Union of India Vs. A.V. Narasimhalu
 INSC 215 (1 September 1969)
Civil Courts-Exclusion of jurisdiction-Sea
Customs Act, 1878, ss. 188, 191.
Section 188 of the Sea Customs Act, 1878,
provides for an appeal against any order of an officer of customs and the order
passed in the appeal is made final subject to the.
revision under s. 191 of the Act. The
respondent claimed refund of customs duty paid by him under protest. The claim
was rejected. An appeal to the Collector of Customs and a revision to the
Central Board of Revenue= were unsuccessful.
The respondent instituted an action in the
Civil Court for refund of the amount. The trial court decreed the suit but the
first appellate court held that the civil court had no.
jurisdiction to entertain the suit. The High
Court, in further appeal, restored the decree of the trial court.
Allowing the appeal, this Court,
HELD: The civil court had no jurisdiction to
entertain the suit. [146 G--H] Where a statute creates a new right or liability
and it provides a complete machinery for obtaining redress against erroneous
exercise of authority, jurisdiction of the Civil Court. to grant relief is
barred. Where however a statute reenacts a right or liability existing at
common law, and the statute provides a special form of remedy, exclusion of the
jurisdiction of the Civil Court to grant relief in the absence of an express
provision will not be readily inferred. [149' D--F] Liability to pay duty of
customs is not a common law liability; it arises by virtue of the Sea Customs
Act. In respect of any grievance arising in consequence of enforcement of that
liability, machinery has been provided by the Act. Having regard to the
complicated nature of the questions which arise in the determination of
pay duty of customs, the legislature has
invested the power of determining liability and the manner of enforcement
thereof upon a specially authorised hierarchy of tribunals.
[149' F--G] (ii) A civil suit will lie for
obtaining appropriate relief in cases where the customs authority has not
complied with the provisions of the statute, or the officer of customs has not
acted in conformity with the fundamental principles of judicial procedure or
the authority has acted in violation of the fundamental principles of judicial
procedure or has made an order which is not within his competence or the statute
which imposes liability is unconstitutional or the order is alleged to. be mala
[149 F-G] (iii) The exclusion of the
jurisdiction of the Civil Court to entertain a suit does not exclude the
jurisdiction of the High Court to issue high prerogative writs against illegal
exercise of authority by administrative or quasi judicial tribunals. 
Dhulabhai etc. v. State of Madras Pradesh & Anr. A.I.R.
1969' S.C. 78, followed.
Secretary of State for India v. Mask &
Co. L.R. 67 I.A. 222, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1361 of 1966.
Appeal by special leave from the judgment and
order dated April 5, 1963 of the Madras High Court in Second Appeal No. 1287 of
Niren De, Attorney-General, V. A. Seyid
Sachthey and S.P. Nayar, for the appellant.
Lily Thomas, for the respondent.
The Judgment of the Court was delivered by
Shah, J.A.V. Narasimhalu--hereinafter called "the plaintiff" imported
43 reels of newsprint 131/4" width under a bill of Entry dated July 15,
1954. The width of the newsprint being less than 15" no import duty was
payable under the Open General Licence The Assistant Collector of Customs held
that the commodity imported fell within item 44 of the Customs Tariff and
levied a duty of 33 3/8% ad valorem. The plaintiff paid the duty under protest,
and applied for refund of the duty relying upon a decision of the High Court
o.f Madras in writ petition No. 402 of 1954 in which it was decided that
newsprint of width less than 15" was exempt from duty. This application
An appeal to the Collector of Customs and a
revision application to the Central Board of Revenue were unsuccessful. The
customs authorities rejected the claim on the ground that the claim not having
been made within three months of the date of demand was barred under s. 40 of
the Sea Customs Act, 1878.
The plaintiff then instituted an action in
the City Civil Court for a decree for Rs. 2,669-62 against the Union of India.
The Trial Court decreed the claim holding that the claim was not barred. In
appeal the Principal Judge, City Civil Court held that the City Civil Court had
no jurisdiction to entertain the suit. In so holding he relied upon the judgment
of the Judicial Committee in Secretary of State for India v. Mask & Co.
(1). In Second Appeal, the High Court of Madras reversed the judgment of the
Principal Judge, City Civil Court, and restored the decree passed by the trial
court. The Union of India has appealed to this Court with special leave.
It is unnecessary to consider whether the
claim is barred under s. 40 of the Sea Customs Act, for, in our judgment, the
Civil Court had no, jurisdiction to.
entertain the suit. Section 188 of the Sea
Customs Act, 1878, insofar as it is relevant, provides:
"Any person deeming himself aggrieved by
any decision or order passed by an officer of Customs under (1) L.R. 67 I.A.
147 this Act may, within three months from
the date of such decision or order, appeal there from to the Chief Customs
Authority, or in such cases as the Central Government directs, to any officer
of Customs not inferior in rank to a Customs Collector and empowered in that
behalf by name or in virtue of his office by the Central Government.
Every order passed in appeal under this
section shall, subject to the power of revision conferred by section 191, be
Section 191 provides:
"The Central Government may, on the
application of any person aggrieved by any decision or order passed under this
Act by any officer of Customs or Chief Customs Authority, and from which no
appeal lies, reverse or modify such decision or order".
The Act is a complete code dealing with
liability to pay customs duty and for obtaining relief against excessive or
erroneous levy and other related matters. The jurisdiction of the Civil Court
to entertain a suit on the ground that the duty was improperly or illegally
levied is excluded. It is true that the decision or order passed under s. 188
of the Sea Customs Act in appeal to the appellate authority is expressly
declared final. But on that account it cannot be held that by refusing to
appeal against the decision or by refusing to claim relief in the manner
provided by s. 188 and s. 191 of the Sea Customs Act, a party aggrieved by the
order of a Customs Officer may invest the Civil Court with jurisdiction to
entertain a suit.
In Mask & Company's case(1) a firm of merchants
imported a quantity of betelnuts into. British India. The Assistant Collector
of Customs assessed them for the purposes of duty on a tariff as
"boiled", rejecting the contention of the importers, that they Were
"raw sliced betel-nuts" subject to duty ad valorem. The importers,
appealed from the decision of the Assistant Collector to the: Collector of
The appeal was dismissed, and in revision to
the Government of India the Collector's decision was affirmed. A suit was then
filed by the importers to recover the excess amount collected from them, by
levying duty upon a tariff and not ad valorem. Before the Judicial Committee it
was contended that the decision or order passed by the officer of Customs could
only be challenged by an appeal under s. 188 of the Sea Customs Act and
jurisdiction of the Civil Court was excluded.
(1) L.R. 67 I.A. 222.
148 Alternatively it was contended that the
right of appeal conferred by s. 188 constituted a procedure which was
alternative to procedure in the civil courts, and since the importers in that
option had chosen to proceed under s. 188, they were bound by that election,
and were thus excluded from resort to the civil courts. The Judicial Committee
observed that adjudication as to confiscations, increased rates of duty or
penalties made under the power conferred by s. 182 were decisions or orders
within the meaning of s. 188, and that the decision of the Collector under s.
188 was final and excluded the jurisdiction of the Civil Court.
The Judicial Committee did not express any
opinion on the question whether prior to taking an appeal under s. 188 the
porters would have been entitled to resort to the civil courts. But in our
judgment it would not be open in all situations where a party who had right to
appeal to refuse to resort to the procedure prescribed by the statute and to
file a suit. The express declaration in s. 188 of the Sea Customs Act that the
order of the Collector in appeal shall be final does not imply that a suit will
lie against the decision or order of the original authority.
In a recent judgment of this Court Dhulabhai
etc. v. State Madhya Pradesh and Anr.(1) this Court set out certain principles
relating to the exclusion of the jurisdiction of the Civil Court. The
propositions (1), (2), (5), (6) & (7) are relevant.
It may be observed that it was not the case
that the Assistant Collector of Customs had not acted in conformity with the
fundamental principles of judicial procedure, nor was it the case that the
provisions of the Act were ultra vires or unconstitutional. The Act in terms, creates
a special liability and provides for determination of the right of the State to
recover duty and the liability of the importer to pay duty and by the clearest
implication it is provided that it shall be determined by the Tribunal so
The High Court in the judgment under appeal
" ...... the: question in these.
appeals is different, namely, whether the
Collector could be said to be acting within his jurisdiction, if he, in direct
disregard of the provisions of the Act and the Rules made thereunder, levied a
duty upon the goods which were not liable to duty and compelled by duress as it
were the importer to pay the same before taking delivery of the goods. The
result of his action was that the respective appellants had to part with
certain sums of money which were collected from them under the colour of
statutory power. In such a case, a suit will undoubtedly (1) A.I.R. 1969 S.C.
149 be maintainable in a civil court by
showing that the Customs authorities had excessively charged duty; it will
really be a common law right to property being interfered with. It may be that
the remedy provided under s. 188 of the Sea Customs Act would be available to
the aggrieved importer to challenge the levy on the ground that it was either
improperly made or that the duty was collected under a mistake or under duress.
But in all such cases, there will also exist a remedy under the common law in a
civil Court, for the simple reason that these categories of cases will amount
to a levy beyond the jurisdiction of the authority, or one made under duress,
or paid by mistake." But an erroneous decision of the Customs Authority
cannot be said to be reached without jurisdiction merely because it may be
shown in some collateral proceeding to be wrong.
Normally an action of an administrative
authority interfering with the right to property may be challanged by resort to
a civil court, Yet in the case of a right which depends upon a statute, the
jurisdiction of the civil court to grant relief may by express provision or by
clear implication of the statute be excluded. Where a statute re- enacts a
right or a liability existing at common law, and the statute provides a special
form of remedy, exclusion of the jurisdiction of the civil court to grant
relief in the absence of an express provision, will not be readily inferred.
Where, however a statute creates a new right or liability and it provides a
complete machinery for obtaining redress against erroneous exercise of
authority, jurisdiction of the civil court to grant relief is barred, Liability
to pay a duty of custom is not a common law liability: it arises by virtue of
the Sea Customs Act: in respect of any grievance arising in consequence of
enforcement of that liability machinery has been provided by the Act. Having
regard to the complicated nature of the questions which arise in the
determination of liability to pay duty of customs the Legislature has invested
the power of determining liability and the manner of enforcement thereof upon a
specially authorised hierarchy of tribunals.
An appeal lies against the order of the
Assistant Collector of Customs against an order imposing duty as well as an
order refusing to refund duty, and the grievance may be carried to the Central
Board of Revenue. In our judgment, the jurisdiction of the civil court is by
clear implication of the statute excluded.
We, however, deem it necessary to observe
that the civil courts have jurisdiction to examine cases in which the Customs
Authority has not complied with the provisions of the statute or the officer of
customs has not acted in conformity with the fundamental principles of judicial
procedure or the Authority has acted 150 in violation of the fundamental
principles of judicial procedure or he has made an order which is not within
his competence or the statute which imposes liability is unconstitutional, or
where the order is alleged to be mala fide. A civil suit will lie for obtaining
appropriate relief in these cases.
But the exclusion of the jurisdiction of the
civil court to entertain a suit does not exclude the jurisdiction of the High
Court to issue high prerogative writs against illegal exercise of authority by
administrative or quasi-judicial tribunals. The finality which may be declared
by the statute qua certain liability either by express exclusion of the
jurisdiction of the civil court or by clever implication does not affect the
jurisdiction of the High Court to issue high prerogative writs.
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 plaintiff 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 collected. The learned Attorney-General stated that the Union desired to
obtain a decision of this Court on the extent of the jurisdiction of the Civil
Court to entertain a suit challenging the decision of the Customs Authorities,
because in the view of the Law Advisers the High Court had fallen into error in
enunciating the principles. But the High Court recorded the judgment under
appeal after the claim was resisted by the Union. We are glad to record the
assurance given by the Attorney General that whatever may be the decision in
the appeal, the Union of India will refund the amount of tax unauthorised
recovered by the Assistant Collector of Customs. This was essentially a case in
which when notice was served the Central Government should instead of relying
upon technicalities have refunded the amount collected. We trust that the
Administrative authorities will act in a manner consistent not with
technicalities, but with a broader concept of justice if a feeling is to be
nurtured in the minds of the citizens that the Government is by and for the
The appeal is allowed. The suit is ordered to
be dismissed. The order of costs passed by the High Court is however
maintained. There will be no order as to costs in this appeal.
Y.P. Appeal allowed.