2001 (10) TMI 108 - HC - Central Excise

Issues Involved:

1. Maintainability of the writ petition for refund of money.
2. Entitlement to interest on the refunded amount and the extent of such interest.

Issue-wise Detailed Analysis:

1. Maintainability of the Writ Petition for Refund of Money:

The appellants argued that a writ petition solely for the refund of money is not maintainable, citing the Supreme Court judgment in Sugan Mal v. State of Madhya Pradesh, which held that such petitions are "not ordinarily maintainable" and should be pursued through a civil suit. The Supreme Court in Sugan Mal emphasized that the High Courts have the power to pass appropriate orders under Article 226 of the Constitution, but typically, claims for refund should be made in civil suits where the state can raise all possible defenses.

However, the respondents countered this argument by citing several Supreme Court decisions, including Shri Anadi Mukta Sadguru S.M.V.S.J.M.S. Trust v. V.R. Rudani, which emphasized that Mandamus is a wide remedy available to address injustice, regardless of whether the duty is imposed by statute. The Court highlighted that Mandamus should not be denied on technical grounds and should be flexible to meet varying circumstances.

The Court noted that the seizure of money was declared illegal, and no appeal was filed against this declaration by the authorities. Therefore, the Court held that the writ petition was maintainable, as there were no defenses left for the authorities regarding the refund. The Court also referenced the Supreme Court's judgment in Shiv Shankar Dal Mills v. State of Haryana, which supported the principle that public bodies must return money wrongly recovered without being constrained by technicalities or the need for alternative remedies.

2. Entitlement to Interest on the Refunded Amount:

The appellants argued that interest should not be awarded as the statute did not provide for it, relying on the Supreme Court decision in Union of India v. Orient Enterprises, which held that interest on delayed refunds is only payable if explicitly provided by statute. They contended that the Central Excise Act's Section 11BB, which provides for interest on delayed refunds of duty, did not apply to the refund of money other than duty.

In contrast, the respondents argued that the interest was awarded as compensation for the unauthorized retention of money. They cited the Supreme Court's decision in Union of India v. Justice S.S. Sandhawalia, which held that a party responsible for withholding an amount legally due must pay interest at a reasonable rate.

The Court agreed with the respondents, noting that the seizure of money was declared illegal, and no appeal was filed against this declaration. The Court emphasized that the Central Excise Authority could not unlawfully detain the amount and that withholding such money necessitated the payment of interest, as established by several Supreme Court decisions. The Court exercised its discretion to award interest, concluding that the respondents were entitled to interest on the refunded amount.

Conclusion:

The appeal was dismissed, and the Court directed the appellant authorities to return the seized money of Rs. 17.80 lakhs with interest accrued from the date of deposit in the ANZ Grindlays Bank, Church Lane. The refund, along with interest, was to be made within a fortnight from the date of communication of the order. There was no order as to costs.

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