TMI Blog2010 (6) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... of settlement application not satisfied. Impugned order rejecting settlement application sustainable. - 3223, 3220, 3222 and 3224 of 2010 - - - Dated:- 2-6-2010 - Badar Durrez Ahmed and V.K. Jam, JJ. REPRESENTED BY: S/Shri C. Han Shankar with Ravindra, for the Petitioner. S/Shri Jatan Singh with Ashok Singh, Sudeep Sudan, Mukesh Anand with Shailesh Tiwari, Sumit Batra and R.C. S. Bhadoria, for the Respondent. [Order per: Badar Durrez Ahmed, J.]. - The petitioners in this group of four writ petitions are aggrieved by the communication dated 04.05.2010 received from the Customs and Central Excise Settlement Commission (hereinafter referred to as 'the Settlement Commission'), whereby they were informed of the rejection of their settlement applications filed under Section 32E of the Central Excise Act, 1944 (hereinafter referred to as 'the said Act). The order of the Settlement Commission, which was communicated to the petitioners was as follows:- "Now that the writ petition has been withdrawn by the applicant and as the case already stands adjudicated even before filing the settlement applications, no case before the Commission exists." 2. Section 32E, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riginal was not sufficient and unless and until the order was received by them, it could not be said that their case had been adjudicated in the context of the provisions of Section 32E of the said Act. Section 32 E(1) of the said Act enables an assessee, in respect of a "case" relating to him, to make an application, "before adjudication", to the Settlement Commission to have the case settled. On behalf of the petitioners, it was submitted that since the settlement applications under Section 32E were filed on 08.01.2010, which was prior in time to the petitioners receiving copies of the order-in-original dated 24.12.2009, the said settlement applications could not have been rejected on the ground that the case had already been adjudicated even before the filing of the settlement applications. The learned counsel for the petitioners also submitted that the Settlement Commission, itself, has been taken the stand in cases before it that unless the order is communicated to the assessee prior to the filing of the settlement application, it cannot be said that the case had been adjudicated. Consequently, in such cases, where, though the order-in-original is passed prior to the filing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or General, Directorate General of Central Excise Intelligence, New Delhi, inter alia, requiring Qualimax Electronics Private Limited (one of the petitioners herein) to show cause to the Commissioner of Central Excise, Ghaziabad as to why: "(i) Rs 5,78,11,047/- (Five crore seventy eight lac eleven thousand and forty seven only) being the Central Excise duty including Special Excise Duty, Education and Higher Education Cess should not be demanded from them under Section 11A of the Central Excise Act, 1944. (ii) Penalty under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944, should not be imposed upon them. (iii) Interest under Section 11AB of the Central Excise Act, 1944 should not be demanded from them." The other petitioners as well as some other persons, who are not before us, were also required to show cause to the said Commissioner of Central Excise, Ghaziabad as to why penalty under Rule 26 of the Central Excise Rules, 2002 should not be imposed upon them. Qualimax Electronics Private Limited submitted its reply which it termed as an interim reply on 21.12.2009. The order-in-original was passed on 24.12.2009 by the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an application under Section 32E. Sub-section (1) of Section 32F stipulates that on receipt of an application under Section 32E(1), the Settlement Commission shall, within seven days from the date of receipt of the application, issue a notice to the applicant to explain in writing as to why the application made by him should be allowed to be proceeded with. The said provision further stipulates that after taking into consideration the explanation provided by the applicant, the Settlement Commission, shall, within a period of fourteen days from the date of notice, by an order, allow the application to be proceeded with, or reject the application, as the case may be, and in the latter eventuality, the proceedings before the Settlement Commission shall abate on the date of rejection. The proviso to Section 32F(1) prescribes that where no notice has been issued or no order has been passed within the aforesaid period by the Settlement Commission, the application shall be deemed to be allowed to be proceeded with. 8. Coming back to the factual situation, the settlement Commission issued the notice prescribed under Section 32F(1) on 11.01.2010, that is, within the stipulated period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he court:- "The learned counsel for the petitioner seeks permission to withdraw this petition with liberty to take recourse to such remedies which may be available to the petitioner after the Settlement Commission determines the issue contained in the show cause notice dated 11th January, 2010. The learned counsel for the petitioner states that the reply to the show cause notice has been filed this morning itself. It is obvious that the Settlement Commission would dispose of the said show cause notice in accordance with law. The writ petition is dismissed as withdrawn with the aforesaid liberty.' As mentioned in the order of this Court dated 18.01.2010, the petitioners had filed their replies to the notice under Section 32F(1) on 18.01.2010 itself. Thereafter, the Settlement Commission was informed of the withdrawal of the writ petition and the impugned communication dated 04.05.2010 was issued by the Settlement Commission. 10. We may now refer to the controversy with regard to the making of the order-in-original, its communication to the petitioners and receipt of copies of the said order by the petitioners. As pointed out above, the order-in-original was passed/made on 24.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sit the premises at 83, Anand Lok, New Delhi-49 to serve the order-in-original. However, service could not be effected inasmuch as the security guard at the premises informed that the directors/authorized signatories, namely, Mr Pradeep Gupta, Mr Mohit Gupta and Mrs Manju Gupta were not present at the house and they were out of station. The letter goes on to state that Mr Pradeep Gupta was contacted over the telephone but he replied that he will not receive any order. It is further indicated in the said letter dated 19.05.2010 that, thereafter, the Inspector and Sepoy went to the factory premises at D-12, Site-IV, Industrial Area, Sahibabad, Ghaziabad and there they found the premises to be locked. They were informed that the unit was closed for a long time. Consequently, in the presence of two panchas, the order-in-original dated 24.12.2009 was supposedly pasted on the gate of the said factory premises. The letter also indicates that copies of the order-in-original, in respect of the three persons referred to above, were also sent by speed post on 21.01.2010 in one envelope and again on 09.02.2010 separately to each party. From the above two letters dated 15.02.2010 and 19.05.2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluded that the normal rule is to tender the order, decision, summons or notice or to send it by registered post to the person for whom it is intended or to his agent. We find that a similar provision is contained in Section 37C of the said Act, which reads as under:- "37C Service of decisions, orders, summons, etc. - (1) Any decision or order passed or any summons or notices issued under this Act or the rules made thereunder, shall be served, - (a) by tendering the decision, order, summons or notice, or sending it by registered post with acknowledgment due, to the person for whom it is intended or his authorised agent, if any; (b) if the decision, order, summons or notice cannot be served in the manner provided in clause (a), by affixing a copy thereof to some conspicuous part of the factory or warehouse or other place of business or usual place of residence of the person for whom such decision, order, summons or notice, as the case may be, is intended; (c) if the decision, order, summons or notice cannot be served in the manner provided in clauses (a) and (b), by affixing a copy thereof on the notice board of the officer or authority who or which passed such decision or order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Kerala High Court in Government Wood Works (supra), after noting its earlier decision in the case of Malayil Mills (supra), which, in turn, had placed reliance on several decisions of the Supreme Court including:- (i) Raja Harish Chandra Raj Singh v. Deputy Land Acquisition Officer: (1962) 1 SCR 676; (ii) Bachhittar Singh v. State of Punjab: AIR 1963 SC 395; and (iii) State of Punjab v. Khemi Ram: AIR 1970 SC 214, Came to the conclusion that the order of any authority cannot be said to be passed unless it is in some way pronounced or published or the party affected has the means of knowing it. It was further observed that it is not enough if the order is made, signed, and kept in the file, because such order may be liable to change at the hands of the authority who may modify it or even destroy it, before it is made known, based on subsequent information, thinking or change of opinion. The Court further held that to make the order complete and effective, it should be issued, so as to be beyond the control of the authority concerned, for any possible change or modification therein. In the context of the facts before it, the Kerala High Court further observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her situation deals with all other cases and the period of limitation that is prescribed is six weeks of the receipt of the notice from the Collector under Section 12(2) or within six months from the date of the Collector's Award whichever expires first. In the case before the Supreme Court, the Award was signed by the Collector on 25.03.1951 and the application under Section 18 had been filed on 24.02.1953. On a plain reading of proviso to Section 18, the application made by the applicant therein was clearly beyond six months. The question which arose before the Supreme Court was whether such a literal and mechanical way of construing the relevant clause was justified in law. In answering the question, the Supreme Court examined the nature of the Collector's award and came to the conclusion that the Award could not be treated as a decision inasmuch as in law it was an offer or a tender of compensation determined by the Collector to the owner of the property under acquisition. If the owner accepted the offer, no further proceeding was required to be taken and the amount was to be paid and the compensation proceedings would stand concluded. On the other hand, if the owner did not ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter, the order of dismissal was communicated to Bachhittar Singh. We may point out that the remarks of the Minister of the State of PEPSU were that although the charges against Bachhittar Singh were serious and that they had been proved and that it warranted the punishment of dismissal, yet as he was a refugee and had a large family to support, the order of dismissal would be too hard and, instead of dismissing him outright, he should be reverted to his original post of qanungo and that he should be warned that if he does not behave properly in future he will be dealt with severely. Bachhittar Singh wanted implementation of the said remarks of the Minister of the State of PEPSU as against the subsequent order of dismissal passed by the State of Punjab. It is in this context that the Supreme Court observed that the Minister's remarks, with regard to the award of lesser punishment were only provisional until they were communicated. The Supreme Court observed that it is possible that after expressing an opinion about a particular matter at a particular stage, a Minister or the Council of Ministers may express quite a different opinion, one which may be completely opposed to the earlie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder would be in a position to change its mind and modify it, if it thought fit. But once such an order is sent out, it goes out of the control of such an authority, and, therefore, there would be no chance whatsoever of its changing its mind or modifying it. It is in this sense that the Supreme Court held that once an order is issued and it is sent out to the concerned government servant, it must be held to have been communicated to him, no matter when he actually received it. Consequently, the Supreme Court held in the context of the facts of the case before it that it would be difficult to 'persuade ourselves to accept the view that it is only from the date of the actual receipt by him that the order becomes effective. If that be the true meaning of communication, it would be possible for a government servant to effectively thwart an order by avoiding receipt of it by one method or the other till after the date of his retirement even though such an order is passed and despatched to him before such date'. The Supreme Court further observed that such a meaning of the word 'communication' ought not to be given unless the provision in question expressly so provides. The Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision or order appealed against." 26. After considering several other decisions including Raja Harish Chandra (supra), the court held: "12. It may be seen therefore, that, if an authority is authorised to exercise a power or do an act affecting the rights of parties, he shall exercise that power within the period of limitation prescribed therefor. The order or decision of such authority comes into force or becomes operative or becomes an effective order or decision on and from the date when it is signed by him. The date of such order or decision is the date on which the order or decision was passed or made: that is to say when he ceases to have any authority to tear it off and draft a different order and when he ceases to have any locus paetentiae (sic). Normally that happens when the order or decision is made public or notified in some form or when it can be said to have left his hand. The date of communication of the order to the party whose rights are affected is not the relevant date for purposes of determining whether the power has been exercised within the prescribed time. 13. So far as the party who is affected by the order or decision for seeking his remedies again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Advocates Act, 1961. The said provision reads as under:- "48-AA. Review.-The Bar Council of India or any of its committees, other than its disciplinary committee, may of its own motion or otherwise review any order, within sixty days of the date of that order, passed by it under this Act." The debate before the court was whether the expression 'the date of that order' should be construed literally as the date of the order or it should be construed as meaning the date of communication of the order. The court, so far as the commencement of the period of limitation for filing the review petition was concerned, was clearly of the opinion that the expression 'the date of that order' as occurring in Section 48-AA has to be construed as meaning the date of communication or knowledge of the order to the review petitioner. It was also held that where the law provides a remedy to a person, the provision has to be so construed, in case of ambiguity, as to make the availing of the remedy practical and the exercise of power conferred on the authority meaningful and effective and that a construction which would render the provision nugatory ought to be avoided. 28. Finally, we are lef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning through all these cases is that when viewed from the perspective of determining the starting point of limitation for an aggrieved party to seek a remedy, be it an appeal, revision or review, communication of the order is a necessary ingredient. Consequently, in such cases, the clock of limitation would not start to tick till the order is communicated to the aggrieved party and, therefore, in construing provisions which use words like 'date of the order', the literal meaning may have to give way to a purposive and constructive meaning as in the Raja Harish Chandra (supra) genre of cases. Even in the category of cases where the orders 'bring an end result to a status' such as an order of dismissal from government service, communication of the orders would be necessary to make such orders effective. Thus, in such cases also the date of the order would be construed as the date when it is communicated. But, as in Khemi Ram (supra), in the case of an order of suspension from service, the date of the order would be construed as the date on which it is made or issued and not the date on which it is received by the government servant. 30. In these writ petitions, the situation is en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the provisions then come in aid of such errant officers and run counter to the legitimate hopes of assesses who want to come clean, pay their taxes and have their cases settled by the Settlement Commission' The answer to this would lie in construing the date of adjudication to be the date on which the adjudicating authority loses his locus poenitentia, or opportunity to tear off, destroy or alter the adjudication order. In other words, when the order goes out of his control. and, that happens when the order is signed and the one-way process of sending it to the assessee is put in motion either directly or indirectly through some other agency. 33. Thus, the date of receipt of the order-in-original is not a relevant circumstance. What is of prime importance is the date on which the order-in-original was despatched from the office of the adjudicating authority (in this case, the Commissioner of Central Excise and Customs, Ghaziabad). As we have seen, the order-in-original dated 24.12.2009 had left the office of the said Commissioner on 31.12.2009 and was beyond his reach and control. Consequently, the adjudication becomes effective and complete on that date, i.e., 31.12.2009. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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