2006 (4) TMI 139 - HC - Central Excise

Issues Involved:
1. Territorial jurisdiction of the High Court.
2. Maintainability of the application under Section 127-B of the Customs Act.
3. Transfer of proceedings from Chennai to Mumbai.
4. Compliance with the directions of the High Court in W.P. No. 6157 of 2003.

Issue-wise Detailed Analysis:

1. Territorial Jurisdiction of the High Court:
The primary issue was whether the High Court of Madras had the territorial jurisdiction to entertain the writ petition. The Court referred to Article 226(2) of the Constitution, which allows a High Court to exercise jurisdiction if the cause of action arises wholly or in part within its territories. The Court observed that almost the entire cause of action had arisen within the jurisdiction of the Additional Bench of the Settlement Commission at Chennai. Significant events, such as the issuance of the show cause notice, the location of the private bonded warehouse, and the recovery of incriminating documents, all occurred within the jurisdiction of the Madras High Court. The Court cited several precedents, including Kusum Ingots & Alloys Ltd. v. Union of India and Oil & Natural Gas Commission v. Utpal Kumar Basu, to support its jurisdictional claim. The Court concluded that it had the jurisdiction to entertain the writ petition as almost the entire cause of action had arisen within its territory.

2. Maintainability of the Application under Section 127-B of the Customs Act:
The appellant contended that the application under Section 127-B of the Customs Act was not maintainable and should have been rejected by the 15th respondent (Settlement Commission). The 15th respondent, however, admitted the application, which the appellant challenged. The Court noted that the appellant had consistently argued against the maintainability of the application and had the right to challenge the order of the 15th respondent in any Court where part of the cause of action had arisen.

3. Transfer of Proceedings from Chennai to Mumbai:
The respondents initially filed an application for transfer of proceedings from the 14th respondent (Settlement Commission, Additional Bench, Chennai) to the 15th respondent (Settlement Commission, Mumbai). The 14th respondent rejected the transfer request, but the 16th respondent (Chairman of the Settlement Commission) later ordered the transfer, citing concerns about fair hearing and justice. The Court noted that the 16th respondent's decision was influenced by the respondents' apprehension of not receiving a fair hearing due to certain observations made by the 14th respondent. The Court acknowledged that the 16th respondent had the authority to order the transfer but emphasized that the Madras High Court still had jurisdiction over the matter.

4. Compliance with Directions of the High Court in W.P. No. 6157 of 2003:
The respondents had previously filed W.P. No. 6157 of 2003, challenging the jurisdiction of the second respondent to issue the show cause notice. The High Court directed the authorities to furnish the required documents within 15 days and allowed the respondents to file objections thereafter. Instead of complying with this direction, the respondents approached the Settlement Commission for settling the case and seeking immunity. The appellant argued that this move was an attempt to scuttle the process of law. The Court observed that the respondents' approach to the Settlement Commission without complying with the High Court's directions was a significant factor in the case.

Conclusion:
The Court concluded that the Madras High Court had the jurisdiction to entertain the writ petition as almost the entire cause of action had arisen within its territory. The Court set aside the order of the learned single Judge, who had dismissed the writ petition on the preliminary ground of jurisdiction, and remanded the matter back to the learned single Judge to be dealt with in accordance with law. The writ appeal was allowed with no order as to costs, and W.A.M.P. No. 676 of 2006 was closed.

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