petitions accordingly succeed and are hereby allowed. ( 9 ) IN the totality of the above circumstances therefore, the impugned orders passed by the appellate Authority cannot be sustainable. These petitions accordingly succeed and are hereby allowed. The impugned orders dated 17th July, 1997, Annexures E, E1, E2, to the writ petitions are hereby quashed. The appellate authority shall pass fresh orders on the petitioner's applications for waiver of pre-deposit expeditiously after affording to the petitioner a personal hearing in the matter. ( 10 ) IN order to avoid any further delay in the disposal of the applications, I direct the petitioner to appear before the appellate Authority on the 20th of October, 1997, for a personal hearing. In case however, the Appellate Authority is not for any reason holding Court on the date fixed, it shall fix another date, under intimation to Sri Rajesh Chander Kumar, Counsel for the petitioner at his office address. Needless to say that in case the petitioner does not appear on the 20th of october, 1997, or the date which the appellate Authority may fix, the latter shall be entitled to pass appropriate orders in the matter without any further opportunity or notice to the petitioner. Pending final orders on the applications by the Appellate Authority, the Recovery Proceedings against the petitioners shall remain stayed. No costs.