Oswal Oil and Soap Industries vs Customs, Excise and Gold Control Appellate Tribunal and Others

Sukhdev Singh Kang, J.—Messrs Hindustan Lever Limited, Bombay, applicant, have filed Civil Misc. No. 992 of 1986 under Order 1, Rule 10, read with Section 151 Civil Procedure Code, for being impleaded as a respondent or intervener in the writ petition (No. 3120 of 1985 - Oswal Oil and Soap Industries and Anr. v. The Custom Excise and Gold Control Appellate Tribunal and Ors.) pending in this Court.

''Messrs Oswal Oil and Soap Industries Proprietors Oswal Agro Mills Ltd. and another have filed Civil Writ Petition No. 3120 of 1985 against respondents, seeking inter alia the issuance of a writ of mandamus, directing respondents 3 and 4 to forthwith carry out the orders passed by respondent Nos. 1 and 2 and refund the petitioners a sum of Rs. 1,31,04,811.89 paid by them as duty and a writ of certiorari quashing show cause notice dated 10th February, 1985 as well as the orders dated 10th May, 1985, passed by the Assistant Collector. The petitioners have pleaded in the writ petition that petitioner No. 1 among other things carries on the trade and business activities of manufacture of soap and oils. The petitioner No. 1 had filed a classification list under Rule 173B of the Central Excise Rules, 1944, effective from 25th September, 1980, seeking the classification of hydrogenated rice bran oil (HRBO) under Central Excise Tariff Item No. 12 which inter alia covers vegetable non-essential oils of all sorts and no Excise duty is payable on them. The Assistant Collector, Central Excise (ACE), Ludhiana, vide his order dated 3rd February, 1981, held that HRBO fell under Tariff Item No. 68 which attracted 8% to 10% duty at the relevant time. Consequently, the petitioner paid excise duty on HRBO manufactured by them. The Collector (Appeals) allowed the appeal filed by the petitioners mainly-relying on the decisions of the Central Excise and Gold Control Appellate Tribunal (for short ''the Tribunal'') which is the apex adjudicatory authority under the Central Excise and Salt Act held that HRBO manufactured by the petitioners would fall under Tariff Item No. 12 and not Tariff Item No. 68. He set aside the order dated 3rd February, 1981, passed by ACE, Ludhiana, and directed that HRBO manufactured by the appellant should be classified under Item No. 12. Despite repeated requests of the petitioners, the departmental authority did not refund the Excise duty paid by the petitioner on HRBO. ACE issued a show cause notice dated 10th February, 1985, to petitioner No. 1 stating that grounds of refund had been examined along with other evidence and he tentatively held that refund was not admissible for the reasons grounds mentioned in the show cause notice. The Revenue filed an appeal before the Tribunal and also moved an application seeking stay of the operation of the impugned order passed by the Collector (Appeals). The Tribunal vide order dated 11th April, 1985, rejected the application for stay filed by the Revenue. The appeal is still pending before the Tribunal. That ACE has vide orders dated 10th May, 1985 turned down the request of the petitioners for refund of excise duty paid by them. They have filed Civil Writ Petition No. 3120 of 1983.

The applicant has averred in its application that Messrs Oswal Oil and Soap Industries (for short ''the writ petitioner'') was engaged in the manufacture of Hydrogenated Rice Bran Oil (for short HRBO''); that the writ petitioner cleared the HRBO manufactured by it on payment of excise duty as the Excise Authorities were of the view that HRBO is classifiable under Tariff Item No. 68 of the First Schedule of the Central Excise and Salt Act (hereinafter referred to as ''the Act''); and not under Tariff Item No. 12 during the relevant period. That the writ petitioner recovered from the applicant a sum of Rs. 80,29,038.90 as Excise duty in respect of sale of HRBO to the applicant-Bombay Factory and Rs. 18,42,000/- approximately in respect of sale of HRBO to the applicant-Calcutta Factory. This happened during the period of October, 1980 to July, 1983. The applicant used the HRBO purchased by it from the writ-petitioner as a raw material for manufacturing soap. The Central Government vide notification No. 201/79= CE dated 4th June, 1979, framed an exemption Scheme, whereunder the duty paid on HRBO, which was used as raw material in the manufacture of soap was refunded by allowing a proforma credit to the manufacture of finished goods/products. In view of the notification referred to above, the applicant availed of refund of tune of Rs. 98,71,000/- by way of credit against the clearance of finished goods viz. soap while paying duty thereon. The net payment of excise duty to the Department on account of the clearance of the said HRBO was, therefore, nil. The incidence of the Excise duty on the writ-petitioner was also nil as it had got full refund/reimbursement of the duty from the applicant. That the question whether HRBO falls under Tariff Item No. 68 or Tariff Item No. 12 is pending consideration of the Appellate Tribunal, New-Delhi, as well as the Supreme Court of India. In case it is ultimately held by the Supreme Court of India that HRBO falls under Item No. 68 and not under Item No. 12, the writ petition will be liable to be dismissed on this ground alone. It was further pleaded that in the writ petition a prayer has been made for the refund of Rs. 1,31,04,811.89 paid as Excise duty on HRBO which has already been collected by the writ-petitioner from the applicant and other purchasers of HRBO during the relevant period. The applicant and other purchasers had, thereafter obtained refund of excise duty by way of proforma credit from the Department while paying the Excise duty on finished goods manufactured by them. It is contended that a notice had been issued by the Range Superintendent Central Excise, Bombay, to the applicant on January 14, 1986, for reversing the credit availed earlier and paying back a sum of Rs. 80,29,038.90 paise in respect of purchase of HRBO by the factory at Bombay. A copy of the notice had been attached as Annexure ''A''. It is stated that if the writ petition is allowed, the applicant will be seriously affected and gravely prejudiced as it might have to pay a sum of over Rs. 80 lakhs to the Department under the aforesaid notice Annexure ''A''. In case the applicant is not impleaded as a respondent or allowed to intervene, it will result in unnecessary multiplication of litigation. It was contended that the applicant will place before the Court certain relevant and material facts which had been withheld by the writ-petitioner in the writ petition.

Notice of this application was given to the writ petitioners who have stoutly opposed this application. A reply has been filed to the application in which material factual averments made by the applicant have been controverted. It has been further pleaded that the applicant was not a party before the Authorities at any stage. It is neither necessary nor a property party. The application should be dismissed.

During the pendency of this application, another application (Civil Misc. No. 1088 of 1986) was filed on 4th April, 1986, seeking permission to place on the record a rejoinder to the reply filed by the writ petitioner in Civil Misc. No. 992 of 1986. Still another application (Civil Misc. No. 1083 of 1986 dated 4th April, 1986) was filed in which it was prayed that the Excise duty should not be refunded to the writ-petitioner, but should be refunded to the applicant and other purchasers of HRBO. All these three applications are proposed to be disposed of by this order.

The writ petitioner has filed a writ petition against the Authorities exercising jurisdiction under the Act. The writ petitioners had classified the HRBO under Tariff Item No. 12, but the ACE did not accept the stand of the petitioner and vide order dated 3rd February, 1981, classified HRBO under Tariff Item No. 68. The writ petitioner had cleared the HRBO manufactured by it on payment of Excise duty.

Dissatisfied with the orders of the Assistant Collector, Ludhiana, the writ petitioner filed an appeal. The Appellate Authority under the Act mainly relying on Adjudicatory judgments of the Tribunal, which is the apex Authority under the hierarchy of the Departmental Authorities, held that HRBO was classifiable under Tariff Item 12, during the relevant period. It may be mentioned here that goods classifiable under Tariff Item No. 12 during the relevant period did not bear any Excise duty. Aggrieved by order of the Collector, the Revenue went up in appeal before the Tribunal. The Revenue also moved an application for the stay of the operation of the order of the Collector. After hearing the parties the stay application was turned down by the Tribunal. The appeal of the Department is still pending before the Tribunal, the Assistant Collector, despite the orders passed by the Collector and the Tribunal in the application for a stay declined to refund the Excise duty paid by the writ-petitioner on HRBO. The writ petitioner filed Civil Writ Petition No. 3120 of 1985, seeking the issuance of a writ of mandamus, directing the respondents to refund the Excise duty paid by him and writ of certiorari quashing notice dated 10th February, 1985, and orders dated 10th May, 1985. The respondents have resisted the writ petition. They oppose ''the grant of relief to the petitioner on various grounds. The writ petitioners seek a direction to respondent Nos. 3 and 4 to give effect to the order passed by the Collector (Appeals) and the Tribunal to refund the Excise duty paid by them on HRBO. The respondents are vigorously opposing this prayer.

From a perusal of the pleadings of the parties, it becomes apparent that the writ-petitioners pray that a writ of mandamus should be issued directing respondents 3 and 4 to carry out the orders passed by respondents 1 and 2 and to refund the petitioners a sum of Rs. 1,31,04,811.89 and further pray that a writ of certiorari quashing a show cause notice dated 10th February, 1985 and orders of the Assistant Collector dated 10th May, 1985 be issued. The petitioners seek the assistance of this Court for compelling respondents 3 and 4 to give effect to the orders passed by respondents 1 and 2. The writ ''petitioners do not seek any relief against the applicant. The applicant was not a party to the proceedings before the respondents and in the proceedings taken by the writ petitioners. The applicant is not directly affected by the orders passed by any of the respondents. This Court has framed rules, which are titled as Writ Jurisdiction Punjab and Haryana Rules, 1976 for the trial and disposal of writ petitions. According to Rule 32, the provisions of Code of Civil Procedure, 1908 shall apply mutatis mutandi in all matters in which no provision is made by these rules and in so far as they are not inconsistence with them. The provisions of Rule 10 of Order 1 of the CPC are, therefore, squarely attracted to the applications for impleading of parties to the writ petitions. The application for being impleaded as a party in fact has been made under Rule 10 of Order 1, read with Section 151 of the Code of Civil Procedure. It will, therefore, be appropriate to keep in mind the principles underlying Rule 10, ibid, as enunciated by the courts. The Final Court in Razia Begum v. Sahebzadi Anwar Begum and Ors., AIR 1958 Supreme Court 886 have observed:

"The question of addition of parties under Rule 10 of Order 1 of the CPC is generally not one of initial jurisdiction of the Court, but of a judicial discretion which has to be exercised in view of all the facts and circumstances of a particular case, but in some cases, it may raise controversies as to the power of the court, in contradistinction to its inherent jurisdiction, or in other words, of jurisdiction in the limited sense in which it is used in Section 115 of the Code. In a suit relating to property, in order that a person may be added as a party, he should have a direct interest as distinguished from a commercial interest, in the subject-matter of the litigation."

So, the interest of person, who claims to be impleaded as a party in a suit relating to property must'' be direct and not merely commercial. The ambit and true scope of sub-para (2) of Rule 10 was defined succinctly by Sarkaria, J. (as his Lordship then was) in Banarsi Dass Durga Prashad Vs. Panna Lal Ram Richhpal Oswal and Others, :

"Under sub-para (2) of Order 1, Rule 10, a person may be added as a party to suit in two cases only, i.e. when he ought to have been joined and is not so joined, i.e. when he is a necessary party, or, when without his presence the questions in the suit cannot be completely decided. There is no jurisdiction to add a party in any other case merely because that would save a third person the expense and botheration of a separate suit for seeking adjudication of a collateral matter, which was not directly and substantively in issue in the suit into which he seeks intrusion."

The learned Judge had quoted with approval the famous dicta, on the subject, of Lord Justice Lindley in the celebrated authority of Moser v. Marsden (1892) 1 Ch 487. It is thus clear that a person cannot be impleaded as a defendant to the suit, who was not directly interested in the subject-matter thereof. It was further observed in the abovementioned case that ''a person may not be added as a defendant merely because he would be incidentally affected by the judgment''.

Still another principle was laid down in this case that as a rule, the Court should not add a person as a defendant in a suit when the plaintiff is opposed to such addition. The reason is that the plaintiff is dominus litis. He is the master of the suit. He cannot be compelled to fight against a person against whom he does not claim any relief. If opposition by the plaintiff to the addition of parties is to be disregarded as a rule, it would be putting a premium on the undesirable practice of third parties intruding to ventilate their own grievances, into a litigation commenced by one at his own expense against another. In exercising that discretion, the Courts will invariably take into account the wishes of the plaintiff before adding a third person as a defendant to his suit. Only in exceptional cases, where the Court finds that the addition of the new defendant is absolutely necessary to enable it to adjudicate effectively and completely the matter in controversy between the parties will it add a person as a defendant without the consent of the plaintiff.

In Kaka Singh Vs. Rohi Singh and Others, S. Narula, C.J. (as his lordship then was) followed the ratio in Banarsi Dass''s case (supra) and held that the powers given to the High Court under Rule 10(2) of Order 1 of the CPC confined only to two cases namely, (i) when a party ought to have been joined, but has not been joined as a party, i.e. when he is a necessary party and (ii) when without the presence of the applicant the question in the suit cannot be completely decided. It was further observed:

"In allowing or disallowing an application under Order 1, Rule 10 of the Code, what has to be seen is whether the addition of a new party would be consistent with the scope of the enquiry as necessitated in the pending suit and whether in the absence of such a party it would not be possible to completely and effectively dispose of the controversy in the pending suit and not that some suit may be avoided."

The learned Chief Justice had quoted with approval the following observations of Sodhi, J. in Manmohan Singh Vs. Sat Narain and Another, :

"... What has to be seen in allowing or disallowing an application under Order 1, Rule 10 of the Code is whether the addition of a new party would be consistent with the scope of the inquiry as necessitated in the pending suit and that in the absence of such a party it would not be possible to completely and effectively dispose of the controversy in the pending suit and not that some other suit may be avoided."

So, it we apply these principles to the facts and circumstances of the present case, then the application for being impleaded as a defendant deserves dismissal. The applicant is admittedly not a necessary party. It was not necessary for the writ petitioners to join the applicant as a respondent to the writ petition. The applicant has no direct interest in the subject-matter of the suit. The lis is between the writ petitioners and the respondents, who are authorities under the Act. For determining the real issue between the parties the presence of the applicant is not at all necessary. The applicant is not going to be directly affected by the result of the writ petition. It may be stated to the credit of Shri H.L. Sibal, Sr. Advocate, the learned counsel for the applicant, that he very candidly conceded that the applicant, did not fulfil the traditional requirements of Sub-rule (2) of Rule 10 of Order 1 of the Code of Civil Procedure.

Shri Sibal, however, raised a somewhat interesting if not ingenious argument, that the applicant and other purchasers had paid Excise duty on the HRBO purchased by them from the writ petitioners. If the writ petition is allowed they shall be able to get back the Excise duty paid by them which they had in fact charged from the applicant and other purchasers. This will lead to his undue enrichment which has been frowned upon by the Final Court in The Newabganj Sugar Mills Co. Ltd. and Others Vs. The Union of India (UOI) and Others, and Shiv Shankar Dal Mills and Others Vs. State of Haryana and Others, . If the application is allowed the applicant will assist the Court in determining the real controversy between the disputants. The argument has not commended itself to me. The writ petition is being hotly contested by the respondents. They are effectively represented by their Standing Counsel. They have raised all possible defences including the defence of the petitioners'' illegal enrichment in the written statement. For projecting the view point of the Revenue no outside assistance is needed. In fact during the course of the arguments of this application, 1 had specifically asked Shri H.S. Brar, the learned counsel for the Revenue, as to whether they were contesting the writ petition. He emphatically said that the Revenue was opposing the writ petition whole-heartedly. He further stated that they were competent to look after their interest and were not in need of any outside assistance.

It is true of late the traditional rule in regard to locus standi has received a liberal construction. Courts have carved out many exceptions to this rule and those have been succinctly culled out in the judgment of Bhagwati, J. (as the learned Chief Justice then was) in S.P. Gupta Vs. President of India and Others, . A rate payer of local authority can question the action of the municipality in granting cinema licence. A convict can espouse the cause of a fellow prisoner and file a habeas corpus petition. Public spirited professors were allowed to espouse the cause of helpless inmates of protective home at Agra, seeking an enforcement of the constitutional rights of the inmates under Article 21 of the Constitution by improvement of the living conditions so that inmates can live with human dignity. Again where a legal wrong or a legal injury is caused to a person or to a determinate class of persons by reason of violation of any constitutional or legal right or any burden is imposed in contravention of any constitutional or legal provision or without authority of law and such person or determinate class of persons is by reason of poverty, helplessness or disability or socially or economically disadvantaged position, unable to approach the Court for relief, any member of the public can maintain an application for an appropriate direction order or writ in the High Court under Article 226 or the Final Court, in case of any breach of any fundamental right under Article 32 of the Constitution. Similarly, where weaker sections of Society are concerned, such as under-trial inmates of the Protective Home in Agra or Harijan workers engaged in road construction, who are living in poverty and destitution, and were helpless victims of an exploitative society, the Court will not insist on a regular writ petition to be filed. At the same time, a note of caution was struck. It was observed:

"But we must hasten to make it clear that the individual who moves the Court for judicial redress in cases of this kind must be acting bona fide with a view to vindicating the cause of justice and if he is acting for personal gain or private profit or out of political motivation or other oblique consideration, the Court should not allow itself to be activised at the instance of such person and must reject his application at the threshold...."

It is clear from Civil Misc. Application No. 1083 of 1986 that the applicant wants that the writ petition should be dismissed and, if in any case, the same has to be allowed then the Excise duty paid by the writ-petitioner should be refunded to the applicant. The intention of the applicant is not to assist the Court for "asking those who claim the service of the judicial Process to embrace the basic rule of distributive justice by consenting to restore little sums, taken in little transactions, from little persons, to whom they belong." (See Shiv Shankar Dal Mills and Others Vs. State of Haryana and Others, ). The applicant who is claiming Rs. 80 lacs is no little person. The applicant''s motive in being impleaded as a respondent is only for personal gain and private profit. It wants that the Excise duty paid by the writ-petitioner should not be paid back to him and it should in fact be paid to ''the applicant. This type of intermedling with the smooth course of justice could not be countenanced. In the context of the enlarged scope of locus standi, the application of the applicant is not bona fide. It is just to obtain a personal gain in proceedings filed by a third party.

The application has no merit and is liable to be dismissed. No case is made out for granting permission to file a rejoinder to the reply of the writ petition. Civil Misc. Petition No. 1088 of 1986 is declined.

For the foregoing reasons, I dismiss Civil Misc. Petition No. 992 and Civil Misc. Petition No. 1083 of 1986 with costs. Counsel fee is assessed at Rs. 500/-.