IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 11.11.2008
CORAM
THE HONOURABLE MR.A.K.GANGULY, CHIEF JUSTICE
AND
THE HONOURABLE MR.JUSTICE F.M.IBRAHIM KALIFULLA
W.P.No.10512 of 2008
Fifth Pillar India,
Rep. by its General Secretary,
T.Retna Pandian S/o Thurai Pandian,
1, Anna Main Road, Kodambakkam,
Chennai 600 024. ... Petitioner
-vs-
1. The Secretary,
Department of Revenue,
North Block, New Delhi-110 001.
2. The Chairman,
Central Board of Excise & Customs,
Ministry of Finance, Department of Revenue,
North Block, New Delhi 110 001.
3. The Chief Commissioner,
Central Excise Chennai Zone,
124, Uthamar Gandhi Salai,
Chennai 600 034.
4. The Commissioner of Central Excise,
Chennai IV, MHU Complex,
692, Anna Salai, Chennai 600 035.
5. The Managing Director,
Hyundai Motors India Limited,
Plot No.H-1; SIPCOT Industrial Park,
Irungattukottai, Sriperumpudur Taluk,
Kancheepuram District. ... Respondents
Petition under Article 226 of The Constitution of India, praying for the issuance of a Writ of Mandamus, directing the respondents 1 to 3 to submit its action taken report on the allegations against Hyundai Motor India Limited, situated at SIPCOT, Sriperumpudur, Kancheepuram District and further to issue suitable directions to the respondents to take appropriate action on the basis of the report and recommendations of the investigating team.
For Petitioner :: Mr.K.M.Vijayan
Senior Counsel for
Mr.Su.Srinivasan
For Respondents 1 to 4 :: Mr.M.Ravindran
ASGI, assisted by
Mr.A.S.Vijayaraghavan
ACGSC
For Respondent 5 :: Mr.N.Venkataraman
Senior Counsel for
Mr.G.Rm.Palaniappan
- - - -
O R D E R
F.M.IBRAHIM KALIFULLA, J.
This is a public interest litigation and the petitioner seeks for the issuance of writ of Mandamus to direct the respondents 1 to 3 to submit their action taken report in respect of the allegations reported against M/s.Hyundai Motor India Limited, situated at SIPCOT, Sriperumpudur, Kancheepuram District with a further direction to the respondents for taking appropriate action on the basis of the report and the recommendations of the investigating team.
2. The petitioner claims itself to be a Trust registered under the Trust Act. It is stated to have taken up a tirade against corruption in public life. In the present writ petition, the petitioner has alleged that the 5th respondent which is a car manufacturing unit has indulged in large scale tax evasion as well as Central Excise duty by under pricing the cars exported to its associate enterprises in the foreign countries and that in spite of such malpractice being brought to the notice of the concerned authorities, no steps have been taken to unearth such corrupt practice.
3. In the affidavit filed in support of the writ petition sworn to by the General Secretary of the petitioner's Trust, it is alleged that by mis-declaring and undervaluing the cost of production of the export products, the profits of the 5th respondent have been drained illegally by its parent organisation in Korea and such mis-declaration has caused and continue to cause several hundred crores of loss in foreign exchange earnings to the State exchequer and that the reduced profits of the 5th respondent also caused loss in corporate tax payment. According to the petitioner, the 5th respondent thus violated Section 4 of the Central Excise Act, 1944, Section 14 of the Customs Act, 1962, and Sections 6(3)(g) and 7(1)(a) of FEMA. It is further stated that the then jurisdictional Range Officer of Central Excise took up the issue initially in his communication dated 09.08.2004 and 16.12.2004 and that instead of initiating proper verification, the said Range Officer was pulled up by the 4th respondent himself stating that there is no Central Excise angle and if any other angle is involved, it should be referred to the Intelligence Agency. It is also stated that the said Range Officer took up the issue further by addressing a communication to the 4th respondent on 15.02.2006, apart from the communication to the Office of the Prime Minister and Finance Minister in his communication dated 29.07.2006.
4. According to the petitioner though the said Range Officer was directed to meet the second respondent on 19.10.2006, he was informed that according to the Board there was nothing to be enquired into the allegations raised by the said Range Officer through Prime Ministers Office.
5. The sum and substance of the allegations as raised by the Range Officer as canvassed by the petitioner is about the under valuation of cars and CKD parts to their Parent/Group companies, that the profits of the 5th respondent are drained out to the parent company at Korea resulting in loss to the Government of India by way of foreign exchange to the tune of several hundred crores of Rupees.
6. It is also alleged that from August, 2007 a rebate of Rs.20,00,00,000/- a month (refund of duty accumulated in CENVAT account) is given back to the 5th respondent which is due to the fact that huge CENVAT accumulation had taken place because of procurement of large quantities of inputs for such undervalued exports to their parent/associate companies and that if such undervalued exports were not there, there would not have been accumulation of CENVAT credit. In was therefore contended that the 5th respondent would have been paying more Central Excise Duty as well as higher foreign exchange earning on the exports. There is also an allegation to the effect that the Chairman of the Parent company viz., Hyundai Motor Corporation viz., Mr.Chung Mong-Koo was arrested for bribery and slush fund scandal on 29.04.2006 at Seoul, South Korea on the allegation that he had embezzled about $106 million of companys money to create slush fund. It is stated that the Chairman of the Hyundai Motor Corporation was subsequently convicted on 04.02.2007 and sentenced to 3 years imprisonment over slush fund scandal. It is also stated that the 5th respondent has taken steps to start another plant adjacent to its existing plant and therefore every effort should be taken to check the mala fide and unfair system being carried out at the instance of the respondents.
7. On behalf of the respondents 1 to 4, the Commissioner of Central Excise and Service Tax, Large Taxpayer Unit, Chennai has sworn to a counter affidavit. In the said counter affidavit, it is stated that Mr.Sameul C.Wilson, Superintendent of Central Excise presently attached to the Ministry of Commerce and posted as Authorised Officer in the Special Economic Zone at SIPCOT, Sriperumbudur is the person behind the present litigation and the petitioner has been used as a tool by the said Mr.Sameul C.Wilson. It is stated that the petitioner never made any representation to the concerned authorities about the issue raised in this writ petition and that the petitioner has used various communications addressed by the said Mr.Sameul C.Wilson who was the Range Officer working within the jurisdiction of the 5th respondent unit. It is therefore contended on behalf of the respondents 1 to 4 that since based on the relevant enquiries held into the allegations raised by Mr.Sameul C.Wilson it was found out that there was no basis in any of the allegations, the present writ petition at the instance of the said individual does not merit any consideration. It is specifically stated in paragraph 5 of the counter affidavit that at the instance of the 5th respondent, there was no loss of Central Excise duty. In paragraph 6 of the counter affidavit it is stated that under the Central Excise Statute as an assessee, the 5th respondent was required to file monthly ER-1 returns furnishing the required details as regards the export market, that such reports are subject to scrutiny and due audit and that such audit mechanism was two-fold i.e. an Internal Audit Formation of Central Excise Department and an independent Central Excise Revenue Audit by Comptroller and Auditor General. It is further stated that such Audit had taken place in respect of the 5th respondent company and as a result of such exercise, no under valuation of cars exported were reported and that no irregularities were found.
8. It is stated that whatever communications addressed by Mr.Sameul C.Wilson was also duly replied by the concerned authorities and that it was found that there was no basis in the allegations raised by Mr.Sameul C.Wilson. In paragraph 8 of the counter affidavit, it is stated that a Special Team comprising of 13 officers drawn from various formations of the Central Excise Department were formed during February, 2006 which included Mr.Sameul C.Wilson and that at the end of their study they were not able to point out any anomaly or irregularity in the pricing of exported cars or with regard to the valuation of cars and spares. It is also stated that prior to the study made by the Special Team, the 5th respondent was subjected to a detailed investigation/study by Director (Costs), Chennai at the request of the Jurisdictional Commissioner of Central Excise, Chennai IV and in the report dated 16.12.2005, the said authority made it clear that he was not able to find any anomaly with regard to pricing of export cars. It is also stated that to the same effect was the report of the Commissioner of Central Excise, Chennai-IV, dated 25.08.2006 submitted to the Chief Commissioner of Central Excise, Chennai Zone.
9. As far as the price variation relating to the export of cars is concerned, it is stated in paragraph 9 of the counter affidavit that as per the report of the Revenue Risk Analysis team, it was due to several duty concession that accrued to the 5th respondent, while exporting cars and that it is a prevalent practice adopted by most of the manufacturers/exports to price their export goods at a competitive price, which is lesser than the domestic sector since the units would have already obtained break-even and gained profits on the domestic sector and that only variable cost has to be met.
10. In paragraph 12 & 13 of the counter affidavit, it is pointed out that the export of cars by the 5th respondent had increased to 40% of its total production, that there was no allegation in the petition that the credit taken on the inputs or input service is wrong and that the credit earned was allowed to be adjusted as against the duty payable on the final products cleared by the manufacturer. The benefits availed by the 5th respondent by virtue of high percentage of exports made by it by invoking Rule 3 and 5 of the CENVAT Credit Rules as well as Rule 19 of the Central Excise Rules were stated to be well in order and therefore the same cannot be found fault with.
11. In paragraph 14, it is specifically stated that there was no under valuation or revenue loss as alleged by the petitioner. In paragraph 16 of the counter affidavit it is specifically denied that the 5th respondent was receiving back an amount of Rs.20 crores from the Government every month as refund (rebate) of the unutilized CENVAT credit accumulated due to such improper exports. It is reiterated that the 5th respondent was not granted any refund in 2004 under Rule 5 of the CENVAT Credit viz., refund of accumulated credit. On the other hand it is stated that rebate was sanctioned to the 5th respondent on account of exports made under payment of duty in terms of the provisions of Rule 18 of the Central Excise Rules 2002 which was valid in law. In paragraph 17 it is stated that the transfer of Mr.Sameul C.Wilson was after his completion of normal tenure of 2 years and that the same was not a vindictive action. It is further stated that the said transfer was never challenged by the said Mr.Sameul C.Wilson. Ultimately it was contended that the intense study and audit to verify the various allegations of Mr.Sameul C.Wilson were made which confirmed that there was no revenue loss or under-valuation as put forth by him and therefore the writ petition should be dismissed with exemplary costs.
12. On behalf of the 5th respondent, its General Manager-Finance (Taxation) has sworn to the counter affidavit. The 5th respondent also reiterated the various facts relating to the detailed exercise carried out by the high level authorities of the Central Excise Department and contended that the department having bestowed its best attention to enquire into the allegations at different levels and found that there was no truth in any of the allegations of Mr.Sameul C.Wilson, the present writ petition on the very same set of allegations at the instance of the petitioner should be rejected. It is stated that the various communications addressed by Mr.Sameul C.Wilson to the 5th respondent were duly replied by them refuting the allegations levelled against the 5th respondent.
13. In paragraph 9 of the counter affidavit, the 5th respondent has furnished the particulars of the total value of exports made by it during the years 2003-04 to 2007-08. In the data furnished therein it is shown that while the total value of exports to their associated enterprises in the foreign countries ranged between 6.77% to 573.45% of the total value of exports which ranged between Rs.1002.03 crores to Rs.3929.89 crores, the exports to Non Associated Enterprises during the said period ranged between Rs.995.25 crores to Rs.3356.44 crores. In the same paragraph, the 5th respondent has also shown that the prices of the Santro model cars manufactured by it are exported to its related party KIA Motor was US$ 4423 while the exports to unrelated party at Algeria and South Africa was US$ 4116 and US$4036 respectively. It is further stated that the price were all based on market driven factors and the allegations of Mr.Sameul C.Wilson which has been the basis for the petitioner's present writ petition were all highly imaginary and were not based on relevant factors.
14. In paragraph 10, the 5th respondent has pointed out that its Santro base model cars which was priced ex-showroom at Rs.3.49 lakhs in 1998 is even now offered at Rs.3.54 lakhs in 2008 after 10 long years. In paragraph 17, the 5th respondent has stated that its accounts were audited both by internal audit and the CERA periodically and the CERA audit was conducted between 03.02.2006 and 17.03.2006 covering the financial year 2004-05 and neither of the audit parties have found any irregularity in the pricing of export cars by the 5th respondent. It is further submitted that the price variation between domestic clearances and export clearances and exports was due to several duty concessions that accrued to the 5th respondent while exporting cars.
15. In paragraph 30 of the counter affidavit, the 5th respondent has furnished the amount of duty and taxes paid by it under different heads. According to the 5th respondent since its inception, it has so far paid Rs.10,711 crores as Excise Duty, Rs.2387.31 crores as Customs Duty, Rs.121.50 crores as Service Tax, Rs.1807 crores towards Income Tax and Rs.1128 crores towards Sales tax / VAT aggregating Rs.16,154.81 crores of revenue to the exchequer. It is also stated that between March, 1999 upto the year ending 31.03.2008, the 5th respondent has realized earnings in foreign currency on accrual basis to the tune of Rs.13,403 crores. In paragraph 31, the 5th respondent has stated that it has got 4606 employees on its rolls, 11234 as Trainees / Apprentices / Contract Workers, 14,000 suppliers / vendors' employees and 5,000 dealers' employees and thereby providing employment opportunities to 34,840 persons both directly and indirectly.
16. In paragraph 32 to 35 it is stated that as one of the largest Central Excise Duty payers for 8 long years, the 5th respondent has received the Highest Tax Payer Award for two years and that it has been declaring profits year after year since its very inception. It also claims to have the credit of highest tax payer of income tax amongst the automobile sector all over India and highest tax payer of southern India. It is also stated to have secured the status of five star export house and won the top exporter of the year award sponsored by various independent agencies. It claims to export cars to more than 90 countries since 1999 and continues to retain and remain as market leader in the automobile industry. It is stated to have rolled out its 10,00,000th car in September 2007 which is stated to be a record for the automobile industry in India. It is also stated to have erected its second plant in February 2008. Apart from the above, it is also claimed that it contributes Rs.100/- for every car sold domestically for carrying out its philanthropic activities in the field of educational and vocational training, environment, road safety, natural calamities and disasters, art, science and culture & technology. Its contributions is stated to have been carried out in the Community Development Programme which includes health, cultural exchange programme and heritage scholarship programmes, natural calamities and disasters relief programmes.
17. While the pleadings of the respective parties are as stated above, we also heard Mr.K.M.Vijayan, learned senior counsel appearing for the petitioner, Mr.M.Ravindran, learned Additional Solicitor General of India appearing for the respondents 1 to 4 and Mr.N.Venkataraman, learned senior counsel appearing for 5th respondent.
18. Mr.K.M.Vijayan, learned senior counsel appearing for the petitioner in his submissions while reiterating the contention that valuable foreign exchange to the tune of several hundred crores were lost due to the misfeasance committed by the 5th respondent also contended that the jurisdictional Commissioner report was blindly followed by all the higher authorities up to the Ministry level without verifying the relevant documents.
19. It is stated that the 5th respondent failed to produce the cost statement of different cars produced by them nor the cost audit conducted by the relevant authorities in order to ascertain the correct facts. The learned senior counsel contended that the approach made to the authorities under the Right to Information Act also did not yield the required result. The learned senior counsel contended that though 14 officers stated to have examined the issue none of them considered the documents produced by the Regional Office or gave any finding on it. It was further contended that no authority compelled the 5th respondent to submit the documents as sought for by the Regional Office in several letters. It was lastly contended that none of the authorities touched the core issue viz., that the 5th respondent made exports to its parent/associate group companies at below the cost of production value which was illegal under Section 4 of the Central Excise Act and Section 14 of the Customs Act. It is contended that not declaring the real export value is an offence under the provisions of FEMA.
20. Mr.M.Ravindran, learned Additional Solicitor General of India, in his submissions pointed out that when a complaint relating to evasion of Central Excise duty was received in the Office of the Commissioner of Central Excise, Internal Audit Section, Chennai-4, Special Teams were formed to conduct audit on the 5th respondent by way of an internal audit. The learned ASG pointed out that in the Office Order No.4/2005, dated 20.12.2005, a team of officers for holding Internal Audit section was formed to function with effect from 01.02.2006. He also pointed out that in the Audit team constituted on 13.02.2006, Mr.Samuel C.Wilson himself was a team head as Superintendent in respect of Poonamallee-IV Range in whose jurisdiction the 5th respondent factory was located and that the report of the said Audit Team dated 13.02.2006, discloses the particulars relating to the sale of cars both in the domestic market as well as exports and that the sale value of the exports were found to be on the lower side which was attributable to the duties and taxes forgone and the export incentive such as Duty Free Credit Entitlement Scheme benefits and Target Plus Scheme benefits. The said report was a detailed one which contains every minute information relating to the products manufactured by the 5th respondent, sale value, the extent of sales both domestic as well as foreign countries, the price factor, the Custom and Excise benefits as well as the tax benefits availed by the 5th respondent, its market strategy, its relationship with its owners and shareholders, its purchase information, its approved audit plan by Additional Commissioner of Central Excise, future expansion plan as well as the evaluation of internal controls etc.,
21. The learned Additional Solicitor General of India also referred to the subsequent report of the Commissioner of Central Excise, Chennai-IV dated 24.08.2006, addressed to the Chief Commissioner of Central Excise, wherein the various allegations levelled against the 5th respondent by Mr.Samuel C.Wilson were enquired into and stated that all his allegations were false, baseless and motivated and that the whole episode was stage managed by Mr.Samuel C.Wilson, to wreck vengence as he was shifted from a sensitive post to an insensitive post. The learned Additional Solicitor General submitted that the th Commissioner also recommended for initiating appropriate disciplinary action against Mr.Samuel C.Wilson for the various acts unbecoming of a Government Servant listed out in paragraph 5 of the letter.
22. The learned Additional Solicitor General of India further contended that the attempt of the petitioner in resorting to the present writ petition was solely based on the information furnished by Mr.Samuel C.Wilson which was nothing but an attempt to malign the image of the respondents 1 to 4 and there was no truth in any of the allegations levelled against the 5th respondent in the mater of either tax evasion, revenue loss or loss of foreign exchange earnings.
23. Mr.N.Venkataraman, learned senior counsel appearing for the 5th respondent in his submissions contended that after the issue was raised by Mr.Samuel C.Wilson on 09.08.2004, which was continued by him in his communications dated 20.09.2004, 04.11.2004, 17.12.2004, 07.04.2005 and 04.05.2005, as many as 14 authorities at different stages starting from the Deputy Commissioner of Central Excise up to the Prime Minister's Office considered his allegations on different dates and found that there was no iota of truth in any of its allegations. The learned senior counsel would contend that such consideration was made by the Deputy Commissioner of Central Excise, Commissioner of Central Excise, Chief Commissioner of Central Excise, Appellate Officer in the Central Board of Excise and Customs (CBEC), New Delhi, Director (CX) CBEC, New Delhi, Central Information Commission, Transfer Pricing Officer, Income Tax, Internal Audit Team of Central Excise, Central Excise Revenue Audit (CERA), Under Secretary to the Government of India, Director (Costing), Central Excise, Special Audit Team and Officers of the Customs who had permitted the exports apart from the Office of the Prime Minister. The learned Senior Counsel after referring to various reports of the authorities submitted that when none of the high level authorities could make out any misdeeds in the pricing of the products of the 5th respondent as well as in the payment of tax, custom duty and earning of foreign exchange, the present allegations of the petitioner are solely based on the very same allegations of Mr.Samuel C.Wilson, which were found to be lacking in truth in every respect. The learned Senior Counsel therefore contended that the petitioner's prayer in the writ petition lacks bona fide and the same is liable to be rejected by awarding exemplary costs.
24. Having heard the learned counsel for the respective parties and having bestowed our earnest consideration to the various submissions of the learned counsel as well as the material papers placed before us, we are of the view that the petitioner failed to make out a case for consideration for the grant of relief as prayed for in the writ petition.
25. At the outset, we have to point out that for filing this writ petition, the petitioner solely relied upon the statements and allegations of Mr.Samuel C.Wilson, who is presently working in the Department of Central Excise and who was the Range Officer in the year 2004 in the Zone were the 5th respondent factory is situated.
26. In fact in the counter affidavit of the 5th respondent, it has been specifically averred in paragraph 38 that Mr.Samuel C.Wilson has been acting as the Chennai Co-ordinator of the petitioner. Though rejoinder has been filed by the petitioner on 28.10.2008, the above statement of the 5th respondent has not been specifically denied. That apart, a perusal of the affidavit filed in support of the writ petition as well as the rejoinder makes it amply clear that every one of the statement of the petitioner was based on various communications of Mr.Samuel C.Wilson and the petitioner did not take any independent effort to examine the correctness or otherwise of the allegations made by Mr.Samuel C.Wilson. Therefore, the consideration of the claim of the petitioner solely dependent upon the allegations made by Mr.Samuel C.Wilson.
27. In the above said background, when we consider the allegations of the petitioner, we find that every one of the allegations made by Mr.Samuel C.Wilson, was duly considered by the authorities at different levels including the Office of the Prime Minister of India and after finding that there was no basis for the allegations levelled against the 5th respondent, the authorities expressed their inability to proceed against the 5th respondent.
28. The earliest complaint made by Mr.Samuel C.Wilson in his capacity as Superintendent of Central Excise, Poonamallee Range-IV was dated 09.08.2004. The sum and substance of the allegation was that the 5th respondent was exporting cars, engine assemblies and spare parts to their parent company at Korea and other group companies at different parts of the world at nearly half the value of the cost of production of the products. For the above communication, the 5th respondent sent its reply dated 31.08.2004, wherein it pointed out that the value adopted for export of its products were far higher than the cost of production involved. The 5th respondent also gave a comparative statement of different model car, the countries to which they were exported, the cost of production, the value adopted for exports, domestic product cost and the relevant year when the exports were made.
29. Mr.Samuel C.Wilson, also wrote a further communication to the 5th respondent and the 5th respondent sent its reply. Mr.Samuel C.Wilson sent a report to the Deputy Commissioner of Central Excise, Poonamallee Division, Chennai dated 16.12.2004, alleging that the 5th respondent was indulging in malpractice in exporting its cars, engines and spare parts to its parent company and other group companies and thereby causing great revenue loss to the Country. The Deputy Commissioner of Central Excise in response to Mr.Samuel C.Wilson letter dated 16.12.2004, sent a letter dated 07.02.2006, communicating the observations of the Commissioner of Central Excise wherein it was stated as to what was the issue Mr.Samuel C.Wilson was raising from Central Excise angle as against the 5th respondent and if there was no Central Excise angle, why investigation was commenced by him and if the issue has to be dealt with from any other angle, it should be left to the Intelligence Agencies to examine the issue. Mr.Samuel C.Wilson was also advised to ascertain the correctness of the documents, based on which the allegations were made. Mr.Samuel C.Wilson, sent a further communication to the Deputy Commissioner of Central Excise dated 15.02.2006, reiterating his allegations against the 5th respondent.
30. In the meantime, the Income Tax department made an assessment and passed its order of assessment dated 15.03.2005 and 09.03.2006 for the assessment years 2002-03 and 2003-04 respectively.
31. Mr.Samuel C.Wilson continued to maintain his allegations by forwarding the complaint to the Office of the Prime Minister on 29.07.2006, as well as to the Director, Department of Revenue, Ministry of Finance. In the mean time, the 5th respondent had its income tax assessment made for the assessment year 2004-05 in the proceedings dated 18.12.2006. The Prime Minister's Office by communication dated 25.04.2007, informed Mr.Samuel C.Wilson that necessary information had already been furnished to him and no further action was called for. He approached the Commissioner of Central Excise by his letter dated 05.05.2007 and insisted on furnishing of the information as requested by him in his report dated 29.07.2006, addressed to the Office of the Prime Minister. By communication dated 07.05.2007, the Office of the Ministry of Finance addressed to Mr.Samuel C.Wilson stated that pursuant to the notice issued to him, he appeared before the Chief Commissioner on 19.10.2006 and that he submitted certain documents which were only copies of letters submitted to the Office of the Prime Minister and no fresh material or information was furnished by him in pursuance of his complaint.
32. By communication dated 09.05.2007, the Ministry of Finance, Department of Revenue, Central Board of Excise and Customs while disposing on the appeal preferred by Mr.Samuel C.Wilson dated 05.05.2007, stated as under in paragraphs 3 & 4:
"3. It is once again reiterated that Department have examined your letter dated 29.07.2006. As the jurisdiction of the unit falls under the Chief Commissioner, Chennai, he was requested to examine your representation and he has got the matter examined through Commissioner of Central Excise, Chennai-4, who has examined in detail your representation and found that legally the allegation made by you do not stand the scrutiny of law. You have also appeared before the CC and submitted certain documents, which has also been examined by the Department.
4. From the above mentioned facts you would appreciate that the Department has taken into account the information provided by you and also examined the legal points raised by you. On legal issues as you are well aware that there could be different interpretation and the matter have been examined at a very senior level in the Department and the views taken by you are not as per the provisions of law."
33. Mr.Samuel C.Wilson filed a further appeal dated 16.06.2007, to the Central Information Commissioner, New Delhi under Section 19(3) of the Right to Information Act, 2005. In the meantime, the Ministry of Finance along with its letter dated 11.06.2007, sent a copy of its Note file wherein the various allegations of Mr.Samuel C.Wilson under different heads were considered and it was found that such allegations did not merit consideration. Nevertheless, Mr.Samuel C.Wilson continued to approach the very same authorities calling for investigation to be made in respect of various allegations raised by him in his communications.
34. Having considered the above materials we find that the authorities who were concerned with the assessment of the Excise Duty, Income Tax and Custom Duty had considered the various allegations of Mr.Samuel C.Wilson and found that none of those allegations brought out any misfeasance on the part of the 5th respondent in order to cause any further investigation to proceed against the 5th respondent. In fact in the document produced by the respondents 1 to 4, at the earliest point of time when cost audit was held on the 5th respondent, the same was held under the leadership of Mr.Samuel C.Wilson, under whom three other inspectors constituted the Audit Team. In the working papers submitted by the said team, it has been specifically stated that the export value per car of the 5th respondent was consistently less than the domestic sale value of the vehicle, when differential value was studied, it revealed that the same was attributable to the duties and taxes foregone.
35. Further in the said report a detailed analysis was stated to have been made with reference to the total volume of production of cars, spares, exports as well as the domestic sale made by the 5th respondent. It also considered the various statutory benefits that accrued to the 5th respondent by virtue of the exports made apart from the tax liability as well as other statutory benefits that were conferred on the 5th respondent. In no part of the report any adverse remarks were noted by the Audit Team. Therefore, when the Audit Team under the leadership of Mr.Samuel C.Wilson, having themselves made a through study of the accounts and other particulars maintained by the 5th respondent and were not able to discern any serious irregularity or illegality either in the maintenance of accounts or in the manner in which the transactions were made by the 5th respondent either in the domestic market or in its export operations, it is un-understandable as to how there could still be any scope for directing any enquiry to be made as claimed by the petitioner herein. In spite of the above factors if any such enquiry is to be ordered simply because the petitioner and Mr.Samuel C.Wilson, entertain a doubt about the conduct of the 5th respondent, that would amount to making a roving enquiry which will only result in a vexatious process being carried out. Such a roving enquiry is not within the scope of a Public Interest Litigation.
36. While considering the present litigation, we feel it appropriate to be guided by the caution indicated by the Honourable Supreme Court in entertaining public interest litigations in the decisions reported in 2002 (2) SCC 333 [Balco Employees' Union v. Union of India]; 2003 (7) SCC 546[Guruvayoor Devaswom Managing Committee v. C.K. Rajan]; 2004 (3) SCC 349 [Ashok Kumar Pandey v. State of West Bengal]; 2005 (1) SCC 590 [Dattaraj Nathuji Thaware v. State of Maharashtra] and 2005 (1) CTC 721 [The Perundurai Citizens Welfare' Soceity v. Tamil Nadu Pollution Control Board]
In 2002 (2) SCC 333 [Balco Employees' Union v. Union of India], the Honourable Supreme Court has held as under in Paragraph 80:
"PIL is not a pill or a panacea for all wrongs. It was essentially meant to protect basic human rights of the weak and the disadvantaged and was a procedure which was innovated where a public spirited person files a petition in effect on behalf of such persons who on account of poverty, helplessness or economic and social disabilities could not approach the Court for relief. There has been in recent times, increasingly instances of abuse of PIL. Therefore, there is a need to re-emphasize the parameters within which PIL can be restored to by petitioner and entertained by the Court. This aspect has come up for consideration before this Court and all we need to do is to recapitulate and reemphasize the same."
In 2003 (7) SCC 546[Guruvayoor Devaswom Managing Committee v. C.K. Rajan], the Supreme Court has laid down several broad guidelines which are the principles evolved by the Supreme Court in relation to public interest litigations. As many as 11 principles have been set out in paragraph 50. Of the said principles laid down, principles "i", "vii", "viii" and "x" are relevant for our present purpose which are as under:
i)
The Court in exercise of powers under Article 32 and Article 226 of the Constitution can entertain a petition filed by any interested person in the welfare of the people who is in a disadvantaged position and, thus, not in a position to knock the doors of the Court. The Court is constitutionally bound to protect the fundamental rights of such disadvantaged people so as to direct the State to fulfil its constitutional promises.
Vii)
The dispute between two warring groups purely in the realm of private law would not be allowed to be agitated as a public interest litigation.
Viii)
However, in an appropriate case, although the petitioner might have moved a Court in his private interest and for redressal of the personal grievances, the Court in furtherance of the public interest may treat it necessary to enquire into the state of affairs of the subject of litigation in the interest of justice.
x)
The Court would ordinarily not step out of the known areas of judicial review. The High Court although may pass an order for doing complete justice to the parties, it does not have a power akin to Article 142 of the Constitution of India. The Court will not ordinarily transgress into a policy. It shall also take utmost care not to transgress its jurisdiction while purporting to protect the rights of the people from being violated.
In 2004 (3) SCC 349 [Ashok Kumar Pandey v. State of West Bengal] the Supreme Court has held in paragraphs 11, 12 and 14 as under:
"11. It is depressing to note that on account of such trumpery proceedings initiated before the courts, innumerable days are wasted, which time otherwise could have been spent for the disposal of cases of genuine litigants. Though we spare no efforts in fostering and developing the laudable concept of PIL and extending our long arm of sympathy to the poor, the ignorant, the oppressed and the needy whose fundamental rights are infringed and violated and whose grievances go unnoticed, unrepresented and unheard; yet we cannot avoid but express our opinion that while genuine litigants with legitimate grievances relating to civil matters involving properties worth hundreds of millions of rupees and criminal cases in which persons sentenced to death and facing the gallows under untold agony, persons sentenced to life imprisonment and kept in incarceration for long years, persons suffering from undue delay in service matters government or private, persons awaiting the disposal of cases wherein huge amounts of public revenue or unauthorized collection of tax amounts are locked up, detenus expecting their release from the detention orders etc. etc. are all standing in a long serpentine queue for years with the fond hope of getting into the courts and having their grievances redressed, the busybodies, meddlesome interlopers, wayfarers or officious interveners having absolutely no public interest except for personal gain or private profit either of themselves or as a proxy of others or for any other extraneous motivation or for the glare of publicity break the queue muffling their faces by wearing the mask of public interest litigation and get into the courts by filing vexatious and frivolous petitions and thus criminally waste the valuable time of the courts and as a result of which the queue standing outside the doors of the court never moves, which piquant situation creates frustration in the minds of genuine litigants and resultantly, they lose faith in the administration of our judicial system. (Emphasis added)
12. Public interest litigation is a weapon which has to be used with great care and circumspection and the judiciary has to be extremely careful to see that behind the beautiful veil of public interest an ugly private malice, vested interest and/or publicity-seeking is not lurking. It is to be used as an effective weapon in the armoury of law for delivering social justice to citizens. The attractive brand name of public interest litigation should not be used for suspicious products of mischief. It should be aimed at redressal of genuine public wrong or public injury and not publicity-oriented or founded on personal vendetta. As indicated above, court must be careful to see that a body of persons or a member of the public, who approaches the court is acting bona fide and not for personal gain or private motive or political motivation or other oblique consideration. The court must not allow its process to be abused for oblique considerations. Some persons with vested interest indulge in the pastime of meddling with judicial process either by force of habit or from improper motives. Often they are actuated by a desire to win notoriety or cheap popularity. The petitions of such busybodies deserve to be thrown out by rejection at the threshold, and in appropriate cases, with exemplary costs. (Emphasis added)
13......
14. The court has to be satisfied about: (a) the credentials of the applicant; (b) the prima facie correctness or nature of information given by him; and (c) the information being not vague and indefinite. The information should show gravity and seriousness involved. Court has to strike balance between two conflicting interests: (i) nobody should be allowed to indulge in wild and reckless allegations besmirching the character of others; and (ii) avoidance of public mischief and to avoid mischievous petitions seeking to assail, for oblique motives, justifiable executive actions. In such case, however, the court cannot afford to be liberal. It has to be extremely careful to see that under the guise of redressing a public grievance, it does not encroach upon the sphere reserved by the Constitution to the executive and the legislature. The court has to act ruthlessly while dealing with imposters and busybodies or meddlesome interlopers impersonating as public-spirited holy men. They masquerade as crusaders of justice. They pretend to act in the name of pro bono publico, though they have no interest of the public or even of their own to protect. (Emphasis added)"
In 2005 (1) SCC 590 [Dattaraj Nathuji Thaware v. State of Maharashtra] the Supreme Court has held as under:
"Public interest litigation is a weapon which has to be used with great care and circumspection and the judiciary has to be extremely careful to see that behind the beautiful veil of public interest, an ugly private malice, vested interest and/or publicity-seeking is not lurking. It is to be used as an effective weapon in the armoury of law for delivering social justice to citizens. The attractive brand name of public interest litigation should not be used for suspicious products of mischief. It should be aimed at redressal of genuine public wrong or public injury and not be publicity-oriented or founded on personal vendetta. As indicated above, Court must be careful to see that a body of persons or member of the public, who approaches the Court is acting bona fide and not for personal gain or private motive or political motivation or other oblique considerations. The Court must not allow it process to be abused for oblique considerations by masked phantoms who monitor at times from behind. Some persons with vested interest indulge in the pastime of meddling with judicial process either by force of habit or from improper motives, and try to bargain for a good deal as well as to enrich themselves. Often they are actuated by a desire to win notoriety or cheap popularity. The petitions of such busybodies deserve to be thrown out by rejection at the threshold, and in appropriate cases with exemplary costs."
Again in 2005 (1) CTC 721 [The Perundurai Citizens Welfare' Soceity v. Tamil Nadu Pollution Control Board] this Bench has held as under:
"As already stated above, these days 'publi interest litigation' has become largely 'private interest litigation' for ulterior motives, or is misused by business rivals, or persons who sponsor such litigation from behind with mala fide intentions. We cannot appreciate these tactics. The docket of the Court is already overful with arrears. The Court should discourage this kind of motivated litigation, which only adds to its burden."
37. Applying the above principles to the case on hand, we are of the considered opinion that the present litigation perpetrated by the petitioner apparently at the instance of Mr. Samuel C. Wilson lacks bona fides. The reports of the officials at different levels of the Central Excise Department, Income Tax Department as well as the Ministry of Finance explicitly shows that the said Mr.Sameul C. Wilson had developed an affront for the reasons best known to him, as against the 5th respondent and inspite of the said authorities having informed him that the complaint made by him have no basis and that no such large scale revenue loss by way of Central Excise or Customs Duty or loss of Foreign Exchange had taken place, the petitioner has come forward with this writ petition reiterating the very same allegations in a stereo typed fashion. Even before us, the petitioner was not able to even prima facie demonstrate how any malpractice was adopted by the 5th respondent in the back drop of pricing of its vehicles in the domestic market vis-a-vis the supply of exports or any undue favour gained by it at the hands of respondents 1 to 4. Merely by levelling the allegations alone this Court will not be in a position to hold that an investigation as prayed for by the petitioner should be ordered. Further, the official respondents viz., respondents 1 to 4 have taken efforts to enquire into the complaints made by Mr.Samuel C. Wilson right from the year 2004 and have reported that there was no basis in his complaints and in one such audit team, the said Mr.Samuel C. Wilson himself was the leader and the report of which team did not find any malpractice on the part of the 5th respondent. In the abovesaid background, we can only construe the present litigation as vexatious one and was launched purely with a view to wreck vengeance on the 5th respondent. It is relevant to note that even Mr.Samuel C. Wilson has not alleged any mala fide either personal or official as against any of the official respondents in regard to the complaints made by him as against 5th respondent. In a public interest litigation unless a strong case is made out as regards the irregularity or illegality in the action of any party against whom such a complaint is raised and such a complaint discloses that illegality or irregularity was carried out against public interest or the interest of the nation, it would be travesty of justice if the Courts were to still countenance such a prayer of the petitioner and order any roving investigation to be made by any public authority.
38. Apart from the various reports submitted by the authorities at different levels viz., from the level of the Deputy Commissioner of Central Excise up till the Office of the Chief Commissioner of Central Excise as well as the Ministry of Finance, the material papers placed before us at the instance of the petitioner has not made out any strong case for causing an enquiry to be made as against the 5th respondent.
39. As far as the reference made to the alleged prosecution launched against the Chairman of the Parent company of the 5th respondent in Korea or the conviction of the said persons by itself cannot be a ground for ordering an enquiry in respect of the operations of the 5th respondent in this country. When the petitioner is not in a position to establish before us with acceptable materials for ordering any enquiry as against the 5th respondent, we are not inclined to rely on the said factor alone viz., the so called conviction of the Chairman of the parent company of the 5th respondent at Korea in order to order an enquiry in this writ petition.
40. In any event if either the petitioner or Mr.Samuel C.Wilson, continues to entertain a strong ground as against the 5th respondent in respect of any corrupt practice in the matter of payment of Excise Duty or Custom Duty or tax liability, it is always open to them to prefer necessary complaint of corruption as against the 5th respondent before the appropriate police authorities and seek for necessary action being taken against the 5th respondent. It is needless to state that if any such attempt is to be made either by the petitioner or Mr.Samuel C.Wilson, such action should satisfy the requirements of law as enunciated under the criminal legal system. It is for the petitioner to workout his remedy in the manner known to law.
41. In as much as the petitioner has failed to establish with necessary supporting materials for ordering any enquiry or investigation to be made as prayed for in this writ petition, we are not in a position to grant the relief as prayed for by the petitioner. Therefore, we dismiss this writ petition and the dismissal of the writ petition shall not preclude the petitioner, if so advised, from working out its remedy before the appropriate police authorities in the manner known to law.
42. The writ petition fails and the same is dismissed with the above observation. In the facts and circumstances of the case, we are not inclined to order any cost. All M.Ps. closed.
Index : Yes (A.K.G.,C.J.) (F.M.I.K.,J.)
Internet : Yes 11.11.2008
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To
1. The Secretary,
Department of Revenue,
North Block, New Delhi-110 001.
2. The Chairman,
Central Board of Excise & Customs,
Ministry of Finance, Department of Revenue,
North Block, New Delhi 110 001.
3. The Chief Commissioner,
Central Excise Chennai Zone,
124, Uthamar Gandhi Salai,
Chennai 600 034.
4. The Commissioner of Central Excise,
Chennai IV, MHU Complex,
692, Anna Salai, Chennai 600 035.
THE HON'BLE THE CHIEF JUSTICE
AND
F.M.IBRAHIM KALIFULLA, J.
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Pre-delivery Order in
W.P.No.10512 of 2008
11.11.2008
