2018 (7) TMI 17 - HC - Central Excise

Principles of constructive res judicata - Validity of Search and Seizure proceedings - prior to the search conducted on 12-4-2012, no search warrant was issued which thus is in total contravention to the provisions of Section 12F of the Central Excise Act - Held that - Though the petitioners had challenged the search and seizure proceedings in the said writ petition, but the same was not pressed while the petition was being finally disposed of - the fact that the petitioners has not pressed the said relief so far as the veracity of the search and seizure proceedings would by itself means that, they have given up the said relief and were harping more on the relief of the permission to get the witnesses called for cross-examination. Having once given up the relief of the challenge to the search and seizure, the subsequent challenge to the same is not permissible and the petition would be hit by a constructive res judicata, the petitioners would be estopped from filing the fresh writ petition for the same cause of action and on the same grounds - the petition thus would not be maintainable so far as the challenge to the search and seizure is concerned. Opportunity to cross-examine the witnesses - Held that - Since the appeal preferred by the petitioners assailing the order dated 31-3-2017 already stands allowed in favour of the petitioners vide order dated 11-10-2017 and the matter stands remitted back to the authority concerned - matter on remand. Petition rejected.

Summary

Issues:
Challenge to search and seizure proceedings conducted by the respondent department without a search warrant and in contravention of directives given by the High Court in a previous litigation.

Analysis:
The two writ petitions were filed by the petitioners challenging the search and seizure proceedings conducted by the respondent department in their factory premises without a search warrant on 12-4-2012. The petitioners, engaged in manufacturing rolled products under Chapter 72 of the Central Excise Tariff Act, contended that the search was illegal and disregarded previous directives from the High Court. The counsel argued that the department's actions were in total contravention of the law and that the final order was anti-dated, indicating mala fide intentions. The petitioners were not allowed to cross-examine witnesses as directed by the High Court, and the department passed the final order prematurely. The counsel further contended that the search and seizure proceedings violated statutory provisions as no search warrant was issued, as admitted by the department under the Right to Information Act, contravening Section 12F of the Central Excise Act.

The department's counsel argued that Rule 22 of the Central Excise Rules, 2002 empowers officers to access premises without a search warrant for revenue safeguarding purposes. The order dated 31-3-2017 was challenged in an appeal, which was allowed on 11-10-2017, remitting the matter back for fresh adjudication while emphasizing compliance with High Court directives. The counsel contended that the matter had been settled through the appeal, and no further adjudication was required, urging the rejection of the petition.

The High Court noted that in a previous writ petition disposed of on 27-4-2017, the petitioners had not pressed the challenge to the search and seizure proceedings but focused on cross-examining witnesses. As the petitioners had abandoned the relief challenging the search and seizure in the previous petition, the subsequent challenge was not permissible due to constructive res judicata. The Court found that the petitioners had given up the right to challenge the search and seizure by not pressing the relief in the earlier petition. Additionally, since the appeal had been allowed, and the matter remitted for fresh adjudication with specific instructions to comply with High Court directives, the Court rejected the current petition on the grounds of abandonment of relief and the settled nature of the matter.

Therefore, the High Court rejected and disposed of both writ petitions, emphasizing the importance of adhering to legal procedures and directives issued by the court in such matters.