Delhi High Court
Brindavan Beverages Pvt. Ltd vs Commr.Of Central Excise, Meerut. on 1 May, 2009
Author: Vikramajit Sen
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CEAC No.10/2008 & CM Nos.13457-58/2008, 14416/2008
# BRINDAVAN BEVERAGES PVT. LTD. ..... Appellant
Through: Mr.Chandra Shekhar,
Sr. Adv. with Mr.P.B.
Aggarwala, Ms. Prerna
Gautam & Mr. Abhishek
Baid, Advs.
versus
$ COMMR.OF CENTRAL EXCISE, MEERUT...... Respondent
^ Through: Mr.P.P. Malhotra, ASG
with Mr. Mukesh Anand
Mr. Shailesh Tiwari &
Mr. Sumit Batra, Advs.
Date of Hearing : March 16, 2009
% Date of Decision : May 01, 2009
CORAM:
* HON'BLE MR. JUSTICE VIKRAMAJIT SEN
HON'BLE MR. JUSTICE RAJIV SHAKDHER
1. Whether reporters of local papers may be
allowed to see the Judgment? Yes
2. To be referred to the Reporter or not? Yes
3. Whether the Judgment should be reported
in the Digest? Yes
VIKRAMAJIT SEN, J.
1. The question which we are called upon to decide on the
threshold of these proceedings is whether this Court ought to
exercise jurisdiction over the challenge made to the Orders dated
1.5.2008 passed by Customs Excise and Service Tax Appellate
Tribunal (CESTAT), New Delhi. Preliminary Objections have been
raised on behalf of the Respondents pertaining to the relative lack
of territorial jurisdiction of the High Court of Delhi. As the array of
parties manifests, the Appellant operates from Plot No.54-55,
Parsakhera Industrial Estate, Parsakhera, Bareilly, Uttar Pradesh
where it had installed the capital goods imported by it. It had
availed of CENVAT credit during the period from November, 2004
to March, 2005. The Commissioner of Central Excise, Meerut-II,
issued a Show Cause Notice dated 30.3.2006. After adjudication
the Commissioner confirmed the demand and directed recovery of
CENVAT of Rupees 1,64,08,716/- under Rule 14 of the CENVAT
Credit Rules, 2004 read with Section 11A of the Central Excise Act,
1944 together with a penalty for the like amount under Rule 15 of
the CENVAT Credit Rules, 2004 read with Section 11AC of the
Central Excise Act, 1944. It is that Order which was appealed
against before CESTAT, New Delhi which, by its impugned Final
Order, rejected the Appeal.
2. Generally speaking the significant part of the cause of action
should have arisen within the territorial sway of the Court which is
chosen by the Petitioner for ventilation of his grievances. Kusum
Ingots and Alloys Ltd. -vs- Union of India, AIR 2004 SC 2321
clarifies the law on these lines, as is evident from the following
paragraphs thereof:-
"When an order, however, is passed by a Court or
Tribunal or an executive authority whether under
provisions of a statute or otherwise, a part of cause of
action arises at that place. Even in a given case, when
the original authority is constituted at one place and the
appellate authority is constituted at another, a writ
petition would be maintainable in the High Court within
whose jurisdiction it is situate having regard to the fact
that the order of the appellate authority is also required
to be set aside and as the order of original authority
merges with that of the appellate authority".
......
"We must, however, remind ourselves that even if a
small part of cause of action arises within the territorial
jurisdiction of the High Court, the same by itself may
not be considered to be a determinative factor
compelling the High Court to decide the matter on
merit. In appropriate cases, the Court may refuse to
exercise its discretionary jurisdiction by invoking the
doctrine of forum conveniens. (See Bhagar Singh Bagga
v. Dewan Jagbir Sawhany, AIR 1941 Cal 670; Mandal
Jalal v. Madanlal, (1945) 49 CWN 357; Bharat Coking
Coal Limited v. M/s. Jharia Talkies and Cold Storage
Pvt. Ltd. (1997) CWN 122; S. S. Jain and Co. and
another v. Union of India and others (1994) CHN 445;
M/s. New Horizon Ltd. v. Union of India, AIR 1994 Delhi
126)".
3. In Stridewell Leathers (P) Ltd. -vs- Bhankerpur Simbhaoli
Beverages(P) Ltd., (1994) 1 SCC 34 the conundrum concerned
which High Court would be the appropriate forum to adjudicate an
appeal from the Company Law Board, Principal Bench, New Delhi.
The Supreme Court opined that - "the expression „the High Court‟
in Section 10-F of the Companies Act means the High Court having
jurisdiction in relation to the place at which the registered office of
the company concerned is situate as indicated by Section 2(11)
read with Section 10(1)(a). Accordingly, in the present case, the
appeal against the order of the Company Law Board would lie in
the Madras High court which has jurisdiction in relation to the
place at which the registered office of the company concerned is
situate and not the Delhi High Court merely because the order was
made by the Company Law Board at Delhi".
4. Various Division Benches of the Delhi High Court, inter alia, in
Commissioner of Central Excise -vs- Technological Institute of
Textile, 1998 (47) DRJ 667(DB), Suraj Woolen Mills -vs- Collector of
Customs, Bombay, 2000 (123) E.L.T. 471 (Del.) and Bombay Snuff
Pvt. Ltd. -vs- Union of India, 2006 (194) E.L.T. 264 (Del.) have
clarified that the High Court should not exercise jurisdiction only
because the Tribunal whose order is in appeal before it, is located
within its territorial boundaries. In Seth Banarsi Dass Gupta -vs-
CIT, (1978) 113 ITR 817 and Birla Cotton & Spinning Mills Ltd. -vs-
CIT, Rajasthan, (1980) 123 ITR 354 this Court declined to exercise
jurisdiction because both the assesses resided and carried on
business outside Delhi. In the former case, the Division Bench
suggested that when a Bench of the ITAT determines an appeal as
an appeal from a particular State, it would be quite appropriate for
the Bench to state the case to the High Court of the State from
which the appeal had originated. A similar approach was taken by
the Division Bench of the High Court of Judicature at Bombay in
Sun Pharmaceutical Industries Limited -vs- Union of India,
2007(218) ELT 495(Bom). The Court held that even though the
Settlement Commission was physically located at Mumbai, since it
was dealing with a case arising in Tamil Nadu, it could be deemed
to be located in that State and accordingly amenable to the writ
jurisdiction of the Madras High Court; the Bombay High Court
declined to exercise writ jurisdiction primarily because only a small
part of the cause of action had arisen within its jurisdiction. In
West Coast Ingots(P) Ltd. -vs- Commissioner of C. Ex., New Delhi,
2007 (209) ELT 343(Del) the Division Bench of this Court declined
to exercise territorial jurisdiction because the lis was pending
before the Principal Bench of Settlement Commission at Delhi. It
followed another decision of the Division Bench in WP(C)
No.16672/2006 titled Raj Leather Cloth Industries Pvt. Ltd. -vs-
Union of India decided on 29.11.2006.
5. On a reading of Article 226 (1) of the Constitution it will be
palpably clear that without the next following provision, that is,
sub-clause(2) a High Court may not have been empowered to issue
a writ or order against a party which is not located within the
ordinary territorial limits of that High Court. The power to issue
writs against any person or Authority or government even beyond
the territorial jurisdiction of any High Court is no longer debatable.
The rider or prerequisite to the exercise of such power is that the
cause of action must meaningfully arise within the territories of
that particular High Court. It does not logically follow, however,
that if a part of the cause of action arises within the territories
over which that High Court holds sway, it must exercise that power
rather than directing the petitioner to seek his remedy in any other
High Court which is better suited to exercise jurisdiction for the
reason that the predominant, substantial or significant part of the
cause of action arises in that Court. In other words any High Court
is justified in exercising powers under Article 226 either if the
person, Authority or Government is located within its territories or
if the significant part of the cause of action has arisen within
its territories. The rationale of Section 20 of the Code of Civil
Procedure would, therefore, also apply to Article 226 (2) of the
Constitution. These considerations are aptly encapsulated in the
term forum conveniens which refers to the situs where the legal
action be most appropriately brought, considering the best
interests of the parties and the public (see Black's Law Dictionary).
The writ Court should invariably satisfy itself that its choosing is
not malafide or an example of forum shopping.
6. This question has now been authoritatively settled by the
Supreme Court in Ambica Industries -vs- Commissioner of
Central Excise, (2007) 6 SCC 769 where several of the above
quoted decisions have been reviewed. The Petitioner/Assessee in
that case carried on business at Lucknow where it was also
assessed. It approached the CESTAT, New Delhi which exercised
jurisdiction in respect of the States of Uttar Pradesh, Maharashtra
and the National Capital Territory of Delhi. The Appeal filed in the
Delhi High Court was rejected on the ground of lack of
territoriality, and the Appeal to the Supreme Court turned out to
be a sterile exercise. Their Lordships observed that "the aggrieved
person is treated to be the dominus litis, as a result whereof, he
elects to file the appeal before one or the other High Court, the
decision of the High Court shall be binding only on the authorities
which are within its jurisdiction. It will only be of persuasive value
on the authorities functioning under a different jurisdiction. If the
binding authority of a High Court does not extend beyond its
territorial jurisdiction and the decision of one High Court would
not be a binding precedent for other High Courts or courts or
tribunals outside its territorial jurisdiction, some sort of judicial
anarchy shall come into play. An assessee, affected by an order of
assessment made at Bombay, may invoke the jurisdiction of the
Allahabad High Court to take advantage of the law laid down by it
and which might suit him and thus he would be able to successfully
evade the law laid down by the High Court at Bombay. ... It would
give rise to the issue of forum shopping. ....For example, an
assessee affected by an assessment order in Bombay may invoke
the jurisdiction of the Delhi High Court to take advantage of the
law laid down by it which may be contrary to the judgments of the
High Court of Bombay".
7. Learned counsel for the Petitioner has relied heavily on the
pronouncements in Canon Steels P. Ltd. -vs- Commr. of Customs
(Export Promotion), 2007 (218) ELT 161(SC). Significantly,
Ambica Industries was not cited or considered even though it
was an earlier decision of a Coordinate Bench. Even more
significant is the fact that Canon is irreconcilable with the view of
the same learned Judge in Commr. of Central Excise, Delhi-III -vs-
Enkay HWS India Ltd., 2002(139) ELT 21(Del) where it had been
held that the site of the Commissionerate or Appellate Authority
does not determine jurisdiction. It appears evident to us that what
prevailed on his Lordship, Dr. Arijit Pasayat in Canon, was the fact
that a writ petition had been filed and withdrawn in the High Court
of Delhi, to be later filed in the High Court of Punjab and Haryana
which also was found not to have jurisdiction. In order to effect
substantial justice, their Lordships directed that the writ petition
should be heard in New Delhi. What is interesting to note is the
fact that the question that the jurisdiction would lie before the
High Court of Judicature at Bombay because the cause of action
and primary adjudication had taken place there, was not even
broached before the Court in that matter.
8. Learned Senior Counsel appearing for the Petitioner has
read copiously from the decision of the Supreme Court in S.S.
Rathore -vs- State of Madhya Pradesh, (1989) 4 SCC 582 as well as
Kunhayammed -vs- State of Kerala, (2000) 6 SCC 359, both of
which deal with the doctrine of merger. This doctrine, however,
will have no relevance or application to the question before us. We
must assume that the order of the Adjudicating Authority had
merged with that of the CESTAT. That is not the central issue
before us. The question is altogether different, that is, which is the
forum where such an order can be challenged. We are not
persuaded to ignore altogether the place where the cause of action
had arisen and where the original adjudication had taken place
which would constitute forum conveniens for all the parties
concerned.
9. In these circumstances, we are of the opinion that merely
because the Order that is impugned has been challenged by the
CESTAT, New Delhi, the High Court at New Delhi ought not
exercise jurisdiction. It is not a moot question that if CESTAT had
an establishment in Uttar Pradesh, the Plaintiff would have to file
its appeal there. What is irrefutable is that the Plaintiff cannot
contend that it is inconvenient to approach the High Court in Uttar
Pradesh where its factory and offices are located. There is no
justification for the officials to travel out of that State only because
for reasons recondite, if not mala fide, a Court outside that State
has been approached. The Appeal is returned to be filed in the
appropriate Court in accordance with law. All pending applications
stand disposed of.
10. The Appellant shall pay costs of Rupees 20,000/- to the Prime
Minister‟s Relief Fund within four weeks from today.
( VIKRAMAJIT SEN )
JUDGE
May 01,2009 ( RAJIV SHAKDHER )
tp JUDGE
