2015 (9) TMI 301 - HC - Central Excise

Validity of Tribunal s order - Tribunal dismissed appeal as not being the civil court - Matter before Tribunal is as to who is the proper party to the case - Held that - Besides demand of duty, penalty has also been imposed upon Sri Pramod Kumar Goyal being the active Director and that the appeal before the Commissioner (Appeal) was contested on behalf of the company by Sri Pramod Kumar Goyal, however, in no circumstance the Tribunal can refuse to enter into the issue as to whether the appeal as filed by Sri Pramod Kumar Goyal was competent or not i.e. it had the backing of a valid resolution of the company or not. Such issues must necessarly be gone into by the Tribunal only for the purposes of ascertaining as to whether the appeal on behalf of the company has been filed by a competent person or not and nothing beyond it. Any other inter se dispute between the two Directors of the Company had not be examined by the Tribunal. Tribunal has misdirected itself in dismissing the appeal only on the ground that a dispute has been raised with regard to the correctness or otherwise of the resolution said to have been made in favour of Pramod Kumar Goyal in the matter of filing of the appeal. The Tribunal must adjudicate upon the said issue on the basis of the material brought on record before it and must decide as to whether the appeal as presented was competent or not. All issues on merits of the maintainability of the appeal are left open to be examined by the Tribunal as per the evidence led by the parties and after affording opportunity to them. - order impugned passed by the Tribunal cannot be legally sustained and is hereby quashed - Decided in favour of assessee.

Summary

Issues involved:
Validity of resolution authorizing appeal filing by a director without board resolution, Competence of director to file appeal on behalf of the company, Dismissal of appeal by Tribunal based on inter se dispute between directors, Misdirection of Tribunal in dismissing appeal, Remand of the appeal for fresh decision by Tribunal, Consideration of Company Law Board order on management rights.

Analysis:

The case involved an Excise Appeal under Section 35 (G) of the Central Excise Act, 1944 challenging an order passed by the Custom Excise and Service Tax Tribunal. The appeal was filed by a company through its Director, but an intervention application was made by another Director claiming lack of authorization due to the absence of a board resolution. The Tribunal dismissed the appeal citing its inability to resolve inter se disputes between directors rather than focusing on the validity of the resolution authorizing the appeal filing.

The petitioner argued that the Tribunal erred in not verifying if the appeal was backed by a valid board resolution, emphasizing that this was the crucial aspect to determine the appeal's competency. The opposing Director contended that the resolution presented was invalid as no board meeting had occurred for eight years, referencing a Company Law Board order. The High Court observed that the Tribunal's dismissal solely based on the directorial dispute was a misdirection, as it should have assessed the appeal's competence based on the resolution's validity.

The Court held that the Tribunal must examine whether the appeal was competently filed with valid authorization, leaving other merit-based issues for subsequent consideration. Consequently, the Tribunal's order was quashed, and the appeal was remanded for a fresh decision, instructing consideration of the Company Law Board's decision on management rights. The administrator appointed by the Company Law Board was directed not to entertain any application in light of the Court's order. The judgment emphasized the need for the Tribunal to focus on the resolution's validity for determining the appeal's competency, rather than delving into directorial disputes beyond the scope of its jurisdiction.