Tuesday, April 20, 2010

RAMDAS ATJAWALE Versus UNION OF INDIA & ORS

(A) Constitution of India, 1950 — Articles 85 and 87 — interpretation of — petitioner challenged the validity of the proceedings in the Lok Sakha commencing from 29th January, 2004 on the ground that the President has not addressed both Houses of Parliament as envisaged under Article 87 of the Constitution — evidence on record that the House was adjourned sine die on 23rd December, 2003 and the resumption of its sittings on 29th January 2004 is nothing but reconvening of the same Session after its adjournment sine die. It is the second part of the same session — this Court held that no special address by the President under Article 87(1) required, if a Sessions is adjourned sine die in the previous year and the sittings of the same Session is resumed in the next year — petition dismissed. (B) Constitution of India, 1950 — Article 122 — Courts not to inquire into proceedings of Parliament — Article 32 — petition under — whether the decision of the Speaker directing resumption of sitting of the Lok Sabha which was adjourned sine die on 23rd December, 2003 is susceptible to judicial review in a proceeding under Article 32 of the Constitution of India — No — this Court held that an allegation of breach of law or a Constitutional provision does not automatically involve an action in breach of fundamental right — petition dismissed — no costs.

Supreme Court of India

WRIT PETITION (CIVIL) NO. 86 of 2004

Judge(s): K.G. BALAKRISHNAN,...............P. SATHASIVAM

Date of Judgment: Monday, March 29, 2010

RAMDAS ATJAWALE  Versus  UNION OF INDIA & ORS

JUDGMENT

B. SUDERSHAN REDDY, J.

This writ application under Article 32 of the Constitution of India has been filed by a Member of Lok Sabha, challenging the validity of the proceedings in the Lok Sakha commencing from 29th January, 2004 on the ground that the President has not addressed both Houses of Parliament as envisaged under Article 87 of the Constitution. The prayer in the writ petition is to issue appropriate Writ or direction or order declaring that the Session of the Lok Sabha called by the Notice dated January 20, 2004 is the first Session in the year 2004; and the proceedings of the Lok Sabha pursuant to the Notice dated 20th January, 2004 are unconstitutional, illegal, null and void.

2. The case set up by the petitioner is that the Session commenced on 29th January, 2004 was the first Session of the Lok Sabha in the year 2004, and there was no address by the President informing the Parliament, the cause of its summons as provided for and required under Article 87 (1) of the Constitution of India. The contention of the petitioner was that the "first Session" means, the Session, which is held first in point of time in a given year. According to him, the Session, which commenced on 29th January, 2004 was the first Session of the House of the year 2004. The sittings thereafter continued up to 5th February, 2004.

3. There is no dispute before us that the Fourteenth Session of the Thirteenth Lok Sabha commenced on 2nd December, 2003 and was adjourned sine die on 23rd December, 2003. Thereafter on 20th January, 2004, the Secretary General of the Lok Sabha, by way of a Notice informed all the Members of the Thirteenth Lok Sabha, duly stating that under Rule 15 of the Rules of Procedure and Conduct of Business in Lok Sabha, the Speaker has directed that the Lok Sabha, which was adjourned sine die on 23rd December, 2003 will resume its sittings on 29th January, 2004.

4. Learned counsel for the petitioner submitted that in terms of mandatory requirement as provided for in Article 87 (1) of the Constitution of India, the President has to address both Houses of Parliament at the commencement of the Session every year and inform the Parliament of the causes of its summons. It was submitted that the commencement of the first Session of each year has to be with reference to the first Session of each year and year shall mean a year reckoned according to British calendar. The contention was that the sittings of the Lok Sabha from 29th January, 2004 were unconstitutional or it could not have been assembled at all in the absence of special address of both the Houses of Parliament by the President. The House of People could have assembled only after the special address by the President.

5. The learned Attorney General submitted that in the instant case the Winter Session of Parliament had commenced on 2nd December, 2003 and was adjourned sine die on 23rd December, 2003. The House resumed sitting of that adjourned Session in pursuance of the Notice of the Secretary General dated 20th January, 2004 under Rule 15 of the Rules of Procedure and Conduct of Business in Lok Sabha. It was submitted that the sitting commenced on 29th January, 2004 was not the commencement of a new Session, but was a continuation of Winter Session, which was adjourned on 23rd December, 2003. The learned Attorney General further submitted that the word "first Session" of the year in Article 87 cannot refer to the resumption of the adjourned Session. It must refer to a new Session. It was submitted that the distinction in procedure between the resumption of an adjourned Session and summoning of a new Session may have to be borne in mind for the purpose of interpretation of Article 87 (1) of the Constitution of India. The submission was that, for the resumption of an adjourned Session, the Speaker, under Rule 15 of the Rules of Procedure and Conduct of Business in Lok Sabha, directs issuance of a notice informing the Members of the next sitting of the Session. But if the House is prorogued, it is only the President who can summon the next Session of the Parliament. It was submitted that in the present case, Article 87 (1) has no application, as the Winter Session was only resumed on 29th January, 2004 and no new Session was summoned.

6. In dealing with these contentions, we shall follow the sequence of events and examine the constitutionality of each happening that would clearly demonstrate that the matter lies in a narrow compass than what has been made to appear.

7. In the United Kingdom the Queen and two Houses of Parliament constitutes the Legislature so that the Queen is an integral part of the Legislature.

8. In India the same model has been adopted. Article 79 of the Constitution provides that there shall be a Parliament for the Union, which consists of the President and the two Houses to be known respectively as the Council of the State and the House of the People. Article 83 (2) provides that the House of the People, unless sooner dissolved, shall continue for five years from the date appointed for its first meeting and no longer and the expiration of the said period of five years shall operate as a dissolution of the House, except during a proclamation of Emergency, the period of five years may be extended for a period not extending one year at a time, and not extending in any case beyond six months after such proclamation cease to operate. Under Article 85 (1), the President has to summon each House of the Legislature at such time and place as he thinks fit, so that six months do not intervene between its last sitting in one Session and its first sitting in the next. Article 85 (2) provides as follows:

"The President may from time to time--

(a) prorogue the Houses or either House; and (b) dissolve the House of the People."

9. Article 86 speaks about Right of the President to address and send messages to Houses.

10.The scheme of the Constitution, as is evident from the compendium of Articles referred to hereinabove, reveals that Union Parliament consists of the President and the Council of States and the House of the People unless dissolved earlier, the House of the People continues for five years from the date of its first meeting, and the expiration of five years operates as a dissolution of the House except that during proclamation of Emergency, the period of five years may be extended at a time not exceeding one year and not extending in any case beyond six months after such proclamation has ceased to operate. The President is under constitutional mandate to summon each House of the Parliament from time to time to meet at such time and place as he thinks fit. The President alone is vested with the power to summon the House from time to time and prorogue the House or either House; and to dissolve the House of the People. The President has a right to address either House or both the Houses together and for that purpose require the attendance of Members. He may send messages to either House of Parliament, whether with respect to a Bill then pending in Parliament or otherwise, and the House to which message is sent is required to take the same into consideration.

11.Article 87 is an important Article for our present purpose and it reads as follows:

"87. Special address by the President:- (1) At the commencement of the first session after each general election to the House of the People and at the commencement of the first session of each year the President shall address both Houses of Parliament assembled together and inform Parliament of the causes of its summons.

(2) Provision shall be made by the rules regulating the procedure of either House for the allotment of time for discussion of the matters referred to in such address."

12.A plain reading of Article 87 clearly suggests that (a) the President shall address at the commencement of the first session after each general election to the House of the People; and (b) at the commencement of the first session of each year.

13.The question is whether in this case was there any failure in complying with the requirement as provided for under Article 87 (1) of the Constitution?

14. In the present case, the Winter session of the House of the People commenced on 2nd December, 2003 and was adjourned sine die on 23rd December, 2003. The resumption of its sittings on 29th January, 2004, by no stretch of imagination, could be characterized as commencement of a new session. The House merely resumed its sittings and continued the Session which actually commenced on 2nd December, 2003. As it is evident from the record, the House was adjourned sine die on 23rd December, 2003, the resumption of its sittings is nothing but reconvening of the same Session after its adjournment sine die. It is the second part of the same session.

15. The words "first session of the year" employed in Article 87 (1) has no reference to resumption of the adjourned session. The session commences with the President's summoning the House to meet. It is Article 85 which deals with the summoning of Sessions of Parliament, prorogation and dissolution of the House of People. The constitutional provision does not require summoning of every Session of Parliament which was adjourned for its own reasons after commencement of its Session pursuant to the summons of the President. It is only when a House is prorogued and a new Session thereafter summoned under Article 85 (2) of the Constitution, the special address by the President as provided for under Article 87 (1) is required with reference to the new Session so as to inform the Parliament of the cause of its summons. No such special address is needed, if a Sessions is adjourned sine die in the previous year and the sittings of the same Session is resumed in the next year.

16.Articles 85 and 87 were amended so as to do away with the summoning of Parliament twice a year and the constitutional requirement of the President's special address at the commencement of each Session. The present constitutional position is that not more than six months are to elapse between the last Session and the first day of the following Session. The House is now prorogued only once a year and the President addresses both Houses of Parliament only at the commencement of the first Session of each year.

17.Article 87, as it originally stood, provided for the President's address in `every Session of the year'. The first amendment in 1951 substituted the words "every Session" by "first Session of each year". By the first amendment, Articles 85 and 174 were also amended. While intervening in the debate Dr. B.R. Ambedkar, with reference to amendment to Article 85, stated:

"...due to the word summon, the result is that although Parliament may sit for the whole year adjourning from time to time, it is still capable of being said that Parliament has been summoned only once and not twice.

There must be prorogation in order that there may be a new session. It is felt that this difficulty should be removed and consequently the first part of it has been deleted. The provision that whenever there is a prorogation of Parliament, the new session shall be called within six months is retained."

(emphas is supplied)

18. Kaul & Shakdher's Practice and Procedure of Parliament (Fifth Edition, at page 180) gives the background to the aforesaid amendment and observed:

"Before article 87(1) was amended in its present form by the Constitution (First Amendment Act, 1951, the article required the President to address both the Houses assembled together at the commencement of each session. Accordingly, the President addressed each of the three sessions held in 1950 of the Provisional Parliament.

During the Third Session, a question arose whether the next session might commence with the President's Address or would the session be merely adjourned to meet again on 5 February, 1951, which would obviate the necessity of the President's Address. Speaker Mavalankar, in this connection, suggested that instead of the President addressing each session, it might be provided that he would give his Address at the commencement of the first session (First Amendment) Bill, 1951, as reported by the Select Committee, observed: "The real difficulty of course is that this (Address) involves a certain preparation outside this House which is often troublesome. Members are aware that when a coach and six horses come, all kinds of things have to be done for that purpose.

Anyhow, that trouble does not fall on the House or members thereof, but on the administration of Delhi"."

Distinction between Prorogation and Adjournment:

19. In the matter of Special Reference No. 1 of 20021, a Constitution Bench of this Court while interpreting Article 85 (2) of the Constitution observed:

"When the House is prorogued, all the pending proceedings of the House are not quashed and pending Bills do not lapse. The prorogation of the House may take place at any time either after the adjournment of the House or even while the House is sitting. An adjournment of the House contemplates postponement of the sitting or proceedings of either House to reassemble on another specified date. During currency of a session the House may be adjourned for a day or more than a day. Adjournment of the House is also sine die. When a House is adjourned, pending proceedings or Bills do not lapse." (emphasis supplied)

20.An adjournment is an interruption in the course of one and the same Session, whereas a prorogation terminates a Session. The effect of prorogation is to put an end with certain exceptions to all proceedings in Parliament then current.

21.In May's Parliamentary Practice, which has assumed the status of a classic on the subject and is usually regarded as an authoritative exposition of Parliamentary practice; it is stated:

"A session is the period of time between the meeting of a Parliament, whether after the prorogation or dissolution, and its prorogation.....During the course of a session, either House may adjourn itself of its own motion to such as it pleases. The period between the prorogation of Parliament and its reassembly in a new session is termed as 1 `recess'; while the period between the adjournment of either House and the resumption of its sitting is generally called an `adjournment'."

22.Kaul & Shakdher's Practice and Procedure of Parliament further explains the constitutional position succinctly stating "the session of Lok Sabha comprises the period commencing from the date and time mentioned in the order of the President summoning Lok Sabha and ending with the day on which the President prorogue or dissolves the Lok Sabha. It is thus clear that a Session commenced in terms of the order of the President summoning the House can come to an end only with the day on which the President prorogue the House or dissolves Lok Sabha. The Parliamentary Practice prevalent till then has been noticed in the same treatise which is to the following effect:

"The Eighth Session of the Eighth Lok Sabha commenced on 23 February, 1987 and was adjourned sine die on 12 May, 1987. The Lok Sabha, however, was not prorogued. On a proposal from the Minister of Parliamentary Affairs, the Speaker, exercising his powers under proviso to Rule 15 of the Rules of Procedure and Conduct of Business in Lok Sabha, agreed to reconvene the sittings of Lok Sabha from 27 July to 28 August, 1987. The two parts, preceding and following the period of adjournment of Lok Sabha sine die on 12 May, 1987, were treated as constituting one session divided into two parts namely, Part I and Part II. On conclusion of the second part of the Eighth Session, Lok Sabha adjourned sine die on 28 August, 1987 and was prorogued on 3 September, 1987."

23. It is thus clear that whenever the House resumes after it is adjourned sine die, its resumption for the purpose of continuing its business does not amount to commencement of the session. The resumed sitting of the House, in this case, on 29th January, 2004, does not amount to commencement of the first Session in the year 2004.

Speaker's Ruling:

24. The very issue regarding propriety of convening of the first session of the House on 29th January, 2004 without the Presidential address was raised in the House. The Speaker gave a ruling declaring that as per the provisions of the Constitution, a session of the House comes to an end when the House is prorogued. As the House was not prorogued after its adjournment sine die on 23rd December, 2003, the session can, at best be treated as a second part of the 14th session of the 13th Lok Sabha "notwithstanding the fact that the calendar year has since changed". The session convened from 29th January, 2004 was held to be second part of the winter session. The ruling of the Speaker is reproduced hereunder:

"Tuesday, February 3, 2004/Magha 14, 1925 (Saka) Ruling by the Speaker - Regarding propriety of (i) terming `Vote on Account' as the `Interim Budget' in the Order Paper of the day; and (ii) convening of the first session of the year on 29 January, 2004 without the Presidential Address.

The Speaker, after hearing ............ gave the following ruling:-

Let me at the outset make it clear that the rulings of the Speaker are generally in accordance with the rules, the rule book and also the Constitution of India. At times, it so happens that the issue requires ruling of Chair and in such circumstances the precedents are seen. If the precedents are not available, then the presiding officer has to make up his own mind and give a ruling on the issues which are raised. In this particular case, fortunately, there are rules of procedure as well as definitions to guide us. I have gone through Erskine May's Parliamentary Practice. I would like the House to listen carefully to the ruling which I am now going to give.

Firstly, let me refer to Erskine May who has given, fortunately, a definition of the term `prorogation'. He has said:

`A prorogation terminates a session; an adjournment is an interruption in the course of one and the same session'.

Therefore, the point which was raised here about prorogation has been made clear by this definition.

................................. But that was not the main point which was raised today. The main point which was raised by Shri Somnath Chatterjee was about the very holding of this Session and this point was also raised in the House by Shri Varkala Radhakrishnan and some other Members on 30th January, 2004 and the Hon'ble Minister of Parliamentary Affairs had responded to the points raised by the Members on that day. Shri Somnath Chatterjee has contended that was commenced on 29th January, 2004 was the first Session of the year. I would like to clarify that there is no mention of adjournment sine die of the House in the Constitution. As per the provisions of the Constitution, a Session of the House comes to an end when the House is prorogued. As the House was not prorogued after its adjournment sine die on 23rd December, 2003 this Session can, at best, be treated as the second part of the Fourteenth Session of the Thirteenth Lok Sabha notwithstanding the fact that the calendar year has since changed.

I am giving an illustration; I am giving a precedent regarding the Third Lok Sabha. On 11th December, 1962 the House adjourned to meet on 21st January, 1963.

This was treated as Part-II of the same Session. I may inform the House that in the past also there have been occasions when after adjournment sine die of the House, the Lok Sabha was re-convened before prorogation.

....For example, the Eighth Session of the Eighth Lok Sabha was adjourned sine die on 12th May, 1987, but the House was not prorogued...and was reconvened after a gap of 75 days on 27th July, 1987 as the second part of the Session. Similarly, the 14th Session of the Eighth Lok Sabha was adjourned sine die on 18th August, 1989, but the House was not prorogued and was reconvened on 11th October, 1989 after a gap of 53 days as second part of the 14th Session.

....There are several other similar instances also. I have already made a reference to the case when the House was adjourned and thereafter, though it was reconvened in the next year, it was not treated as the fresh Session. Therefore I must make it clear that in this particular case also, this Session can be treated as the second part of the Winter Session.

......After listening to the arguments, I have treated this as the second part of the Winter Session. Since under the provisions of the sub-clause (a) of clause (2) of article 85 of the Constitution, the power to prorogue the House vests in the Hon'ble President - please remember that this power is with the Hon'ble President - I am not inclined to allow any more discussion on the issue and I hold both the points of order out of order."

25. The question that arises for consideration in this writ petition is whether the decision of the Speaker directing resumption of sitting of the Lok Sabha which was adjourned sine die on 23rd December, 2003 is susceptible to judicial review in a proceeding under Article 32 of the Constitution of India? Under Article 122 of the Constitution, the Courts are precluded from making inquiry into proceedings of Parliament. Article 122 reads as under:

"122. Courts not to inquire into proceedings of Parliament:- (1):The validity of any proceedings in Parliament shall not be called in question on the ground of any alleged irregularity of procedure.

(2) No officer or member of Parliament in whom powers are vested by or under this Constitution for regulating procedure or the conduct of business, or for maintaining order, in Parliament shall be subject to the jurisdiction of any court in respect of the exercise by him of those powers."

26. A plain reading of Article 122 makes it abundantly clear that the validity of any proceeding in the Parliament shall not be called in question on the ground of any irregularity of procedure. The prayer in the writ petition is to declare the proceedings in the Lok Sabha pursuant to the Notice dated 20th January, 2004 issued under the directions of the Speaker as unconstitutional. The petitioner is essentially raising a dispute as to the regularity and legality of the proceedings in the House of the People. The dispute raised essentially centers around the question as to whether the Speaker's direction to resume sittings of the Lok Sabha which was adjourned sine die on 23rd December, 2003 is proper? The Speaker is the guardian of the privileges of the House and its spokesman and representative upon all occasions. He is the interpreter of its rules and procedure, and is invested with the power to control and regulate the course of debate and to maintain order. The powers to regulate Procedure and Conduct of Business of the House of the People vests in the Speaker of the House. By virtue of the powers vested in him, the Speaker, in purported exercise of his power under Rule 15 of the Rules of Procedure and Conduct of Business in Lok Sabha got issued notice dated 20th January, 2004 through the Secretary General of the Lok Sabha directing resumption of sittings of the Lok Sabha which was adjourned sine die on 23rd December, 2003. Whether the resumed sittings on 29th January, 2004 was to be treated as the second part of the 14th session as directed by the Speaker is essentially a matter relating purely to the procedure of Parliament. The validity of the proceedings and business transacted in the House after resumption of its sittings cannot be tested and gone into by this Court in a proceeding under Article 32 of the Constitution of India.

27.There are two Articles to which reference must be made. Article 118(1) provides that each House of Parliament may make rules for regulating, subject to the provisions of the Constitution, its procedure and conduct of its business. The rules, in fact, are made and known as Rules of Procedure and Conduct of Business in Lok Sabha. Rule 15 of the Rules of Procedure and Conduct of Business in Lok Sabha provides that:

"(1) The Speaker shall determine the time when a sitting of the House shall be adjourned sine die or to a particular day, or to an hour or part of the same day:

Provided that the Speaker may, if he thinks fit, call a sitting of the House before the date or time to which it has been adjourned or at any time after the House has been adjourned sine die.

(2) In case the House, after being adjourned is reconvened under the proviso to sub-rule (1), the Secretary General shall communicate to each member the date, time, place and duration of the next part of the session."

28.Article 118(1) makes it perfectly clear that when the House is to make any rules as prescribed by it, those rules are subject to the provisions of the Constitution which obviously include Fundamental Rights guaranteed by Part III of the Constitution.

29. Similarly, Article 122(1) makes a provision which is relevant. It lays down that the validity of any proceedings in Parliament shall not be called in question on the ground of any alleged irregularity of procedure. Article 122(2) confers immunity on the officers and members of Parliament in whom powers are vested by or under the Constitution for regulating procedure or conduct of the business or for maintaining order in Parliament from being subject to the jurisdiction of any Court in respect of the exercise by him of those powers. This Court In re, Under Article 143, Constitution of India2 (also known as Keshav Singh's case) while construing Article 212(1) observed that it may be possible for a citizen to call in question in the appropriate Court of law, the validity of any proceedings inside the Legislature if his case is that the said proceedings suffer not from mere irregularity of procedure, but from an illegality. If the impugned procedure is illegal and unconstitutional, it would be open to be scrutinized in a Court of law, though such scrutiny is prohibited if the complaint against the procedure is no more than this that the procedure was irregular. The same principle would equally be applicable in the matter of interpretation of Article 122 of the Constitution.

2 1965 (1) SCR 413 30. The Notice dated January 20, 2004 is self-explanatory and reveals that the House was adjourned sine die on 23rd December, 2003 by the Speaker. It is the Speaker's direction to resume its sittings from 29th January, 2004 onwards. The Notice clearly says that it was the second part of the fourteenth session and was likely to conclude on 5th February, 2004. The Speaker's decision adjourning the House sine die on 23rd December, 2003 and direction to resume its sittings e in part two ssentially relates to proceedings in Parliament and is of procedural in nature. The Business transacted and the validity of proceedings after the resumption of its sittings pursuant to the directions of the Speaker cannot be inquired into by the Courts.

31. Under Article 122 (2), the decision of the Speaker in whom powers are vested to regulate the procedure and the Conduct of Business is final and binding on every Member of the House. The validity of the Speaker's decision adjourning the House sine die on 23rd December, 2003 and latter direction to resume its sittings cannot be inquired into on the ground of any irregularity of procedure. The business transacted and the validity of proceedings after the resumption of sittings of the House pursuant to the directions of the Speaker cannot be inquired into by the Courts. No decision of the Speaker can be challenged by a member of the House complaining of mere irregularity in procedure in the conduct of the business. Such decisions are not subject to the jurisdiction of any Court and they are immune from challenge as understood and explained in Keshav Singh's case and further explained in Indira Nehru Gandhi Vs. Raj Narain & Anr.3 wherein it was observed that "the House is not subject to the control of the courts in the administration of the internal proceedings of the House." It is a right of each House of Parliament to be the sole judge of the lawfulness of its own proceedings. The Courts cannot go into the lawfulness of the proceedings of the Houses of Parliament. The Constitution aims at maintaining a fine balance between the Legislature, Executive and Judiciary. The object of the constitutional scheme is to ensure that each of the constitutional organs function within their respective assigned sphere. Precisely, that is the constitutional philosophy inbuilt into Article 122 of the Constitution of India. 32. In M.S.M Sharma Vs. Dr. Shree Krishna Sinha4, a Constitution Bench of this Court held that the validity of the proceedings inside the Legislature of the State cannot be called in question on the allegation that the procedure laid down by the law had not been strictly followed. Sinha, C.J. speaking for the Court observed: 3 1975 (Supp.) SCC 1 4 AIR 1960 SC 1186

"It was contended that the procedure adopted inside the House of the Legislature was not regular and not strictly in accordance with law. There are two answers to this contention, firstly, that according to the previous decision of this Court, the petitioner has not the fundamental right claimed by him. He is, therefore, out of Court. Secondly, the validity of the proceedings inside the Legislature of a State cannot be called in question on the allegation that the procedure laid down by the law had not been strictly followed. Article 212 of the Constitution is a complete answer to this part of the contention raised on behalf of the petitioner. No Court can go into those questions which are within the special jurisdiction of the Legislature itself, which has the power to conduct its own business. Possibly, a third answer to this part of the contention raised on behalf of the petitioner is that it is yet premature to consider the question of procedure as the Committee is yet to conclude its proceedings. It must also be observed that once it has been held that the Legislature has the jurisdiction to control the publication of its proceedings and to go into the question whether there has been any breach of its privileges, the Legislature is vested with complete jurisdiction to carry on its proceedings in accordance with its rules of business. Even though it may not have strictly complied with the requirements of the procedural law laid down for conducting its business, that cannot be a ground for interference by this Court under Article 32 of the Constitution."

33. In the present case, there is no complaint of infringement of any guaranteed fundamental rights and therefore it may not be necessary to dilate on the question as to parameters and extent of judicial review that may be available in case of infringement of any guaranteed fundamental rights of a member of the House.

34. One more aspect of the matter. The petitioner in this writ petition under Article 32 of the Constitution has challenged the validity of proceedings in the Lok Sabha commencing from 29th January, 2004 on the grounds stated hereinabove, with which we have dealt with in the preceding paragraphs. The petition has become infructuous, since the Lok Sabha was dissolved and thereafter two elections have been held. The issue raised in the petition is purely a hypothetical question. There is no existing lis between the parties. It is settled practice that this Court does not decide matters which are only of academic interest on the facts of a particular case.

35. In R.S.Nayak Vs. A.R.Antulay5, a Constitution Bench of this Court observed:

"We propose to adhere to the accumulated wisdom which has reopened into a settled practice of this Court not to decide academic questions."

36. Though the writ petition has become infructuous, having regard to the constitutional issues raised, we have considered the question as to the interpretation of Articles 85 and 87 of the Constitution of India.

5 (1984) 2 SCC 183

37. It is equally well settled that Article 32 of the Constitution guarantees the right to a Constitutional remedy and relates only to the enforcement of the right conferred by Part III of the Constitution and unless a question of enforcement of a fundamental right arises, Article 32 does not apply. It is well settled that no petition under Article 32 is maintainable, unless it is shown that the petitioner has some fundamental right. In Northern Corporation Vs. Union of India6, this Court has made a pertinent observation that when a person complains and claims that there is a violation of law, it does not automatically involves breach of fundamental right, for the enforcement of which alone, Article 32 is attracted.

38.We have carefully scanned through the averments and allegations made in the writ petition and found that there is not even a whisper of any infringement of any fundamental right guaranteed by Part III of the Constitution. We reiterate the principle that whenever a person complains and claims that there is a violation of any provision of law or a Constitutional provision, it does not automatically involve breach of fundamental right for the enforcement of which alone Article 32 of the Constitution is attracted. It is not possible to accept that an allegation of breach of law or a 6 (1990) 4 SCC 239 Constitutional provision is an action in breach of fundamental right. The writ petition deserves dismissal only on this ground.

39.We accordingly find no merit in this writ petition and is accordingly dismissed without any order as to costs.

TEHRI HYDRO DEVELOPMENT CORPORATION Versus ALSTOM HYDRO FRANCE & ANR.

Contract order by tender bids — the appellant invited bids for turn-key execution of the Tehri Pump Storage Plant — respondent Nos. 1 and 2 qualified the bids and submitted their price options as per the orders of this Court — the respondent no.1 submitted a representation against the exercise of scrutiny by the appellant and the objections were inquired by the Panel of Experts — the respondent no.1 whose bid has been found to be non-responsive by the appellant as well as Panel of Experts was prepared to have a final decision from the Government of India — the respondent no.1 urged that the Panel of Experts had not given a fair opportunity to it — this Court held that in absence of any allegations/ charges made and substantiated against the Panel of Experts, it would not be proper to change the Panel of Experts and further ordered that the Panel of Experts to give one more final opportunity to the parties to be heard and more particularly the respondent no.1 on the objections raised on the earlier report of Panel of Experts and give a fresh report in the nature of recommendations — appeals disposed.

Supreme Court of India

CIVIL APPEAL NO. 2761 of 2010

Judge(s): V.S. SIRPURKAR,DR.MUKUNDAKAM SHARMA

Date of Judgment: Friday, March 26, 2010

TEHRI HYDRO DEVELOPMENT CORPORATION  Versus  ALSTOM HYDRO FRANCE & ANR.


ORDER

V.S. SIRPURKAR, J.

1. Leave granted in SLP (C) Nos.15779 and 19890 of 2009.

2. These appeals emanate out of the order passed by the learned Single Judge of Uttaranchal High Court. On 31st August, 2007, the appellant herein invited bids for turn- key execution of the Tehri Pump Storage Plant, Phase-II. After the pre-bid conference and amendments four pre-qualification bids were submitted on 29th December, 2007 by respondent no.1 - Alstom Hydro France, Patel Engineering, Sumitomo Corporation, Japan and Voith Seimens as leaders of their respective consortia. Initially respondents 1 and 2 along with Sumitomo Corporation, Japan were qualified, however, subsequently the bid of Sumitomo Corporation was declined as non-responsive. Thus there were two parties in the fray, they being respondents 1 and 2 herein. These two gave two price options. However, respondent no.1 filed a Writ Petition being W.P. No.167 of 2009 in the Uttarakhand High Court on two grounds, namely, (a) that respondent no.2 was not technically qualified; (b) that respondent no.2 had submitted two price bids which was in contravention of the terms and conditions of the ITB. The High Court by its final judgment came to the conclusion that the respondent no.2 was qualified. It was further held that there was no violation of terms and conditions of ITB.

However, the learned Single Judge passed the following order by way of final directions:

"Consequently this Court holds as follows:

The qualifications of respondent no.2 for having done the work of `erection' at Ghangzhou II seems to be in order as this court holds `supervision of erection' as equivalent to that of `erection' and rejects the arguments of petitioner on the eligibility of respondent no.2. Further, under the facts of this case, if two price bids had been invited by the employer - one as an assignee and the other as a partner, then again there is nothing wrong in such an approach and if consequent to it two price bids have been given by respondent no.2- one as an assignee and the other as a partner, it is in order and will not be called as a non-responsive bid. However, since the process of calling two bids is flawed for lack of clarity, the benefit has to be given to the petitioner, for the reasons already stated above. Hence, it is directed that respondent no.1 must ask for fresh bids from the petitioner as well as respondent no.2."

Being aggrieved the appellant herein filed the present appeals.

3. As it appears from the appeal filed by Tehri Hydro Development Corporation, the appellant assails the direction of the learned Single Judge to issue fresh bids as it was bound to further delay the project which was already delayed for six months only because of the pending proceedings. A contention was also raised that the fresh bidding was directed without offering any protection to the appellant herein against cartelization. It was, therefore, apprehended that the two multinational corporations, they being respondents 1 and 2 in the appeal filed by Tehri Hydro, as leaders of the Consortia could possibly get together and submit revised reduced bids which would not be in the public interest. The criticism by the learned Single Judge in the impugned judgment to the effect that there was no clarity on the issue whether two price bids could be submitted was also assailed on various grounds. It was pointed out that the price options of the respondent no.1 were at Rs.2520.60 crores while after discount it was at Rs.2483.80 crores. The price options of the respondent no.2 was at Rs.2327.50 crores as assignee and under Clause 9.4.4(v)(e) as a partner it was Rs.2261.60 crores and thus the respondent no.2 was the lowest bidder. According to the appellant this fact was completely lost sight of by the High Court.

4. Notice was ordered to be issued on 11.9.2009. At that stage itself all the interested parties were being represented through counsel. It was, however, expressed by the learned Attorney General for India that in the national interest of completing the project early, the appellant was not averse to inviting the fresh bids in light of the judgment of the High Court. Accepting that plea, the following order came to be passed:

"Issue Notice.

The affidavits shall be exchanged within three weeks from today. Tehri Hydro Development Corporation shall invite fresh bids in the light of the judgment of the High Court. Both Alstom Hydro France and Voith Siemens Hydro Germany shall be entitled to put in their bids. These bids shall be examined by the Tehri Hydro Development Corporation and report shall be submitted to this Court in a sealed cover. Needless to mention, all this shall be done without prejudice to their rights and contentions. All contentions shall be open. We are passing this order deliberately as we are told that a very important project is held up.

Put up after six weeks."

Accordingly fresh bids were invited and the respondents 1 and 2 submitted the same.

As ordered in the earlier order two bids were submitted to the Registry of this Court in the sealed covers. Learned Attorney General also offered that the sealed covers could be opened in the office of the Registrar. Accordingly, the bids were directed to be opened on 26.10.2009 at 4.30 p.m. in the office of Registrar (Judicial-I) and copies thereof were directed to be given to the representatives of the respective parties. A Report was submitted thereafter in the sealed covers and vide order dated 4.12.2009, the appellant was directed to process the matter further on the basis of the fresh bids. The appellant, at this stage, also offered to give hearing, if any, to the parties in respect of their objections to the fresh bids.

5. Before that since it was found that respondent no.2 had impugned the order of the learned Single Judge dated 29.12.2009 by way of an appeal before the Division Bench of the Uttaranchal High Court being Special Appeal No.131 of 2009. That appeal got transferred to this Court.

6. On 3.12.2009 the respondent no.1 submitted a representation against the exercise of scrutiny by the appellant. It was suggested that the respondent no.1 had no opportunity to review the contents of the Report. Some other objections were also raised insisting that ultimately the Tender should be awarded in favour of the respondent no.1 alone. It seems that all these objections raised by the respondent no.1 were referred to a Panel of Experts on 29.1.2010. A letter to that effect was written to both the respondents by the appellant. It was stated in this letter that the examination report on fresh bids was opened in the Court on 4.12.2009 and since the court had directed the appellant herein to give hearing to the objections raised by the parties, if any, before the final decision and since the copies of the examination report were already supplied and the appellant had received a representation raising objections, in order to maintain the transparency the appellant had constituted a Panel of three experts of national repute and impeccable integrity to examine the objections raised by the Consortium of respondents. This panel of experts comprises of following experts:

i) Shri Ramesh Chandra (Ex-Chairman, CWC) ii) Shri D.V. Khera (Ex-Chairman, CEA) iii) Shri A.K. Shangle (Ex-Member, CWC)

The objections raised by the first respondent were inquired into by the Panel of Experts. The Panel of Experts framed the following question:

"Whether the examination report of THDC declaring the bid of the Consortium of M/s.Alstom as non-responsive is OK or the objections raised by the Consortium of M/s.Alstom are justified with reference to the Terms & Conditions of the Tender, Techno-commercial bid submitted in October 2008 and fresh price bid submitted in October, 2009 and their bid can be considered as responsive."

The Panel of experts have drawn a conclusion in their report to the following effect:

"Based upon the views outlined above, POE is of the opinion that fresh price bid of consortium of M/s.Alstom is non-responsive. Their quoted price on partnership basis even though non-responsive is however lower by Rs.84.5 crores (M/s.Voith Rs.21,551,245,304.00 - M/s.Alstom Rs.20,705,840,090.00). Similarly, the quoted price on assignee basis though non-responsive is lower by Rs.108.7 cores (M/s.Voith Rs.22,343,174,985.00 - M/s.Alstom Rs.21,256,007,413.00). The unconditional offer of consortium of M/s.Alstom to take care of THDC observation without any extra cost so that bid becomes responsive and in accordance with employers' requirement is not acceptable as this is not permissible under Bidding Document of this Tender."

7. Ultimately when the matter was heard on 15.2.2010, a copy of the report of the Panel of Experts was handed over to the parties.

8. When the matter came up on 19.3.2010 Shri Harish Salve, Senior Advocate and Dr.A.M. Singhvi, Senior Advocate appearing for the respondent no.1 urged that the Panel of Experts had not given a fair opportunity to it and that it had merely reiterated what was already done by the appellant. The respondent no.1, however, in order to give quietus to the matter urged as under:-

"it is agreeable if the Government of India sends for the files and considers all the objections raised by it and Voith and issues appropriate directions to the appellant. Such a power is available with the Government in relation to PSUs in any event. If such an `administrative review', is conducted, the petitioner (respondent no.1 in the appeal filed by Tehri Hydro) states that it shall not challenge any decision that may be taken in the matter by the Government of India and the matter shall, as far as the petitioner (respondent no.1 in the appeal filed by Tehri Hydro) is concerned, be given a quietus".

In short the respondent no.1 whose bid has been found to be non- responsive by the appellant as well as Panel of Experts was prepared to have a final decision from the Government of India.

9. Learned Attorney General as well as Shri F.S. Nariman, Senior Advocate appearing on behalf of the respondent no.2, however, opposed this plea. It was pointed out by the learned Attorney General that at no point of time the integrity, competence or capability of the members of the Panel of Experts was ever challenged by anybody including the respondent no.1. The nature of objections raised to the report is of technical character. Even in its objections the respondent no.1 has not challenged the bonafides of the Panel of Expert though during the arguments the possibility of bias was expressed though haltingly. Learned Attorney General pointed out that in case the respondent no.1 has any grievance of not being heard by the Panel of Experts, the respondent no.1 could still address the Panel of Experts which could be requested to give a hearing to the respondent no.1. The Attorney General Pointed out that all the grievances, technical or otherwise could well be raised before the Panel of Experts and for that purpose a hearing could be given to all the concerned parties on the basis of the objections raised by them which would atleast put an end to the controversy.

10. The offer given by the Attorney General is undoubtedly a fair offer. The respondent no.1 has no problem about the matter being referred to the Government of India. We do not think that in absence of any allegations/ charges made and substantiated against the Panel of Experts, it would be proper to change the Panel of Experts and to appoint a new Panel of Experts through the Government of India or some other panel. There has to a finality somewhere. We are pained to note that a very important project like the present one is being held up in a legal battle between the two multinational companies. Till today, even the contract has not been finalized. All this would invariably cause loss to the nation. After all, contractual rights of these companies are not more important than the national interest.

11. Under the circumstances we order that the Panel of Experts shall give one more final opportunity to the parties to be heard and more particularly the respondent no.1 on the objections that it has raised on the earlier report of Panel of Experts and give a fresh report in the nature of recommendations. This exercise should be completed by the end of April, 2010. The appellant herein would then, without loss of time, take the decision, considering the report of the Panel of Experts regarding the award of contract.

12. This course would leave nothing to be decided in the pending appeals. Firstly, when the Attorney General for India agreed to invite fresh bids as per the directions of the High Court, there remained nothing in that appeal as the invitation for new bids would straightaway put the clock back and the parties would be back to square one.

Secondly, when all the parties agreed to give their fresh bids in pursuance of the offer made by Attorney General for India, there remained nothing in the original controversies. The challenge to the judgment by respondent no.1 in the appeal arising out of SLP 19890 of 2009 would also not survive once both the contesting respondents accepted the proposal to put bids again. Therefore, at this juncture, it is futile to go into the earlier controversies. Even the challenge by respondent no.2 would be of no consequence once the respondent no.2 was given a fresh opportunity for bidding. The exercise of bidding before this Court was ordered with the sole objective of saving time and to give the transparency to the whole exercise. Once the fresh bids were allowed to be given the old controversies before the High Court would naturally become extinct. In our opinion it would be in the interest of the project which has already been dragged by more than a year that the Panel of Experts should be allowed to consider the objections and express their opinion. That opinion shall then be considered by the appellant which would take the final decision on that basis. We must reiterate here that it is not for this Court to award the contracts by accepting or rejecting the tender bids. It is exclusively for the appellant herein to do that. Once all this exercise is over, nothing would remain for us to decide in these appeals.

13. In view of the directions passed above both the appeals as well as the Transfer Case No.33/2009 are disposed of.

The Chairman-cum-Managing Director, Rajasthan Financial Corporation and another Versus COMMANDER S.C. JAIN (RETD.) & ANR.

Consumer Protection Act, 1986 — Section 2(1)(g) — deficiency in service — non-release of loan amount — appellant Corporation sanctioned term loan of Rs.18,000/- for machinery and also Rs.1,26,000/- as the working capital limit for the respondent's business — due to the repeated failure on part of the respondent to submit the details of the material purchased and consumed, the appellant finally cancelled the unavailed loan — respondent filed complaint for deficiency in service on the part of the appellant — District Forum dismissed the complaint and held no deficiency in service as the bills presented by the respondent were of a firm which was non-existent — National Commission also observed that the appellant - Corporation "cannot be held to be deficient in rendering services" in the said loan agreement but directed the appellant - Corporation to pay compensation of Rs.1,50,000/- with interest @12% and Rs. 10,000/- as costs — appeal — the appellant - Corporation repeatedly requested the respondent to submit the bills of the purchase of the machinery in order to disburse the amount sanctioned for the machinery, however, the respondent constantly submitted wrong receipts — this Court held that the loss suffered by the respondent for not being able to start the unit cannot be the basis for awarding the compensation specifically when the respondent was at fault for the non release of the balance loan amount — impugned order of the National Commission set aside — appeal allowed — no costs.


Supreme Court of India

CIVIL APPEAL NO.2774 of 2010

Judge(s): P. SATHASIVAM,H.L. DATTU

Date of Judgment: Friday, March 26, 2010

THE CHAIRMAN-CUM- M. D. R. F. C. & ANR. Versus COMMANDER S.C. JAIN (RETD.) & ANR.

ORDER

H.L. DATTU, J.

The petitioner has sought leave to appeal against the order passed by the National Consumer Disputes Rederessal Commission, New Delhi (for short `National Commission') wherein and whereunder it has directed the appellant to pay compensation to the tune of Rs.1,50,000/- along with interest at the rate of 12 per cent from the date of filing of petition in favour of the respondent. Leave granted.

FACTS:

2) The Respondent had applied for loan on 03.03.1990 to the Rajasthan Financial Corporation (in short `Corporation') for setting up a manufacturing unit of plastic doors, windows etc. The Corporation after considering the request made, had sanctioned term loan of Rs.18,000/- for machinery and also Rs.1,26,000/- as the working capital limit for the said business. As per the sanction letter, the Corporation was to provide only 75 per cent of the purchase price to the respondent and the remaining share, i.e., 25 per cent was to be contributed by the respondent. The sanction letter also provided that if the concern has purchased machinery in accordance with the scheme and full payment has been made, 90 per cent of the admissible amount of loan will be released on the basis of the statement of account prescribed for the purpose, duly supported by bills and receipts and balance after valuation of machines. The period of repayment of the loan was eight years in quarterly installments. The first installment was to be due on the first day of 18th month reckoned from the date of first disbursement of loan against fixed assets. Further as per the terms of the sanction letter one of the important terms was that the machinery should be purchased from authorized dealer and of Wolf make or from M/s Rally India Ltd.

3) On 29.06.1990, the respondent requested the appellant -Corporation for more time to complete the formalities of submitting the loan documents in order to enable the appellant to disburse the loan amount. The loan document was, however, executed in favour of the appellant on 05.07.1990. The appellant -Corporation requested the respondent to submit bills and receipts of plant and machinery as well as raw material so that the parties could proceed with the loan agreement. Thereafter, in a short period, the bills were submitted and it was apparent from the bills submitted that the name of the firm in whose favour the bills were originally issued was struck off and the respondent firm's name was inserted in its place. Thus the appellant - Corporation asked the respondent to submit correct bills.

4) Thereafter on 26.07.1990, the respondent again submitted the bills in the name of Kailash Udhyog and not in the name of his own business, i.e., Fauji Kutir Udhyog. The appellant - Corporation was forced to dishonor the bills as the name indicated in them were not as per the requirement and new bills were asked to be submitted. Later, on 04.05.1991 the respondent submitted a bill of Nita Udyogic Vastu Bhandar Private Limited dated 21.08.1989 for a sum of Rs.10,200/- representing the purchase price of drill machine etc., prior to the date of sanction of the loan and its disbursement. Another bill of Rs.17,800/- dated 29.12.1989 which represented saw machines with two HP motors with accessories etc. was also submitted. Due to repeated submission of wrong bills by the respondent, the appellant addressed a letter to the respondent stating that the bills were unacceptable for two reasons, firstly, Nita Udyogic Vastu Bhandar Private Limited is a family concern and the respondent is in gainful employment in the concern. Secondly, Nita Udyogic Vastu Bhandar Private Limited is not an authorized dealer for Wolf make machine or M/s rally India Ltd. The appellant also informed that the machines were old as per the internal checkup done by the appellant - Corporation. The respondent was given another chance as the appellant informed the respondent that though the loan agreement was time barred, his case could be considered favourably only if he submits the bills from authorized dealer or manufacturer. The correct and accurate bills were to be submitted within one month from 31.05.1991. The respondent submitted bills from the authorized dealer of Wolf portable machine, i.e., Heerex Corporation amounting to Rs.19,797.75/- against which a sum of Rs.2000/-, as advance was paid to the respondent. The respondent was, therefore, asked to submit a receipt for Rs.3172.75 denoting his contribution of 25 per cent, in order to avail the sum of Rs.14,625/-. In spite of such a request the respondent never submitted the receipt. The appellant - Corporation sent a cheque of Rs.14,625/- favouring the authorized dealer Heerex Corporation, to Fauji Kutir Udyog along with a request to send the receipt to the Corporation for the amount so paid. An additional request was also made as regards the receipts showing the respondent's share of Rs.3172.75/-. Another correspondence was addressed to the respondent requesting him to fulfill all other terms and conditions of the loan agreement, including a condition to create assets in the ratio of 1:1.10 as stipulated in Clause 5 of the Special Terms and Conditions annexed with the loan agreement. The respondent thereafter made a representation whereby he claimed that the Corporation was under liability to pay a sum of Rs.3,375/- as the balance amount of sanctioned loan by considering his earlier bill of Nita Udyog Vastu Bhandar Private Limited which was rejected by the appellant stating it to be untenable as the Nita Udyog Vastu Bhandar was not an authorized dealer.

5) On 19.12.1991, the respondent requested the appellant -Corporation for disbursement of the loan against the raw materials without submitting any supporting documents showing the details of the expenditure. The appellant - Corporation addressed two separate letters dated 26.12.1991 and 02.11.1992 asking the respondent to submit the details of the consumption of quantity of raw materials and the stock position update along with sales made.

PROCEEDINGS BEFORE THE CONSUMER FORUM:

6) The respondent moved the District Consumer Commission with a complaint of deficiency of service and also prayed for the disbursement of Rs.3,375/-. The plea of the respondent was dismissed by the District Consumer Commission on the principle that his application is not maintainable as the dispute in a loan agreement between the debtor and creditor does fall within the jurisdiction of the Consumer forum.

7) Due to the repeated failure on part of the respondent to submit the details of the material purchased and consumed, the appellant finally cancelled the unavailed loan, on 08.09.1992 and informed the same to respondent. The respondent replied to the said communication stating that he had already initiated the proceedings before the State Consumer Commission, Jaipur on 15.07.1992.

8) The State Commission allowed the appeal vide order dated 12.12.1994 and remanded the matter back to the District Forum. The District forum dismissed the complaint on 02.12.1995 holding that the respondent was unable to show the details of the purchased goods from authorized dealer and that M/s Nita Udyog Vastu Bhadar Private Limited is their own concern which was closed much before the issuance of the bill, thus failing to show that he was entitled to the sum of Rs.3,375/-. Further, the appeal was entertained by the State Commission as the respondent sought to file certain documents. The matter was remanded back to the District Forum vide order dated 21.03.2003. The District Consumer Forum dismissed the complaint along with costs vide order date 31.01.2004 stating that there was no deficiency in service as the bills presented by the respondent were of a firm which was non-existent.

9) The respondent being aggrieved by the order of the District forum, preferred appeal before the State Consumer Commission. The State Commission refused to entertain the appeal vide order date 02.09.2004. Thereafter, the review petition filed by the respondent was also rejected by the State Commission vide order dated 09.09.2004.

REVISION PETITION BEFORE THE NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION:

10) The respondent being aggrieved by the decision of the State Consumer Commission preferred a Revision Petition before the National Consumer Disputes Redressal Commission. The National Commission considered revision on two counts. Firstly, as regards the non-release of the balance amount of Rs.3,375/- as against the machinery and secondly, the non-release of the balance amount of Rs.81,000/- from the sanctioned amount of Rs.1,26,000/- for working capital limit. As regards the first point, the National Commission considered the contention of the appellant - Corporation whereby it was stated that the amount of Rs.3,375/- was not released as the respondent did not comply with the terms spelled out in the letter of sanction. However, the National Commission concluded on this point that there was no specific obligation pointed out by the appellant -Corporation which is said to be left unfulfilled by the respondent. As regards the second point, the National Commission cited a para from the letter dated May 04, 1991 addressed by the appellant - Corporation to the respondent whereby it is pointed out that the bills submitted were not the correct one as they were issued in name of firm Kailash Udyog and the respondent had fraudulently replaced there name in the bills. Therefore, the National Commission observed that the appellant -Corporation "cannot be held to be deficient in rendering services" in the said loan agreement. Further, it is important to note that the National Commission has specifically pointed out that the prayer in the original complaint was only for release of Rs. 3,375/- and only at a later stage, i.e., when the matter was remanded back to the District Forum by the State Commission vide order dated 21.03.2003, that the respondent filed another complaint with regard to the amount for working capital thereby seeking direction to release the sum of Rs.81,000/-. Further, the peculiar observation made by the National Commission is that the respondent have claimed compensation "without any corresponding profit and loss statement or any affidavit in support of such a demand".

11) However, the National Commission has directed the appellant - Corporation to pay compensation of Rs.1,50,000/- with interest at the rate of 12 per cent from the date of filling of complaint. The cost is also awarded to the tune of Rs 10,000/-.

APPEAL FROM THE DECISION OF THE NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION:

12) The appellant - Corporation has sought appeal on the ground that the National Commission has erred in awarding the compensation with interest, inspite of holding that there was no deficiency in rendering the service to the respondent. It is also contended by the appellant - Corporation that they have fully discharged obligation under the loan agreement and there was nothing outstanding for which it could be held responsible and, in fact, it is the respondent who had failed to carry out its obligation as they had repeatedly submitted incorrect and fraudulent receipts.

13) It is pertinent to mention that the appellant - Corporation had repeatedly requested the respondent to submit the bills of the purchase of the machinery of Wolf make, or from M/s Rally India Ltd. in order to disburse the amount sanctioned for the machinery which in the `Sanction Letter' dated 3.3.1990 appears to be "Rs.18,000/- against fixed assets"(Annexure P-1). However, it is on record and is observed by the District Commission and State Commission that the respondent has constantly submitted wrong receipts. The District Consumer Forum has observed in the order dated 31.01.2004 that the Nita Udyogic Vastu Bhandar (P) Ltd from whom the respondent claim to have purchased the machinery and the bills so produced dated 29.12.1989 are clearly fraudulent as this concern stood closed since March 1989. This fact was reiterated by the State Commission in its order dated 02.09.2004. Therefore, we find no hesitation to conclude that National Commission failed to appreciate that the respondent had repeatedly acted fraudulently in providing the bills and receipts to the appellant - Corporation.

14) Secondly, the National Commission though has held that there is no deficiency in service as regards the disbursement of the balance loan amount of Rs.81,000/-, have gone ahead to award compensation to the tune of Rs.1,50,000/- with interest of 12 per cent.

15) For deciding whether the respondent ought to be awarded compensation, it is important to consider the meaning of deficiency as provided under section 1(g) of the Consumer Protection Act, 1986 (hereinafter referred to as `the Act'):

(g) "Deficiency" means any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service;

16) Further, the Consumer Protection Act also provides that the important component of the complaint by the `consumer' on the basis of which the compensation is decided, is that there should be `deficiency' in the service provided or goods sold to the concerned consumer. The definition of `complaint' is provided under section 1(c) of the Act :

(c) "Complaint'' means any allegation in writing made by a complainant that- (i) An unfair trade practice or a restrictive trade practice has been adopted by any trader or service provider; (ii) The goods bought by him or agreed to be bought by him suffer from one or more defects; (iii) Service hired or availed of or agreed to be hired or availed of by him suffer from deficiency in any respect; (iv) a trader or the service provider, as the case may be, has charged for the goods or for the service mentioned in the complaint, a price in excess of the price in excess of the price-

(a) fixed by or under any law for the time being in force;

(b) displayed on the goods or any package containing such goods;

(c) displayed on the price list exhibited by him by or under any law for the time being in force;

(d) agreed between the parties;

(v) goods which will be hazardous to life and safety when used are being offered for sale to the public;-

(A) in contravention of any standards relating to safety of such goods as required to be complied with, by or under any law for the time being in force;

(B) if the trader could have known with due diligence that the goods so offered are unsafe to the public;

(vi) service which are hazardous or likely to be hazardous to life and safety of the public when used, are being offered by the service provider which such person could have known with due diligence to be injurious to life and safety.

17) It is also important to note the following provision of the Act:

Section 14. FINDING OF THE DISTRICT FORUM.

(1) If, after the proceeding conducted under section 13, the District Forum is satisfied that the goods complained against suffer from any of the defects specified in the complaint or that any of the allegations contained in the complaint about the services are proved, it shall issue an order to the opposite party directing him to do one or more of the following things, namely :-

(a) to remove the defect pointed out by the appropriate laboratory from the goods in question;

(b) to replace the goods with new goods of similar description which shall be free from any defect; (c) to return to the complainant the price, or, as the case may be, the charges paid by the complainant;

(d) to pay such amount as may be awarded by it as compensation to the consumer for any loss or injury suffered by the consumer due to the negligence of the opposite party;

(e) to remove the defects or deficiencies in the services in question;

(f) to discontinue the unfair trade practice or the restrictive trade practice or not to repeat them;

(g) not to offer the hazardous goods for sale; (h) to withdraw the hazardous goods from being offered for sale;

(i) to provide for adequate costs to parties.

18) Thus, it is clear that the Act has provided provision for correcting the shortcomings in the service or goods provided by way of awarding compensation or other means specified in the provision above mentioned only when the Consumer Forum comes to the conclusion that there is `deficiency' in service provided or goods sold. The loss suffered by the respondent for the reason of not being able to start the unit cannot be the basis for awarding the compensation specifically when the respondent was at fault for the non release of the balance loan amount. Therefore, when there is no deficiency found on the part of the appellant - Corporation, it cannot be asked to pay compensation.

19) In the light of the above discussion, the impugned order cannot be sustained. Accordingly, it is set aside. Appeal is allowed. No order as to costs.

KAMAL KUMAR AGARWAL Versus COMMIR. OF COMMERCIAL TAXES, W. BENGAL & ORS.

West Bengal Sales Tax Act, 1994 and Rules 1995 — Section 68(3) read with Rule 211-A, sub-rule (6) — restriction on movement of goods — appellant appointed as Customs House Agent [CHA] to clear the consignment of goods imported from Hamburg — a copy of the Declaration in Form 44A, duly endorsed, forwarded to the appellant to be produced before the Sales Tax Authority posted at Haldia — subject goods duly received by the consignee — a show-cause notice was issued to the appellant by the Assistant Commissioner of Commercial Taxes alleging contravention of Section 68 of the Act and further imposed a penalty on the appellant for failure to produce the endorsed copy of the Declaration in terms of Rule 211A(6) — appeal — whether the appellant, who has signed the Declaration in the prescribed Form, has complied with the said Rule — No — this Court held that with the making of the Declaration, the appellant undertook the obligation to transit the consignment to the destination outside the State for which the proof was the countersigned copy of the Declaration — the endorsed counter-signed copy of the Declaration has not been produced by the appellant in the impugned proceedings before the Assessing Authority — no material been produced to indicate that the goods had crossed the border at Chichira, thus, law presumes that the subject-goods have been sold unauthorisedly within the State of West Bengal and that is the sole reason why penalty has been imposed on ad valorem basis — appeal dismissed — no costs.

Supreme Court of India

CIVIL APPEAL NO.2757 of 2010

Judge(s): S.H. KAPADIA,AFTAB ALAM

Date of Judgment: Friday, March 26, 2010

KAMAL KUMAR AGARWAL  Versus COMMIR. OF COMMERCIAL TAXES, W. BENGAL & ORS.


J U D G M E N T

S.H. KAPADIA,J.

Leave granted.

Heard learned counsel on both sides.

In this civil appeal arising out of special leave petition, we are required to consider the scope and effect of Section 68(3) of the West Bengal Sales Tax Act, 1994 [`Act', for short] read with sub-rule (6) of Rule 211A of the West Bengal Sales Tax Rules, 1995 [`Rules', for short].

On 8th September, 2001, M/s. Sanman Trade Impex Private Limited, Mumbai, appointed the appellant as it's Customs House Agent [CHA] to clear the consignment of goods imported from Hamburg. To enable the appellant to clear the consignment, M/s. Sanman Trade Impex Private Limited sent all the relevant documents required for getting the goods cleared from Kolkata to Mumbai. M/s. Sanman Trade Impex Private Limited also forwarded copy of the Declaration in Form 44A, duly endorsed, to the appellant to be produced before the Sales Tax Authority posted at Haldia [for short, `first checkpost']. M/s. Sanman Trade Impex Private Limited appointed M/s. Brahmaputra Roadways, Kolkata, as it's transporter for onward transportation of imported goods from Kolkata to Mumbai. According to the appellant, the imported goods were to be handed over by him to the transporter, M/s. Brahmaputra Roadways, along with all the necessary documents for onward transportation of goods to it's final destination after getting the goods duly cleared from the Customs and Port Authorities. According to the appellant, the goods were duly received by M/s. Sanman Trade Impex Private Limited on 30th October, 2001, which fact is duly certified by the letter from M/s. Sanman Trade Impex Private Limited informing him that the subject-goods have been received by it intact and in good condition.

On 24th August, 2001, M/s. Paluck Trade Links, New Delhi, appointed the appellant as it's CHA to clear the consignment imported by it from London. At this stage, we may state that, in this civil appeal, we are concerned with two items, namely, Soda ash imported from Hamburg and Aluminium Scrap imported from London. To continue the chronology of facts, M/s. Paluck Trade Links, New Delhi, also appointed M/s. Brahmaputra Roadways as it's transporter for onward transportation of the imported goods from Kolkata to Delhi. On July 30, 2002, a show- cause notice was issued to the appellant by the Assistant Commissioner of Commercial Taxes alleging contravention of Section 68 of the Act. The appellant was asked to explain as to why penalty should not be levied for such contravention. In reply, the appellant contended that he had no obligation or liability under Section 68 of the Act in respect of transportation of goods from Haldia to Chichira [exit checkpost]. According to him, the goods could be moved only by the owner or the importer directly by itself or through it's transporter. According to the appellant, a CHA has no role to play in the movement of goods. He submitted that he was appointed by the importer only to get the documents cleared from the Customs and Port Authorities and not for movement of goods for which it is the importer who appoints a transporter. Therefore, according to him, the notice was not maintainable in terms of Section 68 of the Act. The appellant further submitted that he was not required to keep an endorsed copy of the said Declaration. In this connection, reliance was placed on Rule 211A(6) of the Rules. According to the appellant, under Rule 211A(6) of the Rules, the endorsed copy had to be returned to the person transporting the goods for onward movement to it's final destination. Hence, according to him, the show-cause notice was not maintainable.

By order dated 27th December, 2002, the Assistant Commissioner of Commercial Taxes imposed a penalty on the appellant for failure to produce the endorsed copy of the Declaration in terms of Rule 211A(6) of the Rules. Being aggrieved by the order, the appellant preferred a revision before the West Bengal Taxation Tribunal, which application stood rejected. The decision of the West Bengal Taxation Tribunal has been upheld by the High Court vide judgement dated 17th December, 2007, hence, this civil appeal is filed by the appellant.

For the sake of convenience, we quote hereinbelow the relevant provisions of the Act:

"68. Restriction on movement of goods.-- [1] To ensure that there is no evasion of tax, no person shall transport from any railway station, steamer station, airport, port, post office or any checkpost set up under section 75 or from any other place any consignment of goods except in accordance with such restrictions and conditions as may be prescribed.

[2] xxx xxx xxx xxx

[3] Subject to the restrictions and conditions prescribed under sub-section (1) or sub-section (2), any consignment of goods may be transported by any person after he furnishes in the prescribed manner such particulars in such form obtainable from such authority or in such other form as may be prescribed.

69. Interception, detention and search of road vehicles and search of warehouse, etc.-- For the purpose of verifying whether any consignment of goods are being or have been transported in contravention of the provisions of section 68 or section 73, the Commissioner, an Additional Commissioner, or any person appointed under sub-section (1) of section 3 to assist the Commissioner, may, subject to such restrictions as may be prescribed,--

[a] intercept, detain and search at any place, referred to in sub-section (1) of section 68, a road vehicle or river craft or any load carried by a person, or

[b] search any warehouse or at any other place in which, according to his information, such goods so transported in contravention of the provisions of section 68 have been stored, or

[c] intercept, detain and search at any checkpost or any other place referred to in sub-section (2) of section 73, any goods vehicle.

71. Penalty for transporting goods in contravention of section 68 or section 73.-- [1] If any goods are seized under section 70, the Commissioner or the Additional Commissioner may, by an order in writing, impose upon the person from whom such goods are seized or the owner of such goods, where particulars of the owner of such goods are available, or where there is no claimant for such goods at the time of such seizure, any person who subsequently establishes his claim of ownership or possession of such goods, after giving such person or owner, as the case may be, a reasonable opportunity of being heard, a penalty of a sum not exceeding fifty per centum of the value of such goods as may be determined by him in accordance with the rules made under this Act:

Provided that the sum of penalty that may be imposed under this sub-section shall not exceed--

[a] thirty per centum of the value of goods if the rate of tax leviable under sub- section (1) of section 17, or sub- section (1) of section 18, or sub- section (1) of section 20, in respect of such goods does not exceed ten per centum;

[b] fifty per centum of the value of goods if the rate of tax leviable under sub- section (1) of section 17, or sub- section (1) of section 18, in respect of such goods exceeds ten per centum.

[2] A penalty imposed under sub-section (1) shall be paid by the person or the owner of goods, as the case may be, into a Government Treasury or the Reserve Bank of India by such date as may be specified by the Commissioner or the Additional Commissioner in a notice to be issued for this purpose, and the date so specified shall not be earlier than fifteen days from the date of the notice:

Provided that the Commissioner or the Additional Commissioner may, for reasons to be recorded in writing, extend the date of payment of the penalty for such period as he may think fit.

71B. Penalty for contravention of the provisions of section 68 when goods transported are not available.-- [1] Where the goods are, or have been, transported by a person, dealer or casual trader in contravention of restrictions or conditions prescribed under section 68 and such goods are not available for seizure under sub- section (1) of section 70, the Commissioner, or the Additional Commissioner, shall, after giving such person, dealer or casual trader a reasonable opportunity of being heard, impose a penalty of a sum not exceeding twenty-five per centum of the value of such goods.

[2] The procedure for imposition of penalty as prescribed under section 71A shall apply mutatis mutandis in the matter of imposition of penalty under this section.

72. Regulatory measures for transport of goods through West Bengal.

[1] When a goods vehicle, transporting any goods [other than goods sales of which are tax-free under section 24], enters into West Bengal, and such vehicle transporting such goods is bound for any place outside West Bengal, the transporter of such goods shall have to make, in the prescribed manner, a declaration on the body of the consignment note or on a document of like nature that the goods being so transported in his vehicle shall not be unloaded, delivered or sold in West Bengal and he shall also specify in such declaration the name of the last checkpost through which the vehicle transporting such goods shall move outside West Bengal.

[2] xxx xxx xxx xxx [3] xxx xxx xxx xxx [4] The transporter shall carry with him the consignment note or the document of like nature containing the declaration duly countersigned under sub-section (3) while transporting the goods through West Bengal and produce such consignment note or document of like nature before the Commissioner at the last checkpost that he reaches before the exit of the vehicle with such goods from West Bengal, and the Commissioner shall, in the prescribed manner, endorse such consignment note or document of like nature evidencing exit from West Bengal of the vehicle transporting the same goods as are specified in such consignment note and return the same to the transporter.

xxx xxx xxx xxx [5] The Commissioner may, subject to such conditions and restrictions as may be prescribed, intercept at any place, other than those referred to in sub-section (2) and sub-section (4), within West Bengal any goods vehicle and require the transporter to produce before him the declaration and other documents referred to in sub-section (2) and search such goods vehicle for verification of the goods with the declaration and other documents produced, if any, by the transporter.

[6] Where the Commissioner or the other authority referred to in sub-section (5) is satisfied, for reasons to be recorded in writing, that the transporter has contravened the provisions of this section, he may, after giving the transporter a reasonable opportunity of being heard, impose, by an order to be passed in the prescribed manner, such penalty, not exceeding twenty-five per centum of the value of the goods so transported, as may be determined by him in accordance with the rules made under this Act.

73. Measures to prevent evasion of tax on sales within West Bengal.

[1] Where a transporter carries from any place in West Bengal in a goods vehicle any consignment of goods and such vehicle is bound for any place outside West Bengal, he shall, in addition to a document of title to the goods, carry with him, in respect of such goods,--

[a] where carriage is caused by a sale of such goods, two copies of the bill or cash memorandum issued by the seller of such goods, and a way bill in the prescribed form, or such document, containing description, quantity or weight and value of the goods and such other particulars as may be prescribed, or

[b] where carriage is caused otherwise than by a sale of such goods, two copies of the forwarding note, delivery challan or document of like nature, by whatever name called, issued by the owner or consignor of such goods, and a way bill in the prescribed form containing such particulars as may be prescribed.

We may also quote hereinbelow Rule 211A of the Rules along with the Declaration Form appended to the said Rule:

"211A. Procedure for transport from railway station, port, airport etc. of any consignment of goods despatched from any place outside West Bengal and bound for any place outside West Bengal.-- (1) Where any consignment of goods other than those referred to in the Explanation to sub-rule (1), or in sub-rule (2), of rule 210 despatched from any place outside West Bengal reaches a railway station, port, airport or post office in West Bengal and such consignment of goods is bound for any destination outside West Bengal, any person shall, before taking delivery of such goods from any such place, make a declaration in the format appended to this sub-rule.

DECLARATION [See sub-rule (1) of rule 211A]

To The .................... ..................Checkpost/Charge/Section/Division

I, ........................., do hereby declare that -- [1] I am a person who is importing or bringing into West Bengal/I am a person who is authorised by the importer mentioned in the invoice/bill of lading/ bill of entry/air consignment note/railway receipt/ postal receipt to take delivery of the consignment of goods despatched from ................., a place situated outside West Bengal;

[2] the said consignment of goods has reached a railway station, port, airport or post office in West Bengal, namely,..............;

[3] the said consignment of goods is bound for a destination outside West Bengal, namely, .........;

[4] the delivery of the said consignment is required to be taken by me for the purpose of transporting such consignment of goods to its destination outside West Bengal;

[5] the said goods shall not be, either wholly or partly, unloaded, delivered or sold in West Bengal;

[6] the statements in this declaration are true to the best of my knowledge and belief;

I am furnishing hereunder the particulars/ information relating to the said consignment:-

[a] name, address and sales tax registration No., if any, of the consignor outside West Bengal: ..............

[b] railway receipt/bill of lading/air- consignment note/postal receipt No. and date thereof: .................

[c] invoice No. and date : ...............

[d] description of each commodity of the consignment: ..................

[e] quantity/weight of each commodity in the consignment: ..................

[f] value of the consignment with custom duty, freight etc.: ...............

[g] name, address and sales tax registration No. of the consignee outside West Bengal:.................

[h] name, address, licence No. and telephone No. of the clearing and forwarding agent, if any, in West Bengal who is handling the consignment on behalf of the consignee:...............

[i] mode of transportation of the consignment to the destination outside West Bengal after taking delivery: .................

[j] registration No. of the road vehicle if such goods are transported to such destination by a road vehicle: ...............

[k] railway receipt/bill of lading/air- consignment note/postal receipt No. and date:................

[l] name of the exit checkpost: ................

[m] approximate date by which the vehicle shall move outside West Bengal: ................

[n] where the goods are being transported by a road vehicle,--

[i] whether there is any possibility of transhipment in West Bengal [please tick whichever is applicable] yes/no;

[ii] if yes,--

[A] place of such transhipment :...... [B] vehicle No. after the transhipment is effected: ............... [C] name and address of the transporter: ................. [D] consignment note No. and date:......

Signature of the importer/clearing and forwarding agent/the person taking delivery of the consignment of goods from port, airport, railway station, post office for despatch of the same outside West Bengal

Date: ........ Full name of the signatory Address of the signatory

Note:- Please strike out whatever is not applicable.

[2] The declaration made under sub-rule (1) shall be produced in triplicate along with a copy of invoice, railway receipt, bill of lading, air-consignment note, postal receipt or a document of like nature before the Assistant Commissioner, Commercial Tax Officer or Assistant Commercial Tax Officer posted at the checkpost situated in or around the railway station, port, airport or post office from which the delivery of the consignment of goods as referred to in sub-rule (1) is to be taken.

[3] If no checkpost has been set up in or around the railway station, port, airport or post office from which the delivery of the consignment of goods as referred to in sub-rule (1) is to be taken, the declaration under the said sub-rule (1) shall be produced in triplicate by the person taking delivery of such goods along with a copy of invoice, railway receipt, bill of lading, air-consignment note, postal receipt or a document of like nature before the Assistant Commissioner or Commercial Tax Officer having jurisdiction over the area in which such railway station, port, airport, or post office is situated.

[4] The declaration along with a copy of documents as referred to in sub-rule (2) or sub- rule (3) produced before any of the authorities mentioned in such sub-rules shall be countersigned with his office seal by such authority and the two countersigned copies of such declaration shall be returned to the person referred to in sub-rule (1).

[5] For the purpose of section 69, the person referred to in sub-rule (1) shall, while transporting any consignment of goods on its way to destination outside West Bengal, stop his vehicles on being asked by such Assistant Commissioner or Commercial Tax Officer as the Commissioner may authorise in this behalf, at any place and present before him, on demand, the countersigned copies of the declaration referred to in the said sub-rule along with invoice, consignment note, road challan or any other document of like nature.

[6] The two copies of the declaration duly countersigned under sub-rule (4) shall be produced before the Assistant Commissioner, Commercial Tax Officer or Assistant Commercial Tax Officer posted at the exit checkpost and such authority shall, on being satisfied upon verification of the goods being transported with those specified in such declaration, endorse such declaration, retain one copy of such endorsed declaration and return the other copy of it to the person transporting such goods for onward movement to the place of destination outside West Bengal after recording in a register the particulars given in the endorsed declaration and other connected documents and also the particulars of transhipment of the goods, if any, in West Bengal.

[7] For the purposes of interception, detention, search and seizure by any authority under this rule, the procedure in such matters contained in the provision of rule 212 shall apply mutatis mutandis.

[8] Any infringement of any provision of this rule by the person referred to in sub-rule (1) shall be deemed to be a contravention of the provisions of section 68 by the person referred to in the said sub-rule."

The Act has been enacted to consolidate and amend the laws relating to the levy of tax on sale or purchase of goods in the State of West Bengal. Under Explanation (2) to Section 2(10) of the Act, an agent for handling or transporting of goods or handling of document of title to goods is a "dealer". Agents of all types have been included in the definition of the word "dealer" under Section 2(10) of the Act. [See State of West Bengal vs. O.P. Lodha & Anr. (1997) 105 STC 561 (SC)]. Section 68 occurs in Chapter VIII of the Act, which deals with maintenance of accounts; search and seizure of accounts; measures to regulate transport of goods; checkposts; seizure of goods; imposition of penalty, etc. To ensure that there is no evasion of tax, Section 68 of the Act, inter alia, states that no person shall transport from any Port or any checkpost or from any other place any consignment of goods, except in accordance with such restrictions and conditions, as may be prescribed. [See Section 68(1) of the Act] The important words which occur in Section 68(1) of the Act are "no person". It does not refer to the word "transporter". This aspect is of some significance because Section 68(1) of the Act puts a restriction on the movement of goods. The checkposts are designed and meant to prevent the evasion of sales tax and other dues. This restriction stands lifted subject to the compliance of certain provisions of the Act. Under Section 68(3) of the Act, any consignment of goods may be transported by any person after he furnishes in the prescribed manner such particulars in such Form as may be prescribed. The expression "any person" in sub-section (3) of Section 68 of the Act would include, a clearing and forwarding agent, a transporter or any person who makes a Declaration in the prescribed manner. Therefore, sub- section (3) is not confined to a transporter, as is sought to be argued on behalf of the appellant. Secondly, sub- section (3) indicates that any consignment of goods may be transported by any person after he furnishes particulars in the prescribed Form. In this connection, we may refer to Rule 211A of the Rules. The said Rule occurs in Chapter XV of the Rules, which deals with restrictions on transport of any consignment of goods, regulatory measures for movement of such goods in transit through West Bengal, interception, search, seizure and penalty for contravention, and certain measures to prevent evasion of tax on sales within West Bengal. If one reads Chapter VIII of the Act with Chapter XV of the Rules, one finds that both Chapters deal with regulatory measures to avoid tax evasion. Therefore, in our view, the machinery provisions under the Act constitute an integral part of the charging provisions. These regulatory measures are intended to ensure that there is no evasion of tax. Therefore, one cannot read the Act by segregating the machinery provisions from the charging provisions. Rule 211A of the Rules deal with procedure for transport from Port, checkposts, etc., of any consignment of goods despatched from any place outside West Bengal and bound for any place outside West Bengal. In the present case, the subject-goods have come from Hamburg, which is a place outside West Bengal. They passed through the customs barrier, the port barrier and the sales tax barrier at Haldia [which is the first checkpost] and, ultimately, were bound for Mumbai through the exit checkpost at Chichira. In short, the goods were meant to be in transit through the State of West Bengal and they were bound for Mumbai, which is a place outside West Bengal. In such a situation, Rule 211A of the Rules was applicable.

In this case, we are required to ascertain whether the appellant, who has signed the Declaration in the prescribed Form, has complied with the said Rule? If not, the consequence of non-compliance? If one reads Section 68(3) of the Act along with Rule 211A(1) of the Rules, one finds that `any person', before taking delivery of the consignment from any port, etc., is required to make a Declaration in the prescribed Form and only on making the requisite Declaration, such `any person' is allowed to transport the consignment of goods through West Bengal to a place outside the State. In other words, no person will be able to transit the consignment of goods through the State of West Bengal without making a Declaration in the prescribed Form. Before taking delivery of such goods, such a person shall make a Declaration in the Form appended to Rule 211A(1) of the Rules. Such a Declaration, therefore, is a condition precedent for taking delivery of the goods from Port, Airport, etc., to any place outside the State of West Bengal. In this connection, once again, we may emphasise that in Rule 211A(1) of the Rules, the words used are "any person". These words include, a clearing and forwarding agent, a transporter and Customs House Agent or any other person, who makes a Declaration in the Form prescribed. In this connection, clause (4) of the Declaration is equally important. It mandates a statutory obligation on the declarant, who takes delivery of the consignment to transport such consignment to it's destination outside West Bengal [which, in the present case, is Mumbai]. The declarant could be an importer or a clearing and forwarding agent or any person taking delivery of the consignment. This obligation is imposed on the declarant so that, in the event of detection of tax evasion, it would not be open to the declarant to deny his liability which, in our opinion, under the Scheme of the Act is an absolute liability in the sense that if the declarant commits breach of his obligation under the Act read with the Rules, then a legal presumption is drawn against him, of course, subject to rebuttal. It is important to note, in this connection, that the appellant in this case was the declarant. He had appended his signature on the Declaration prescribed under Rule 211A(1) of the Rules. At this stage, we may point out that, under the procedure prescribed in the Rules, the declarant, before taking delivery of the goods from the port, has to make a Declaration in the prescribed Form in which he undertakes unequivocally to transport such consignment to it's destination outside the State of West Bengal. With such Declaration, the appellant becomes liable for a breach if he fails to produce the counter- signed copy of the Declaration before the Assessing Authority. The Declaration is in triplicate. One copy duly endorsed remains with the Sales Tax Authority at the first checkpost which, in the present case, is at Haldia.

The remaining two counter-signed copies of the Declaration in the prescribed Form are carried by the declarant to the exit checkpost where one copy is retained by the Authority and the other is given to the declarant. In the present case, the endorsed counter-signed copy of the Declaration has not been produced by the appellant in the impugned proceedings before the Assessing Authority. Non- production thereof raises a legal presumption of tax evasion. The reason is that when countersigned copy of the Declaration is not produced, law presumes, unless otherwise proved, that goods in question have been consumed, used or otherwise disposed of within the State. In the present case, there is no evidence whatsoever to rebut that presumption. There is no material to indicate that the goods had crossed the border at Chichira, except a confirmation from the consignee that it has received the goods in question. We cannot accept such confirmation from the consignee primarily because, under the Act, the importer/consignee is not liable for the breach. The consignee is not the declarant. In the present case, the consignee [importer] has not undertaken any obligation to take the goods in transit through the State of West Bengal to it's destination outside the State. If one reads carefully Section 68 of the Act, one finds that the provisions of said section contemplate a regulatory measure to ensure that there is no evasion of tax. Even if Section 68 of the Act is treated as a machinery section, even then the said Section has been enacted to ensure that there is no evasion of tax. In that sense, if one examines the Scheme of the Act, it becomes clear that non-production of the endorsed counter-signed copy of the Declaration before the Competent Authority would give rise to a legal presumption of tax evasion, subject to such presumption being rebutted.

On behalf of the appellant, it was urged that, under the Scheme of the Act, the word "transporter" has been defined by way of an Explanation to Section 72 of the Act. This argument was advanced to demonstrate that Sections 68, 71B and Explanation (a) to Section 72 of the Act are applicable only to a transporter, i.e., the owner or any person having possession or control of a goods vehicle or the driver or any other person in charge of such vehicle, who transports the goods on account of any other person or on his own account and, therefore, the said provisions do not apply to CHA. We find no merit in this argument. As stated above, the appellant, as a declarant, could be an importer, a clearing and forwarding agent, etc., who undertakes the delivery of the consignment for the purpose of transporting such consignment of goods to it's destination outside West Bengal. Once such a Declaration is made by the appellant, he is a transporter, even assuming that the said provisions, namely, Sections 68, 71B and Explanation (a) to Section 72, are applicable only to a transporter. The matter can be looked at from another angle. Section 68 imposes a restriction when it says that no person shall transport any consignment of goods from any Railway Station, Airport, Port, etc., except in accordance with such conditions and restrictions, as may be prescribed.

In other words, the restriction on movement of goods under sub-section (1) of Section 68 of the Act can only be lifted in a situation falling under sub-sections (3) and (4) of Section 68 of the Act. Under sub-section (3), any person, who seeks delivery of the consignment, is required to undertake an obligation that he is undertaking that delivery for transporting such consignment to it's destination outside West Bengal. Section 71B of the Act is consequential upon contravention of provisions of Section 68 when goods transported are not available. It says that where the goods are transported by a person in contravention of restrictions or conditions prescribed under Section 68 of the Act read with Rule 211A of the Rules, including the Declaration therein, and if such goods are not available for seizure, the Prescribed Authority shall, after giving reasonable opportunity of being heard, impose a penalty. That penalty is an amount not exceeding twenty five per cent of the value of such goods. Section 71B read with Section 68 of the Act indicates that if the declarant undertakes delivery of the consignment with an obligation to transport such consignment of goods to it's destination outside West Bengal and if he contravenes any restrictions or conditions prescribed under Rule 211A of the Rules read with the Declaration, then such person becomes liable to pay penalty on ad valorem basis. In the present case, the appellant has not produced before the Assessing Authority any evidence to show that the consignment, whose delivery has been taken from the Customs Port, has gone out of West Bengal. He has not produced the endorsed countersigned copy of the Declaration before the Assessing Authority. In such a case, law presumes that the subject-goods have been sold unauthorisedly within the State of West Bengal and that is the sole reason why penalty has been imposed on ad valorem basis, i.e., on certain percentage of the value of the goods. It was open to the assessee to prove to the contrary and rebut the above legal presumption. However, he has failed to do so. Further, when the appellant signs the Declaration in terms of Rule 211A(1) of the Rules, he, inter alia, undertakes an obligation to act as a transporter. Under Section 72 of the Act, if any person transports a consignment from any place outside the State and, in order to go to it's destination at a place outside the State, seeks to pass through the State of West Bengal, he is required to make a Declaration, as prescribed in Rule 223(1) of the Rules on the body of the consignment note before the appropriate Authority of the first checkpost for his verification and counter- signature. Further, the transporter is required to carry such a Declaration and other documents and produce them before the Prescribed Authority of the last checkpost for his verification. In our view, Section 72 of the Act read with Rule 223(1) of the Rules has no application to the facts of the present case. Section 72, no doubt, deals with goods being transported through the State of West Bengal; however, the said section specifically refers to entry of a "goods vehicle" into West Bengal and such vehicle transporting the goods is bound for a place outside West Bengal. In the present case, we are concerned with goods coming from Hamburg in Germany into the Port in West Bengal, hence, Section 72 of the Act has no application. Moreover, the word "transporter" has been defined specifically for the purpose of only Sections 72 and 73 of the Act and has not been defined for the entire Act. In the circumstances, it is not open to the appellant to say that there is a clear dichotomy between a transporter and a CHA/clearing and forwarding agent. In the present case, we are concerned with the contravention of the provisions of Section 68 of the Act by a person who makes a Declaration in the prescribed Form in terms of Rule 211A(1) of the Rules.

One of the key arguments advanced on behalf of the appellant herein was that Rule 211A(6) of the Rules applies to the transporter/carrier, who is in possession of two countersigned copies of the Declaration when the goods are being transported across the exit checkpost of West Bengal, because it is the transporter who gets back the endorsed Declaration as "a person transporting the goods for onward movement". According to the appellant, Rule 211A(8) of the Rules has no application as the said sub-rule is consequential to the applicability of sub-rule (6) of Rule 211A, which sub-rule is applicable only in the case of a transporter. In other words, according to him, sub-rule (6) casts an obligation on the transporter and not upon the CHA, whose assignment is confined to the precincts of the Customs Port. We find no merit in this submission. Under sub-rule (2) of Rule 211A of the Rules, the Declaration, in triplicate, is required to be produced along with the copy of invoice, railway receipt, bill of lading or document of like nature before the Prescribed Authority posted at the checkpost situated in or around the Railway Station, Port, Airport or Post Office from which the delivery of the consignment of goods is to be taken. Sub-rule (3) of Rule 211A of the Act deals with a situation where there is no checkpost set up in or around the Railway Station, Port, etc. We are not concerned with that situation in this case. Under sub- rule (5), it is, inter alia, provided that, in cases of interception, detention and search of vehicles falling under Section 69 of the Act, the declarant under sub-rule (1) shall, while transporting any consignment on it's way to the destination outside West Bengal, shall stop his vehicle on being asked by the Prescribed Authority to produce the countersigned copies of the Declaration referred to in sub-rule (1) of Rule 211A along with the invoice, consignment note, road challan or any other document of like nature. Therefore, sub-rule (5) squarely applies to a declarant under sub-rule (1). Under sub-rule (6), two copies of the Declaration duly countersigned shall be produced before the Prescribed Authority posted at the exit checkpost and such Authority shall, on being satisfied upon verification of the goods being transported with those specified in the Declaration, endorse such Declaration, retain one copy of such endorsed Declaration with it and return the other copy to the person transporting such goods for onward movement to the place of destination outside West Bengal after recording in his register the particulars given in the Declaration. As stated above, it is the case of the appellant that sub- rule (6) of Rule 211A applies to a transporter and not to a CHA. We find no merit in this submission. If one reads sub-rule (6), it becomes clear that the said sub-rule refers to copies of the Declaration duly countersigned under sub-rule (4) to be produced before the Prescribed Authority at the exit checkpost. Sub-rule (4), in turn, refers to a Declaration being made under sub-rule (2) which, in turn, refers to the Declaration made under sub- rule (1) of Rule 211A of the Rules. Therefore, under sub- rule (4), such a Declaration is required to be countersigned by the Prescribed Authority and two copies thereof are returned to the declarant under sub-rule (1).

In other words, sub-rule (6) applies to a declarant who could be a transporter, CHA, clearing and forwarding agent or any person taking delivery of the consignment of goods from the Port for despatch of the same outside West Bengal. Further, as stated above, clause (4) of the Declaration refers to an obligation being undertaken by the declarant that the delivery is required to be taken by him for transporting such consignment to it's destination outside West Bengal. Hence, with the making of the Declaration, the appellant undertook the obligation to transit the consignment to the destination outside the State for which the proof was the countersigned copy of the Declaration.

Before concluding, we may state that a request was made by the learned senior counsel appearing on behalf of the appellant that, in the event of this Court rejecting this civil appeal, the Department may give the benefit of instalments to the appellant to make payment towards impugned penalty. We do not wish to express any opinion thereon.

Accordingly, we find no merit in this civil appeal, which is, accordingly, dismissed with no order as to costs.