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M J Antony: Trickle-down litigation

Source : BUSINESS_STANDARD
Last Updated: Wed, Jan 16, 2013 03:50 hrs

Though most sensible people avoid long and expensive lawsuits, if the cost is borne by the government, it turns into an engaging game. All the more so if both sides are financed by public money. So, more than half the litigation in courts involves the government. The latest high-profile case between the National Highway Authority of India and the environment ministry is one example. It might mark the total collapse of the machinery set up by the Supreme Court to avoid legal sparring between various arms of the government as well as public sector undertakings and local authorities.

There is a trickle-down effect, too. In a case decided by the Delhi High Court last week, an excise commissioner moved a writ petition against the Centre because he thought the government was wrong in granting rebate to an export firm and causing loss to the exchequer (Union of India vs M/s Ind Metal Extrusions Ltd). The high court said he was “more loyal than the king”.

The company, which is a merchant exporter, claimed rebate under the excise rules on goods procured from manufacturers initially for home consumption but subsequently exported. The assistant commissioner rejected the request on the ground that some of the goods were exempt from duty, since they were manufactured in specified areas, disentitling the exporter from claiming the rebate. A show-cause notice was issued to which the company objected on various grounds. Accepting the objections, the official allowed the rebate claims.

However, this order was reviewed by the commissioner, who felt that the order was not correct. An appeal was filed but the appellate authority dismissed it. Dissatisfied with the order, the commissioner approached the Central government with long arguments, but he was not successful in that attempt, too. The government, acting through the joint secretary, again rejected the argument of the commissioner and asserted that the rebate was admissible.

The irrepressible commissioner moved a writ petition in the high court against the appellate authority and the joint secretary in the finance ministry asking the court to quash their orders and direct the government to pass fresh order after hearing the parties. The firm, in turn, argued that no writ petition can be filed by a government functionary questioning the decision of the government itself, nor can the Union of India question its own order. The joint secretary is acting on behalf of the government, and not as an individual.

The high court dismissed the writ petition stating that the whole hierarchy of commissioners and other officials are functionaries of the government and they implement the Excise Act. “Since the Central government has to act only through human agency, the function is entrusted to an official of the Central government who is of the rank of joint secretary in the finance ministry. He does not pass the revision order in his individual capacity or as a functionary under the Act; his orders are those of the Central government itself,” the judgment said. “One cannot be said to be aggrieved by one’s own order and in this view of the matter the Central government cannot question its own order.”

If the aggrieved official had taken an appeal route, via the Customs, Excise and Service Tax Appellate Tribunal, the dispute could have been taken up to the Supreme Court. But in this case, the government or its officials cannot challenge the government’s own decision.

The high court’s powers to issue writs under Article 226 of the Constitution are so wide that it exceeds the jurisdiction of the Supreme Court. The apex court can exercise its writ powers under Article 32 only when the fundamental rights of a person is infringed. But a high court can issue writs of several hues when even an ordinary legal right is violated. Moreover, the Constitution uses a hold-all phrase and says a high court can entertain writ petitions “for any other purpose”. Therefore, its sway is vast.

Thus, an assessee of a levy who suffers civil consequences on withdrawal of an exemption notification and reclassification can move a writ petition. A tenant who under a lease agreement has to bear property tax can challenge an increase in the levy. On the other hand, a person moving the Supreme Court has to show violation of a fundamental right.

Even then, the Supreme Court is flooded with petitions because it has opened wide its doors to the public since the 1980s through the device of public interest litigation. The court has, thus, become a catalyst of social change and investigator into swelling sleaze.

However, it has tried to stop the arms of government from starting deleterious wars against each other. In a batch of Oil and Natural Gas Corporation judgments in the 1990s, the court asked the government to set up “committees of disputes” in government departments to avoid fratricidal litigation. Last year, it admitted that the medicine was worse than the disease and scrapped the whole idea. Now it looks like a free-for-all, some persons excessively loyal to the government and others predatory.




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