Union of India & Anr Vs. M/S. Jesus
Sales Corporation [1996] INSC 463 (26 March 1996)
Singh
N.P. (J) Singh N.P. (J) Venkataswami K. (J) N.P. Singh J.
CITATION:
1996 AIR 1509 1996 SCC (4) 69 JT 1996 (3) 597 1996 SCALE (3)103
ACT:
HEAD NOTE:
This
appeal has been filed on behalf of the Union of India against the judgment of a
Full Bench of Delhi High Court holding that an oral hearing had to be given to
the respondent by the Appellate authority before taking a decision under third
proviso to sub-section (1) of Section 4-M of the Imports and Exports (Control)
Act, 1947 (hereinafter referred to as the 'Act'). On the aforesaid finding the
writ petition filed on behalf of the respondent was allowed and the order
passed by the Appellate authority was quashed. A direction was given to afford
an opportunity to the said respondent to be heard on the question as to whether
the appeal filed on behalf of the respondent should be entertained without
deposit of the penalty imposed.
The
respondent obtained an advanced licence for import of brass scrap on certain
conditions, under the Duty Exemption Scheme. The said licence was issued
subject to the respondent's exporting 78 MT Brass Artware for approximate FOB
value of Rs.14,00,420/-. A show cause notice was issued to the respondent under
Section 4-M of the said Act on basis of the report of investigation. Ultimately
a penalty of Rs.6 lakhs was imposed against the said respondent. An appeal was
filed on behalf of the respondent along with an application for dispensing with
the pre- deposit. By a communication dated 18.2.1993 issued on behalf of the
Appellate authority, the respondent was directed to deposit 25% of the penalty
amount or bank guarantee for the same amount. The validity of this
communication was questioned before the High Court saying that before rejecting
the prayer made on behalf of the respondent to dispense with the whole amount
of penalty an opportunity should have been given to the said respondent of
being heard in terms of the proviso to Section 4-M of the Act. Section 4-M of
the Act provides:
"(1)
Any person aggrieved by any decision or order made under this Act may prefer an
appeal,- (a) where the decision or order has been made by the Chief Controller
or Additional Chief Controller, to the Central Government;
(b)
where the decision or order has been made by any officer below the rank of the
Additional Chief Controller, to the Chief Controller or where he so directs, to
the Additional Chief Controller, within a period of forty-five days from the
date on which the order is served on such person:
Provided
that the Appellate authority may, if it is satisfied that the appellant was
prevented by sufficient cause from preferring the appeal within the aforesaid
period of forty-five days, allow such appeal to be preferred within a further
period of forty-five days:
Provided
further that in the case of an appeal against an order imposing a penalty, no
such appeal shall be entertained unless the amount of the penalty has been
deposited by the appellant:
Provided
also that, where the Appellate authority is of opinion that the deposit to be
made will cause undue hardship to the appellant, it may, at its discretion,
dispense with such deposit either unconditionally or subject to such conditions
as it may impose.
(2)
The Appellate authority may, after giving to the appellant a reasonable
opportunity of being heard, if he so desires, and after making such further
inquiries, if any, as it may consider necessary, pass such orders as it thinks
fit, confirming, modifying or reversing the decision or order appealed against,
or may send back the case, with such directions as it may think fit, for a
fresh adjudication or decision, as the case may be, after taking additional
evidence, if necessary:
Provided
that an order enhancing or imposing a penalty or confiscating goods or
materials of a greater value shall not be made under this section unless the
appellant has had an opportunity of making a representation, and, if he so
desires, of being heard in his defence." In view of the aforesaid Section
any person aggrieved by any decision or order made under the said Act may
prefer an appeal before the authority prescribed therein and within the time
fixed. The first proviso to sub-section (1) of Section 4-M vests power in the
Appellate authority if it is satisfied that appellant was prevented by
sufficient cause from preferring the appeal within the period prescribed to
allow such appeal to be preferred within a further period of forty-five days.
The second proviso prescribes a condition that an appeal against an order
imposing a penalty shall not be entertained unless the amount of the-penalty
has been deposited by the appellant. Having said so, the third proviso says
that where the Appellate authority is of the opinion that the deposit to be
made will cause undue hardship to the appellant, it may at its discretion
dispense with such deposit either unconditionally or subject to such conditions
as it may impose. Neither the first proviso which vests power in the Appellate
authority for condonation of delay in filing the appeal nor the third proviso
which vests power in the Appellate authority to dispense with the deposit of
the amount of the penalty unconditionally or on some conditions say
specifically that such orders have to be passed only after hearing the parties
concerned. The Appellate authority in its discretion may condone the delay in
filing the appeal. Same is the position so far the question of pre-deposit of
the amount of penalty is concerned. The Appellate authority may dispense with
such deposit in its discretion. The proviso relating to the condonation for
delay in filing the appeal is more or less on the-pattern of Section 5 of the
Limitation Act. Some how, a practice has grown throughout the country that
before rejecting the prayer for condonation of delay in filing the appeal or
application, opportunities are given to the appellants or petitioners, as the
case may be, to be heard on the question whether such delay be condoned.
Opportunities
to be heard are also the contesting respondents in such appeals. In different
statutes where power has been vested in the Appellate authority to condone the
delay in filing such appeals or applications, there are no specific provisions
in those statutes saying that before such delays are condoned the appellants or
the applicants shall be heard, but on basis of practice which has grown during
the years the courts and quasi-judicial authorities have been hearing the
appellants and applicants before dismissing such appeals or applications as barred
by limitations. It can be said that courts have read the requirements of
hearing the appellants or the applicants before dismissing their appeals or
applications filed beyond time on principle of natural justice, although the
concerned statute does not prescribe such requirement specifically.
Now
the question is as to whether the same requirement has to be read as an
implicit condition while construing the scope of third proviso to sub-section
(1) to Section 4-M, i.e. the Appellate authority before refusing to entertain
an appeal on the ground that no deposit of the amount of penalty imposed had
been made, should hear the appellant on the question of dispensing with such
deposit unconditionally or subject to conditions. It may be mentioned at the
outset that the provisions requiring predispose of the amount of penalty or tax
imposed before the appeals are heard are of two types. There are some statutory
provisions which specifically prescribe and provide that before the appeals are
heard, the amount of tax or penalty imposed have to be deposited. No discretion
has been left by the statute in question in the Appellate authority to waive
such deposit taking into consideration the hardships of the appellants
concerned. One such provision was considered by this Court in the case of Shyam
Kishore and Others v. Municipal Corporation of Delhi and Another, (1993) l SCC 22 under Delhi Municipal
Corporation Act, 1957. In that Act, pre- deposit is a must before an appeal can
be heard. This Court held that the Appellate authority has no jurisdiction to
waive the condition or stay collection of tax pending disposal of the appeal.
The grievance that the said provision in that event shall be deemed to be violative
of Article 14 of the Constitution being harsh in nature was rejected. But there
are statutes which vest power in the Appellate authorities to waive deposit
unconditionally or with conditions. So far the present case with which we are
concerned, as already pointed out above, the third proviso vests power in the
Appellate authority to dispense with the amount of the penalty unconditionally
or subject to conditions. As such it is different from the provision under the
Delhi Municipal Corporation Act referred to above. Here the discretion has been
vested specifically in the Appellate authority to dispense with such deposit
either unconditionally or subject to such conditions as it may impose taking
into consideration the undue hardship which such deposit may cause to the
appellant.
The
learned counsel appearing on behalf of the Union of India took a stand that
when aforesaid proviso requires the Appellate authority to exercise discretion
taking into consideration the facts and circumstances at each case, it does not
flow from the said provision that before exercising such discretion, the
Appellate authority should hear the appellant; this discretion can be exercised
by the Appellate authority as the said authority may deem think proper. Now it
is too late to urge that when a statute vests discretion in an authority to
exercise a statutory power such authority can exercise the same in an
unfettered manner. Whenever an unfettered discretion has been exercised, courts
have refused to countenance the same. That is why from time to time courts have
'woven a network of restrictive principles' which the statutory authorities
have to follow while exercising the discretion vested in them. This principle
has been extended even when the authorities have to exercise administrative
discretions under certain situations. Another well settled principle which has
emerged during the years that where a statute vests discretion in the authority
to exercise a particular power, there is an implicit requirement that it shall
be exercised in a reasonable and rational manner free from whims, vagaries and
arbitrariness.
The
High Court has primarily considered the question as to whether denying an
opportunity to the appellant to be heard before his prayer to dispense with the
deposit of the penalty is rejected, violates and contravenes the principles of
natural justice. In that connection, several judgments of this Court have been
referred. It need not be pointed out that under different situations and
conditions the requirement of the compliance of the principle of natural
justice vary. The courts cannot insist that under all circumstances and under
different statutory provisions personal hearings have to be afforded to the
persons concerned. If this principle of affording personal hearing is extended
whenever statutory authorities are vested with the power to exercise discretion
in connection with statutory appeals, it shall lead to chaotic conditions. Many
statutory appeals and applications are disposed of by the competent authorities
who have been vested with powers to dispose of the same. Such authorities which
shall be deemed to be quasi-judicial authorities are expected to apply their
judicial mind over the grievances made by the appellants or applicants
concerned, but it cannot be held that before dismissing such appeals or
applications in all events the quasi-judicial authorities must hear the
appellants or the applicants, as the case may be. When principles of natural
justice require an opportunity to be heard before an adverse order is passed on
any appeal or application, it does not in all circumstances mean a personal
hearing. The requirement is complied with by affording an opportunity to the
person concerned to present his case before such quasi-judicial authority who
is expected to apply his judicial mind to the issues involved. Of course, if in
his own discretion if he requires the appellant or the applicant to be heard
because of special facts and circumstances of the case, then certainly it is
always open to such authority to decide the appeal or the application only
after affording a personal hearing. But any order passed after taking into
consideration the points raised in the appeal or the application shall not be
held to be invalid merely on the ground that no personal hearing had been
afforded. This is all the more important in the context of taxation and revenue
matters. When an authority has determined a tax liability or has imposed a
penalty, then the requirement that before the appeal is heard such tax or
penalty should be deposited cannot be held to be unreasonable as already pointed
out above. In the case of Shyam Kishore v. Municipal Corporation of Delhi (supra) it has been held by this
Court that such requirement cannot be held to be harsh or violative of Article
14 of the Constitution so as to declare the requirement of pre-deposit itself
as unconstitutional.
In
this background, it can be said that normal rule is that before filing the
appeal or before the appeal is heard, the person concerned should deposit the
amount which he has been directed to deposit as a tax or penalty. The non-deposit
of such amount itself is an exception which has been incorporated in different
Statutes including the one with which are concerned. Second proviso to
sub-section (1) of Section 4-M says in clear and unambiguous words that an
appeal against an order imposing a penalty shall not be entertained unless the
amount of the penalty has been deposited by the appellant. Thereafter the third
proviso vests a discretion in such Appellate authority to dispense with such
deposit unconditionally or subject to such conditions as it may impose in its
discretion taking into consideration the undue hardship which it is likely to
cause to the appellant. As such it can be said that the statutory requirement
is that before an appeal is entertained, the amount of penalty has to be
deposited by the appellant; an order dispensing with such deposit shall amount
to an exception to the said requirement of deposit. In this background, it is
difficult to hold that if the Appellate authority has rejected the prayer of
the appellant to dispense with the deposit unconditionally or has dispensed
with such deposit subject to some conditions without hearing the appellant, on
perusal of the petition filed on behalf of the appellant for the said purpose,
the order itself is vitiated and liable to be quashed being violative of
principles of natural justice.
it
shall not be out of place to mention that subsection (2) of Section 4-M
provides specifically that appellant shall be given reasonable opportunity of
being heard if he so desires before final order is passed on his appeal. That
requirement according to us cannot be read impliedly as an implicit condition
in the third proviso to sub-section (1) of Section 4-M. But it need not be
impressed that when the Appellate authority has been vested with the discretion
to dispense with such deposit unconditionally or on conditions, then it has to
apply its mind on that question like a quasi- judicial authority taking into
consideration all the facts and circumstances of the case including the undue
hardship which has been pointed out on behalf of the appellant. In that proviso
the two expressions 'opinion' and 'descretion' both have been used. In view of
the settled position that whenever a statutory authority has to form an opinion
on a question, it does not mean that it has to be formed in a subjective or
casual manner. That opinion must be formed objectively on relevant
considerations. Same is the position in respect of the exercise of discretion.
The framers of the Act require such Appellate authority to exercise its
discretion in a reasonable and rational manner taking into consideration the
relevant facts and circumstances of a particular appeal while considering the
question as to whether the deposit of the amount of the penalty be dispensed with
unconditionally or subject to the conditions.
In the
present case on the application filed by the respondent, a direction was given
to deposit only 25% of the amount of the penalty which had been imposed against
the said respondent. According to us, the Appellate authority passed a
reasonable order which should not have been held to be invalid by the High
Court merely on the ' ground that before passing the said order the respondent
was not given oral hearing, which amounted to violation of the principles of
natural justice.
The
appeal is accordingly allowed. The impugned order is set aside. In the facts
and circumstances of the case, there shall be no orders as to cost.
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