2006 (12) TMI 146 - HC - Central Excise

Writ jurisdiction - Jurisdiction of Court entertaining this appeal - whether suits of the Settlement Commission was within the jurisdiction of this Court? - HELD THAT - We may observe that a significant part of the cause of action cannot be said to arise within the territorial jurisdiction of this Court merely because the order under challenge has been passed by a Tribunal located within its territorial jurisdiction when the events leading to the filing of the proceedings before such Tribunal and the parties to such proceedings are outside the territorial jurisdiction of the Court. This is the situation in the present case. Also the petitioners here are not without remedy on account of this Court declining to entertain their petitions. We may mention that we have been adopting this approach in certain other matters including Raj Leather Cloth Industries Pvt. Ltd. v. Union of India 2006 (11) TMI 659 - DELHI HIGH COURT where again the challenge was to an order of the Settlement Commission by a party located in Haryana. We are not inclined to adopt a different approach here. We do not agree with the submissions of the learned senior counsel for the petitioners that the facts are any different warranting a departure from the above approach. Thus we decline to entertain these writ petitions. However the dismissal of the writ petitions is without prejudice to the rights of the petitioners to approach the appropriate Court to seek the relief sought for in these writ petitions. The writ petitions and applications are accordingly dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

- Whether the High Court of Delhi has territorial jurisdiction to entertain writ petitions under Article 226 challenging orders passed by the Principal Bench of the Settlement Commission at Delhi, when the petitioners, cause of action, and original show cause notices are all located in Goa.

- Whether the Settlement Commission's orders requiring the petitioners to pay simple interest at 10% per annum on excise duty liability, while granting immunity to a sister concern, constitute valid and non-discriminatory decisions.

- Whether the principle of forum conveniens and the doctrine of territorial jurisdiction should lead the Court to decline jurisdiction despite the impugned orders being passed within its territorial limits.

2. ISSUE-WISE DETAILED ANALYSIS

Territorial Jurisdiction of the High Court of Delhi

The Court examined whether it should exercise jurisdiction under Article 226 of the Constitution merely because the impugned orders were passed by the Principal Bench of the Settlement Commission located in Delhi. The petitioners, both companies situated in Goa, challenged orders relating to show cause notices issued by the Commissioner of Central Excise, Goa, concerning supplies made in Goa. The petitioners argued that the cause of action substantially arose within Delhi since the final orders were passed there.

The Court referred extensively to the Supreme Court decision in Kusum Ingots and Alloys Ltd., which clarified that while a part of the cause of action may arise where an appellate or final authority passes an order, this does not compel the High Court to exercise jurisdiction. The Court quoted:

"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."

The Court noted that the petitioners' reliance on Kusum Ingots was misplaced as that judgment does not mandate automatic jurisdiction but leaves discretion to the High Court based on facts.

Further, the Court relied on Division Bench decisions in Suraj Woolen Mills and Bombay Snuff Pvt. Ltd., which held that the High Court should not exercise jurisdiction solely because the appellate authority is within its territorial limits, especially when the parties and cause of action are located outside its jurisdiction. These decisions, though concerning statutory appeals, were held to embody a general principle applicable to writ petitions under Article 226.

The Court also considered Vijay Fertilizers Pvt. Ltd., where it was held that a High Court may exercise jurisdiction if the person or authority is within its territories or a substantial and significant part of the cause of action arises there. However, the Court emphasized that the mere fact that the final order is passed in Delhi does not mean the substantial cause of action arose there, particularly when the petitioners and relevant events are located in Goa.

The Court distinguished the Agri Trade India Services Pvt. Ltd. judgment, where jurisdiction was exercised because the notification challenged was issued in Delhi and representations were considered there, unlike the present case.

The Court concluded that the significant part of the cause of action did not arise within Delhi, and the petitioners were not without remedy since they could approach the appropriate High Court with territorial jurisdiction over Goa.

Validity of the Settlement Commission's Orders Requiring Payment of Interest

The petitioners challenged the Settlement Commission's orders requiring them to pay simple interest at 10% per annum on excise duty liability, while granting full immunity from interest payment to a sister concern, Goa Ispat Limited. The petitioners contended that they were similarly placed and that such differential treatment was unjustified.

The Court did not delve deeply into the merits of this issue since it declined jurisdiction on territorial grounds. However, it noted that the facts were undisputed and the core question was whether the impugned orders discriminated without justification. The Court implicitly recognized that this issue could be properly adjudicated by the competent High Court with territorial jurisdiction.

3. SIGNIFICANT HOLDINGS

- "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."

- "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 substantial and a significant part of the cause of action has arisen within its territories."

- "A significant part of the cause of action cannot be said to arise within the territorial jurisdiction of this Court merely because the order under challenge has been passed by a Tribunal located within its territorial jurisdiction, when the events leading to the filing of the proceedings before such Tribunal, and the parties to such proceedings, are outside the territorial jurisdiction of the Court."

- The Court established that the principle of territorial jurisdiction and forum conveniens applies to writ petitions under Article 226, and that the Court may decline jurisdiction even if a part of the cause of action arises within its limits, especially when the parties and majority of events are outside its jurisdiction.

- The Court declined to entertain the writ petitions on the ground of lack of territorial jurisdiction, without prejudice to the petitioners' right to approach the appropriate High Court within whose jurisdiction the cause of action substantially arose.