9911796707
TMI Blog2019 (12) TMI 1014X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules"). 3. By the order dated 03.09.2019, this Court taking cognizance of the submissions made by the learned counsel for the respondent no.1 that the Appeal pending before the respondent no.1 was listed for final hearing on 09.09.2019, adjourned the hearing of the petition to await the outcome of the said Appeal. 4. The respondent no.1 by the order dated 20.09.2019 partially allowed the Appeal filed by the petitioner by reducing the period of blacklisting from three years to 18 months. The said order was challenged by the petitioner before this Court by filing an application being CM No.43517/2019 seeking amendment of the Writ Petition. The said application was allowed by this Court by its order dated 27.09.2019. 5. In view of the above, the primary challenge before this Court is to the order dated 20.09.2019 passed by the respondent no.1. 6. The brief facts giving rise to the Impugned Order are as under: a) On 16.08.2016 the premises of M/s Barshala, respondent no.5 herein, were inspected by a team from the Excise Department of the Government of NCT of Delhi. It is alleged that during the said inspection, by means of a "HHT device', the status of 12 beer bottles (11 Foste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to the said Show Cause Notice. h) By the order dated 16.07.2019, the respondent no.3, however, held both, M/s Barshala and the petitioner herein, to have violated the provisions of Section 2 (47)(a)(ii), (iii), 11, 33 read with Section 44 and 38 of the Delhi Excise Act, 2009 (hereinafter referred to as "Act") and cancelled the licence of M/s Barshala alongwith blacklisting of its Directors for a period of three years. As far as the petitioner was concerned, the respondent no.3 noted that as the petitioner's licence had already expired due to implementation of new Excise Policy/Terms and Conditions and as the cancellation of the licence was no longer possible, the petitioner was blacklisted for a period of three years. i) The petitioner challenged the above order by way of an Appeal under Section 72 of the Delhi Excise Act, 2009, before the respondent no.1. The petitioner further prayed for stay of the operation of the order dated 16.07.2019 passed by the respondent no.3. j) As noted hereinabove, the application seeking stay was rejected by the respondent no.1 vide its order dated 05.08.2019. k) Thereafter some hearings were also conducted before the respondent no.1 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Rule 70 of the Rules. Rule 70 (1) of the Rules itself prescribes that no such order shall be passed without giving reasonable opportunity of hearing to the person concerned. He submits that in the present case, the Show Cause Notice dated 07.09.2016 was issued only to the respondent no.5- M/s Barshala and not to the petitioner. The petitioner was thereafter called upon to attend the hearing of the said Show Cause Notice and filed submissions/documents and explanation. The petitioner, while submitting such documents and submissions, had been reiterating before the respondent no.3 that the proceedings were only against the respondent no.5 and not against the petitioner. Therefore, the order dated 16.07.2019 has been passed without putting the petitioner to a Show Cause Notice. 10. The learned senior counsel for the petitioner further submits that even if, for the sake of the arguments, it is accepted that the notice calling upon the petitioner to attend the hearing is a Show Cause Notice, as the same did not mention the punishment that the petitioner would be visited with, the same cannot be treated to be a Show Cause Notice as explained by the Supreme Court in its judgment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47 and of this Court in M/s Otik Hotels and Resorts Pvt. Ltd. v. Indian Railways Catering and Tourism Corporation Ltd. (judgment dated 05.10.2016 passed in WP(C) 9159/2016). 14. On the other hand, the learned counsel for the respondents submits that the present petition is not maintainable in view of the alternate remedy in form of an Appeal to respondent no.2 being available to the petitioner. He submits that in the present case, the petitioner has availed the statutory remedy not only in form of filing an Appeal before the respondent no.1 against the order dated 16.07.2019 passed by the respondent no.3, but also by filing of an Appeal to the respondent no.2 against the order dated 05.08.2019 passed by the respondent no.1. He submits that the petitioner having exercised its statutory remedies, must be relegated to the same. He places reliance on the judgment of the Supreme Court in State of Rajasthan v. Union of India & Ors., (2018) 12 SCC 83 in support of its contentions. 15. On merits, the learned counsel for the respondents submits that there was a substantial compliance with the Principles of Natural Justice by the respondent no.3. He submits that the petitioner was granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Sales Corporation vs. State (GNCT of Delhi) & Ors. (Judgment dated 17.07.2018 passed by this Court in WP(C) No.2660/2018), he submits that in cases of economic offences, the Court cannot take a lenient view as the exact proportion of tax evasion cannot be estimated. 19. I have considered the submissions made by the learned counsels for the parties. 20. Rule 70 of the Rules provides as under: "70. Excise Black List, manner of blacklisting.-(1) Any licensee, tenderer, bidder, manufacturer or supplier, whose products are sold in Delhi, may be blacklisted by the Deputy Commissioner for violation of the provisions of the Act and the rules framed thereunder or for any other reason which may be considered detrimental to the interest of revenue or public health. No such order shall be passed without giving reasonable opportunity of hearing to the person concerned. (2) Any person whose name is mentioned in the black list shall be debarred from applying for or holding any excise licence within Delhi for such period, not exceeding five years, as may be specifically indicated in the blacklisting order. (3) The name of the black listed persons shall be circulated by the Deputy Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, even if the defaults/breaches complained of are not satisfactorily explained. When it comes to blacklisting, this requirement becomes all the more imperative, having regard to the fact that it is harshest possible action. xxxxxxx 26. In the present case, it is obvious that action is taken as provided in sub-clause (ii). Under this clause, as is clear from the reading thereof, the Department had a right to cancel the contract and withhold the agreement. That has been done. The Department has also a right to get the job which was to be carried out by the defaulting contractor, to be carried out from other contractor(s). In such an event, the Department also has a right to recover the difference from the defaulting contractor. This clause, no doubt, gives further right to the Department to blacklist the contractor for a period of 4 years and also forfeit his earnest money/security deposit, if so required. It is thus apparent that this sub-clause provides for various actions which can be taken and penalties which can be imposed by the Department. In such a situation which action the Department proposes to take, need to be specifically stated in the show-cause notice. It becom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposed action of blacklisting the appellant in the show-cause notice, has not caused any prejudice to the appellant. Moreover, had the action of blacklisting being specifically proposed in the show-cause notice, the appellant could have mentioned as to why such extreme penalty is not justified. It could have come out with extenuating circumstances defending such an action even if the defaults were there and the Department was not satisfied with the explanation qua the defaults. It could have even pleaded with the Department not to blacklist the appellant or do it for a lesser period in case the Department still wanted to blacklist the appellant. Therefore, it is not at all acceptable that non-mentioning of proposed blacklisting in the show-cause notice has not caused any prejudice to the appellant. This apart, the extreme nature of such a harsh penalty like blacklisting with severe consequences, would itself amount to causing prejudice to the appellant." 23. A reading of the above would clearly show that the requirement of serving a Show Cause Notice is a sine qua non before taking any action of blacklisting. The Show Cause Notice must state the alleged breach / default as also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned date." 31. The petitioner in all its replies kept insisting that no Show Cause Notice has been issued to the petitioner and that it was participating in such proceedings merely to give information as required and called upon by the Licencing Authority. In spite of these submissions, the Licencing Authority never put the petitioner to notice of allegations against it or the proposed penalty. The mere fact that the petitioner was allowed to take an inspection of all the records, cannot satisfy the test of putting the petitioner to a specific notice of allegations against it. 32. In view of the above, it is held that the order dated 16.07.2019 passed by the Deputy Commissioner (Excise) was in complete breach of the Principles of Natural Justice. 33. The learned counsel for the respondents sought to undermine the violation of Principles of Natural Justice by contending that trade or business in liquor is res extra commercium and therefore, has to be tested on a different pedestal while considering the question of violation of Principles of Natural Justice. I cannot subscribe to the said plea. 34. As noted hereinabove, the Principles of Natural Justice are embodied in Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agdamba Sales Corporation (supra). 40. The learned counsel for the respondents further submitted that even assuming that the order passed by the Deputy Commissioner, Excise was in violation of Principles of Natural Justice, the petitioner having been granted a full opportunity of hearing by the Commissioner, (Excise) in its appeal filed against the order of the Deputy Commissioner, the infirmity in the order of the Deputy Commissioner, if any, stood rectified and therefore, the petitioner must be relegated to its statutory remedies. 41. The answer to the above submission would require consideration of two linked questions of law; (a) whether granting an opportunity of hearing and compliance with the Principles of Natural Justice by an Appellate Authority cures the defect in the order passed by the Original Authority; (b) whether the petitioner having availed its statutory remedy in the form of a first appeal, must be relegated back to its subsequent statutory remedy in form of a second appeal. 42. On the first question, the learned counsels for the parties have cited extensive case laws, which requires reference. 43. In the Institute of Chartered Accountants of India (supra), t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate body, this has the result of depriving the member of his right of appeal from the expelling body. If the rules and the law combine to give the member the right to a fair trial and the right of appeal, why should he be told that he ought to be satisfied with an unjust trial and a fair appeal? Even if the appeal is treated as a hearing de novo, the member is being stripped of his right to appeal to another body from the effective decision to expel him. I cannot think that natural justice is satisfied by a process whereby an unfair trial, though not resulting in a valid expulsion, will nevertheless have the effect of depriving the member of his right of appeal when a valid decision to expel him is subsequently made. Such a deprivation would be a powerful result to be achieved by what in law is a mere nullity; and it is no mere triviality that might be justified on the ground that natural justice does not mean perfect justice. As a general rule, at all events, I hold that a failure of natural justice in the trial body cannot be cured by a sufficiency of natural justice in an appellate body." The view taken by Megarry, J. was followed by the Ontario High Court in Canada in R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orities. Paragraphs 24 to 26 of the said judgment are quoted hereinbelow: "24. We are clearly of opinion that Section 5A of the Land Acquisition Act is applicable in the matter of acquisition of land in this case and since no personal hearing had been given to the appellants by the Commissioner with regard to their written objections the order of acquisition and the resultant confirmation order of the State Government with respect to the land of the appellants are invalid under the law and the same are quashed. It should be pointed out, it is not a case of failure of the rules of natural justice as such as appeared to be the only concern of the High Court and also of the city civil court. It is a case of absolute non-compliance with a mandatory provision under Section 5A of the Land Acquisition Act which is clearly applicable in the matter of acquisition under the Bombay Act. 25. We should also point out that the acquisition order must be an order valid under the law and the question of appeal arises only after confirmation of the order by the State Government. If the order is, at inception, invalid, its invalidity cannot be cured by its approval of the Standing Committee or by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly departmental tribunals composed of persons belonging to the departmental hierarchy without adequate legal training and background and whose glaring lapses occasionally come to our notice. The superior court will ordinarily decline to interfere by issuing certiorari and all we say is that in a proper case of the kind mentioned above it has the power to do so and may and should exercise it. We say no more than that." 48. This Court in L.P.Desai (supra) held that mere fact that the petitioner therein had filed an appeal and was heard in the appeal would not alter the situation that the original order passed was in violation of the Principles of Natural Justice and therefore, void ab initio. This Court held as under: "18. Before parting with this case, it would be relevant to note that though the aforesaid discussion has proceeded on the assumption that no prejudice has been caused to the petitioner, in point of fact prejudice has actually been caused to the petitioner. This is so because the Show Cause Notice was not issued to the petitioner. Even the show cause notice issued to the company did not contain specific allegations against the petitioner to which he could reply. No o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right of appeal, why should he be told that he ought to be satisfied with an unjust trial and a fair appeal? ...... As a general rule ...... I hold that a failure of natural justice in the trial body cannot be cured by a sufficiency of natural justice in an appellate body." In their Lordships' opinion this is too broadly stated. It affirms a principle which may be found correct in a category of cases: these may very well include trade union cases, where movement solidarity and dislike of the rebel, or renegade, may make it difficult for appeals to be conducted in an atmosphere of detached impartiality and so make a fair trial at the first-probably branch-level an essential condition of justice. But to seek to apply it generally overlooks, in their Lordships' respectful opinion, both the existence of the first category, and the possibility that, intermediately, the conclusion to be reached, on the rules and on the contractual context, is that those who have joined in an organisation, or contract, should be taken to have agreed to accept what in the end is a fair decision, notwithstanding some initial defect. In their Lordships' judgment such intermediate cases exist. In them it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise of its discretion, when reviewing the domestic or statutory decision, should take into account all the proceedings which led to it, the conduct of the complaining party and the gravity of any breach of natural justice which may have occurred. This, though perhaps with some difference in emphasis, is their Lordships' approach. It remains to apply the principles above stated to the facts of the present case. In the first place, their Lordships are clearly of the view that the proceedings before the committee were in the nature of an appeal, not by way of an invocation, or use, of whatever original jurisdiction the committee may have had. The nature of the appeal is laid down by section 32 of the Australian Jockey Club Act 1873, and by the rules. Under the Act, the appeal is to be in the nature of a rehearing-a technical expression which does little more than entitle teh committee to review the facts as at the date when the appeal is heard (see Builders Licensing Board (N.S.W.) v. Sperway Constructions (Sydney) Pty. Ltd. (1977) 51 A.L.J.R. 260, 261, per Mason J.) not one which automatically instulates their findings from those of the stewards. The decision is to be "upon t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lainant no more than a right to a fair hearing in the proceedings as a whole." 51. In the appeal filed, the House of Lords held as under: "Lord Keith of Kinkel- Upon the view which I take, that the district auditor's decision was not vitiated by procedural unfairness to the question whether such unfairness, had it existed, was capable of being cured by the appeal to the High Court does not arise directly for decision. It is, however, my opinion that the particular appeal mechanism provided for by section 20(3) of the Act of 1982, considered in its context, is apt to enable the court, notwithstanding that it finds some procedural defect in the conduct of an audit which has resulted in a certificate based on wilful misconduct, to inquire into the merits of the case and arrive at its own decision thereon. Section 20(3)(b) empowers the court to "confirm the decision or quash it and give any certificate which the auditor could have given." The relevant rules of court enable a rehearing of the broadest possible scope to take place. Evidence may be given on oath, which is not possible before the auditor, and there is no limit to the further material which may be introduced so as to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory provisions here applicable which establish an adjudicatory system in many respects quite unlike any that has come under examination in any of the decided cases to which we were referred. We are concerned with a point of statutory construction and nothing else." "Lord Templeman My Lords, when by statute an appeal lies from a tribunal to a court of law, the statute must be construed to determine whether the court is free to determine the appeal on the basis of the evidence before the court or is bound by the evidence or information laid before the tribunal. In the present case I have no doubt that it was for the court of law to consider whether "willful misconduct" was proved and for that purpose to consider the evidence laid before the court. The task of the court was to "give any certificate which the auditor could have given" (section 20(3) of the Act of 1982). The court was not concerned with any defects in the procedure adopted by the auditor because those defects (if any) did not hamper the prosecution or conduct of the appeal. Different considerations apply if a statute only allows an appeal to a court of law on a question of law, or entitles or oblige the court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g where opportunity is afforded to an aggrieved party to present his case and evidence and the appellate court in exercise of a jurisdiction, coextensive with that of the original jurisdiction, decides a matter on merits, then the consequences of non-compliance of rules if natural jurisdiction in the original proceeding may be held to by been cured, is a recognized principle. We think this principle should operate here." 53. The Calcutta High Court in West Bengal State Electricity Regulatory (supra), applied the principles laid down by the Supreme Court in Canara Bank & Ors. vs. Debasis Das & Ors. 2003 4 SCC 557 to hold that where oral hearing has been granted by the Appellate Authority, the same amounts to a post-decisional hearing which obliterated the procedural deficiencies of a pre-decisional hearing provided no prejudice in the factual situation of the case is demonstrated. I may herein quote from the said judgment as under: "47. Similar view appears to have been expressed by the Apex Court in Canara Bank & Ors. v. Debasis Das & Ors, MANU/SC/0225/2003 : (2003) 4 SCC 557 wherein the Court held that an opportunity of oral hearing granted by the appellate authority amounted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction to record evidence to enable it to come to its own conclusion and therefore, even where the domestic enquiry held by the employer was defective, opportunity of hearing afforded at the appellate stage will sufficiently meet the demands for a just and proper enquiry. It observed as under:- "28. In the instant case, the appellant has contended that the respondent did not participate in the domestic enquiry in spite of an opportunity of hearing having been provided to him. He was also offered the inspection of the documents, but he did not avail of that opportunity. He himself invoked the jurisdiction of the Appellate Authority and the order of dismissal passed against him was set aside on the ground that the appellant did not hold any domestic enquiry. It has already been seen above that the Appellate Authority has full jurisdiction to record evidence to enable it to come to its own conclusion on the guilt of the employee concerned. Since the Appellate Authority has to come to its own conclusion on the basis of the evidence recorded by it, irrespective of the findings recorded in the domestic enquiry, the rule laid down in Ratna case will not strictly apply and the opportunity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h must then assess the compensation for itself. The statute clearly entitles such shareholders and creditors to have compensation assessed first by the prescribed authority and then by the appellate authority. This Court, in Institute of Chartered Accountants of India v. L.K. Ratna and Ors., [1986] 3 SCR 1049, held that the defect in observing the rules of natural justice in the trial administrative body cannot be cured by observing such rules of natural justice in the appellate body. It was held: "It is then urged by learned counsel for the appellant that the provision of an appeal under Section 22-A of the Act is a complete safeguard against any insufficiency in the original proceeding before the Council, and it is not mandatory that the member should be heard by the Council before it proceeds to record its finding. Section 22-A of the Act entitles a member to prefer an appeal to the High Court against an order of the Council imposing a penalty under Section 21(4) of the Act. It is pointed out that no limitation has been imposed on the scope of the appeal, and that an appellant is entitled to urge before the High Court every ground which was available to him before the Council. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt of New Zealand was similarly inclined in Wislang v. Medical Practitioners Disciplinary Committee, [(1974) 1 N.Z.L.R. 29] and so was the Court of Appeal of New Zealand in Reid v. Rowley [(1977) 2 N.Z.L.R. 472]."[(at pp. 1065-1066)] This judgment was the subject matter of comment in Union Carbide Corporation v. Union of India, [1991] Supp (1) SCR 251, where this Court held, following the judgment in Charan Lal Sahu v. Union of India, (1990) 1 SCC 613, that non-compliance with the obligation to issue notices to persons effected by the Bhopal gas leak did not, for this reason alone, vitiate the settlement that was entered into with Union Carbide by the Government on their behalf. This Court, in passing, commented that the principle laid down in Leary v. National Union of Vehicle Builders, [1971] Ch. 34 might perhaps be too broad a generalisation, except in cases involving public interest. This was an observation made in answer to an argument by Shri Shanti Bhushan, stating that a defect of natural justice always goes to the root of the matter. Ultimately, given the fact that the settlement fund was held to be sufficient to meet the needs of just compensation to the victims of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the second tier hearing appeal from the original decision; and (iii) the appeal is by way of rehearing and the appellate body gives a full-fledged hearing to the party concerned. If the appeal is not by way of rehearing, but is limited only to the points of law, and the appellant remains bound to accept the determinations of fact as found by the original body, then the Calvin ruling would not apply. Calvin v. Carr qualifies the Leary principle to some extent. The Leary principle applies in all cases except those of consensual domestic bodies (such as, social clubs etc.) where proceedings at both levels (original and appellate) taken together satisfy the demands of natural justice. It is to be noted that in Calvin, the appeal was by way of rehearing. This distinguishes Leary from Calvin in an important aspect. Ultimately, however, it is for the court to decide whether the doctrine of Leary or Calvin should be applied in a particular situation. It is suggested that in India, the Leary principle should be applied in most of the situations as it is necessary that the initial decision making bodies are made to follow the principles of natural justice rather meticulously. The Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Writ Petition before the High Court. There certainly cannot be a straight jacket answer to the above question. 61. In the present case, though the order passed by the original authority that is the Deputy Commissioner of Excise was clearly in violation of Principles of Natural Justice, the petitioner chose the statutory remedy of filing an appeal before the Commissioner (Excise). Section 72 of the Delhi Excise Act, 2009 provides for remedy of appeal. It is quoted hereinbelow: "72. Appeal.- (1) Any person aggrieved by any decision or order passed under this Act by an excise officer, subordinate to the Deputy Commissioner, may appeal to the Deputy Commissioner. (2) Any person aggrieved by any decision or order passed under this Act by the Deputy Commissioner may appeal to the Excise Commissioner. (3) Any person aggrieved by any decision or order passed under this Act by the Excise Commissioner may appeal to the Financial Commissioner. (4) Such appeal shall be filed within thirty days from the date of communication of such decision or order together with self-attested copy thereof: Provided that a further period of thirty days may be allowed if the appellant establishes th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the same. It is not the case of the petitioner that the petitioner was not afforded an opportunity of hearing by the Commissioner Excise. By that stage, the petitioner was fully aware of the allegations against it and the proposed penalty. It had full opportunity to meet allegations on merit as also counter the extenuating circumstances that would justify an order of blacklisting the petitioner even for a lesser period. In fact, detailed written submissions dated 02.08.2019, 14.08.2019 and 23.08.2019 were filed by the petitioner before the Commissioner (Excise), including on merits of allegations and its defence. The order dated 20.09.2019 passed by the Commissioner Excise, in fact, reduces the period of blacklisting from three years to 18 months. In such circumstances, Doctrine of Election would clearly become applicable. If the petitioner is aggrieved of the order dated 20.09.2019, its remedy would be in form of filing of an appeal against the same before the Financial Commissioner. 67. In Whirlpool Corporation (supra), Popcorn Entertainment (supra) and Harbanslal Sahnia (supra), the Supreme Court has held that existence of alternative remedy would not operate as a bar inter a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty Commissioner but also led arguments and filed written submissions upon the case against it on three occasions viz. on 27.11.2018, 18.12.2018 and on 03.04.2O19. 35. Thus, it emerges that not only the Appellant was served with a show cause notice in relation to the inspection carried out at Barshala, the Appellant was also informed of the nature of the proceedings, the cause for the proceedings and also the specific case of M/s Barshala whilst discharging its own burden of accounting of the said bottles found during the inspection at its premises. 36. The record reflects the Appellant participated extensively in the proceedings over a prolonged period of time, raised its defences, and also gave written submissions denying liability and malafide on its part. 37. Thus, it cannot be said that the Appellant was in the dark about any allegation against it or that it was caught by surprise during the proceedings. In such circumstances, it cannot be held that there was any failure of natural justice with respect to the Appellant. Thus, this contention of the Appellant is accordingly rejected." 70. In view of my findings hereinabove, the findi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
