Hospital Trust & ANR Vs. Union of India & ANR.  INSC 1963 (17
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 6704 OF 2008 (Arising
out of S.L.P. (C) No.10532/2008) Sunitadevi Singhania Hospital ...Appellant
Trust and Anr.
Versus Union of India
& Anr. ...Respondents O R D E R Leave granted.
Appellants are before
us being aggrieved by and dis-satisfied with an order dated 18.1.2008 passed by
a Division Bench of the High Court of judicature at Bombay dismissing the writ
petition filed by the appellants herein on the ground that it was not a fit
case to exercise the Court's extraordinary jurisdiction.
The basic fact of the
matter is not in dispute.
Appellant No.1 which
is a Charitable Tust runs a hospital on no profit basis. It imported certain
equipments invoking the Notification 64/88-Cus.
dated 1.3.1988 issued
by the Government of India in terms whereof exemption from payment of custom
duty was granted in respect thereof subject to an obligation that it would
reserve 10% of the beds for patients from families having a income of less than
Rs.500/- per month and provision for free treatment of at least 40% of the
outdoor patients shall be made.
-1- An investigation
was carried out in the year 1999 as to whether the appellant No.1 had fulfilled
all such conditions or not. The matter went before the Customs Excise and
Service Tax Appellate Tribunal, West Regional Bench at Mumbai. The appeal of
the appellant before the Tribunal was heard along with the cases of M/s Miraj
Medical Centre W. Hospital and M/s Balabhai Nanavati Hospital.
By reason of a
judgment and order dated 19.1.2006, the Tribunal having held that the
appellants before it had continuous obligation to fulfill the aforementioned
conditions laid down under the said Notification dated 1.3.1988 and having not
complied therewith the redemption fine and penalty imposed upon it by the
Customs Authorities were justified.
appellant filed an application for rectification of mistake before the Tribunal
in regard to the quantum of redemption fine and penalty.
The said application
An appeal was
preferred against the order of the Tribunal before this Court.
It is stated before
us by Shri S.Ganesh, learned senior counsel appearing on behalf of the
appellants and we have no reason to disbelieve him that one of the contentions
raised before this Court was that the Tribunal had not taken into consideration
the fact involved in the matter and had the same been done it could have been
-2- established that the appellant had in fact fulfilled all its obligations in
terms of the said Notification. Several other points were also said to have
been urged before the Tribunal.
presumably, on the premise that Judges' record is final and if an apparent
error has been committed by the Tribunal in not taking into consideration the
contentions raised before it by the appellants, permitted it to withdraw the
appeal with liberty to file an appropriate application before the Tribunal,
counsel states that several other points had been argued before the Tribunal
which have not been taken note of by it. Learned counsel states that an
appropriate application shall be filed before the Tribunal and seeks permission
of the Court to withdraw the appeal. The appeal is dismissed as withdrawn
Pursuant thereto or
in furtherance thereof the appellant No.1 filed an application before the
Tribunal purported to be an application for rectification of mistake wherein,
inter alia, the following grounds were raised:
" 8. While
disposing of the appeals by a common order dated 19.1.2006, this Hon'ble
Tribunal has only recorded the facts as applicable to one of the appellants,
namely, the Miraj Medical Centre and has failed to appreciate the difference in
facts and circumstances in the applicants case, inter-alia, as regards the
(a) The applicants
had actually reserved 10% of the hospital beds for poor and indigent persons
and had advertised on several occasions the facility of free treatment to such
people without means;
(b) The applicants
also satisfied the criteria for out patient treatment, both by giving free
treatment at the hospital's OPD as also by organizing free treatment camps, and
the free treatment camps have been judicially recognised as meeting the purpose
of the notification, by the Hon'ble Madras High Court in Apollo Hospital's
case, which was relied upon by the applicants in their memorandum of appeal;
-3- (c) The equipment
and records were completely destroyed in the riots of 2001, which were beyond
the applicants' control;
(d) In any event, the
applicants being a hospital run by a charitable trust, on a no profit basis,
the applicants were eligible for the exemption under Notification No.64/88-Cus.
under Entries 1 & 3 alternatively.
9. The factual
position being distinct and different from the main matter heard by this
Hon'ble Tribunal, the Hon'ble Tribunal ought to have appreciated the difference
in the facts and ordered accordingly. The non-appreciation and/ or improper
appreciation of facts has resulted in an error apparent on the face of the
record in the Order dated 19.1.2006.
10. The Hon'ble
Tribunal has failed to appreciate that if the obligations under Entry 2 in the
table annexed to Notification 64/88 is a continuing obligation, the compliance
with the obligation will also be in the nature of a continuing compliance i.e.
it will have to be measured over the entire useful life of the equipment and
not at any periodic rests. In the applicants' case, from the date of the import
of the equipment until the destruction of the said equipment in the riots as
aforesaid, the applicants have satisfied both the in-patient reservation
criterion and the out patient free treatment criterion. There was, therefore,
no breach of the continuing obligation by the applicants."
We have been informed
at the Bar that the Registry of Central Excise and Service Tax Appellate
Tribunal does not entertain an application of this nature and, thus, the same
was necessarily required to be labelled as application for rectification of
mistake, although, in view of Prayer (a) made therein it was for all intent and
purport an application for review and/or recall of the order passed by the
The Tribunal by an
order dated 12.10.2007 dismissed the said application holding that the same was
-4- barred by limitation on the premise that the Tribunal's final order was
passed on 19.1.2006 and the application for rectification of mistake should
have been filed within six months from the said date. It was, furthermore,
opined that the Tribunal had no power to condone the delay by reason of the
hereinbefore, the High Court refused to interfere therewith.
Mr. S. Ganesh,
learned senior counsel appearing on behalf of the appellants would contend that
having regard to the peculiar facts and circumstances obtaining in the instant
case, the Tribunal must be considered to have acted illegally and without
jurisdiction in so far as it failed to take into consideration that all
Tribunals had inherent power to recall their order.
learned senior counsel appearing on behalf of the respondents, on the other
hand, supported the impugned judgment.
Indisputably, the Tribunal
considered the appeals preferred by the appellants along with the appeals
preferred by two others. It has been contended before us that Dr. Balabhai
Nanavati Hospital had filed Customs Appeal Nos. 61 and 62 of 2006 thereagainst
before the High Court which had been allowed by an order dated 11.1.2007.
From the Tribunal
which is the final Court of fact, an assessee is entitled to obtain a judgment
wherein all its contentions have been considered. If what has been contended
-5- before us by the appellants, namely, it indeed had complied with all the
conditions laid down in the Notification are correct and, thus, was not liable
to pay any redemption fine or penalty, the Tribunal was bound to consider the
Tribunal only considered the factual matrix involved in the case of M/s Miraj
Medical Centre W. Hospital and not the factual aspect of the matter involving
factual matrix. Appellants' case had purported to have been determined on the
question of law without taking into consideration the question whether the law
so laid down by the Tribunal is applicable to the fact of the appellants' case
It is true that the
period of limitation specified in terms of Sub-Section (2) of Section 129(B) of
the Customs Act is required to be observed but the Tribunal failed to notice
that it has inherent power of recalling its own order if sufficient cause is
shown therefor. The principles of natural justice, which in a case of this
nature, in our opinion, envisage that a mistake committed by the Tribunal in
not noticing the facts involved in the appeal which would attract the ancillary
and/or incidental power of the Tribunal necessary to discharge its functions
effectively for the purpose of doing justice between the parties, were required
to be complied with.
While the judges'
records are considered to be final, it is now a trite law that when certain
questions are raised -6- before the Court of law or Tribunal but not considered
by it, and when it is brought to its notice, it is the only appropriate
authority to consider the question as to whether the said contentions are
correct or not.
aforementioned purpose the provisions of limitation specified in Sub-section
(2) of Section 129 B of the Customs Act would not be attracted. We, however, do
not mean to lay down a law that such an application can be filed at any time.
If such an application is filed within a reasonable time and if the Court or
Tribunal finds that the contention raised before it by the applicant is prima-facie
correct, in order to do justice, which is being above law, nothing fetters the
judges hands from considering the matter on merit. Government Industrial
Tribunal and Ors. - 1980(Suppl) SCC 420, held that Industrial Tribunal has an
inherent power to set aside an ex-parte award subject of course to the
condition that the same has not been published in the Gazette.
Ltd.[supra] has been followed by this Court in Sangham Tape Co. v. Hans Raj
[(2005)9 SCC 331], stating:
"8. The said
decision is, therefore, an authority for the proposition that while an
Industrial Court will have jurisdiction to set aside an ex parte award, but
having regard to the provision contained in Section 17-A of the Act, an
application -7- therefor must be filed before the expiry of 30 days from the
publication thereof. Till then the Tribunal retains jurisdiction over the
dispute referred to it for adjudication, and only up to that date, it has the
power to entertain an application in connection with such dispute.
9. It is not in
dispute that in the instant case, the High Court found as of fact that the
application for setting aside the award was filed before the Labour Court after
one month of the publication of the award.
10. In view of this
Court's decision in Grindlays Bank such jurisdiction could be exercised by the
Labour Court within a limited time frame, namely, within thirty days from the
date of publication of the award. Once an award becomes enforceable in terms of
Section 17-A of the Act, the Labour Court or the Tribunal, as the case may be,
does not retain any jurisdiction in relation to setting aside of an award
passed by it. In other words, upon the expiry of 30 days from the date of
publication of the award in the gazette, the same having become enforceable,
the Labour Court would become functus officio".
Yet again in Rabindra
Singh v. Financial Commissioner, Cooperation, Punjab & Ors. [2008(8)SCALE
242], this Court held:
matters for exercise of jurisdiction is the source of power and not the failure
to mention the correct provisions of law. Even in the absence of any express
provision having regard to the principles of natural justice in such a
proceeding, the courts will have ample jurisdiction to set aside an ex parte
decree, subject of course to the statutory interdict."
-8- This Court,
however, in a slightly different context in Jet Ply Wood (P) Ltd. and Anr. vs.
Madhukar Nowlakha & Ors [(2006) 3 SCC 699] opined that even an order
permitting withdrawal of a suit can be allowed to be recalled by a civil court
in exercise of its inherent power.
It is only from that
point of view this Court passed the aforementioned order dated 13.4.2007.
It may be true, as
has been contended by Mr. Abhichandani, learned senior counsel that Section 14
of the Limitation Act, 1963 will have no application in view of the fact that
provisions governing limitation are contained in the Customs Act. It is so for
in a matter of this nature the Tribunal was required to consider the
application filed by he appellant which was filed within a reasonable time. It
should have also considered that the appellant had been bonafide pursuing its
remedies before this Court.
We may place on
record that for all intent and purport, this Court had granted liberty to the
appellants to take recourse to the remedies suggested by its counsel as the
word 'accordingly' has been used before the words 'the appeal is dismissed as
The Tribunal did not
consider the matter on merit. The Tribunal failed to take into consideration
that, ipso-facto, in a case of this nature provisions of Section 129B of the
Customs Act as such has no effect. Label of an -9- application is not decisive
for consideration by the Tribunal as to whether a case has been made out to
hear the application on merit, particularly, having regard to the grounds set
For the reasons
aforementioned, we in exercise of our jurisdiction under Article 142 of the
Constitution of India set aside the impugned judgment with a direction to the
Tribunal to hear out the appellants afresh on merit on the said application.
The appeal is
allowed. There shall, however, be no order as to costs.
[ CYRIAC JOSEPH ]
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