TMI Blog2006 (5) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... a valid license from the Reserve Bank of India, carries on business of booking international tickets and arranging tours for its customers. Pursuant to the search conducted by the Officers of the second respondent on 13-8-1984, a sum of Rs. 99,800 belonging to the petitioner was seized and a show- cause notice was issued for the alleged violation of section 9(1)( b ) of FERA, 1973. Subsequently, proceedings were initiated against the petitioner and on 23-6-1986, an order was passed by the second respondent confiscating the said amount and levying a penalty of Rs. 10,000. The petitioner paid the penalty amount and the appeal filed by him was dismissed. Aggrieved by that the petitioner and the company filed C.M.A. Nos.1210 and 1211 of 1993 before this Court and the appeals were allowed by a common order dated 11-4-1997 passed by a Division Bench of this Court. Against the said order, no further appeal has been preferred. 3. Subsequent to the order dated 11-4-1997 passed in the abovesaid CMAs, the petitioner had written several letters dated 15-7-1998, 25-8-2001, 29-8-2001 and 13-9-2001, requesting the second respondent to return the confiscated amount of Rs. 99,800 and the penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court dated 11-3-2002 in W.P. No. 7868 of 2002, the second respondent sanctioned the refund of Rs. 1,09,800, by his letter dated 24-4-2002. But, the claim of the petitioner for interest was negatived on the ground that there is no specific provision in FERA, 1973. The learned Senior Counsel also submitted that the issue relating to the power of the High Court to award interest even in the absence of statutory provisions has already been settled by two different Division Benches of this Court in the cases reported in Union of India v. Coromandel Prodorite Ltd. 1991 (52) ELT 165 and CCE v. Thermo Electric Madras Mfg. 1992 (58) ELT 23. Further, the learned senior counsel submitted that taking note of the decisions rendered by various High Courts and Supreme Court of India, provisions providing for payment of interest on refund, etc., have been introduced under section 11BB of the Central Excise Act and under section 27A of the Customs Act with effect from 1995. 7. The learned Senior Counsel further submitted that the Hon ble Supreme Court of India in the case of Sandvik Asia Ltd. v. CIT [2002] 280 ITR 643, has directed payment of interest on interest in a case arisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 73. Further, according to the learned Senior Counsel, since, FERA, 1973 being a self-contained code, in the absence of any specific provision for payment of interest on the refund, this Court exercising the jurisdiction under Article 226 of the Constitution of India, may not direct payment of interest. 10. Written submissions have been filed by the second respondent. In the written submissions, it is submitted that as per the procedure, the seized amount is credited to the Government of India s Account and a Refund Bill in Form No. 41 was sent along with covering letter dated 24-4-2002 for the signature of the petitioner but the petitioner did not affix his signature in the Refund Bill to enable the respondents to sanction the refund and therefore the Directorate of Enforcement could not process the case further for refund of Rs. 1,09,800 to the petitioner till date and therefore the contention of the petitioner that the respondents are holding the money illegally and without any authority of law, is not correct. It is further submitted that there is no provision either in FERA, 1973 or in FEMA, 1999, enabling the payment of interest on refund, though similar such provisions ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the two Division Benches of this Court and also the Supreme Court of India has awarded interest in the absence of statutory provisions, the same principles are applicable to FERA as well. According to the learned Senior Counsel, the Judgment of the Gujarat High Court, reported in Padmanabh Silk Mills case ( supra ) is not applicable to the facts of this case, since in that case, the question was whether interest can be claimed on pre-deposit in the light of the provisions contained in section 11BB of the Central Excise Act, 1944. The learned Senior Counsel further submitted that in view of the decision of the Supreme Court in Sandvik Asia Ltd. s case ( supra ), the Gujarat Judgment may also be treated as impliedly overruled. 15. Regarding the question of laches, it is submitted that since the same was not argued before the Court, it is not permissible to raise the same in the written submissions. 16 . Further, in the written submissions submitted by the petitioner, it is stated that the petitioner has been consistently pursuing the matter with the officials of the Enforcement Directorate, which is evident from the numerous letters written by him and therefore, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the light of the fact that the second respondent himself had not taken such a plea either in the earlier writ petition filed by the petitioner or in the reply sent by him to the petitioner and further, the fact that the second respondent himself had offered to refund the amount and sent Form 41 to the petitioner, the contention of the Senior Counsel is liable to be rejected. For the same reasons, the contentions of the learned Senior Counsel regarding the taintedness of the money seized is liable to be rejected. 18. Coming to the question of laches, it has to be pointed out that the same was not argued by the learned Senior Counsel. But it has been faintly raised in the written submissions. 19. In the case of Nandlal Jaiswal ( supra ), it has been observed as follows: "23....When the writ jurisdiction of the High Court is invoked, unexplained delay coupled with the creation of third party rights in the meanwhile is an important factor which always weighs with the High Court in deciding whether not to exercise such jurisdiction...." (p. 272) 20. In the case of Ram Chandra Shankar Deodhar ( supra ), it has been observed as follows : "9.... It may also be noted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the part of the petitioner in approaching this Court. ( ii )It is not the case of the second respondent that any third party right has been created. Therefore, the above contention of the second respondent is liable to be rejected. 23. Now, the main question as to whether this Court acting under Article 226 of the Constitution of India is empowered to direct payment of interest on the refundable amount due to the petitioner in the absence of any statutory provision in FERA, 1973 relating to payment of interest, has to be considered in the light of the law laid down by this Court and the Hon ble Supreme Court of India. 24. In the case of Coromandel Prodorite Ltd. ( supra ), it has been held as follows : "5. . . .The absence of provision, however, cannot prevent a Court from exercising its jurisdiction in exercise of the powers under Article 226 of the Constitution of India so as to do justice between the parties and make an order in equity. As the Court of Equity, the High Court, while exercising powers under Article 226 of the Constitution of India, has to reach out to undo injustice. There is no bar imposed upon the courts for granting to a citizen interest on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of 2002 and only after the order dated 11-3-2002 passed in the said writ petition, the second respondent by his letter dated 24-4-2002, offered to refund the amount. The claim made by the petitioner for refund is legal and the demand for interest on the refundable amount cannot be said to be unreasonable. 26. In the case of Thermo Electric Madras Mfg. ( supra ) the Division Bench of this Court upheld the order of the learned Single Judge awarding interest at 18 per cent per annum in a case arising under the Central Excise Act. Recently, in the case of Sandvik Asia Ltd. ( supra ), the Hon ble Supreme Court directed payment of interest on interest, even though there is no provision to that effect in the Income-tax Act. In that decision, it is laid down as follows : "Even assuming that there is no provision for payment of compensation, compensation for delay is required to be paid as the Act itself recognizes in principle the liability of the Department to pay interest when excess tax was retained and the same principle should be extended to cases where interest was retained." The abovesaid decision of the Hon ble Supreme Court of India clearly lays down that even if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n paragraph 9, it is observed as follows : "9. On the language of the proviso, as it is, there cannot be two answers, according to us also. It is settled law that taxation statute in particular has to be strictly construed and that there is no equity in a taxing provision...." (p. 142) The said observation was made by the Hon ble Supreme Court of India, while considering the question of exemption under clauses XV and XVI of section 5(1A) of the Wealth-tax Act and therefore, this decision also is not applicable to the facts of this case. 30. Relying upon the decision in the case Central Bureau of Investigation ( supra ) of the second respondent in the written submissions has submitted that FERA, 1973 is a self-contained code and it is a Special legislation and in the absence of specific provisions enabling the payment of interest on the refund, a claim for interest on the refund, cannot be entertained. In the said decision, while considering the applicability of section 5 of the Criminal Procedure Code, the Hon ble Supreme Court of India observed as follows : "22....But, FERA is a self-contained Code containing comprehensive provisions of investigation, inquiry and trial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uant to the said order, when the petitioner made a demand for refund together with interest in his letter dated 15-7-1998 the second respondent ought to have refunded the amount but failed to do so. The retention of the amount before 11-4-1997 cannot be said to be wrongful as the proceedings pursuant to seizure were pending. The presumption of taintedness of the money seized could have continued during the pendency of the legal proceedings before various forums, including this Court, but that presumption could no longer continue after 11-4-1997 on which date the Honourable Division Bench passed the order in the CMAs. Therefore, in the considered view of this Court, the petitioner is entitled to claim interest only from 11-4-1997 viz., the date of order passed in the CMAs and not from the date of the seizure of the amount or from the date of the deposit of the penalty amount. 34. Admittedly, the second respondent sent a letter dated 24-4-2002 to the petitioner enclosing the Refund Bill in Form No. 41 for a sum of Rs. 1,09,800 being the amount due to the petitioner. By the said letter, the second respondent requested the petitioner to sign on the reverse side of the Bill agains ..... X X X X Extracts X X X X X X X X Extracts X X X X
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