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PETITIONER: UNION OF INDIA

       Vs.

RESPONDENT: A.V. NARASIMHALU

DATE OF JUDGMENT: 01/09/1969

BENCH:

ACT: Civil  Courts-Exclusion  of  jurisdiction-Sea  Customs  Act, 1878, ss. 188,  191.

HEADNOTE: Section  188 of the Sea Customs Act, 1878, provides  for  an appeal  against any order of an officer of customs  and  the order  passed  in the appeal is made final subject  to  the. revision  under  s. 191 of the Act. The  respondent  claimed refund of customs duty paid by him under  protest. The claim was  rejected.  An appeal to the Collector of Customs and  a revision to the Central Board of Revenue= were unsuccessful. The  respondent instituted an action in the Civil Court  for refund  of the amount. The trial court decreed the suit  but the first appellate court held that the civil court had  no. jurisdiction  to  entertain the suit.  The  High  Court,  in further  appeal,  restored the decree of  the  trial  court. Allowing the appeal, this Court, HELD:  The civil court  had no  jurisdiction  to   entertain the  suit. [146 G--H]     Where a statute creates a new right or liability and  it provides a complete machinery for obtaining redress  against erroneous  exercise of authority, jurisdiction of the  Civil Court.  to grant relief is barred.  Where however a  statute reenacts  a right or liability existing at common  law,  and the statute provides a special form of remedy, exclusion  of the  jurisdiction of the Civil Court to grant relief in  the absence  of  an  express  provision  will  not  be   readily inferred. [149’ D--F]     Liability  to  pay duty of customs is not a  common  law liability;  it arises by virtue of the Sea Customs Act.   In respect   of  any   grievance  arising  in  consequence   of enforcement of that liability,  machinery  has been provided by the Act.  Having regard to the complicated nature of  the questions which arise in the determination of liability  to. pay duty of customs, the legislature has invested the  power of  determining  liability  and the  manner  of  enforcement thereof upon a specially authorised hierarchy of  tribunals. [149’ F--G]     (ii)  A civil suit will lie for  obtaining   appropriate relief   in   cases  where the  customs  authority  has  not complied with the provisions of the statute, or the  officer of customs has not acted in conformity with the  fundamental principles of judicial procedure or the authority has  acted in  violation  of  the fundamental  principles  of  judicial procedure  or  has  made an order which is  not  within  his competence  or  the  statute  which  imposes  liability   is unconstitutional  or the order is alleged to. be mala  fide. [149 F-G]

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   (iii)  The  exclusion of the jurisdiction of  the  Civil Court to entertain a suit does not exclude the  jurisdiction of  the High Court to issue high prerogative  writs  against illegal  exercise  of authority by administrative  or  quasi judicial tribunals. [150]     Dhulabhai etc. v. State of Madras Pradesh & Anr.  A.I.R. 1969’ S.C. 78, followed. Secretary of State for India v. Mask & Co. L.R. 67 I.A. 222, referred to. 146

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1361 of 1966.     Appeal  by  special leave from the  judgment  and  order dated  April  5,  1963 of the Madras High  Court  in  Second Appeal No. 1287 of 1960.     Niren  De, Attorney-General, V. A. Seyid Muhammad,  R.N. Sachthey and S.P. Nayar, for the appellant. Lily Thomas, for the respondent. The Judgment of the Court was delivered by     Shah,   J.A.V.  Narasimhalu--hereinafter   called   "the plaintiff" imported 43 reels of newsprint 131/4" width under a  bill  of  Entry dated July 15, 1954.  The  width  of  the newsprint  being  less than 15" no import duty  was  payable under  the Open General Licence The Assistant  Collector  of Customs held  that  the  commodity imported fell within item 44  of  the Customs Tariff and levied a duty of 33  3/8%  ad valorem.   The  plaintiff paid the duty under  protest,  and applied  for refund of the duty relying upon a  decision  of the High Court o.f Madras in writ petition No. 402 of   1954 in  which it was decided that newsprint of width  less  than 15"  was exempt from duty.  This application  was  rejected. An  appeal  to  the  Collector of  Customs  and  a  revision application    to   the  Central  Board  of   Revenue   were unsuccessful.  The customs authorities rejected the claim on the  ground  that the  claim  not having  been  made  within three months of the date of demand was barred under s. 40 of the Sea Customs Act, 1878.     The  plaintiff  then instituted an action  in  the  City Civil Court for a decree for Rs. 2,669-62 against the  Union of  India.  The Trial Court decreed the claim  holding  that the  claim  was  not barred.  In appeal the Principal Judge, City  Civil  Court  held that the City Civil  Court  had  no jurisdiction to entertain the suit. In so holding he  relied upon the judgment of the Judicial Committee in Secretary  of State  for  India v. Mask & Co. (1). In Second  Appeal,  the High Court of Madras reversed the judgment of the  Principal Judge,  City Civil Court, and restored the decree passed  by the trial court.  The Union of India has  appealed  to  this Court with special leave.     It  is  unnecessary  to consider whether  the  claim  is barred  under  s.  40 of the Sea Customs Act,  for,  in  our judgment,   the   Civil  Court  had  no,  jurisdiction   to. entertain  the  suit.  Section 188 of the Sea  Customs  Act, 1878, insofar as it is relevant, provides:        "Any   person  deeming  himself   aggrieved  by   any decision or order passed b.y an officer of Customs under (1) L.R. 67 I.A. 222. 147               this  Act may, within three  months  from  the               date of               such  decision or order, appeal  therefrom  to               the Chief Customs Authority, or in such  cases

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             as   the  Central Government directs,  to  any               officer  of Customs not inferior in rank to  a               Customs Collector and empowered in that behalf               by  name or in virtue of his office   by   the               Central Government.                     Every order passed in appeal  under this               section   shall,  subject  to  the  power   of               revision    conferred   by  section  191,   be               final".               Section 191 provides:                     "The  Central  Government  may,  on  the               application  of any person aggrieved  by   any               decision   or  order passed under this Act  by               any  officer  of  Customs   or  Chief  Customs               Authority,  and  from which  no  appeal  lies,               reverse or modify such decision or order". The  Act  is a complete code dealing with liability  to  pay customs  duty and for obtaining relief against excessive  or erroneous levy and other related matters.  The  jurisdiction of  the Civil Court to entertain a suit on the  ground  that the duty was improperly or illegally levied is excluded.  It is  true that the decision or order passed under s.  188  of the Sea Customs  Act in  appeal to  the appellate  authority is  expressly   declared  final.  But  on  that  account  it cannot  be  held  that by refusing  to  appeal  against  the decision  or  by  refusing to claim  relief  in  the  manner provided  by  s. 188 and s. 191 of the Sea  Customs  Act,  a party aggrieved by the order of a Customs Officer may invest the Civil Court  with jurisdiction to entertain a suit.     In Mask & Company’s case(1) a firm of merchants imported a quantity of betelnuts into. British India.  The  Assistant Collector of Customs assessed them for the purposes of  duty on  a  tariff as "boiled", rejecting the contention  of  the importers, that they Were "raw sliced betel-nuts" subject to duty  ad valorem. The importers, appealed from the  decision of  the  Assistant Collector to the: Collector  of  Customs. The appeal was dismissed,  and in revision to the Government of India the Collector’s decision was affirmed.  A suit  was then  filed  by the importers to recover the  excess  amount collected  from them, by levying duty upon a tariff and  not ad valorem.  Before the Judicial Committee it was  contended that the decision or order passed by the officer of  Customs could  only be challenged by an appeal under s. 188  of  the Sea  Customs  Act and jurisdiction of the  Civil  Court  was excluded. (1) L.R. 67 I.A. 222. 148  Alternatively  it  was contended that the right  of  appeal conferred  by  s.  188 constituted  a  procedure  which  was alternative to procedure in the civil courts, and since  the importers in that option had chosen to proceed under s. 188, they  were  bound by  that election, and were thus  excluded from  resort  to the civil courts.  The  Judicial  Committee observed  that adjudication as to  confiscations,  increased rates of duty or penalties  made  under  the power conferred by  s. 182 were decisions or orders  within  the meaning  of s. 188, and that the decision of the Collector under s.  188 was final and excluded the jurisdiction of the Civil Court. The  Judicial Committee did not express any opinion  on  the question whether prior to taking an appeal under s. 188 the porters  would  have been entitled to resort  to  the  civil courts.  But  in our judgment it would not be  open  in  all situations where  a party who had right to appeal to  refuse to resort to the procedure prescribed by the statute and  to file  a suit.  The express declaration in s. 188 of the  Sea

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Customs Act that the order of  the Collector in appeal shall be  final  does not imply that a suit will lie  against  the decision or order of the original authority.     In  a  recent judgment of this Court Dhulabhai  etc.  v. State Madhya Pradesh and Anr.(1) this Court set out  certain principles relating to the exclusion of the jurisdiction  of the  Civil Court. The propositions (1), (2), (5), (6) &  (7) are relevant.     It  may  be observed that it was not the case  that  the Assistant  Collector of Customs had not acted in  conformity with  the fundamental principles of judicial procedure,  nor was  it the case that the provisions of the Act  were  ultra vires  or  unconstitutional.  The Act in  terms,  creates  a special  liability  and provides for  determination  of  the right of the State to recover duty and the liability of  the importer to pay duty and by the clearest  implication it  is provided  that  it shall be determined  by the  Tribunal  so constituted.               The  High Court in the judgment  under  appeal               observed:                     "   ......   the:  question  in   these.               appeals  is  different,  namely,  whether  the               Collector  could be said to be  acting  within               his  jurisdiction, if he, in direct  disregard               of  the  provisions of the Act and  the  Rules               made  thereunder, levied a duty upon the goods               which were not liable to duty and compelled by               duress  as  it were  the importer to  pay  the               same before taking delivery of the goods.  The               result  of his action was that the  respective               appellants had to part with certain  sums   of               money which were collected from them under the               colour  of statutory power.  In such a case, a               suit will undoubtedly (1) A.I.R. 1969 S.C. 78. 149               be  maintainable in a civil court  by  showing               that  the Customs authorities had  excessively               charged duty;  it will really be a common  law               right to  property being interfered with.   It               may  be that the remedy provided under s.  188               of  the Sea Customs Act would be available  to               the  aggrieved importer to challenge the  levy               on  the ground that it was  either  improperly               made  or that the duty was collected  under  a               mistake  or  under  duress. But  in  all  such               cases,  there will also exist a  remedy  under               the  common  law  in a civil  Court,  for  the               simple  reason that these categories of  cases               will amount to a levy beyond the  jurisdiction               of  the authority, or  one made under  duress,               or paid by mistake." But an erroneous decision of the Customs Authority cannot be said  to be reached without jurisdiction merely  because  it may  be  shown in some collateral proceeding  to  be  wrong. Normally   an  action  of   an   administrative    authority interfering   with  the right to property may be  challanged by   resort  to a civil court, Yet in the case  of  a  right which depends upon a statute, the jurisdiction of the  civil court  to grant relief may by express provision or by  clear implication of the statute be excluded.  Where a statute re- enacts  a right or a liability existing at common  law,  and the statute provides a special form of remedy, exclusion  of the  jurisdiction of the civil court to grant relief in  the absence  of  an  express  provision,  will  not  be  readily

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inferred.   Where, however a statute creates a new right  or liability and it provides a complete machinery for obtaining redress   against    erroneous   exercise   of    authority, jurisdiction  of the civil court to grant relief is  barred, Liability  to  pay  a duty of custom is  not  a  common  law liability:  it arises by virtue of the Sea Customs  Act:  in respect   of   any  grievance  arising  in  consequence   of enforcement of that liability machinery has been provided by the  Act.   Having regard to the complicated nature  of  the questions  which arise in the determination of liability  to pay  duty of customs the Legislature has invested the  power of  determining  liability  and the  manner  of  enforcement thereof upon a specially authorised hierarchy of  tribunals. An appeal lies against the order of the Assistant  Collector of  Customs  against an order imposing duty as  well  as  an order   refusing  to refund duty, and the  grievance may  be carried  to the Central Board of Revenue.  In our  judgment, the jurisdiction of the civil court is by clear  implication of the statute excluded.     We,  however,  deem it  necessary to  observe  that  the civil courts have jurisdiction to examine cases in which the Customs  Authority has not complied with the  provisions  of the  statute  or  the officer of customs has  not  acted  in conformity  with  the  fundamental  principles  of  judicial procedure or the Authority has acted 150 in  violation  of  the fundamental  principles  of  judicial procedure  or he has made an order which is not  within  his competence  or  the  statute  which  imposes  liability   is unconstitutional,  or where the order is alleged to be  mala fide.   A  civil  suit will lie  for  obtaining  appropriate relief in these cases.     But the exclusion of the jurisdiction of the civil court to entertain a suit does not exclude the jurisdiction of the High  Court to issue high prerogative writs against  illegal exercise  of  authority by administrative or  quasi-judicial tribunals. The finality which may be declared by the statute qua certain  liability  either  by express exclusion of  the jurisdiction  of  the civil court or by  clever  implication does not affect the jurisdiction of the High Court to  issue high prerogative writs.     The jurisdiction of the civil court to entertain a  suit challenging  the validity of the imposition of the  duty  of customs being excluded, the plaintiff’s suit must fail.  But it must be observed that the present is a fair  illustration of  the   administration  not making a serious   attempt  to avoid  futile   litigation for small claims.   There  was  a judgment  of  the  High Court of  Madras  on  the  identical question which fell to be determined.  If the plaintiff  had moved  the High Court in exercise of its jurisdiction  under Article  226  the  Union had practically  no  defence.   The Union  could without loss of face accede to the  request  of the plaintiff to refund the amount  collected.  The  learned Attorney-General  stated that the Union desired to obtain  a decision of this Court on the extent of the jurisdiction  of the Civil Court to entertain a suit challenging the decision of  the Customs Authorities, because in the view of the  Law Advisers the High Court had fallen into error in enunciating the  principles.  But the High Court recorded  the  judgment under appeal after the claim was resisted by the Union.   We are  glad  to  record the assurance given  by  the  Attorney General that whatever may be the decision in the appeal, the Union  of India will refund the  amount of tax  unauthorised recovered by the Assistant  Collector of  Customs.  This was essentially  a  case in which when notice  was   served  the

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Central   Government   should  instead   of   relying   upon technicalities  have  refunded  the  amount  collected.   We trust   that  the  Administrative authorities will act in  a manner  consistent  not  with  technicalities,  but  with  a broader concept of  justice if a  feeling is to be  nurtured in  the minds of the citizens that the Government is by  and for the people.     The  appeal  is  allowed.  The suit  is  ordered  to  be dismissed.  The order of costs passed by the High  Court  is however  maintained.  There will be no order as to costs  in this appeal. Y.P.                                         Appeal allowed. 151