TMI Blog1979 (2) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... 15.34 P. from the first respondents by way of excise duty under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, were illegal, invalid and ultra vires and for a decree in the said sum of Rs. 1,64,415.34 P. with interest thereon at the rate of 9% p.a. from the date of the suit till payment and for the costs of the suit. The suit was decreed with costs by Mr. Justice Rege in the terms prayed for by the first respondents save that he granted them interest on the said sum of Rs. 1,64,415.34 P. at the rate of 6 per cent per annum from the date of the judgment till payment. The Union of India has not filed any appeal against the said judgment and decree, but the other defendants to the said suit have filed the present Appeal and have made the original plaintiffs and the Union of India as the Respondents thereto. ****** 7. At the hearing of this Appeal Mr. Desai, learned Counsel for the Appellants, has argued four points. They are : (1) The plaintiffs' Suit was not maintainable by reason of the provisions of Section 20(1) of the Act. (2) The plaintiffs' Suit was not maintainable by reason of the provisions of Rule 127 of the Medicinal and Toilet Preparations (Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) any act in good faith done or ordered to be done under the Act. Thus, if a suit relates to an order which has not been passed in good faith, or to any act which has not been done or ordered to be done in good faith, or if it relates to an order or an act not done or ordered to be done under the Act, sub-section (1) will have no application to it. The argument that Section 20 read as a whole impliedly excludes the jurisdiction of Courts with respect to suits other than those in sub-section (1) wholly overlooks the fact that sub-Section (2) of Section 20 prescribes a period of limitation. No period of limitation could be prescribed in respect of a suit or a legal proceeding which cannot be instituted. It is only in respect of suits and legal proceedings which can be instituted in Civil Courts that a period of limitation can be prescribed. The argument based on Section 20 with respect to the implied exclusion of jurisdiction of Courts in respect of all suits and proceedings would, if it were correct, render sub-section (2) of that section meaningless and nugatory. **** 12. It is in the context of Explanation I both as inserted by the Amending Act 19 of 1961 with effect from Jun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new labels and containers were printed and had intimated this fact to the Collector of Bombay in the Prohibition and Excise Department, but apart from that fact, the taxing authority under the Act was not concerned with any violation of the Drugs Rules. A violation under the Drugs Rules was matter which concerned authorities under the Drugs Act. For a breach of Rule 96 penalty has been provided in Rule 85 of the Drugs Rules, 1945. That penalty is the cancellation or suspension of the manufacturing licence granted to the offending manufacturer. This penalty is to be imposed by the licensing authority under the Drugs Rules. There is no provision either in the Drugs Act or the Drugs Rules or the Act or the Rules that a manufacturer of a medicinal preparation, if he commits a breach of the Drugs Rules, the medicinal preparation manufactured by him would be exigible to duty under the Act irrespective of the fact whether by the Act it is exigible to duty or not. What the Collector and the Director of Excise and Prohibition both have done in relying upon this so-called breach of Rule 96 of the drugs rules is to incorporate into the Act a new item of taxation and have arrogated to themsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sconstruction". The plaintiffs did not act inadvertently in paying the amount. In fact, they adverted full well to the fact that the demand of amount of duty from them was an illegal demand. They were not under any error as to the illegality of the orders levying excise duty upon them nor did they misconstrue any section of the Act in paying the said sum of Rs. 1,64,415.34 P. In fact, they correctly understood the law and raised the correct contention that Codopyrin manufactured by them with the revised formula during the period in question was not exigible to excise duty. They were nonetheless forced to pay this sum under threat of the coercive machinery of the Act. Their case, therefore, did not and could not fall under the said Rule 13. If so, under the fifth proposition laid down by the Supreme Court in Dhulabhai's case the plaintiffs were entitled to file this suit for duty illegally collected from them. 15. We will now turn to the Appellants' submission that the Suit i barred by reason of the provisions of Rule 127 of the Rules. The said Rule provides as follows :- "127. Appeals. - (i) All appeal against an order or an officer other than an Excise Commissioner made in exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vel beyond its scope. Section 20 of the Act has already provided in which particular matters the jurisdiction of the Court would be barred. It would not be open to the Central Government under its rule-making power to enlarge the scope and ambit of Section 20. Even sub-section (2) of Section 19, which prescribes certain specific matters with respect to which the Central Government may make rules, does not clothe the Central Government with power to oust the jurisdiction of Civil Courts. Courts always lean in favour of the validity of a statutory provision. We must, therefore, so construe Rule 127 as not to make it ultra vires the Act. If the construction canvassed for by Mr. Desai, learned Counsel for the Appellants, were placed upon Rule 127, that Rule would be beyond the scope of the rule-making power of the Central Government and would be ultra vires of the Act. A Court, however, would not lightly place a construction upon a statutory provision, whether enacted by the Legislature or contained in a piece of delegated legislation, which has the effect of rendering that provision unconstitutional or ultra vires where two constructions are possible according to one of which it would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roach the Collector was acting contrary to and beyond the relevant entry under winch he had to find out whether goods were of the description given in that entry. The Supreme Court further held that such an approach would be in non-compliance of the entry which was applicable. So far as the position with respect to the exclusion of jurisdiction of civil courts is concerned, the Supreme Court observed [at p. 1566(1)]: "The principles thus is that exclusion of the jurisdiction of the Civil Courts is not to be readily inferred. Such exclusion, however, is inferred where the statute gives finality to the order of the Tribunal on which it confers jurisdiction and provides for adequate remedy to do what the Courts would normally do in such a proceeding before it. Even where a statute gives finality, such a provision does not exclude cases where the provisions of the particular statute have not been complied with or the Tribunal has not acted in conformity with the fundamental principles of judicial procedure. The word 'jurisdiction' has both a narrow and a wider meaning. In the sense of the former, it means the authority to embark upon an enquiry; in the sense of the latter it is used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er legal proceedings, (2) while sub-section (1) applies to suits or other legal proceedings in respect of any order passed in good faith or any act in good faith done or ordered to be done under the Act, sub-section (2) applies to suits, prosecutions or other legal proceedings in respect of anything done or ordered to be done under the Act; (3) the qualification with respect to good faith in sub-section (1) is not to be found in sub-section (2). The one common factor to be found in sub-sections (1) and (2) is the qualification that order or the Act, as the case may be, must be one which is passed or done or ordered to be done under the Act. The omission of any reference to prosecutions in sub-section (1) and the omission of any reference to any order in sub-section (2) as also the omission of the qualification with respect to good faith in sub-section (2) are significant. It is these different phraseologies used in these two sub-sections that give us the clue to what sub-section (1) is intended to apply to. The word 'prosecution' is not mentioned in sub-section (1) because a prosecution in respect of any act done or ordered to be done can only be with reference to special offences ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt in the Union of India v. Mansingka Industries Private Limited, (1975) 77 Bom. L.R. 663, already referred to earlier. As pointed out by us, the section which the Division Bench had to construe is identical with the section which falls to be construed by us, and this authority is, therefore, binding upon us. If an act, which is not an act under the Act, is done or ordered to be done by merely ostensibly purporting to do it under the Act, neither sub-section (1) nor sub-section (2) will apply. Similarly, if an order is passed otherwise than in good faith, sub-section (2) will not in terms apply. Thirdly, if an order is passed, which is not in law an order under the Act though it may ostensibly state that it is an order under the Act, sub-section (1) also will not apply. Thus, there arises a third category of suits and legal proceedings which are not covered either by sub-sections (1) and (2), and in respect of these suits the Civil Courts will continue to have jurisdiction, and as sub-section (2) will not apply, the period of limitation for filing such suits will be the ordinary period of limitation prescribed by the Limitation Act, 1963. We have already seen in the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we have already dealt with this aspect of the case while dealing with the question of maintainability of the suit, and we have already held that it was not a patent or preparatory medicine which attracted the application of Item No. 4 in the Schedule to the Act. We may mention that on this aspect of the case no arguments whatsoever were advanced to us to show why the wordings on the lable were the criterion to be applied, and as the judgment under appeal shows, almost some was the position at the time of the trial of the suit. Thus, we negative all the points raised by the Appellants. The result is that this Appeal must fail. 22. Before parting with this Appeal we would like to express our distress at this wasteful and futile litigation. There was almost nothing to be said by the Appellants and the Union of India so far as the merits of the case were concerned. As we have mentioned earlier, no arguments have been attempted to be advanced to justify the orders of the authorities. The arguments in this Court as also in the trial Court mostly central around the technical defence of maintainability of the Suit. We may well ask, "To what purpose, assuming for the sale of argument t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) S.C.C. 658. In that case the respondent who had imported certain goods applied for refund of the duty paid by him. His application was dismissed as also his appeals to the authorities. The respondent then filed a suit against the Union of India. The defence raised was that the suit was not maintainable. This defence was negatived by the High Court, but in appeal by the Union of India this defence was upheld and the appeal allowed and the suit dismissed. While allowing appeal the Supreme Court observed as follows (at p. 662): "The jurisdiction of the Civil Court to entertain a suit challenging the validity of the imposition of the duty of customs being excluded, the plaintiff's suit must fail. But it must be observed that the present is a fair illustration of the administration not making a serious attempt to avoid futile litigation for small claims. There was a judgment of the High Court of Madras on the identical question which fell to be determined. If the plaintiffs had moved the High Court in exercise of its jurisdiction under Article 226, the Union had practically no defence. The Union could without loss of face accede to the request of the plaintiff to refund the amount c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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