K. VIJAY KUMAR1
"Even landmark judgements sometimes generate avoidable debate. The celebrated judgement in L. Chandra Kumar v. Union of India, which rendered the decisions of Tribunals set up under Article 323A and 323B of the Constitution amenable to judicial scrutiny of a Division Bench of High Court under Article 226/227 of the Constitution, is no exception.",
Hon'ble Justice BA Khan, in
Neo Sacks Ltd. v. CEGAT, New Delhi. – 1999(114) ELT 826(MP)
- In L. Chandra Kumar vs Union of India, the Hon'ble Supreme Court of India, held " It has also been contended before us that even in dealing with cases which are properly before the Tribunals, the manner in which justice is dispensed by them leaves much to be desired. Moreover, the remedy provided in the parent statutes, by way of an appeal by special leave under Article 136 of the Constitution, is too costly and inaccessible for it to be real and effective. Further more, the result of providing such a remedy is that the docket of the Supreme Court is crowded with decisions of Tribunals that are challenged on relatively trivial grounds and it is forced to perform the role of a First Appellate Court. ………………… We hold that all decisions of Tribunals whether created pursuant to Article 323A or Article 323 B of the Constitution, will be subject to the Hugh Court's writ jurisdiction under Article 226/ Article 227 of the Constitution, before a Division Bench of the High Court within whose territorial jurisdiction the particular Tribunal falls".
- The Hon'ble Court further added
"We may add here that under the existing system, direct appeals have been provided from the decisions of all Tribunals to the Supreme Court under Article 136 of the Constitution. In view of our above-mentioned observations, this situation will also stand modified. In the view that we have taken, no appeal from the decisions of a Tribunal will directly lie before the Supreme Court under Article 136 of the Constitution; but instead, the aggrieved party will be entitled to move the High Court under Article 226/ 227 of the Constitution and from the decision of the Division Bench of the High Court, the aggrieved party could move this court under Article 136 of the Constitution."
- It was believed that this landmark judgement would nullify the provisions of Section 35 L of the Central Excise Act 1944, which provides for appeal to the Supreme Court. Unfortunately, litigation in Central Excise never ends, not even after the Supreme Court of India gives an emphatic judgement. Not only did Section 35L remain in the statute, even though in effect it was struck down by the Hon'ble Supreme Court, but also several fresh litigation poured in. There were several articles in ELT as to whether Chandra Kumar was applicable to CEGAT or not.
- The Hon'ble High Court of Delhi, in Shalimar Rubber Industries v UOI, -1998 (103) ELT 217- held " The order of the Tribunal dated 9th April 1996 is appealable before the Supreme Court as provided in Section 35 L of the Act. In view of these alternate remedies we do not think it is a fit case where we should exercise our jurisdiction under Article 226 of the Constitution …………..
- The Hon'ble High Court of Bombay in Color-Chem Ltd v UOI - 1998 (98) ELT 303 - held: The admitted position in this case is that an appeal is provided against the impugned order of the Tribunal to the supreme Court under section 35L of the Act………….. We are of the clear opinion that in such a situation, the High Court should not entertain the writ petition challenging the order against which appeal is provided only to the supreme Court because it would amount to usurping the powers of the Supreme Court in the guise of exercise of writ jurisdiction".
- The Hon'ble High Court of Karnataka in Premier Irrigation Equipments Ltd Vs UOI, 1998(100) ELT.29(Kar) ,relied on the Shalimar Rubber Industries case and held that
- The High Courts always possessed the power of judicial review under Article 226/227 of the Constitution, even with out the Chandra Kumar judgement.
- Writ jurisdiction can be exercised only to ensure fairness and not sit in appeal over an order of the Tribunal.
- Parliament in its wisdom has provided for appeal to the highest court under Section 35 L of the Act. The validity of this Section has neither been assailed nor assailable on any valid ground.
- Since the petitioner has a remedy by way of appeal to the Supreme Court, the writ petition is dismissed.
- In fact one of the grounds referred to in the appeal was that an appeal to the Supreme Court would be very expensive and the cost would be equal to the relief. Hence the remedy by way of appeal to the Supreme Court is highly inefficacious which virtually amounts to the negation of right of appeal. The Hon'ble Supreme Court had made a note of the high cost of litigation in the Supreme Court. (See extracts from Chandra Kumar judgement in para 1 above.)
- While three High courts took the view that Chandra Kumar did not take away the provision of appeal direct to the Supreme Court, the Hon'ble High Court of Madhya Pradesh at Indore took an altogether different view. The Hon'ble High Court considered the two important questions
- Whether the Supreme Court judgement covered the CEGAT also.
- Whether a writ petition to the High Court is liable to be rejected because of the availability of alternate statutory remedy under Section 35 L of the Excise Act.
- Whether the Supreme Court judgement covered the CEGAT also.
- The Court observed that curiously both sides derived their sustenance from the Chandra Kumar judgement. The Hon'ble High Court went into the genesis of the Chandra Kumar case and quoting the extracts of the apex court's judgement as given in para 2 above , said
This should have cleared the cobwebs but the irony is that varying interpretations are placed on the dictum of the Apex Court. …. It can not thus be logically suggested that its dictum was limited to the CAT and the four Tribunals created post Article 323B.
- Regarding the availability of alternate remedy as provided for under Section 35 L of the Central Excise Act, the Hon'ble High court ruled, " It is true that an appeal is provided against the order of the CEGAT under Section 35 L of the Central Excise act to the Supreme Court but the Apex Court itself made it redundant by providing that no appeal would directly lie to it against any decision of the Tribunal save otherwise under Article 136 by special leave from the decision or judgement of the Division Bench of the High Court."
- Thus three High Courts, namely Delhi, Bombay and Karnataka held that in spite of Chandra Kumar, an appeal did lie to the Supreme Court against an order of the CEGAT, while the Madhya Pradesh High Court held that by Chandra Kumar, the Supreme Court made Section 35 L redundant and in spite of Section 35 L of the Central Excise Act remaining in Statute, a direct appeal can not be made against the CEGAT's order to the Supreme Court.
- And we are back to square one!
- Just like the High Courts, contributors of articles to ELT have also been sharply divided on this issue.
- In an article in the 15 October 1997 issue of ELT, Mr. AJ Raval, advocate in Gujarat High Court, said," Net result is that now on appeal against the orders of the Tribunals would lie in the Apex Court". He even gave a list of High Courts, which have to approached for appeals against various CEGAT benches.
- In the 1 December 1997 issue of ELT, Mr. MVS Appa Rao, Advocate felt that Chandra Kumar applies only to Tribunals created under Articles 323 A and 323 B and CEGAT created under the Customs Act is not covered under the judgement.
- In the 15 November 1997 issue of ELT, Mr. VT Raghavachari, a former member of the CEGAT stated " The legal position now therefore is that in spite of Section 35 L of the Central Excise Act, no appeal shall lie direct to the Supreme Court from a decision of the CEGAT". Mr. Raghavachari also suggested a few consequential amendments to the statute.
- This writer in 1998(99) ELT A3, even referring to the two High Court orders in Shalimar and Color-chem. opined that no direct appeal lies to the Supreme Court.
- In 1998 (100) ELT, Mr. Abhijit Saha felt that CEGAT was not created under Article 323B and hence Chandra Kumar was not applicable to CEGAT.
- In view of such divergent opinion, especially because of the conflicting decisions of Madhya Pradesh high Court and the other High Courts, there is now absolute confusion. Maybe the situation is, in Madhya Pradesh, an order of the CEGAT has to be appealed to in the High Court, while in Delhi, Maharashtra and Karnataka, the appeal lies to the Supreme Court. If a manufacturer has two factories, one in Madhya Pradesh and another in Maharashtra and in respect of each of these factories, he has got two identical orders from the respective CEGAT benches. Now against his Madhya Pradesh factory, he has to appeal to the high Court and against his Maharashtra factory, he has to appeal to the Supreme Court. Suppose the Supreme Court dismisses his appeal, but the High Court allows it, what happens? Even the department is not sure where to appeal. The same situation prevails for the department too. Against an assessee in Maharashtra, the department has to go in appeal to the Supreme Court and against an assessee in Madhya Pradesh, to the High Court.
- The only solution appears to be to take the matter back to the Hon'ble Apex Court, to decide what it really meant in Chandra Kumar. If this is done as early as possible, a lot of avoidable confusion and endless and meaningless litigation can be ended.
EXCISE LAW TIMES – 15.02. 2000- A - 16