Case: Union Of India  Vs. M/S.Gtc Industries Ltd., Bombay

GTC Industries Ltd. (respondent in this appeal) is a well known manufacturer of cigarettes having its own brand names one of which is Panama Virgin. GTC Ltd. was having its cigarettes manufactured inter alia, through M/s. North Easter Tobacco having its own place of work in Mizoram. These cigarettes were being removed from the premises of North Eastern Tobacco (hereinafter referred to NET) without payment of Excise Duty and the same was was detected when certain vehicles carrying were apprehended by the Excise Authorities.3. The Collector issued Show Cause Notices to GTC and NET. Show Cause Notices were also issued to the partners of NET M/s Sailo, Lalchunganga and Liangtilinga, to one Ajay Sukhani who was the power of attorney holder on behalf of NET and also the officers of GTC and its sister concerns with the allegation that NET was set up as a front company by GTC to evade payment of excise duty. Contravention of various provisions of the act was alleged against GTC as well as its officers.4. In the course of hearing before the Collector of Central Excise GTC applied to the Collector requesting that summons be issued under Section 14 of the Central Excise Act, 1944 (hereinafter referred to as the Act to the partners of NET including Shri Sailo so that GTC could cross examine him. The Collector after hearing arguments ruled that he could not issue summons to the said persons in as much as they were also co-notices to the proceedings. They had also been issued show cause notices for contravening the provisions of the Act and therefore could not be compelled to appear for the purpose of cross-examination by another co-noticee. The Collectorthe persons who were asked to cross-examination three of them viz. Richard Sailo, Liangtiluinga, Lalchungnunga are co-noticees to these proceedings. By issuing them summons as requested by GTC, prejudice is likely to be caused to their defence by compelling their attendance before me. It is an established principle of law that no notice can be forced to appear before the adjudicator. In fact, I had given the opportunity by letters dated 23rd Oct., 1989 and 17th November, 1989 to M/s GTC to bring these persons as their own witnesses, it they wished to rely on their testimony. But they have not done so. Being unable to issue summons to these persons, I cannot but reject the request of GTC.The ruling of the Collector declining to issue summons was challenged in the High Court by filing the present Writ Petition before the completion of the adjudication proceedings on the ground or violation of Principles of Natural Justice.6. The High Court initially on 4th of December, 1989, as an interim measure, stayed all the proceedings in pursuance to the Show cause notice. Later on, on 24th January, 1990, the stay granted on 4th of December 1989 was vacated by the Division Bench. The matter was further carried to this court by filing SLP 6288/90 which was heard and disposed of on 4th May, 1990 with the followingsome arguments, both sides are agreed that the respondent may pass the final order of adjudication. However, the order may not be communicated to the petitioner. it may be put in a sealed cover and placed before the High Court for such directions as the High Court may give at the time of hearing of the writ petition.We are told that the writ petition is likely to come up before the High Court for hearing on 17th May, 1990. We hope that the Write Petition will be disposed of expeditiously.The SLP is disposed of in there terms.On 15th of May, 1990, the collector passed the final order in the adjudication of the show cause notice and forwarded the same in a sealed cover to the High Court in terms of the order passed by this Court in SLP 6288/90. On 10th of July, 1990 High Court opened the sealed cover and delivered a copy of the order of the Collector to the counsel for GTC and directed that it may be served on the other affected parties as well. The High Court concluded the hearing on 10th August 1990 and the impugned judgment was pronounced on 20th October, 1990.8. Plea raised by the appellant that since the final order passed by the Collector had been communicated to the affected persons as required under the law, the parties should be directed to seek their remedy by way of appeal provided under the Act was rejected by the High Court on the ground that alternate remedy was not an absolute bar to the exercise of extraordinary jurisdiction under Article 226 of the Constitution. In the given facts and circumstances of the case the Court could proceed to examine the correctness or otherwise of an order without asking the aggrieved party to exhaust the alternate remedy of filing of appeal/revision provided under the Act. It was held that GTC had come to the Court before the finalisation of the adjudication by the Collector with the grievance that the proceedings were being conducted in violation of Principles of Natural Justice Finalisation of the proceedings by the Collector were made subject to the decision of the Writ Petition. As the order of the Collector came into being during the pendency of the writ petition, the same could be examined by the Court and if necessary relief moulded to the requirements of the subsequent developments which had taken place during the pendency of the writ petition.9. On merits, the counsel appearing for the GTC before the High Court confined his arguments to the issue of infringement of the violation of Principles of Natural Justice only. The High Court held that denial of opportunity to the GTC to cross-examine Shri Sailo, Lalchunganga and Liangtilinga was nothing short of denial of reasonable opportunity to the Writ Petitioner to defend and establish its version. That the same amounted to the breach of Principles of Natural Justice. On this basis the final adjudication order of Collector was set aside and the matter was remitted back with the direction to resume the proceedings and issue summons to the partners of NET for necessary cross-examination by GTC and thereafter to decide the matter

Court's reasoning:
It may not be possible for us to separate or disentangle the submissions of Shri Sailo from other material evidence on record. It is well settled that a quasi-judicial order has to be judged on the basis of reasoning contained therein and not on the basis of pleas put forward by the person seeking to sustain the order in its counter affidavit or oral arguments before the court.15. It is apt to note here that no statement was made by Shri Salio before the adjudicating authority. What is referred to as statement of Shri Salio is nothing but his oral submissions made at the hearing.16. An adverse finding could not have been recorded against the GTC by relying upon the oral submissions made by a co-noticee at the hearing without any supporting material on record, providing due opportunity to GTC to meet the same.