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Issues Involved:
1. Whether Section 40(1) of the Central Excises and Salt Act is a legal bar to the maintainability of the suit. 2. Whether the claim is barred by limitation prescribed by Section 40(2) of the Central Excises and Salt Act, 1944. 3. Whether the inferences drawn by the Courts below that the action taken by the appellants was not in good faith is supportable in law. 4. Whether the award of interest by the Courts below is legally sustainable. 5. Whether the plaintiff was bound to mitigate the damages by applying for possession of the tobacco pending the proceedings and by taking delivery of the same when called upon to do so. Detailed Analysis: Issue 1: Legal Bar under Section 40(1) The defendants argued that the suit is not maintainable due to the provisions of Section 40(1) of the Central Excises and Salt Act, 1944. The court examined whether the seizure and retention of the goods by the defendants were actions taken in good faith under the Act. The court noted that the provision protects acts done in good faith under the Act but does not protect actions done in violation of the Act or beyond the jurisdiction of the officer. The court found that the seizure and retention were not justified and were in violation of natural justice principles, as previously quashed in O.P. No. 2566 of 1962. Therefore, the court concluded that Section 40(1) does not bar the suit. Issue 2: Limitation under Section 40(2) The defendants contended that the suit is barred by the limitation period prescribed in Section 40(2) of the Act, which is six months from the accrual of the cause of action. The court noted that the plaintiff was first informed to take back the goods on 28-10-1964, and the suit was filed on 5-11-1966. The court referred to the Andhra Pradesh High Court's decision in B. Poornaish v. Union of India, which held that Section 40 applies only to suits for damages and not to suits for the return of goods or their value. Consequently, the general law of limitation applies, and the suit is not barred by Section 40(2). Issue 3: Good Faith of Defendants' Actions The court examined whether the actions of the Central Excise officers were in good faith. The court found that the seizure was not justified, and the goods were not returned in the same condition as seized. The plaintiff was justified in not taking delivery due to the deterioration of the goods. The court concluded that the question of good faith is not relevant in a suit for the return of goods or their value when the goods cannot be returned in the same condition. Therefore, the inference that the defendants did not act in good faith was supported by the evidence. Issue 4: Award of Interest The court noted that the claim for damages by way of interest at 12% was negatived by the trial court and upheld by the appellate court. Since this issue was not argued in the second appeal, the court did not address it further. Issue 5: Mitigation of Damages The court did not address this issue as it was not argued in the second appeal. Conclusion: The court overruled the contentions of the defendants and dismissed the second appeal, affirming the decisions of the lower courts. The suit was found to be maintainable, not barred by limitation, and the actions of the defendants were not in good faith. The plaintiff was entitled to the value of the goods seized, as they could not be returned in the same condition. The appeal was dismissed with costs.
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