1984 (11) TMI 63 - SC - Central Excise

Whether the company was not entitled to the exemption granted by notification dated April 6, 1984 as it had cleared the goods earlier without paying central excise duty, but on furnishing bank guarantees under various interim orders of courts? Held that - We do not have the slightest doubt that the orders of the learned single judge as well as Division Bench are wholly unsustainable that a prima facie case had been made out in favour of the company and should never have been made. Even assuming that the company had established a prima facie case, about which we do not express any opinion, we do not think that it was sufficient justification for granting the interim orders as was done by the High Court. There was no question of any balance of convenience being in favour of the respondent-company. The balance of convenience was certainly in favour of the Government of India. Governments are not run on mere bank guarantees. We notice that very often some courts act as if furnishing a bank guarantee would meet the ends of justice. No governmental business or for that matter no business of any kind can be run on mere bank guarantees. Liquid cash is necessary for the running of a Government as indeed any other enterprise. We consider that where matters of public revenue are concerned, it is of utmost importance to realise that interim orders ought not to be granted merely because prima facie case has been shown. More is required. The balance of convenience must be clearly in favour of the making of an interim order and there should not be the slightest indication of a likelihood of prejudice to the public interest. We are very sorry to remark that these considerations have not been borne in mind by the High Court and an interim order of this magnitude had been granted for the mere asking. The appeal is allowed with costs.

Summary

Issues Involved:
1. Tendency of courts to grant interim orders.
2. Interim orders in tax recovery cases.
3. Alternative statutory remedies under Article 226.
4. Interim orders granting principal relief.
5. Jurisdictional issues in filing writ petitions.
6. Impact of interim orders on public revenue and administration.
7. Judicial hierarchy and adherence to higher court decisions.

Detailed Analysis:

1. Tendency of Courts to Grant Interim Orders:
The court expressed concern over the increasing tendency of some courts to grant interim orders, often ex parte and non-speaking, which have the potential for public mischief. This practice was condemned in several cases, including Samarias Trading Company Pvt. Ltd. v. S. Samuel and others. The court emphasized the need for caution and restraint in granting such orders, especially when they could impair public interest.

2. Interim Orders in Tax Recovery Cases:
In Siliguri Municipality v. Amalendu Das, the court reiterated that High Courts should not, as a rule, grant stay of tax recovery in proceedings under Article 226 of the Constitution unless under very exceptional circumstances. The court highlighted the importance of ensuring that no prejudice is caused to taxpayers if they ultimately succeed, while also protecting the authority levying the tax to ensure the functioning of essential civic services.

3. Alternative Statutory Remedies under Article 226:
The court in Titaghur Paper Mills Co. Ltd. v. State of Orissa held that when a statute provides an efficacious alternative remedy, it is not for the High Court to exercise its extraordinary jurisdiction under Article 226. The court stressed that Article 226 should not be used to bypass statutory procedures unless there are extraordinary situations requiring such intervention.

4. Interim Orders Granting Principal Relief:
In Union of India v. Oswal Woollen Mills Ltd., the court criticized the practice of granting interim orders that practically allow the main relief sought in the writ petition without hearing the opposite parties. The court emphasized that such drastic interim orders should not be passed without at least hearing those who made the order, as it could lead to devastating consequences.

5. Jurisdictional Issues in Filing Writ Petitions:
The court addressed the issue of writ petitions being filed in far-away courts with doubtful jurisdiction, as seen in Union of India v. Oswal Woollen Mills Ltd. The court noted that such practices delay prompt return and contest, and often serve as a legal maneuver to make it difficult for officials to move applications to vacate stays.

6. Impact of Interim Orders on Public Revenue and Administration:
The court observed that interim orders have often jeopardized the collection of public revenue and prejudiced the budgets of governments and local authorities. The court cited examples where interim orders have led to administrative paralysis and disruption of essential services. The court emphasized the need for circumspection in granting interim relief, particularly against orders of public officials acting in discharge of their statutory duties.

7. Judicial Hierarchy and Adherence to Higher Court Decisions:
The court stressed the importance of maintaining judicial hierarchy and the need for lower courts to accept the decisions of higher courts. The court referred to the observations in Cassell and Co. Ltd. v. Broome, emphasizing that the judicial system only works if the decisions of the supreme appellate tribunal are loyally accepted by lower courts.

Conclusion:
The court concluded that the orders of the learned single judge and the Division Bench in the present case were unsustainable. The court emphasized that governments cannot be run on mere bank guarantees and that interim orders in matters of public revenue should not be granted merely because a prima facie case has been shown. The balance of convenience and public interest must be considered. The appeal was allowed with costs, and the interim orders were vacated.