TMI Blog2022 (6) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... intiff - Admittedly, in this Case, the authority has not initiated any legal proceedings of recovery or penalty against the plaintiff. The course adopted by the defendant authority is in the realm of Quasi-judicial proceedings of seeking penalty under the Act. Therefore, though the notice has been issued after six months from the date of checking i.e. 21.02.1979, the notice cannot be held to be illegal one and no declaration or injunction against the same can be granted in favour of the plaintiff. The Trial Court has not considered the provision of Section 40(2) of the Act which clearly does not apply to the departmental proceedings and only applies for initiation of suit or prosecution. Therefore, in view of the facts and legal provisions, it is clearly found that the Trial Court has committed error in declaring the show cause notice as illegal and time barred. In the facts and circumstances of the case, whether the Trial Court has committed error of facts and law in deciding the issue of maintainability of the suit under the provisions of Section 40 of the Act? - HELD THAT:- The right to restoration of the goods is a vested Civil Right and on expiry of the initial period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficers have returned back the bags and have instructed them to arrange it as it was, prior to checking, however, as there was no time available for them, they did not do so. It also reveals from his evidence that the necessary writing was also being done as and when there was weighting of the bags. Thus the factum of preference of the panchnama and weighting of the bags and handing over the bags to the plaintiff side is clearly established. Further, it reveals from the evidence that the tobacco was lying in the warehouse of the plaintiff. As per the entire oral evidence of the plaintiff witnesses, all the bags of tobacco were kept in the same warehouse. Further it reveals that as per the oral evidence of the plaintiff side, fire was broken out as there was no proper ventilation available and due to heat, fire broke out. Since the tobacco was lying in the warehouse of the plaintiff, it was for the plaintiff to see to it that there is proper ventilation available in it and no untoward incident of fire took place. The entire case of the plaintiff is based upon the allegations that due to negligence on the part of officers of the Excise Department, not permitting him to sold out tob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atus assigned to them before the Trial Court. 4. It is contended by the defendants that the Central Excises And Salt Act, 1944 (hereinafter referred to as the Act )is self contained code and no civil suit is maintainable and no decree could have been passed against the defendants-appellants. It is also averred that the Trial Court has not appreciated the oral and documentary evidence produced by the defendants and has not appreciated the facts that the goods which were checked were handed over to the plaintiff under the suparatnama and therefore, the goods were in physical possession of the plaintiff. It is contended that the plaintiff could not have claimed any damages against the defendants. It is also contended that while checking the goods appropriate panchnama was prepared in presence of the plaintiff s son. It is also contended that the defendants were not liable for the incident of fire which took place between 21.10.1979 and 23.10.1979. It is also contended that the Trial Court has failed to appreciate that the acquittal in Criminal Court has no relevance in a Civil Proceedings. 4.1. It is contended that the Trial Court has erred in holding that the paper panchnama a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Excise. That the officers of the Central Excise used to do checking of the stock every year and every thing was being done by the plaintiff with the previous permissions of the officers of the Central Excise. 6. It is the case of the plaintiff that his warehouse is situated at Station Road on the public road at Anand and he has also kept the warehouse at Raipur (Madhya Pradesh) and he used to stay at Raipur M.P. According to him, he has entrusted the work of warehouse situated at Anand to his son Mahendrakumar and his near relative Chhaganbhai and he was staying at Raipur M.P. for his business purposes. It is contended that prior to 21.02.1979, stock checking was carried out by the officers of the Central Excise from the warehouse of the plaintiff in presence of the plaintiff and at that time, all the stocks were found to be proper and thereafter the plaintiff left for Raipur M.P. 6.1. It is contended by the plaintiff that on 21.02.1979, the officers of the Central Excise i.e. present defendants and other officers visited the plaintiff s warehouse and checked and verified the stock and prepared one panchnama in absence of the plaintiff. It is also contended that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereafter, the plaintiff requested the defendants to permit him to dispose of the remaining tobacco but it was not granted. It is also alleged that the defendants have abused their powers and authority and have acted illegally and prepared false panchnama and though the plaintiff has brought to their notice, nothing was done and therefore all the defendants are severally and jointly liable for the loss and damages suffered by the plaintiff. 6.3. It is also alleged that the defendants have not acted bonafidely and they have not discharged their duties in accordance with law. 6.4. On the aforesaid grounds, the plaintiff has filed suit for permanent injunction for restraining the defendants from taking action against him under the show cause notice and also for damages to the tune of Rs.9,94,049.37/- which includes the interest of Rs.60,671/- along with the interest and the cost from the defendants. 7. The defendants have resisted the suit inter alia contending that the facts of the plaint are not true and not admitted. It is contended by the defendants that the premises of the warehouse were licensed premises and the Central Excise Officers are legally authorized to visit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 35(a) of the CPC. 8.On the basis of the pleadings of the parties, the Trial Court has framed issues at Exhibit 47 which reads as under:- 1. Whether the plaintiff proves that he is entitled to recover Rs.9,33,378.37 p. From the defts? 2. Whether the plaintiff is entitled to interest as claimed? 3. Whether the plaintiff proves that the suit notice dtd.29/9/79 is illegal? 4. Whether the plaintiff proves that the notice served by the defendants dt.29/9/79 is time barred? 5. Whether the suit is barred by the law of limitation? 6. Whether the suit is not maintainable as per Sec.40 of the Central Excise Act? 7. Whether the plaintiff is entitled to declaration and injunction as prayed for? 8. What is due to the plaintiff from the defendants? 9. What order and decree? No more sought. 9. It appears from the record that on the basis of oral and documentary evidence and submissions made by both the sides, the Trial Court has answered issue nos.1, 3 and 4 in affirmative, whereas issue nos.2 and 7 have been answered in partly affirmative, and issue nos.6 and 7 has been answered in negative and ultimately the suit has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er no.494-1986 of April 1986 124 9 Copy of Panchnama drawn by the Borsad Town Police Station 155 10 Original Certificate issued by the Manager of Kamleshkumar Chhotalal Company regarding the amount of damages given by the Insurance Company dated 20.04.1988 160 11 Certified copy of the deposition of Narendrakumar Ishwarbhai (defendant no.2) in Criminal Case No.1766 of 1982 179 12 Certified copy of the deposition of Chandramohan Mehra (defendant no.3) in the aforesaid case criminal case 240 11. The defendant side have produced the following oral and documentary evidence:- Oral evidence Sr. No. Details of Oral Evidence Exhibit No. 1 Chandrakant Himmatlal Jardos (defendant no.1) 168 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case, whether the Trial Court has committed error of facts and law in deciding the issue of maintainability of the suit under the provisions of Section 40 of the Act? (iii) In the facts and circumstances of the case, whether the Trial Court has committed error of facts and law in observing that the plaintiff is entitled to recover the amount of Rs.9,33,378.37 with interest? (iv) In the facts and circumstances of the case, whether the Trial Court has committed error of facts and law in passing the impugned decree in favour of the plaintiff? (v) What order and decree? 14. My findings on the aforesaid points, for the reasons given below, are as under:- (i) In the affirmative. (ii) In the affirmative. (iii) In the affirmative. (iv) In the affirmative. (v) As per the final order. 15. Learned advocate Mr.Shukla for the appellantdefendant has vehemently submitted the same facts which are narrated in the memo of appeal. He has submitted that the warehouse of the plaintiff was visited by the officers of the Central Excise and on stock verification it was found that there was some discrepancy and shortage of stocks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence, the damages has been assessed by the plaintiff and it is blindly accepted by the Trial Court. He has submitted that the impugned judgment and order of the Trial Court be set aside and the suit of the plaintiff be dismissed. He has relied upon the decisions reported in case of (1991) 2 SCC 119 especially, para 4 to 8 has observed as under:- 4. But the question is whether the issuance of a show cause notice and the initiation of the consequential adjudication proceedings can be described as other legal proceedings within the meaning of sub-section (2) of section 40 of the Act? If the said departmental action falls within the expression other legal proceeding there can be no doubt that the action would be barred as the same indisputably was initiated six months after the accrual of the cause action. So the crucial question is whether the issuance of the show cause notice dated August 30, 1972 and the passing of the impugned order in adjudication proceedings emanating therefrom constitutes `other legal proceeding' within the meaning of section 40(2) of the Act to fall within the mischief of that sub-section which bars such proceedings if commenced after a period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words `other legal proceeding' are wide enough to include adjudication and penalty proceedings under the Act. Even the learned Additional Solicitor General did not contend to the contrary but what he said was that since this wide expression is preceded by particular words of a certain genus, namely, words indicating reference to proceedings taken in courts only, the wide words must be limited to things ejusdem generis and must take colour from the preceding words and should, therefore, receive a limited meaning to exclude proceedings of the type in question. There can be no doubt that `suit' or `prosecution' are those judicial or legal proceedings which are lodged in a court of law and not before any executive authority, even if a statutory one. The use of the expression `instituted' in section 40(2) strengthens this belief. Since this sub-section has been construed by this Court in Raju's case (supra) not to be confined in its application to only Government servants but to extend to others including the assessees and since the words `for anything done or ordered to be done under this Act' are found to be comprehensive enough to include acts of non-complianc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pressed in the aforesaid two decisions. In considering the scope of the expression `other legal proceeding' we have confined ourselves to the language of sub-section (2) of section 40 of the Act before its amendment by Act 22 of 1973 and should not be understood to express any view on the amended provision. On careful consideration we are in respectful agreement with the view expressed in the aforesaid decisions that the wide expression `other legal proceeding' must be read ejusdem generis with the preceding words `suit' and `prosecution' as they constitute a genus. In this view of the matter we must uphold the contention of the learned Additional Solicitor General that the penalty and adjudication proceedings in question did not fall within the expression `other legal proceeding' employed in section 40 (2) of the Act as it stood prior to its amendment by Act 22 of 1973 and therefore, the said proceedings were not subject to the limitation prescribed by the said sub-section. 16. Learned advocate Mr.Parekh for the original plaintiff has vehemently submitted that the Trial Court has properly appreciated the facts and evidence on record and has properly allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be relied upon and rightly the trial Court has discarded it. 16.2. While referring to the evidence of Narendrabhai Ishwarlal Mehta at exhibit 178, he has stated that even if the version of these witness that they have used 4 to 5 scales for weighing the bags, it would not be possible to complete the verification of 13522 bags in less than 9 hours. He has also submitted that the plaintiffs tobacco was seized on 21.02.1979 whereupon the plaintiff has frequently requested to release the same, but, the defendant side has not paid heed to it. He has submitted that as per Section 110(2) of the Customs Act, 1962, the seized goods needs to be returned to the owner, if any action is not taken within six months of the seizure. According to him, in the present case after passing six months the defendant has issued time barred notice dated 29.09.1979 which is clearly illegal one. 16.3. He has submitted that the fire took place in the warehouse from 21.10.1979 to 23.10.1979 in which several bags of tobacco were destroyed and due to rainy water tobacco was spoiled. He has submitted that when the plaintiff approached the defendant authority for permission to sell the remaining bags, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) In case of Union of India V. Narasimhalu reported in (1969) 2 SCC 658. (iv) In case of Shanti Lal Mehta V. Union of India And Ors reported in ILR 1983 Delhi 374. 17. In the rejoinder, learned advocate Mr.Harshil Shukla for the appellant has submitted that there was no any malafide intentions on the part of the officers of the Central Excise. He has submitted that whatever damage is caused is due to natural fire broke out in the warehouse for which the defendants could not be held liable. He has submitted that the appeal may be allowed and the impugned judgment and decree of the Trial Court be set aside and the suit of the plaintiff be dismissed with cost. 18. Point No.(i) The plaintiff has challenged the show cause notice issued under the Act on the grounds that it was issued after lapse of 6 months and it is time barred. To decide this point of limitation of six months, it needs to refer to Section 40 of the Act prior to its amendment, which reads as under:- 40. Protection of action taken under the Act. (1) No suit, prosecution or other legal proceeding shall lie against the Central Government or any officer of the Central Government or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the pendency of the suit. Thus, there was no question of declaration to be wade in respect of show cause notice issued to the plaintiff. However, as observed and held by the Apex Court in the aforesaid decision, the issuance of show cause notice in departmental proceedings for seeking penalty cannot be held to be beyond the limitation period. Admittedly, in this Case, the authority has not initiated any legal proceedings of recovery or penalty against the plaintiff. The course adopted by the defendant authority is in the realm of Quasi-judicial proceedings of seeking penalty under the Act. Therefore, though the notice has been issued after six months from the date of checking i.e. 21.02.1979, the notice cannot be held to be illegal one and no declaration or injunction against the same can be granted in favour of the plaintiff. 18.3. It is pertinent to note that the Trial Court while dealing with the issue of notice, in para 22 has observed that during the pendency of the suit against the said notice, departmental proceeding was going on and therefore there was no question of granting any permanent injunction against the defendant arises and yet it has declared the notice as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not protect an act done in violation of provisions of the Act or beyond the jurisdiction of the officer or the authority concerned. It was also observed that there was a case for damages for the tortious act. The suit was only for the value of the goods illegally seized and retained by the defendants. 21. Learned advocate has also relied upon the decision of the Delhi High Court in case of J.R.Sehgal V. (Supra), wherein it was a case of noncompliance of Section 110 of the Customs Act and on that basis, it was held that as there was noncompliance with the provisions of the Act, action against the department cannot be termed as without jurisdiction. Learned advocate for the plaintiff has also relied upon the decision in case of Union of India V. (Supra), wherein the question was relating to the Sea Customs Act, as there was no liability of payment of any import duty upon the goods. On that basis it was held that jurisdiction of the Civil Court was not barred. It was also observed that the Civil Court have jurisdiction to examine cases in which customs authority has not complied with the provisions of the statute or the officers of the Customs has not acted in conformity in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plaintiff has filed a suit after service of notice. The suit is also for damages. Therefore, considering the facts of the present case, the suit is maintainable even under Section 40(2) of the Act. Therefore, the Trial Court has not committed any error of facts and law in holding that the suit is maintainable. Hence I have decided point no.(ii) accordingly. Point No. (iii iv) 24. Since the evidence on record pertaining to both these issues are inter connected, to avoid repetition of the same, both are discussed together. 25. Now the entire case of the plaintiff is based upon the facts that the defendants have seized the goods and it was kept in the plaintiff s warehouse and he was not permitted to get it back though repeatedly requested. It is also case of the plaintiff that in the month of October 1979, there was fire broke out in his warehouse and due to that certain bags of tobacco burnt and thereafter due to rainy water, other bags were also spoiled and for that purpose, the defendants are liable for the damages and interest thereof. 26. Now, on perusal of the oral and documentary evidence, it transpires that the plaintiff Somabhai in his oral evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown his inability to remember as to on which date and in which month fire broke out, however, has denied that the fire has broke out after the service of notice dated 29.09.1979. He has denied the suggestions that after such panchnama, the goods were handed over to him. He has denied the suggestions that after the goods kept in his warehouse, it was his responsibility to maintain it properly. 27. The plaintiff s witness Mahendrabhai Somabhai Patel who is the son of the plaintiff, in his deposition at exhibit-127 has stated that on 21.02.1979 his father was at Raipur (M.P.) He has stated that on that day, officers of the Central Excise Department have checked the warehouse for 5 to 6 hours and thereafter they have obtained signatures of two panchas. He has also stated that signatures of one Bhikhabhai Patel and Arvindbhai Patel were obtained whereas his signature was not obtained. He has also stated that thereafter, he was called at Anand Office and his signature was obtained in papers of which some papers were blank and some were having writing in them. He has stated that when the warehouse was checked on the same day there was checking made on residential premises also. He h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 147, it appears that he has admitted his signature on the panchnama but he has denied the factum of the preparation of the panchnama in his presence by the officers of the Excise Department. 29. On perusal of evidence of Mahendrakumar Popatbhai Bhavsar at exhibit 154, it reveals that he is panch witness of panchnama prepared by the police in respect of fire broke out in the warehouse of the plaintiff. According to his evidence, he is also doing business of tobacco and they are keeping tobacco bags in a place where there is air and light and they used to keep stock card in which the particulars regarding the number of bags, weight as well as lot number are mentioned. He has stated that if the tobacco is not properly stored and there is no ventilation then there is likelihood of fire being broke out. He has stated that he was called by the Police in the warehouse of Somabhai and in respect of preparation of the panchnama for the alleged fire. In his evidence copy of panchnama has been produced at exhibit 155. From his evidence which included the cross-examination, it appears that he has admitted that the goods in the warehouse is of the ownership of the owner of the warehouse an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire broke out, Janakbhai and his watchman were there, however, he has voluntarily stated that both were sleeping. He has stated that whenever, there is checking by the Officers of the Excise Department, they are weighing by sample testing and thereafter, they will arrange the bags as it was prior to checking. He has admitted that he has only seen the smoke and he did not know that why there was fire. 31. On perusal of the evidence of one Shantilal Umedbhai Patel at exhibit-159, it appears that he, also dealt with in the business of tobacco and earlier in his warehouse, fire was broke out and he got the damages from the insurance company. He has mentioned the procedure regarding the registration of mentioning material in the register kept by the tobacco businessmen in the warehouse and the preparation of the registers and the manner in which the bags are being kept in the warehouse. He has also stated that the bags are being kept in such a manner that there is sufficient place available from all the corners so that no natural fire is broke out. He has stated that if no such place is kept open, then, there is possibility of natural fire. He has also stated that sometimes, if there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng his cross-examination he has stated that when the officers of the Excise Department came, he was alone and thereafter Mahendrabhai and Chhaganbhai were called. He has also stated that officers have checked the bags and weighted it and they were making notes thereof. He has stated that the bags from all the lots were checked and weighted. He has admitted that the officers of the Excise Department had told him to arrange the bags as it was there prior to checking, but, as he and labourers have no time they have not arranged so. 32.1. Thus, from his evidence it transpires that the factum of checking of the warehouse and bags in presence of Mahendrabhai and Chhaganbhai with these witnesses and there were 6 to 8 labourers engaged in it is proved. It also appears from his evidence that the bags from all the lots were checked and weight was done and the officers of the Department has instructed to arrange the bags in the same manner as it was prior to the checking, but, the same was not so arranged. 33. On the perusal of the oral evidence of Chandrakant Himmatlal Jardos -defendant no.1 at exhibit 168, it appears that he has narrated factum of checking of the warehouse of the plai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter has been produced at exhibit 179. He has admitted that while checking, the Excise Officers have made checking of the stock randomly and at the time of stock checking, there is always stock verification. He has admitted that if owner of the warehouse appoints anybody to act for himself, he has to inform the officers. He has admitted that when he was present, there was no exact figure of shortage of the bags. He has also stated that in his presence panchas have not read the panchnama and panchas as well as Mahendrabhai have not signed it in his presence. He has also admitted that there are varieties of the tobaccos and there is averment in the exhibit 150 regarding the nature of the tobacco and the number of bags. He has admitted that he cannot say as to who has got it written. He has shown his ignorance as to whether there was fire broke out in the warehouse of the plaintiff on 21.10.1979 and 23.10.1979. He has denied the suggestion that he did not permit the plaintiff from selling the tobacco and has also denied the suggestion that for recovery of Excise duty on the shortage of the bags of 3,701, the remaining tobacco were not permitted to be sold. He has admitted that he h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrange it as it was, prior to checking, however, as there was no time available for them, they did not do so. It also reveals from his evidence that the necessary writing was also being done as and when there was weighting of the bags. Thus the factum of preference of the panchnama and weighting of the bags and handing over the bags to the plaintiff side is clearly established. 37. Now, so far as the factum of breaking out of fire in the warehouse is concerned, there is panchnama prepared by the Police as well as the evidence of plaintiff side which clearly establishes that there was fire broke out in the warehouse. As per the Police panchnama fire broke out due to natural heat and the evidence of Ratnaji Vasram Makwana at exhibit 158, at the time of fire breaking out, one Janakbhai and other watchman were present. However according to this witness, both were slept. Moreover, it also reveals from the panchnama at exhibit 155, prepared by the Police that due to heat, there was accidental fire in the warehouse. At this stage, it is pertinent to note that even as per the plaintiff s version in pleading that there was a natural fire occurred in the warehouse, due to which tobacco c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y evidence list at exhibit 109. However, on the perusal of the deposition of the plaintiff, no such documents have been exhibited in the evidence. It was incumbent on the part of the plaintiff to lead evidence in respect of valuation of the goods in question, however, no such evidence has been produced. Now, the Trial Court has relied upon the evidence produced before the Criminal Court wherein, the plaintiff has been acquitted from the criminal charge and no appeal has been filed, but the decision of the Criminal Court acquitting the plaintiff from the criminal charges cannot be treated as a proof of valuation of the goods. Even otherwise, the observations and the judgment of the Criminal Court is decided on the principles of proof beyond reasonable doubt and there is no questions of any valuation of the goods in a criminal trial, therefore, the judgment of the Criminal Court acquitting the plaintiff from the criminal charge cannot be said to establish the facts that valuation of the goods is proved by the plaintiff. 39.1. Further, even if the other side i.e. defendant has not produced any evidence against the valuation of the plaintiff does not mean that the plaintiff is absol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presumption as has been made by the Trial Court. 40. Now, considering the impugned judgment and decree of the Trial Court, it clearly transpires that the Trial Court has not considered all these factual and legal aspects and has merely swayed away with the passing of the acquittal judgment in favour of the plaintiff and on the basis that the defendant side has not produced any evidence regarding the valuation of the goods and on the ground that the suit notice is time barred and illegal. The impugned judgment and decree of the Trial Court, for the reasons given above, are not sustainable in the eyes of the law. 41. Further, considering the impugned judgment of the Trial Court, it appears that the Trial Court has even not bothered to produce the oral evidence of the witnesses and has simply decided the case on the basis of some statement from the evidence. The Trial Court has failed to follow the principles of evidence that while appreciating the oral evidence of any witness, the version of chief examination, crossexamination as well as re-examination needs to be appreciated. However, in this case, the learned Trial Court has not even referred to the entire evidence of any wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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