Ballarpur Industries Limited vs State of Haryana and Others

G.S. Singhvi, J.—This petition is directed against the order Annexure-P 7 by which the Director, Development and Panchayats, Haryana-cum-Appellate Authority has dismissed the appeal filed by the petitioner under Rule 3(13) of the Haryana Rural Development Rules, 1987 against the recovery of penalty and interest from the petitioner. The petitioner has also challenged the subsequent orders passed by the Assessing Authority directing it to deposit Rs. 4,43,845.70.

Admitted facts which have come on record show that the petitioner''s unit at Yamunanagar is engaged in the manufacture of paper, caustic soda, chlorine, vegetable products etc. One of the raw-materials used for manufacture of paper is Bhabber grass. The petitioner challenged levy of market fee on bhabber grass by filing CWP No. 9869/92 which was dismissed by the High Court on 9.7.1993 on the basis of the an earlier decision in Bohra Mills Vs. The State of Haryana and Others, . Thereafter the petitioner deposited a sum of Rs. 9,36,934.48 towards market fees for the period 1.9.1987 to 16.6.1993. In the meantime, the petitioner was served with notice Annexure-P.1 requiring it to deposit Rs. 4,68,467.24 towards Rural Development Fund in accordance with the provisions of the Haryana Rural Development Act, 1986 and the Rules framed thereunder. The petitioner is said to have approached the Assessing Authority for permission to pay the aforesaid amount in instalments. This request of the petitioner does not seem to have been accepted because on 9.10.1993, the Assessing Authority-cum-Executive Officer and Secretary of the Market Committee issued Annexure-P.2 and directed the petitioner to pay penalty and interest on the amount of Rural Development Fund. This has been done by the said officer under Rule 3(1), (2) and (9) of the Haryana Rural Development Fund Rules, 1987. The petitioner instituted an appeal against the order passed by the Assessing Authority but it was dismissed on the ground of non-deposit of the amount of interest and penalty. This decision was challenged through CWP No. 141172/94. A Division Bench of this Court disposed of the writ petition with a direction to the Appellate Authority to hear and decide the appeal of the petitioner on merits on petitioner depositing the amount of fees with the further stipulation that the Appellate Authority shall not insist on deposit of amount of fine and interest as a condition precedent for hearing of the appeal. Thereafter, the Appellate Authority passed the impugned order Annexure-P.7 and dismissed the appeal by observing that the appellant has not come with clean hands and no cogent grounds have been given by the appellant for acceptance of the appeal. Immediately, thereafter, the petitioner has been served with Annexures-P.8, P.9 and P.10 calling upon it to deposit the balance amount of Rs. 4,43,845.70.

The petitioner has assailed the order passed by the Appellate Authority on the ground that it has been passed in disregard of the order passed by the High Court directing the Appellate Authority to hear and decide the appeal on merits. It has been pleaded that the Appellate Authority has failed to decide the appeal on merits and no cogent reason has been assigned for dismissing the appeal. The petitioner also challenged the levy of penalty and interest on the ground that no action oriented notice or opportunity of hearing was given to it before the Assessing Authority passed the order imposing penalty upon it. The respondents have defended the order passed by the Appellate Authority as well as the levy of penalty and interest by stating that the petitioner deliberately failed to deposit the amount of Rural Development Fund and with-held the money belonging to the Market Committee.

We have heard learned counsel for the parties and have gone through the record of the case.

While deciding CWP No. 14172/84, this Court did give a clear direction to the Appellate Authority to hear and decide appeal filed by the petitioner on merits on deposit of amount of fees within a period of seven days. This obviously meant that the Appellate Authority would apply its mind to the various points raised by the petitioner in support of its appeal and then adjudicate the same. A look at the order Annexure-P.7 shows that after reproducing the factual aspect of the case and noticing the arguments of the parties, the Appellate Authority has dismissed the same by recording the following conclusion:-

"The ignorance of law is no excuse. Even the company came in appeal without complying with the provisions of Rules 3(13) of the Haryana Rural Development Rules, 1987. The compliance of Rules 3(13) was made by the firm on 11.10.1994 only on the direction of the Hon''ble Punjab and Haryana High Court in CWP No. 14172/94 vide its order dated 3.10.1994 filed by the appellant himself. Thus the appellant company never came with clean hands. The appellant-company could not give any cogent reason for accepting the appeal which is dismissed."

This shows that the Appellate Authority has not at all examined the merit of the contentions raised on behalf of the petitioner in support of its appeal and it has dismissed the same solely on the premise that the appellant did not deposit the amount under Rule 3(13) till the High Court passed the order and this conduct of the appellant was unjustified. It must, therefore, be held that the Appellate Authority has passed the impugned order in violation of the direction given by the High Court to it to decide the appeal on merits.

We would have ordinarily remanded the case to the Appellate Authority by quashing the order Annexure-P.7 but after having considered the arguments of the learned counsel regarding the validity of the action of the Assessing Authority to impose penalty and levy interest, we are satisfied that the order passed by the Assessing Authority is liable to be quashed only on the ground of violation of principles of natural justice. The Assessing Authority did not give any action oriented notice to the petitioner proposing imposition of penalty and levy of interest and no opportunity of hearing was afforded to the petitioner before Annexure-P.2 was issued. Rule 3(9) of 1987 Rules requires issuance of a show cause notice to a party against whom an order for imposition of fine is proposed to be passed. This necessarily means that the affected person can submit reply and put forward its case against the imposition of penalty. Admittedly, no such notice was given to the petitioner and, therefore, there is no escape from the conclusion that the order imposing penalty has been passed in violation of rules as well as the principles of natural justice.

For the reasons mentioned above, the writ petition is allowed, orders Annexures-P.7 and P.2 as well as the communications Annexures-P.8, P.9 and P.10 are quashed. Liberty is, however, given to the Assessing Authority to pass fresh order after giving opportunity of hearing to the petitioner. The petitioner is directed to appear before the Assessing Authority on 8.7.1996. We make it clear that issue of interest will also be considered and decided by the Assessing Authority after hearing the petitioner''s representative.