terim Application Nos1 2 and 3 of 1989
IN Civil Appeal Nos 3187 and 3188 of 1988
From the Judgment and Order dated 441988 of the Madhya Pradesh High Court in Civil Revision No 26 of 1988
Soli J Sorabjee Attorney General PP Rao Rajinder Sachher DK Kapur Mrs Indu Goswamy Raju Ramachandran Mukul Mudgal SR Bhat MS Ganesh VB Mishra AM Khanwilkar Ms Madhu Khatri p Parameswaran Ms A Subha shini and CSVaidyanathan for the appearing parties
383 The following Order of the Court was delivered By these applications the Indian Red Cross Society seeks a modification of certain directions issued by this court on 15th February 1989 in Civil Appeals Nos 3187 and 3188 of 1988 pursuant to the settlement of the suit instituted by the Union of India against Union Carbide Corporation and the Union Carbide Corporation India Limited arising out of the Bhopal Gas leak disaster
The prayer of the Indian Red Cross Society in these applications arises in the context of the order dated 7th June 1985 made by John F Keenan Presiding Judge of the Southern District Court at New York US directing the utilisation of 5 Million dollars for relief to the victims of the gas leak disaster through Indian Red Cross Society
In the said order Judge Keenan referred to the willingness of the Union Carbide Corporation to pay 5 million dollars to aid the victims of the gas plant disaster which occurred in December 1984 in Bhopal India and had desired and indicated that in the administration of this fund which was intended to be at the disposal of the Union of India should be subject to certain reporting requirements as to the utilisation of the funds
Union of India did not agree to subject itself to those conditions
Referring to the alter native arrangements as to the administration of the interim relief necessitated by Union of India s disinclination to take up relief operation on the terms stipulated by the Court Judge Keenan observed Counsel for the Union of India has informed the Court that the Union of India considers these reporting requirements so onerous as to compel the Union of India to decline the five million dollars in interim relief offered
Accordingly the Court directs that Liasion Counsel and Messrs Bailey and Chesley of the Executive Committee contact the American Red Cross Society to arrange for discussions with the Indian Red Cross Society in order to formulate a plan for distribution of the five million dollars to the victims of the gas plant disaster
The US District Court therefore proposed a scheme for the utilisation of the Interim Relief Fund through the agency of the American Red Cross Society
But what is of particular significance in the present context is as to how this interim relief fund was to be treated and accounted for at the end of the day when the litigation culminated in a final decision
That the payment was intended to be without prejudice to the contentions of the Union Carbide Corpora tion and that further the amount of interim relief would form part of the quantum that may finally be adjudicated was rendered explicit in the last paragraph of the said order dated 7th June 1985 which stipulated 384 Neither the promulgation implementation nor anything contained herein shall be asserted or used in any manner against the interests of Union Carbide Corporation
This provision of interim relief by Union Carbide Corporation shall be credited against the payment of any final judgment or settlement of the claims against Union Carbide Corporation arising out of the Bhopal gas leak of December 1984 After the proceedings in the US District Court terminat ed upon the Union Carbide Corporation s plea of forum non conveniens being upheld Union of India instituted suit No 1113 of 1986 in the District Court at Bhopal
The claim in the suit came to be settled in this court in the said Civil Appeal Nos 3187 3188 of 1988 by the orders dated 14th15th February 1989
In terms of the said settlement the sum of 5 million US dollars was treated as part of the settlement fund
In the order of this Court dated 15th February 1989 this sum of 5 million US dollars was specifically referred to in clause a of paragraph 2 and paragraph 5
The relevant portions of the order are excerpted below a a sum of US 425 million Four Hundred and Twenty five millions shall be paid on or before 23rd March 1989 by Union Carbide Corporation to the Union of India less US  5 million already paid by the Union Carbide Corporation pursuant to the order dated 7th June 1985 of the Judge Keenan in the court proceedings taken in the United States of America
The amounts payable to the Union of India under these orders of the Court shall be deposited to the credit of the Registrar of this Court in a bank under directions to be taken from this Court
This order will be sufficient authority for the Registrar of the Supreme Court to have tile amount transferred to his credit which is lying unutilised with tile Indian Red Cross Society pursuant to the directions from tile International Red Cross Society Emphasis supplied The case of the applicant Indian Red Cross Society is that in the course of the negotiations the American Red Cross had with it in the matter of administration of this relief the Red Cross Society of India had made it clear to the American Red Cross that it would not undertake the relief administration unless the fund was assigned to it unconditionally
Red Cross Society of India would say that it was on this specific understanding that it accepted the engagement to administer the funds in India
385 Accordingly the Indian Red Cross Society contends that the order dated 5th February 1989 in so far it treats the unutilised part of the interim relief fund as part of the settlement fund and authorises the Registrar of he Supreme Court to realise it as such is not consistent with the terms under which the relief fund was agreed to be entrusted to and accepted by the Indian Red Cross Society and that therefore those directions in the order dated 15th Febru ary 1989 require to be deleted
We have heard Dr Chitaley for the Indian Red Cross Society Shri FS Nariman for the Union Carbide Corporation and the learned Attorney General for the Union of India
In view of the circumstance that at the time these applications were heard the validity of the settlement stood assailed in certain proceedings of Review the Union of India abstained from making any statement as to he merits of the claim of the Indian Red Cross Society
Union of India sought to steer clear of any possible implication of any appropriation of the settlement fund which might be suscep tible of an inference of rectification it of the settlement
The Union Carbide Corporation while disputing the claim of the Indian Red Cross Society that the said 5 million US dollars constituted subject matter of a separate and dis tinct fund outside the scope of the litigation culminating in the orders of 1415th February 1989 however stated that it had no objection if the Union of India was agreeable to the Indian Red Cross Society retaining and utilising the money lying with it
The grantability of the prayer of the Indian Red Cross Society really turns upon whether the interim relief of 5 million US dollars was a distinct award standing inde pendently and outside of the final adjudication
It is manifestly not so
Judge Keenan s order dated 761985 makes that clear
It however appears true that the Indian Red Cross Society sought to stipulate with its American counter part that the Indian Red Cross Society be free from any contingent obligations stemming from the final result of the litigation one way or the other
Indeed at some point of time the American Red Cross presumably at the instance of the Indian Red Cross Society desired to have the matter submitted for further consideration of the District Court at New York
But nothing has been placed before us to indicate that the District Court for the Southern District New York ever changed the terms of its order dated 7th June 1985
On the contrary the affidavit dated 20th November 1989 of Mr John Macdonald filed on behalf of the Union Carbide Corpora tion indicates that from the very inception this interim 386 relief fund was intended to be in the nature of an advance payment or credit to the defence
The following observa tions of Judge Keenan on 16th April 1985 as to the intended nature of the proposed interim relief place the matter beyond doubt
Judge Keenan observed It seems to me that some sort of emergency systematic relief should be supplied to the survivors on a prompt basis
Any such funding supplied by the defendant would be treated in the nature of an advance payment or credit to the defence
It would appear that the agreement between the Ameri can Red Cross and the Indian Red Cross Society came to be discussed before the District Court New York during hear ing on 20th November 1985
The portions of the transcript of what transpired at the hearing furnished in Mr John Macdonald s affidavit indicate that far from approving the purported arrangement inter se between the American Red Cross and the Indian Red Cross Society they show that the terms of the order dated June 7 1985 as to the nature and character of the interim relief as an advance payment or credit to the defence were left undisturbed
The tran script of the hearing furnished in the affidavit of Mr John also reaffirms that if there is any recovery against Union Carbide it is a set off 
This is not disputed nor any independent material placed before us to show that the terms as to the nature and character of the interim payment had been altered in terms of the inter se arrangements pleaded by the Indian Red Cross Society
In the circumstances the agreement between the American Red Cross and Indian Red Cross Society cannot prevail over the effect of the order dated 7th June 1985 of Judge Keenan
This Court s directions in this behalf in the order dated 15th February 1989 are not inconsistent there with and do not therefore require any modification
Now that the terms of the settlement have been upheld in the review proceedings the unutilised part of the interim relief of 5 million US dollars will become part of the Bhopal gas relief fund and shall have to be administered as such
The Registrar of the Supreme Court shall be entitled to call up the funds with the Indian Red Cross Society which stood unutilised as on 15th February 1989
The present applications of the Indian Red Cross Society are accordingly dismissed
GN Applications dismissed


Summary:
The petitioner Company was engaged in the business of manufacture of aluminium products and its factory was locat ed at Kalwa in Thane District obtaining aluminium as raw materials from its another factory situated In a different State
With effect from 11082 the Company at Kalwa was included in the municipal Jurisdiction of Thane and prior to that date the Company did not have to pay any octroi on the raw materials brought into its factory at Kalwa
The respondent Corporation was levying octroi duty on the imports of aluminium raw materials made by the petition er Company at the rate of from 1101982 to 1441987 and from 15487 at the rate of 2
On 18587 the Thane Manufacturer s Association made a representation to the respondent Corporation about the increase in octroi rates
The respondent Corporation in Its letter dated 20111987 pointed out that when raw material specified In Entry 77 in Schedule I to the Maharashtra Municipalities Octroi Rules imported for use in the manufacture of fin ished goods It would be subject to the levy of octroi not exceeding 125 and not less
On receipt of this letter the petitioner Company made detailed enquiries and was informed that under Rule 4 of the Rules the goods mentioned In Part IA of the Schedule I1 which were imported were liable to be subjected to octroi at a lower rate
The Company also noticed further 209 that Part IA of the Rules provided that the goods specified in Entry 77 when imported by an industrial undertaking for use as a raw material for processing within that undertaking and if a declaration in Form 14 was filed the levy of octroi in such cases would not exceed 125 and would not be less than 025
The petitioner however had not filed any Form 14 duly filled in and according to it it acted under a mistake of law and under the bonafide impression that the octroi levied on and recovered by the Corporation at the rate of 13 in respect of the period from 11082 to 14487 and at the rate of 2 from 15487 onwards represented the correct rate
On 831988 the petitioner Company in its letter to the respondent Corporation stated that under a mistake of law it paid excess amount and same should be refunded
On 1651988 the respondent Corporation replied that as the petitioner Company had not complied with the procedure specified in Part IA of the Schedule 11 to the Rules for availing such concessional rates and therefore the refund could not be sanctioned
On 1941989 the petitioner Company claimed a refund of total amount of Rs 135410179 p
The respondent rejected the claim against which the Company filed a writ petition in the High Court seeking refund
A Division Bench of the High Court dismissed the writ petition holding that the concessional rate of octroi duty was available only if the declaration in Form 14 was filled with the octroi authorities
Questioning the High Court s Order this Special Leave Petition was filed
The petitioner Company contended that a procedural failure should not disentitle the petitioner Company pro vided if otherwise the Company could have legitimately claimed
The respondent Corporation submitted that the conces sional rate would be available only if the raw material was utilised by the Company for manufacturing goods within the industrial undertaking that if a declaration had been filed in proper Form 14 there could have been a 210 scope for verification and in the absence of such a declara tion the question of refunding at this distance of time did not arise and that the concession should have been availed at the time when it was available and having failed to avail the question of claiming the same later did not arise
Dismissing the petition this Court HELD
A verification at the relevant time by the octroi authorities becomes very much necessary before a concession can be given
In the absence of filing such a declaration in the required Form 14 there is no opportunity for the authorities to verify
Therefore the petitioner Company has definitely failed to fulfil an important obliga tion under the law though procedural
214 F 2
The verification at the time when the raw material was still there is entirely different from a verification at a belated stage after it has seized to be there
May be that the raw material was used in the industrial undertaking as claimed by the petitioner Company or it may not be
In any event the failure to file the necessary declaration has necessarily prevented the authorities to have a proper verification
214 H 215 A 3
A concession has to be availed at the time when it was available and in the manner prescribed
216 D 4
The concession can be granted only if the raw materi al is used in the industrial undertaking seeking such con cession
For that a verification was necessary and that is why in the rule itself it is mentioned that a declaration has to be filed in Form 14 facilitating verification
Fail ure to file the same would automatically disentitle the Company from claiming any such concession
218 C D 5
In the instant case the octroi duty paid by the petitioner Company would naturally have been passed on to the consumers
Therefore there is no justification to claim the same at this distance of time and the court in its discretion can reject the same
218 G kirpal Singh Duggal vs Municipal Board Ghaziabad    HMM Limited and another vs Administrator Bangalore City Corporation and another 19894 SCC 640 distinguished
Kedarnath Jute Manufacturing Co vs Commercial Tax Officer Calcutta 211 and Ors   followed
Orissa Cement Ltd vs State of Orissa  Ors AIR 1991 SC 1676 referred to
Dictionary of English Law by Earl Jowitt Halsbury s Laws of England 4th Edn
Para 198 referred to