TMI Blog2016 (11) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... ted or rendered nugatory because of the condition of pre-deposit for hearing the appeal and a reasoned order would require to be passed. Accordingly, the order dated 21.02.2014 (Annexure P-20) passed by the Appellate Authority is quashed. The matter is remitted to the first appellate authority where the petitioners may file an application for interim injunction/protection before the appeals are taken up for hearing by the first appellate authority who shall adjudicate the application for grant of interim injunction/protection to the petitioner in the light of the principles set out above. - CWP No.12922 of 2014(O&M) - - - Dated:- 27-10-2016 - Mr. Rajesh Bindal and Mr. Harinder Singh Sidhu, JJ. For The Petitioner : Mr. A.S.Narang, Advocate For The Respondent : Mr.Ankur Mittal, Addl. AG, Haryana, Mr.Vikas Suri, Sr.Standing Counsel ESIC HARINDER SINGH SIDHU, J. This petition has been filed praying for quashing Section 45- AA of the Employees State Insurance Act, 1948 (hereinafter referred to as the 'ESI Act') in so far as it imposes a condition of pre-deposit of 25% of the demanded amount for entertaining the appeal. The petitioner has further prayed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Meanwhile, on a representation from the petitioner the Central Government re-examined its earlier opinion and opined that as the case of the petitioner pertained to grant of exemption from 1.10.2008 to 22.8.2010, and the request, therefor, was made prior to the amendment of ESI Act on 1.6.2010, the State Govt. could grant exemption retrospectively. Based on this opinion, the petitioner company again requested the State Govt for reconsideration of grant of exemption from 1.10.2008 to 22.8.2010. It is the case of the petitioner, that no decision on the said request has been taken or communicated to the petitioner. 7. Without waiting for the decision on exemption, the Deputy Director, ESIC, Sub-Regional office of the Employees State Insurance Corporation, Gurgaon (respondent No.5) passed order dated 30.12.2013 (Annexure P-18) demanding contribution of ₹ 48,38,844/- for the period October 2009 to August 2010. 8. Aggrieved against that order, the petitioner- company preferred appeal under Section 45- AA of the ESI Act. The Appellate Authority declined to entertain the appeal of the petitioner since 25% of the amount claimed was not deposited. The matter was referred to resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n sum, he argued that in Section 62(5) of the VAT Act, as per the language of the Statute, first an appeal is provided and then the condition of pre-deposit is incorporated in the proviso. By contrast, in the ESI Act, the right of appeal is plainly conditional on deposit of 25% amount. Hence, the ratio of the PSPCL case is not attracted in the present case. 13. He further argued that in the PSPCL case, this Court has not considered the decision of Hon ble the Supreme Court in Narain Chander Ghosh vs UCO Bank and others (2011)4 SCC 548 in which, it was held that the condition of pre-deposit for entertaining appeal under Section 18(1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is mandatory. 14. Ld. Counsel for the petitioner responded by contending that the argument of the respondent lacks substance. It is nothing more than quibbling about words and an exercise in semantics. He argued that the consistent view of the Courts has been that any condition of pre-deposit has to be read down to incorporate within it inherent power of the appellate forum to grant interim relief regarding the pre-deposit in appropriate c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortunity of being heard to the parties, shall make an order (a) affirming or amending or canceling the assessment or the order under appeal; or (b) may pass such order, as it deems to be just and proper. (7) The appellate authority shall pass a speaking order while deciding an appeal and send copies of the order to the appellant and the officer whose order was a subject matter of appeal. In PSPCL's case (supra), this Court had framed the following questions for consideration: 4. From the submissions made by learned counsel for the parties, the following questions emerge for our consideration:- (a) Whether the State is empowered to enact Section 62(5) of the PVAT Act? (b) Whether the condition of 25% pre-deposit for hearing first appeal is onerous, harsh, unreasonable and, therefore, violative of Article 14 of the Constitution of India? (c) Whether the first appellate authority in its right to hear appeal has inherent powers to grant interim protection against imposition of such a condition for hearing of appeals on merits? 17. The Court considered a large number of decisions of Hon ble the Supreme Court and different High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said provision and its judgment has been referred to with approval in the decision of this Court inGujarat Agro Industries Co. Ltd. v. Municipal Corpn. of the City of Ahmedabad [AIR 1968 SC 623] . This Court has also referred to its decision in Shyam Kishore v.Municipal Corpn. of Delhi [(1993) 1 SCC 22] in which a similar provision was upheld. 26. It may be noted that in Gujarat Agro Industries Co. Ltd. v. Municipal Corpn. of the City of Ahmedabad [AIR 1968 SC 623] the appellant had challenged the constitutional validity of Section 406(e) of the Bombay Municipal Corporation Act which required the deposit of the tax as a precondition for entertaining the appeal. The proviso to that provision permitted waiver of only 25% of the tax. In other words a minimum of 75% of the tax had to be deposited before the appeal could be entertained. The Supreme Court held that the provision did not violate Article 14 of the Constitution. 27. In view of the above, we are clearly of the opinion that Section 47-A of the Stamp Act as amended by A.P. Act 8 of 1998 is constitutionally valid and the judgment of the High Court declaring it unconstitutional is not correct. The r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cent of the recoverable amount. He submitted that the proviso to Section 65(1) of the Act is therefore unreasonable and arbitrary and violative of Article 14 of the Constitution and should be declared constitutionally invalid. 14. The learned counsel for the appellant cited the decision of this Court inMardia Chemicals Ltd. v. Union of India [(2004) 4 SCC 311] in which the provision requiring pre-deposit of 75% of the demand made by the bank or the financial institution in Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 has been held to be onerous and oppressive rendering the remedy illusory and nugatory and constitutionally invalid. 15. The learned counsel for the appellant submitted that assuming that the proviso to Section 65(1) of the Act is constitutionally valid where the valuation adopted by the Additional Collector or Collector and the consequent demand of additional stamp duty are unreasonable and exorbitant, the alternative remedy of revision after deposit of 50% of the exorbitant demand is not efficacious, and affected party should be able to move the High Court under Article 226 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e documents, the affected party has a right of revision under Section 65(1) of the Act. He further submitted that the requirement of 50% of the amount determined by the Collector at the stage of filing of the revision is therefore not a requirement at the initial stage but a requirement at the revisional stage and the decision of this Court in Mardia Chemicals Ltd. v. Union of India [(2004) 4 SCC 311] is distinguishable from the facts of the present case. 20. We need not refer to all the decisions cited by the learned counsel for the parties because we find that in Govt. of A.P. v. P. Laxmi Devi [(2008) 4 SCC 720] this Court has examined a similar provision of Section 47-A of the Stamp Act, 1899, introduced by A.P. Amendment Act 8 of 1998. Sub-section (1) of Section 47-A, introduced by Andhra Pradesh Act 8 of 1998 in the Stamp Act, is extracted hereinbelow: 47-A.Instruments of conveyance, etc. how to be dealt with .-(1) Where the registering officer appointed under the Registration Act, 1908, while registering any instrument of conveyance, exchange, gift, partition, settlement, release, agreement relating to construction, development or sale of any immovable prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with List III Entry 44 of Schedule VII to the Constitution. 22. While coming to the aforesaid conclusions, this Court in P. Laxmi Devi case[(2008) 4 SCC 720] has relied on Anant Mills Co. Ltd. v. State of Gujarat [(1975) 2 SCC 175] , Vijay Prakash D. Mehta v. Collector of Customs [(1988) 4 SCC 402] andGujarat Agro Industries Co. Ltd. v. Municipal Corpn. of the City of Ahmedabad[(1999) 4 SCC 468] in which this Court has taken a consistent view that the right of appeal or right of revision is not an absolute right and it is a statutory right which can be circumscribed by the conditions in the grant made by the statute. Following this consistent view of this Court, we hold that the proviso to Section 65(1) of the Act, requiring deposit of 50% of the demand before a revision is entertained against the demand is only a condition for the grant of the right of revision and the proviso does not render the right of revision illusory and is within the legislative power of the State Legislature. 23. We also find that in the impugned order the High Court has relied on an earlier Division Bench judgment of the High Court in Choksi Heraeus (P) Ltd. v.State [AIR 2008 Raj 61] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertainment of an appeal does not nullify the right of appeal. All that the statutory provision seeks to do is to regulate the exercise of the right of appeal. The object of the provision is to keep balance between the right of appeal and the right of the revenue to speedy recovery of the amount. The conditions imposed including prescription of a pre-deposit are meant to regulate the right of appeal and the same cannot be held to be violative of Article 14 of the Constitution of India unless demonstrated to be onerous or unreasonable. To put it differently, right of appeal being a statutory right, it is for the legislature to decide whether to make the right subject to any condition or not. In the light of the above enunciation, we proceed to examine Section 62(5) of the PVAT Act. A perusal of sub section (5) of Section 62 of the PVAT Act shows that pre-deposit of twenty five percent of the total amount of tax, interest and penalty is a condition precedent for hearing an appeal before the first appellate authority. Any challenge to the constitutional validity of this provision for pre-deposit before entertaining an appeal on the ground that onerous condition has been imposed and rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Edition at page 350. The statement contained therein is that where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means as are essentially necessary to its execution. Learned counsel for the petitioners vehemently argued that the provision has to be read down to include the right to waive the condition by the appellate authority in an appropriate case. Main emphasis was laid by the learned counsel for the petitioners on the judgment of the Apex Court in Income Tax Officer, Cannanore vs. M.K. Mohamad Kunhi, AIR 1969 SC 430, wherein the question was whether the Income Tax Appellate Tribunal had the power under the relevant provisions of the Income Tax Act, 1961 to stay recovery of the realization of the penalty imposed by the departmental authorities on an assessee during the pendency of an appeal before it. After considering the matter, the Apex court held that the Appellate Tribunal has power to grant stay as incidental or ancillary to its appellate jurisdiction subject to there being a strong prima facie case and satisfaction that the entire purpose of the appeal will be frustrated or rendered nugatory by allowing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose provisions will not render the proceedings invalid--State of U. P. v. Manbodhan Lal Srivastava, AIR 1957 SC 912 (headnote). (3) All the parts of a statute or sections must be construed together and every clause of a section should be construed with reference to the context and other clauses thereof so that the construction put to be on a particular provision makes consistent enactment of the whole statute. This would be more so if a literal construction of a particular clause leads to manifestly absurd and anomalous results which could not have been intended by the Legislature. (4) The principle that a fiscal statute should be construed strictly is applicable only to taxing provisions such as a charging provision or a provision imposing penalty and not to those parts of the statute which contain machinery provisions--CIT v. National Taj Traders [1980] 121 ITR 535 (SC) (headnote). 32. Before we record our conclusion on question No.(c), noticed hereinbefore, it would also be apposite to refer to a five Judges Full Bench of this Court in Ranjit Singh vs. State of Haryana and others, (2012) 2 RCR (Civil) 353 to which one of us (Ajay Kumar Mittal,J.) was a member which was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion (c) posed is answered accordingly. 21. It was clearly and unequivocally concluded that provisions of Section 62(5) of the VAT Act were directory in nature and that the first appellate authority was empowered to partially or completely waive the condition of pre-deposit by necessary implication and intendment and in the interest of justice. But this power was not to be exercised in routine but only on a strong prima facie case being made out and the first appellate authority being satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory by allowing the condition of pre-deposit to continue as a condition precedent to the hearing of the appeal before it. 22. In our view, the ratio of this decision is squarely applicable to the present case as well. We also agree with the Ld. Counsel for the petitioner that there is no substance in the argument of the Ld. Counsel for the respondent that the judgment is distinguishable merely because Section 45-AA is not similarly worded as Section 62(5) of the Punjab VAT Act. The principle settled by various decisions relied on in the PSPCL case is that the requirement of pre-deposit for entertaining the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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