1985 (4) TMI 76 - HC - Central Excise

Summary

Issues:
1. Arbitration agreement between parties for stay of civil suit
2. Claim for refund of excise duty paid under mistake of law
3. Dispute regarding excise duty payment and refund

Analysis:

1. The plaintiff-company filed a civil suit against the defendant-company and others for the recovery of an amount paid as excise duty under a mistake of law. Instead of filing a written statement, the defendant-company sought a stay of the suit based on an arbitration agreement between the parties. The trial Court granted the stay, leading to an appeal by the plaintiff-company against this decision.

2. The defendant-company contended that the excise duty was paid to the Central Government and then recovered from the plaintiff-company as per their agreement. They argued that the primary claim should be against the Central Government and the Collector of Central Excise. The plaintiff-company, on the other hand, indicated that if the defendant-company could prove payment to the Central Government, no relief would be sought against them. However, if the Court found that no payment was made to the Central Government, the defendant-company would be liable to refund the amount.

3. The High Court determined that the suit should proceed for two main reasons. Firstly, if the defendant-company had indeed paid the excise duty to the Central Government, they could seek reimbursement from the plaintiff-company. However, if the Central Government denied receiving the payment, this issue needed to be resolved in the suit. Secondly, the Court noted that the question of excise duty payment was a complex legal matter not suitable for arbitration, especially since the Central Government was a necessary party to determine the dispute. The Court also clarified that any refund, if awarded, would be payable to the plaintiff-company and not the defendant-company.

4. Consequently, the High Court allowed the appeal, setting aside the trial Court's order for stay and remitting the matter back for the suit to proceed. The parties were directed to appear before the trial Court for further proceedings, with no order as to costs.