IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MR. JUSTICE S.S.SATHEESACHANDRAN WEDNESDAY, THE 30TH JUNE 2010 / 9TH ASHADHA 1932 AS.NO. 289 OF 1994(B) --------------------- {OS.118/1992 OF SUB COURT, THIRUVALLA} .................... APPELLANT(S)/DEFENDANTS: --------------------------------- 1. STATE OF KERALA, REPRESENTED BY THE COMMISSIONER FOR EXCISE AND SECRETARY TO GOVERNMENT (TAXES), BOARD OF REVENUE, GOVERNMENT OF KERALA, THIRUVANANTHAPURAM. 2. THE KERALA FINANCIAL CORPORATION, * REPRESENTED BY THE MANAGING DIRECTOR, K.F.C.HEAD OFFICE, THIRUVANANTHAPURAM. 3. THE STATE BANK OF TRAVANCORE, * REPRESENTED BY ITS BRANCH MANAGER, MALLAPPALLY. BY SRI.RANJITH THAMPAN,ADDL.ADVOCATE GENERAL RESPONDENT(S)/PLAINTIFFS: --------------------------------- M/S. ALEX BROS CHEMICAL CORPORATION, MALLAPPALLY, REPRESENTED BY 1. ABRAHAM P. ALEX, ITS MANAGING PARTNER, PUTHEN PURACKAL HOUSE, MALLAPPALLY P.O, MALLAPPALLY VILLAGE. AS.NO. 289 OF 1994(B) :: 2 :: 2. MRS.SHEELA ABRAHAM, ITS PARTNER, PUTHENPURACKAL HOUSE, MALLAPPALLY P.O., MALLAPPALLY VILLAGE. APPELLANTS 2 & 3 INCLUDED AS ADDL. RESPONDENTS 3 AND 4 ** THE NAME OF THE APPELLANTS 2 AND 3 ARE STRUCK OUT FROM THE ARRAY OF APPELLANTS AND THEY ARE INCLUDED IN THE ARRAY OF RESPONDENTS AS ADDL.R3 AND R4 VIDE ORDER DATED 30.6.10 ON CMP 396/01. ADV. SRI.P.N.K.ACHAN, SENIOR ADVOCATE SRI.K.MOHANAKANNAN SRI.PHILIP MATHEW THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 30/06/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: AS.NO. 289 OF 1994 :: :: ORDER ON C.M.P.No.180/01 IN AS.NO. 289 OF 1994 DISMISSED. Sd/- (THOTTATHIL B.RADHAKRISHNAN) JUDGE Sd/- (S.S.SATHEESACHANDRAN) 30.6.2010. JUDGE sk/- //true copy// P.S. To Judge. THOTTATHIL B.RADHAKRISHNAN & S.S.SATHEESACHANDRAN, JJ. --------------------------------------- A.S.No.289 of 1994 --------------------------------------- Dated this the 30th day of June, 2010 JUDGMENT THOTTATHIL B.RADHAKRISHNAN, J. The State of Kerala, the first defendant in a suit for compensation, is the appellant. 2. The first respondent/1st plaintiff, a partnership firm, with two partners, sued the State for compensation, on the allegation that on 15.10.1987, a lorry load of rectified spirit brought into the State of Kerala by the 1st plaintiff in connection with its activity of manufacture of paracetamol was seized and was released only 4 days later, after arranging an amount of Rs.2,82,455/- through the 3rd defendant State Bank of Travancore, and paying that as excise duty. 3. The State contested, contending that the rectified spirit was brought evading payment of duty and A.S.No.289 of 1994 :: 2 :: that the levy was in accordance with law. It was specifically contended that the suit was barred by limitation and also not maintainable. 4. Recording a concession by the Additional Government Pleader that the question of limitation is not being pressed, the court below went on to hold that the imposition of excise duty was without the authority of law. Hence the court below concluded that the plaintiffs were entitled to an amount quantified at Rs.2,82,455/- with 12% per annum from 19.5.1987 as compensation and also further amounts totalling to Rs.9,34,413/- as damages with interest at 12% per annum for prospective damages from 11.4.1990 till realisation and Rs.2,82,455/- with interest at 12% per annum from 19.5.1987 till realisation and costs from the first defendant and its assets. A.S.No.289 of 1994 :: 3 :: 5. In support of this appeal, the learned Additional Advocate General argued that the suit is hit by Section 72 of the Kerala Abkari Act and even if it is one that could be sustained on the face of that provision, the same is barred by limitation, it having been filed beyond 6 months after the accrual of the cause of action. He further argued that the question of levy of excise duty was in terms of the statutory provisions inasmuch as levy of such duty was found referable to a matter within the legislative competence of the State as laid down by the Apex Court in State of U.P. v. Synthetics & Chemicals Ltd. {AIR 1980 SC 614}, which decision held the field on 15.10.1987, when the vehicle of the plaintiff was intercepted. He further pointed out that it was only on 25.10.1989, the Constitution Bench of the Apex Court reversed the earlier view in State of U.P. v. Synthetics & Chemicals Ltd. [supra A.S.No.289 of 1994 :: 4 :: 1980] and laid down in Synthetics & Chemicals Ltd., v. State of U.P. {AIR 1990 SC 1927} that rectified spirit would fall within the legislative domain of the Union and the State Government could not levy excise duty on that material. He, therefore, argued that even if there was anything objectionable, that was something that fell within the statutory provisions and liable to be impeached in statutory proceedings and ought not to be countenanced as could be taken to the civil court, in view of the provisions of Section 72 of the Act. He further pointed out, but, at any rate, the action of the State and its officers cannot be impeached as lacking in bona fides and the suit is hit by Section 72 of the Act. 6. Per contra, the learned senior counsel appearing for the plaintiff argued that having regard to the nature of the transaction and the acts in question, and the A.S.No.289 of 1994 :: 5 :: fact that the plaintiff had to spend money for getting the vehicle released, the decree passed by the court below is sustainable. He stated that following the release of the vehicle on payment of the excise duty, as claimed by the State, the plaintiff had made a representation to the Government for refund of the amounts paid and had moved this court by filing O.P.No.8753/87 and this court had directed the Government to consider the representation and thereafter the Government rejected the request for refund as per Ext.A14 dated 28.8.1989 and it is only then, that the cause of action would arise and hence suit is not barred by limitation. 7. At the outset, we need to notice that neutral alcohol was treated as a subject on which there could be levy of tax by the States, going by the decision in State of U.P. v. Synthetics & Chemicals Ltd. [supra 1980] the law A.S.No.289 of 1994 :: 6 :: thus laid by the Apex Court held the field for nearly a decade until that decision was overruled on 25.10.1989 by the Constitution Bench in Synthetics & Chemicals Ltd., v. State of U.P. [supra 1990]. Therefore, as on the date on which the officials of the State Government had intercepted the vehicle of the 1st respondent i.e., on 15.10.1987, the law that stood was the one laid down by the Apex Court, recognising the State's power to levy duty on neutral alcohol. If that were so, levy could not have been objected to, even on a ground referable to the provisions of the Abkari Act. We need to immediately advert to paragraph 88 of Synthetics & Chemicals Ltd., v. State of U.P. [supra 1990] wherein, after holding that neutral alcohol is not a matter on which the States are authorised to impose duty, it was noticed that imposts and levies have been imposed by virtue of the decision of the Apex Court in State of U.P. v. A.S.No.289 of 1994 :: 7 :: Synthetics & Chemicals Ltd. [supra 1980] and that the States as well as the manufacturers and petitioners (probably consumers under the transactions) have adjusted their rights and their position on that basis except in the case of State of Tamil Nadu. In that view of the matter, the Apex Court categorically stated that, the provisions are declared to be illegal prospectively. In other words, the enforcement of levy would stand restrained in future, however, that the States will not be liable for any refund. Tax already collected and paid will not be refunded. It is also stated that such imposts would be illegal and invalid but would not affect any realisations already made. 8. With the aforesaid fact situation, the plaintiff could not have even requested for a refund on the ground that neutral alcohol could not have been subjected to any levy in terms of the Abkari Act and the Rules made A.S.No.289 of 1994 :: 8 :: thereunder. Not only that, as per Ext.A14 dated 28.8.1989, the Government had rejected the request of the plaintiff for refund of the amount paid by it. That decision has become final, it having not been challenged in any statutory proceedings or at least, before this court under Article 226 of the Constitution. That decision of the Government having become final, the question would be as to whether there was any exercise of power by the State or its officers, except in a bona fide manner. We are of the firm view that the courts have to first assume and presume legality, propriety and regularity of official acts and it is for the manufacturer to prove, plead and prove to the contrary. 9. We find that there is not even a pleading that the act taken by the State or its officers was mala fide. There is not even a plea that the action is 'not bona fide'. The only allegation in the plaint is that the levy and the A.S.No.289 of 1994 :: 9 :: demand made were without the authority of law. That does not make it a mala fide demand or a demand without bona fides. 10. Now, adverting to Section 72 of the Abkari Act, which statutory provision is, rightly, not under challenge before us, no action shall lie against the State Government or an Abkari Officer for damages in a Civil Court for any act bona fide done or ordered to be done in pursuance of that Act, or under any law for the time being in force relating to Abkari Revenue and all prosecutions of any Abkari Officer and all actions which may be lawfully brought against the Government or against any Abkari Officer in respect of anything done or alleged to have been done in pursuance of that Act shall be instituted within six months from the date of the act complained of and not afterwards. The provision in Section 72 of the Abkari Act A.S.No.289 of 1994 :: 10 :: insofar as it prescribes a period of limitation is a special law and applies over and above the Limitation Act, 1963. The date of the act complained of has necessarily to be the interception and retention of the goods/vehicle guaranteed goods. This was one on 15.10.1987. Assuming that the cause of action would run for a couple of days on payment of Rs.2,82,455/-, even then, the period of limitation of 6 months would run out on the expiry of that period from 25.10.1987. The suit was instituted before the court below on 11.4.1990 by filing an application to sue as an indigent person. That was long after the impugned action. If at all sustainable, on the face of Section 72 of the Abkari Act, that claim became bar of limitation in terms of that provision. 11. We are clear in our mind that the Additional Government Pleader had no duty to concede to the court A.S.No.289 of 1994 :: 11 :: below that the plea of limitation is not pressed. Beyond that, it is a fact that Section 3 of the Limitation Act compels the court to look into the question of limitation and not merely act on the concessions made, at any rate, on behalf of the State. In fact, Section 3 of the Limitation Act contains a command to the court and it admits of no leniency in that matter. 12. Now, we find that after Ext.A14 decision dated 19.5.1987 was issued by the Government refusing the request of the plaintiff for refund, the plaintiff is stated to have filed O.P.No.9616/89. In the plaint in the suit from which this appeal arises, the plaintiff pleads that the said writ petition was filed challenging the decision of the Government not to return or refund the amount, however, reserving the right of the plaintiff to take further steps. We are surprised as to how the plaintiff could have reserved a A.S.No.289 of 1994 :: 12 :: right for himself, even before he instituted a litigation in relation to the transaction. The provisions contained in the Code of Civil Procedure is nothing but a bundle of principles of cannon sense, natural justice and practice preserving the course of justice. A catena of decisions, including of this court would advise that the rules relating to Code of Civil Procedure, though do not apply in terms, to proceedings under Article 226 of the Constitution, should be taken as guiding beacons in deciding matters in writ jurisdiction. Otherwise, the public policy underlining the provisions of the Code of Civil Procedure could be easily got over. Even if it were a suit, while challenging the decision of the Government not to refund the amount, the plaintiff, on his own volition could not have sued for a different claim arising from the same cause of action/transaction, except with the leave of the court. A.S.No.289 of 1994 :: 13 :: Whatever that be, there is no shred of evidence for the court below to grant a decree to the plaintiff as has been done. For the aforesaid reasons, this appeal is allowed with costs, setting aside the impugned decree and judgment. The suit is consequently dismissed with costs throughout. Since the plaintiffs had sued as indigents, it is directed that the court fee shall be realised from them jointly and severally. Sd/- (THOTTATHIL B.RADHAKRISHNAN) JUDGE Sd/- (S.S.SATHEESACHANDRAN) JUDGE sk/ //true copy// P.S. to Judge.