1990 (12) TMI 195 - SC - Central Excise

Whether the petitions were not maintainable under Article 226 being related to claims arising out of a purely commercial contract whether statutory or non-statutory, and also on merits holding that since 45 days were to be counted including the day of auction, the Board was entitled to the proportionate reduction in duty as held by High Court? Held that - The purpose of including the day of auction in the period of 45 days, contrary to the manner of computation of time in the General Clauses Act, is obvious and is brought home more prominently by the present instance itself. As has been stated earlier, the reserve price is fixed on the basis of the rates, taxes, duties, etc. which are in existence till the day prior to the date of auction. These imposts keep changing and none of the parties has a control either over their variation or over the time of their variation. The dates of auction have necessarily to be fixed in advance. It is to obviate the hardship or to grant the necessary benefit, as the case may be, that purposely the period of 45 days laid down in clause 10 is stipulated to include the day of the auction as well. It is for this reason that we are unable to accept the contention advanced by Shri Shanti Bhushan and are in complete agreement with the impugned decision of the High Court on merits. Appeals dismissed.

Summary

Issues:
Interpretation of Clause 10 of the terms and conditions of a coffee auction sale regarding sharing of increased or reduced export duty within a specified period.

Detailed Analysis:

1. Interpretation of Clause 10:
The case involved the interpretation of Clause 10 of the terms and conditions of a coffee auction sale. The clause specified that any increase or reduction in taxes, duties, etc., within 45 days of the auction (inclusive of the day of the auction) shall be shared between the auction purchasers and the Coffee Board. The dispute arose due to a reduction in export duty on the day of the auction, which was not known to the Board or the auction purchasers at the time of the auction. The appellants argued that the reduction in duty should be deemed to have come into operation before the auction, but the Court held that the period of 45 days includes the day of the auction as well, as per the clause. The purpose of including the day of the auction in the period was to address variations in taxes and duties and ensure fairness in the auction process.

2. Application of the Clause:
The Court noted that the Board had fixed the reserve price based on the export duty prevailing until the day before the auction. The reduction in duty on the day of the auction led to a demand for a refund from the auction purchasers, as per the clause. The appellants contended that since the duty reduction occurred on the auction day, there was no change within the 45-day period. However, the Court emphasized that the clause explicitly includes the day of the auction in the computation of the 45-day period. This provision aims to address uncertainties in duty rates and ensure equitable sharing of duty changes between the parties.

3. Legal Dispute and High Court Decision:
The appellants filed writ petitions seeking a refund of the duty amount paid to the Coffee Board. The High Court dismissed the petitions, stating that they were related to claims arising from a commercial contract and were not maintainable under Article 226. The High Court also ruled on the merits, upholding the Board's right to retain the duty refund. The Division Bench affirmed this decision. The Court, while acknowledging the commercial nature of the dispute, chose to focus solely on interpreting Clause 10 to resolve the appeals.

4. Final Decision:
Ultimately, the Supreme Court upheld the High Court's decision, dismissing the appeals and ordering the appellants to bear the costs. The Court emphasized the importance of adhering to the terms of the auction sale agreement, particularly Clause 10, which governs the sharing of duty changes between the Coffee Board and the auction purchasers. The judgment underscores the significance of contractual provisions in resolving disputes arising from commercial transactions and highlights the need to interpret such clauses in a manner that upholds the agreed terms and principles of fairness in business dealings.