Case: Raymond Synthetics Ltd. And Ors Vs. Union Of India And Ors

the premises during the first fortnight to each calendar year must be deposited in the government treasury by the twenty second day of that month and the cess due for the remainder of the month must be deposited before the seventh day of the next following month. If the cess is not paid by the specified date, then by virtue of s. 3(3) the arrear of cess will carry interest at the rate of six per cent per annum from the specified date to the date of payment. Section 3(5) is a very different provision. It does not deal with the interest paid on the arrears of cess but provides for an additional sum recoverable by way of penalty from a person who default in making payment of cess. It is a thing apart from an arrear of cess and the interest due thereon. 45. Now, the interest payable on an arrear of cess under s. 3(3) is in reality part and parcel of the liability to pay cess. It is an accretion to the cess. The arrear of cess "carries" interest; if the cess is not paid within the prescribed period a larger sum will become payable as cess. The enlargement of the cess liability is automatic under section 3(3). No specific order is necessary in order that the obligation to pay interest is as certain as the liability to pay cess. As soon as the prescribed date is crossed without payment of the cess, interest begins to accrue. It is not a penalty for which provisions has been separately made by s. 3(5). Nor is it a penalty within the meaning of s. 4, which provides for a criminal liability and a criminal prosecution. The penalty payable under s. 3(5) lies in the discretion of the collecting officer or authority. In the case of the penalty under s. 4, no prosecution can be instituted unless, under s. 5(1), a complaint is made by or under the authority of the Cane Commissioner of the District Magistrate. There is another consideration distinguishing the interest payable under s. 3(3) from the penalty imposed under s. 3(5). Section 3(6) provides that the officer or authority empowered to collect the cess may forward to the Collector a certificate under his signature specifying the amount of arrears including interest due from any person, and on receipt of such certificate the Collector is required to proceed to recover the amount specified from such person as if it were an arrear of land revenue. The words used in s. 3(6) are "specifying the amount of arrears including interest", that is to say that the interest is part of the arrear of cess. In the case of a penalty imposed under s. 3(5), a separate provision for recovery has been made under s. 3(7). Although the manner of recovery of a penalty provided by s. 3(7) is the same as the manner of recovery provided by s. 3(6) of the arrears of cess, the Legislature dealt with it as something distinct from the recovery of the arrears of cess including interest. In truth, the interest provided for under s.3(3) is in the nature of compensation paid to the Government for delay in the payment of cess. It is not by way of penalty. The provision for penalty as a civil liability has been made under s. 3(5) and for penalty as a criminal offence under s.4. The Delhi High Court proceeded entirely on the basis that the interest bore the character of a penalty. It was according to the learned Judges "penal interest". The learned Judge failed to notice s. 3(5) and s.4 and the other provisions of the Cess Act". 46. The last question will be that in view of the clear terms of the statute whether the administrative inconvenience could be pleaded. This could be decided with reference to the case in Sanjeev Coke Manufacturing Co. v. Bharat Coking Coal Ltd. & Another, [1983] 1 SCR 1000 @ 1029, as follows:- "...But in the ultimate analysis, we are not really to concern ourselves with the hollowness or the self-condemnatory nature of the statements made in the affidavits filed by the respondents to justify and sustain the legislation. The deponents of the affidavits filed into Court may speak for the parties on whose behalf they swear to the statement. They do not speak for the Parliament. No one may speak for the Parliament and Parliament has said what it intends to say, only the Court may say what it the Parliament meant to say. None else. Once a statute leaves Parliament House, the Courts is the only authentic voice which may echo (interpret) the Parliament. This the court will do with reference to the language of the statute and other permissible aids. The executive Government may place before the court their understanding or misunderstanding of what Parliament has said or intended to say or what they think was Parliaments object and all the facts and circumstances which in their view led to the legislation. When they do so, they do not speak for Parliament. No Act of Parliament may be struck down because of the understanding of Parliamentary intention by the executive government or because their (the Governments) spokesmen do not bring out relevant circumstances but indulge in empty and self- defeating affidavits. They do not and they cannot bind Parliament. Validity of legislation is not to be judged merely by affidavits filed on behalf of the State, but by all the relevant circumstances which the court may ultimately find and more especially by what may be gathered from what the legislature has itself said..." Therefore, it has to be held that administrative inconvenience can hardly be any ground. 47. Viewing the statutory provisions form the above perspective, I agree with my learned brother that the liability to repay the excess amount arose on November 1, 1990 and the liability to pay interest arose on the expiry of eight days from November 1, 1990. ORDER: 48.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]In the present case, counsel points out, time for refund had been extended by the Madhya Pradesh Stock Exchange till 19th December, 1990. Accordingly the liability of the company to repay the excess amount did not arise until then. In the circumstances, interest became payable only after 8 days from the expiry of the period as extended by the Madhya Pradesh StockMr. Dewans argument were to be accepted, the company would have incurred no liability to pay interest, for time had been extended by the Madhya Pradesh Stock Exchange. But this argument is clearly contrary to the provisions contained in sub-section (4) of section 73 of the Act which reads:_ "S. 73(4). Any condition purporting to require or bind any applicant for shares or debentures to waive compliance with any of the requirements of this section shall be void".In the teeth of that sub-section, Mr. Dewans argument on the point is totally without merit. Even if sub-section (4) had not been inserted in section 73, Mr. Dewans argument in this respect would have been equally unsustainable, for no agreement can defeat or circumvent a mandatory requirement of the statute. This is all the more so in view of section 9 which specifically provides that the provisions of the Act override the memorandum or articles of association of the company or any agreement executed or resolution passed by it. The statute requires the company to pay interest in terms of sub-section (2A). That provision says that the company should pay excess money forthwith, failing which interest becomes payable at the end of 8 days therefrom. Any inconsistent provision in the prospectus is unenforceable and it can be of no avail to theis no substance in this contention. As stated earlier, sub-section (2A) provides for the accrual of interest and the rates thereof. Unlike sub-section (2B) provides for punishment by imposition of fine or imprisonment, sub-section (2A) speaks only of interest which is in contradiction to punishment and is not penal in character. It merely provides a mode of calculation of the amounts payable. Any consideration with reference to a penal provision is of no relevance to the liability of the company or its directors to pay interest in terms of sub-sectionthe date of allotment, as found by the High Court, nor the date specified in the prospectus, as contended by the company, is relevant to the commencement of liability for payment of interest on the excessliability of a company to repay the excess money under section 73(2A) of the Act arises on the expiry of 10 weeks from the date of the closing of the subscription lists, and the interest begins to accrue thereon at the end of 8 daysthe liability to repay the excess money in the present case arose on 1.11.1990 which was admittedly the date of expiry of 10 weeks from the date of the closing of the subscription lists, and consequently the liability to pay interest at the rate specified in sub-section (2A) arose on the expiry of 8 days from 1.11.1990.