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PETITIONER: ASSISTANT COLLECTOR OF CENTRAL EXCISE, GUNTUR

       Vs.

RESPONDENT: RAMDEV TOBACCO COMPANY

DATE OF JUDGMENT25/01/1991

BENCH: AHMADI, A.M. (J) BENCH: AHMADI, A.M. (J) VENKATACHALLIAH, M.N. (J)

CITATION:  1991 AIR  506            1991 SCR  (1) 126  1991 SCC  (2) 119        JT 1991 (1)   199  1991 SCALE  (1)70

ACT:      Central Excises and Salt Act, 1944/Central Excises  and Salt  Rules 1944:  Section 40(2)/Rules 32,  151,  160-‘Other legal proceedings’- Whether includes-Issuance of show  cause notice   and   initiation  of   consequential   adjudication proceedings.

HEADNOTE:      The   appellant  issued  a  notice  calling  upon   the respondent  who  was a dealer in tobacco to show  cause  why duty  should not be demanded under Rule 160 of  the  Central Excise Rules, 1944 on the tobacco removed from his warehouse and  not  accounted  for,  and further  to  show  cause  why penalty should not be imposed for infraction of the  Rules. The respondent sent a detailed reply, and after hearing  him the appellant came to the conclusion that the respondent had evaded  payment of duty.  Thereupon the appellant  issued  a demand  notice  for the duty payable and further  imposed  a penalty.      The respondent filed a writ petition in the High  Court challenging the order of the appellant.  The learned  Single Judge  allowed  the  petition  taking  the  view  that   the appellant’s  action  was time barred because  under  section 40(2)  of  the Central Excises and Salt Act, 1944  no  suit, prosecution  or other legal proceedings could be  instituted for anything done or ordered to be done under the law  after the  expiration of six months from the accrual of the  cause of  action.   The Division Bench dismissed  the  appellant’s appeal.      Before this Court it was inter alia contended on behalf of   the   appellant  that  the  expression   ‘other   legal proceeding’  is  preceded by particular words of  a  certain genus, i.e., ‘suit’ and ‘prosecution’, indicating  reference to  proceedings  taken in courts only, and,  therefore,  the wide  words  must be limited to things ejusdem  generis  and must  take  colour from the preceding words  and  receive  a limited  meaning  to  exclude  proceedings of  the  type  in question.      Allowing the appeal of the Revenue, this Court,      HELD:  (1)  The rule of ejusdem  generis  is  generally invoked where

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                                                      127 the  scope  and  ambit of the  general  words  which  follow certain    specific   words   (which   have   some    common characteristic  and  constitute a genus) is required  to  be determined.[131G]      (2) The cardinal rule of interpretation is to allow the general words to take their natural wide meaning unless  the language of the statute gives a different indication or such meaning  is likely to lead to absurd results in  which  case their  meaning can be restricted by the application  of  the rule of ejusdem generis and they may be required to fall  in line  with the specific things designated by  the  proceding words.    But  unless  there  is  a  genus  which   can   be comprehended from the preceding words, there can be question of  invoking  this  rule.   Nor  can  this  rule  have   any application  where the general words precede specific  words [132B-C]      (3)  The wide expression ‘other legal proceeding’  must be read ejusdem generis with the preceding words ‘suit’  and ‘prosecution’ as they constitute a genus. [133H]      (4)‘Suit’ or ‘prosecution’ are those judicial or  legal proceedings  which  are  lodged in a court of  law  and  not before  any  executive authority, even if a  statutory  one. [132E-F]      (5)  The  penalty and adjudication proceedings  in  the instant case did not fall within the expression ‘other legal proceeding’  employed  in section 40(2) of the  Act,  as  it stood  prior  to its amendment by Art.22 of the  1973,  and therefore,  the  said proceedings were not  subject  to  the limitation prescribed by the said sub-section. [ 133H; 134A]      Public  Prosecutor,  Madras  v. R. Raju  &  Anr.  etc., [1973] S.C.R. 812; Universal Cables Ltd. v. union of  India, [1977]  E.L.T.  (J92);  Amar Chandra  v.  Excise  Collector, Tripura,  A.I.R. 1972 S.C. 1863; C.C. Industries &  Ors.  v. H.N. Ray & Anr., [1980] E.L.T. 442, referred to.

JUDGMENT: CIVIL  APPELLATE  JURISDICTION:  Civil Appeal  No.  2341  of 1978.      From  the Judgement and Decree dated 16.11.1977 of  the Andhra Pradesh High Court in Writ Appeal No. 358 of 1976.      Altaf   Ahmed,   Additional   Solicitor   General,   P. Parmeshwaran and Dilip tandon for the Appellant.                                                        128      A.S. Nambiar and B. Parthasarthy for the Respondent.      The Judgement of the Court was delivered by      AHMADI,  J.  This appeal, on certificate,  is  directed against  the  decision of the High Court of  Andhra  Pradesh which was quashed the imposition of duty and levy of penalty on  the ground that the show cause notice was issued  after the  expiry of the period of six months from the accrual  of the  cause of action.  The facts leading to this appeal  are as follows:      The  respondent  M/s. Ramdev Tobacco  Company,  a  sole proprietory  concern, was at all material times a dealer  in tobacco  having a licenced warehouse at Guntur.  The  dealer was  liable  to  pay duty on the  tobacco  received  at  his warehouse and transported to another dealer.  On August  30, 1972  the  appellant  issued  a  notice  calling  upon   the respondent  to  show cause why duty should not  be  demanded under  Rule 160 of Central Excise Rules, 1944  (‘the  Rules’ hereafter)  on  64,444 kgs. of VFC Farmash  Tobacco  removed from  his warehouse and not accounted for in  the  warehouse

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register maintained under the Rules. The respondent was also asked  to show cause why penalty should not be imposed  for infraction  of Rules 151 and 32(1) of the Rules for  illicit removal  of  the aforementioned quantity of  tobacco.   This show cause notice was founded on the allegation that in 1970 the respondent obtained six transport permits (T.P. 2) dated January 13, 1970, February 10, 1970, March 26, 1970, May 16, 1970, July 24, 1970 and August 5, 1970 and transported under each  permit  more  than the  quantity  of  tobacco  allowed thereunder  in  contravention of the  aforementioned  rules. The respondent sent a detailed reply to the said show  cause notice on November 4, 1972.  After giving a personal hearing to  the respondent on September 18, 1973 the appellant  came to  the  conclusion that the respondent had  evaded  payment of  duty  on 1272 bags weighing 48,304 Kgs, of  VFC  Farmash tobacco  and  issued a demand under Rule 160 in the  sum  of Rs.1,66,165.76  under  adjudication order No.  173/74  dated April 9, 1974.  In addition thereto the appellant imposed  a penalty of Rs. 100 for contravention of Rules 151 and  32(1) of  the  Rules.   Thereupon  the  respondent  filed  a  writ petition   No.2600  of  1974  under  Article  226   of   the Constitution   challenging  the  aforesaid  order   of   the appellant.  This writ petition was heard and disposed of  by a  learned Single Judge of the High Court who took the  view that  the appellant’s action was time barred inasmuch as  it was  initiated after the expiry of the period of six  months from  the accrual of the cause of action.  According to  the learned Judge under section                                                        129 40(2) of the Central  Excises and Salt Act, 1944 (‘the  Act’ hereinafter) no suit, prosecution or other legal  proceeding could be instituted for anything done or ordered to be  done under  the law after the expiration of six months  from  the accrual of the cause of action.  Since a period of more than six months had indisputably expired from the dates on  which the  excess tobacco was transported under the six  transport permits in question, the action was clearly time barred.  In this  view of the matter the writ petition was  allowed  and the  demand made under the impugned adjudication order  both in  respect  of duty and penalty was quashed.   The  present appellant questioned the correctness of this view in appeal, Writ  Appeal  No. 358 of 1976, but in  vain.   The  Division Bench  found the view taken by the learned Single  Judge  in accord  with  its  view in Writ Petition No.  2516  of  1974 decided  on  April 1, 1976.  It,  therefore,  dismissed  the appeal  but since it had granted a certificate to appeal  in the  case relied on, it also granted a  similar  certificate which has given rise to this appeal.      Sub-section (2) of section 40 of the Act as it stood at the relevant point of time before its amendment by Amendment Act 22 of 1973 read as under:          "No  suit,  prosecution or other  legal  proceeding          shall be instituted for anything done or ordered to          be  done under the Act after the expiration of  six          months  from the accrual of the cause of action  or          from the date of the act or order complained of". Before  we proceed to analyse this sub-section it  would  be advantageous  to bear in mind that sub-section (1)  of  this section  bars  the institution of any suit,  prosecution  or other legal proceeding against the Central Government or its officer in respect of any order passed in good faith or  any act in good faith done or ordered to be done under the  Act. The second sub-section prescribes a period of limitation for suits, prosecutions and other legal proceedings  instituted, lodged  or  taken for anything done or ordered  to  be  done

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under the Act.  That is why in Public Prosecutor, Madras  v. R.Raju  &  Anr.,  etc., [1973] SCR 812 it  was  urged  on  a conjoint  reading of the two sub-sections  that  sub-section (2)  applied  only to Government and could not come  to  the rescue of a tax payer.  Rejecting this contention this Court held:           "The two sub-sections operate in different fields.          The  first  sub-section contemplates bar  of  suits          against  the  Central  Government  or  against  the          officers by protecting them in                                                        130          respect of orders passed in good faith or acts done          in good faith.  It is manifest that the second sub-          section  does not have any words of  restriction  or          limitation  of class of persons unlike  sub-section          (1).   Sub-section (2) does not have any  words  of          qualification  as  to  persons.   Therefore,   sub-          section  (2)  is applicable to  any  individual  or          person." This  the  appellant’s contention that sub-section  (2)  was confined  only  to the Government officers was found  to  be unwarranted on the plain words of the provision and was also repelled  by  reference to other comparable  statutes  which went to show that whenever the legislature intended to limit the   application  against  the  Government  officers,   the Legislature  had chosen appropriate words of  limitation  to restrict  the  operation  of  the  provision.   It  follows, therefore, that the application of the sub-section  extended to any person, not being a Government Officer, against  whom any   suit,  prosecution  or  other  legal  proceeding   was commenced for anything done or ordered to be done under  the Act.      The  next  contention convassed in that  case  by  the learned  counsel  for  the  appellant  was  that  the  words "anything  done or ordered to be done" employed in the  sub- section would not include anything done in violation of  the Act.   This Court after referring to the definition  of  the word ‘act’ in the General Clauses Act, 1897, which  extended to  illegal omissions also, and the case law on the  subject observed at page 820 as under:          "These decisions in the light of the definition  of          the word ‘act’ in the General Clauses Act establish          that  non-compliance  with the  provisions  of  the          statute by omitting to do what the act enjoins will          be  anything  done or ordered to be done under  the          Act.   The  complaint against the  respondents  was          that they wanted to evade payment of duty.  Evasion          was  by using and affixing cut and torn  banderols.          Books  of  account were not  correctly  maintained.          There   was   shortage  of  banderols   in   stock.          Unbanderolled  matches were found.  These  are  all          infraction  of the provisions in respect of  things          done or ordered to be done under the Act." It is, therefore, clear from the above observation that  any omission or infraction of the statutory provision would also fall within the ambit of the provision.  Non-payment of duty or  dues which a dealer is under an obligation to pay  under the statute was, therefore, held to fall within                                                        131 the  scope  of the provision.  In that  case  the  complaint against  the  respondents was that to evade the  payment  of duty  they had used and affixed cut and torn  banderols  and had  failed to maintain the accounts correctly resulting  in shortage  in  stocks.  The respondents were  prosecuted  for contravention  of the Rules punishable under  sections  9(b)

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and  9(d)  of the Act as also under section 420  read   with section 511 and 109, I.P.C.  The respondents pleaded the bar of  section 40 of the Act as it then stood.  The High  Court upheld the contention that the prosecution was barred by  the rule  of limitation incorporated in section 40 as  the  same was instituted after the  expiry of six months from the date of  the commission of the alleged offences.  This  Court  on the  aforesaid line of reasoning affirmed the  High  Court’s decision.      But  the  question is whether the issuance  of  a  show cause  notice  and  the  initiation  of  the   consequential adjudication  proceedings can be described as  ‘other  legal proceedings’  within  the  meaning  of  sub-section  (2)  of section  40  of the Act?  If the  said  departmental  action falls  within the expression ‘other legal proceeding’  there can be no doubt that the action would be barred as the  same indisputably  was initiated six months after the accrual  of the  cause action.  So the crucial question is  whether  the issuance of the show cause notice dated August 30, 1972  and the   passing   of  the  impugned  order   in   adjudication proceedings  emanating  therefrom constitutes  ‘other  legal proceeding’  within the meaning of section 40(2) of the  Act to  fall within the mischief of that sub-section which  bars such  proceedings if commenced after a period of six  months from  the  accrual  of  the cause  of  action.  The  learned Additional  Solictor General submitted that  the  expression ‘other  legal proceeding’ must be read ejusdem generis  with the  proceeding expressions ‘suit’ and ‘prosecution’ and  if so  read  it  becomes crystal clear  that  the  department’s action  cannot  come  within the  purview  of  ‘other  legal proceeding’.   How valid is this contention is the  question which we are called upon to answer in the present appeal.      The rule of ejusdem generis is generally invoked  where the  scope  and  ambit of the  general  words  which  follow certain    specific   words   (which   have   some    common characteristic  and  constitute a genus) is required  to  be determined.   By the application of this rule the scope  and ambit  of  the general words which follow  certain  specific words  constituting a genus is restricted to things  ejusdem generis  with  those  preceding  them,  unless  the  context otherwise   requires.   General words must  ordinarily  bear their  natural and larger meaning and need not  be  confined ejusdem  generis to things previously enumerated unless  the language  of  the statute spells out an  intention  to  that effect.  Courts                                                        132 have   also limited the scope of the general words in  cases where  a  larger  meaning is likely to lead  to  absurd  and unforeseen  results.   To put it  differently,  the  general expression  has to be read to comprehend things of the  same kind  as those referred to by the preceding specific  things constituting a genus, unless of course from the language  of the  statute it can be inferred that the general words  were not intended to be so limited and no absurdity or unintended and unforeseen complication is likely to result if they  are allowed   to take their natural meaning.  The cardinal  rule of  interpretation  is to allow the general  words  to  take their  natural  wide  meaning unless  the  language  of  the statute  gives  a different indication or  such  meaning  is likely to lead to absurd results in which case their meaning can  be restricted by the application of this rule and  they may  be  required to fall in line with the  specific  things designated by the preceding words. But unless there is genus which  can be comprehended from the preceding  words,  there can be no question of invoking this rule. Nor can this  rule

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have  any  application  where  the  general  words   precede specific words.      There  can be little doubt that the words ‘other  legal proceeding’  are  wide enough to  include  adjudication  and penalty  proceedings  under  the  Act.   Even  the   learned Additional Solicitor General did not contend to the contrary but  what  he said was that since this wide  expression   is preceded  by  particular words of a certain  genus,  namely, words  indicating reference to proceedings taken  in  courts only,   the  wide words must be limited  to  things  ejusdem generis  and must take colour from the preceding  words  and should,  therefore,  receive a limited  meaning  to  exclude proceedings of the type in question.  There can be no  doubt that  ‘suit’  or ‘prosecution’ are those judicial  or  legal proceedings  which  are lodged in a court of  law  and   not before any executive authority, even if a statutory one. The use   of  the  expression  ‘instituted’  in  section   40(2) strengthens  this belief.  Since this sub-section  has  been construed  by  this Court in Raju’s case (supra) not  to  be confined in its application to only Government servants  but to  extend to others including the assessees and  since  the words  ‘for anything done or ordered to be done  under  this Act’ are found to be comprehensive enough to include acts of non-compliance or omissions to do what the Act and the  Rule enjoin,  the  limitation prescribed by section  40(2)  would undoubtedly  hit  the adjudication and  penalty  proceedings unless  the  expression  ‘other legal  proceeding’  is  read ejusdem  generis  to limit its ambit  to  legal  proceedings initiated in a court of law.      The  scope  of  section 40(2) as it  stood  before  its amendment pursuant to Raju’s case came up for  consideration before a Division                                                        133 Bench  of the Madhya Pradesh High Court in Universal  Cables Ltd.  v.  Union  of  India, [1977]  ELT  (J92)  wherein  the question  raised  for  determination  was  whether   penalty procedings taken under Rule 173Q for the infraction of  Rule 173C with a view to evading payment of duty fell within  the expression  ‘other legal proceeding’ used in the  said  sub- section.   The High Court conceded that the expression  when read  in isolation is wide enough to include any  proceeding taken in accordance with law, whether so taken in a court of law  or before any authority or tribunal but when read  with the preceding words ‘suit’ or ‘prosecution’ it must be given a  restricted meaning.  This is how the High Court expressed itself at page J 106:          "Now  the language of section 40 (2) is: ‘no  suit,          prosecution  or  other legal  proceeding  shall  be          instituted’.    ‘Suit’  and   ‘prosecution’   which          precede the expression ‘other legal proceeding’ can          be taken only in a Court of Law". After  stating the expanse of the ejusdem generis  rule,  as explained in Amar Chandra v. Excise Collector, Tripura, AIR. 1972  SC 1863 at 1868 (Sutherland, Volume 2  pages  399-400) the High Court observed that there was no indication in  the said  sub-section  or  elsewhere in the Act  that  the  said general  words were intended to receive their  wide  meaning and were not to be construed in a limited sense with the aid of the ejusdem generis rule.  A departmental proceeding like penalty  proceedings  were, therefore,  placed  outside  the scope  of the said sub-section.  This view was  quoted  with approval by a learned Single Judge of the Bombay High  Court in C.C. Industries & Others v. H.N. Ray and Another,  [1980] ELT 442 at 453.  These two cases, therefore, clearly support the  view  canvassed  before us by  the  learned  Additional

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Solicitor General.      We   have  given  our  careful  consideration  to   the submission  made on behalf of the appellant,  reinforced  by the  view  expressed  in the aforesaid  two  decisions.   In considering  the  scope  of  the  expression  ‘other   legal proceeding’  we have confined ourselves to the  language  of sub-section  (2)  of  section  40  of  the  Act  before  its amendment by Act 22 of 1973 and should not be understood  to express  any  view  on the amended  provision.   On  careful consideration  we are in respectful agreement with the  view expressed   in  the  aforesaid  decisions  that   the   wide expression  ‘other  legal proceeding’ must be  read  ejusdem generis with the preceding words ‘suit’ and ‘prosecution’ as they constitute a genus.  In this view of the matter we must uphold  the contention of the learned  Additional  Solicitor General that the penalty and adjudication                                                        134 proceedings  in question did not fall within the  expression ‘other  legal proceeding’ employed in section 40 (2) of  the Act  as  it stood prior to its amendment by Act 22  of  1973 and  therefore, the said procedings were not subject to  the limitation prescribed by the said sub-section.      Mr.  Nambiar, the learned counsel for  the  respondents strongly argued that we should not entertain the  submission based  on the ejusdem generis rule since it was  not  raised before the High Court. That indeed is true but being a  pure question  of  law we have though it fit  to  entertain   the same.  We therefore, do not entertain this objection.      In  the result we allow this appeal and set  aside  the order  passed  by the learned Single Judge as  well  as  the Division   Bench   which  affirmed  it   and   dismiss   the respondent’s  writ petition itself.  We also set  aside  the order by which the appellant was directed to pay costs.   We restore  the adjudication order dated April 4, 1974 and  all consequential orders, if any, passed thereunder. Interim stay granted on August 16, 1979 is vacated and the appellant will be entitled to recover the dues from the security  furnished pursuant  to that order.  The appeal is allowed  accordingly with no order as to costs. R.S.S.                                  Appeal allowed.                                                        135