Case: Sun Pharmaceutical Industries Limited Vs. The Union of India &amp; Others

THE FACTUAL MATRIX4. The factual matrix reveals that the petitioner is a company under Companies Act, 1956 and is a successor of one M/s. Pradeep Drug Company Ltd. (P.D.C.L.). The reference to the petitioner herein willmean and include reference to the P.D.C.L. or the petitioner or both. The P.D.C.L.company, which has since merged with the petitioner company, was served with show cause notices under the provisions of Sections 28(1),AB of the Customs Act, 1962 ("the Act" for short) for violation of Sections 58,59,68,71 and 72 of the Act and called upon to show cause as to why a duty in the sum of Rs. 84,76,688/with interest thereon together with penalty of Rs.10,60,000/should not be demanded from it.The show cause notices were received by theThe show cause notices are based on the allegations that while checking the "Input output Ratio", the Revenue Authorities discovered that there was a systematic; meticulous and wilful evasion of duty by theAccording to the Revenue, the petitioner company had inflated the quantity of raw material required for production of the finished products such as Erythromycin; Raxythromycin and Erythromycin Azithromycin. That after utilising the actual quantity of raw materials and final products, the remaining quantity was utilized in the account of the petitioner company under the pretext of job work done by theIt is further alleged that having taken advantage of the so called Job Work System, the petitioner had started clearing thematerials, without payment of customs duty for the manufacture of the finished products. It is also alleged that the petitioner company had fraudulently fabricated and created bogus records with regard to the mother liquor i.e. "the mixture of spent solvents". According to the Revenue, the petitioner company has admitted the evasion of duty and the part played by it. It is in these circumstances that the show cause notices came to be issued to the>6. After receipt of the aforesaid show cause notices, the petitioner; instead of replying the show cause notices; directly approached the Settlement Commission at Chennai; on 25.11.2003 by filing an application under Section 127B of the Act.On being noticed, respondent no.2, the Commissioner of Customs and Central Excise, Chennai III, fileddated 3rd January, 2004 opposing application for settlement.8. The above application, at the request of the petitioner, came to be transferred to the Respondent no.3, the Settlement Commission Customs and Central Excise, Additional Bench, Mumbai, by an order dated 23rd March, 2004 passed by the Chairman of the Settlement Commission, Principle Bench,New Delhi.9. In view of the aforesaid order of transfer, petitioner appears to have filed fresh application dated 28th June, 2004 before the respondent No.3. The petitioner, in the application, expressed its willingness to settle the dispute on payment of Rs.67,40,290.00 as the additional amount of duty disclosed.10. The respondent No.2 filed submissions dated 3rd and 31st August, 2004 before the respondent No.3. The application of the petitioner came up for admission on 31st August, 2004. The petitioner, at the hearing, admitted duty liability in the sum of Rs.67,40,290.00 as against demand of Rs.1,71,91,550/made in the show cause notices.11. The Settlement Commission by its interim order dated 31.8.2004, issued on 30.9.2004, allowed the petitioner to proceed under Section 127C(1) of the Act with direction to pay admitted duty liability of Rs. 67,40,290/within 30 days of the receipt of order dated 31st August, 2004. The petitioner accordingly paid the said sum of Rs.67,40,200.00.The respondent No.2,thereafter, filed a Writ Petition No.2464 of 2005 before the Madras High Court challenging the legality and validity of the said interim order dated 31st August, 2004, which came to be dismissed by the learned Single Judge holding that the Madras High Court had no territorial jurisdiction to entertain and try the writ petition since the order was passed by the Settlement Commission, Mumbai.13. In the appeal filed by the Revenue dismissal order came to be set aside. The said writ petition was restored and remanded to the learned Single Judge for hearing on merits; observing asthe present case, the appellant has alleged that the entire occurrence of the offence was committed within the jurisdiction of the Settlement Commission, Additional Bench, Chennai and out of 13 applicants, 8 applicants are working in the fifth respondents factory at Sathamai Village, within the jurisdiction of the Settlement Commission, Chennai and the show cause notice, which was the basis for filing the application, was also issued at Chennai. The private bonded warehouse, from where the respondents are alleged to have acquired the raw materials without payment of duty, is also located at Maduranthagam. The surprise investigation, the recovery of incriminating documents and records have also taken place within the jurisdiction of this Court. All the other events spelt out inwhich form the grounds to the allegations contained in the show cause notice, would show that they took place within the jurisdiction of this Court." (Emphasis supplied)14. The aforesaid judgment has been accepted by the petitioner. The writ petition remanded by the learned Division Bench of Madras High Court is still pending for admission before the learned Single Judge.15. During the pendency of the aforesaid petition, the respondentCommission, Mumbai passed final order dated 28th April, 2006.16. The Commission settled the case of the petitioner for Rs.1,52,16,978.00. and directed the petitioner to pay the remaining amount of Rs. 84,76,680/with interest thereon at the rate of 10% per annum from 28.7.2001 together with penalty of Rs.10,60,000/within 30 days from the date of receipt of the order. The respondent No.3 has also granted immunity to the petitioner from prosecution alongwith others.The petitioner, in this petition, has prayed for setting aside order dated 28th April, 2006 to the extent it requires petitioner to pay duty in excess of quantity of Rs. 5,103.90 kgs of ET and interest @ 10% per annum together with penalty of Rs.10,60,000/on the various grounds raised in the petition.18. When this petition, for the first time came up for admission before this Court, the counsel for the petitioner was put on notice that this Court may not consider it appropriate to exercise territorial jurisdiction in the matter. The learned counsel, thus, was called upon to address this Court on the question, whether it would be appropriate on the part of this Court to exercise writ jurisdiction in the matter, and as to why the petitioner should not be relegated to the jurisdiction of the Madras High Court. That is how, the petition was heard on preliminary issue indicated herein.

Court's reasoning:
28. We fully concur with the above view.In the view of the above, even if the respondent no.3 is physically located at Mumbai, however, since it is dealing with the case arising in the State of Tamil Nadu, it could be deemed to be located in that State amenable to the writ jurisdiction of the Madras High Court.31. The above case was principally decided on the touchstone of doctrine of merger; wherein the order of the first Appellate Authority had merged in the order of the Tribunal. The logic underlying the doctrine of merger is that there cannot be more than one decree or operative orders governing the sameat a given point of time. When a decree or order passed by the inferior Court, Tribunal or Authority was subjected to a remedy available under law before superior forum; then the order of superior forum disposing of lis before it either wayWe are unable to persuade ourselves to exercise territorial jurisdiction in the matter. It may at once be noticed that the judgment in Kusum Ingots and Alloys Ltd. (supra) does not lay down that a High Court should invariably exercise jurisdiction when an order, challenged before it, is passed by an authority or Tribunal located within its territorial jurisdiction.In other words, the above judgment in Kusum Ingots and Alloys Ltd., leaves it to the High Court to decide, on the facts of each case, whether it is required to exercise jurisdiction; if a part of the cause of action arises within its territorial jurisdiction.36. On the above canvas of law, in exercise of our discretion, for all the above reasons, we decline to entertain this petition. However, the dismissal of the Writ Petition is without prejudice to the rights of the petitioner to approach appropriate forum to seek appropriate relief sought in the present petition.