IMPORTANT POINT
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 submission before the court.

Headnote:Case of evasion of excise duty by GTC on cigarettes which were got manufactured by NET as its front company-Show cause issued to both companies and their partners and officers by Collector-GTC applying for examining partners of NET under Section 14 of Central Excise Act, 1944-Collector declining permission but using oral submission of Mr. Sailo, one of the NET s partners, in his final order-High Court directed opportunity be given for examination of partners of NET by GTC-Whether correct? (No)-High Court setting aside order of Collector whether correct? (Yes)-High Court directing hearing afresh by another Collector-Whether proper? (No) same Collector should hear afresh with caution not to rely on oral submission of NET s partner but on any other material with proper opportunity to GTC-Appeal allowed in part accordingly-(Constitution of India-Article 226-Writ-Alternate remedy-Central Excise Act, 1944-Section 14).
Held : Contention of the counsel for the Union of India that the order of the Collector should be sustained by ignoring the submissions/statement of Shri Sailo as there was other sufficient material on record to sustain and justify the said order cannot be accepted. 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. 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. 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. For the reasons stated above, the appeal is accepted in part and directions issued by the High Court to the Collector to summon Shri Sailo, Liantilinga and Lalchungunga for necessary examination and to afford an opportunity to the GTC to cross-examine them are set aside. But the order of the High Court setting aside the order of the Collector is sustained on the ground that the Collector had erred in placing reliance on the submissions of Shri Sailo. The direction issued by the High Court that the proceedings shall be taken by the officer other than the one who had made the adjudication order shall also stand set aside. Otherwise also this direction has become infructuous with the passage of time. The incumbent Collector is directed to decide the matter afresh on the basis of any other material obtained said also placed on record for the purpose duly granting reasonable opportunity to GTC to produce evidence in rebuttal. The Collector is directed to dispose of the matter within four months from the date of appearance of the parties before it. The parties through their counsel are directed to appear before the Collector of Customs, Shillong on 5th May, 2003. No costs. (Paras 13 to 17)

JUDGMENT

Bhan, J.-Union of India has filed this appeal against the order of the Gauhati High Court in Civil Rule No. 1940 of 1989 wherein the High Court at the instance of respondent No.1 has quashed the order passed by the Collector of Customs and Central Excise, Shillong. (for short the Collector ) dated 15th May 1990 and remanded the case to the Collector for a fresh decision with the following directions :

"In view of the above, the adjudication order dated 15.5.90 is set aside. The collector shall resume the proceedings and summon the aforesaid three persons viz. Sri R. Salio. Sri Liangtilinga and Sri Lalchungunga for necessary examination in accordance with the observation made above and thereafter proceed to decide the matter afresh. The other materials obtained and already on record shall be available for the purpose . We also direct that further proceedings shall be taken by an officer other than the one who has made the adjudication order dated 15/16 May, 1990 and the competent authority in that regard shall take appropriate action and make necessary orders."

2. Facts relevant to the points raised in this appeal are:

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 Eastern 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 detected when certain vehicles carrying the cigarettes 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 inasmuch as they were also co-noticees 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 Collector held:

"Of the persons who were asked to cross-examination three of them viz. Richard Sailo, Liangtilinga, Lalchungunga 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 noticee 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, if 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."

5. The ruling of the Collector declining to issue summons was challenged in the High Court by filing the present Writ Petition before the completion or 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 1

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2003 Supreme(SC) 359

IMPORTANT POINTA 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 submission before the court.

IMPORTANT POINT
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 submission before the court.