Collector Of Customs, Calcutta vs East India Commercial Co. Ltd

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 383 of 1961

Decision Date: 30 April 1962

Coram: K.N. Wanchoo, Bhuvneshwar P. Sinha, P.B. Gajendragadkar, N. Rajagopala Ayyangar

The case was titled Collector of Customs, Calcutta versus East India Commercial Co. Ltd and was decided by the Supreme Court of India on 30 April 1962. The judgment was authored by Justice K.N. Wanchoo, and the bench comprised Justices K.N. Wanchoo, Bhuvneshwar P. Sinha, P.B. Gajendragadkar, and N. Rajagopala Ayyangar. The petitioner was the Collector of Customs, Calcutta and the respondent was East India Commercial Co. Ltd. The citation for this decision is 1963 AIR 1124 and 1963 S.C.R. Supplement (2) 563, with additional citator references including R 1965 S.C. 458, D 1967 S.C. 1244, D 1968 S.C. 231, RF 1974 S.C. 1380, RF 1987 S.C. 2111, and R 1990 S.C. 10. The statutory provision involved was Section 8 of the Sea Customs Act, 1878, dealing with the effect of confirmation of an order in appeal and the merger of the Collector’s order into that of the Central Board of Revenue. The headnote recorded that the respondent had imported two thousand drums of mineral oil, of which the appellant confiscated fifty drums and imposed a personal penalty of Rs. 61,000 under the Sea Customs Act. The respondent’s appeal against this action was dismissed by the Central Board of Revenue, after which the respondent filed a petition under Article 226 of the Constitution in the Calcutta High Court. The Full Bench of that High Court held that it lacked jurisdiction to issue a writ against the Central Board of Revenue in view of the precedent set in Saka Venkata Subbha Rao. However, because the Central Board of Revenue had only dismissed the appeal against the collector’s order, the High Court concluded that it retained jurisdiction to pass an order against the collector. The matter then proceeded to this Court after the respondent obtained a certificate of appeal. The Supreme Court held that the collector’s order had merged into the order of the Central Board of Revenue; consequently, no writ could be issued against the collector. The Court explained that after disposal of an appeal, only the order of the appellate authority is operative, regardless of whether that order reverses, modifies, or confirms the original order. A confirming order is as effective as a reversing or modifying order. Because the appellate authority in this case was situated beyond the territorial jurisdiction of the Calcutta High Court, that Court was not entitled to issue a writ to the original authority within its jurisdiction. The Court relied on the decisions in Election Commission of India v. Saka Vankata Subba Rao (1951 S.C.R. 1144), A. Thangal Kunju Mukatiar v. M. Venkitachalam Poiti (1955 2 S.C.R. 1196), Commissioner of Income‑Tax v. M/s Amritlal Bhogilal & Co. (1959 S.C.R. 713), and Madan Gopal Rungta v. Secretary to the Government of Orissa (1962 Supp. 3 S.C.R.), as well as the overruling of Barkatali v. Custodian General of Evacuee Property (A.R. 1954 Raj. 214) and the authorities Joginder Singh Waryam Singh v. Director, Rural Rehabilitation, Pepsu, Patiala (A.R. 1955 Pepsu 91) and Burhanpur National Textile Workers Union v. Labour Appellate Tribunal of India at Bombay (A.I.R. 1955 Nag. 148).

and Azmat Ullah v. Custodian, Evacuee Property, A.I.R. 1955 All 435, approved. State of U. P. v. Mohammed Nooh, [1958] S. C. R. 595, distinguished. JUDGMENT: CIVIL APPELLATE, JURISDICTION: Civil Appeal No. 383 of 1961. Appeal from the judgment and order dated July 21 1959, of the Special Bench of the Calcutta High Court in Matter No. 76 of 1952. D. R. Prem and R. L. Dhebar, for the appellant and respondents Nos. 2 and 3. S. P. Desai and B. P. Maheshwari, for respondent No. 1. 1962. April 30. The judgment of the Court was delivered by WANCHOO, T. This appeal arose from a certificate that had been granted by the Calcutta High Court. For the purpose of the present discussion the essential facts are as follows: the respondent had imported two thousand drums of mineral oil. On the basis of an order dated September 20 1950 the appellant, who was the Collector of Customs, Calcutta, confiscated fifty of those drums and imposed a personal penalty of Rs.61,000 on the respondent under the Sea Customs Act No. 8 of 1878, hereinafter referred to as the Act. The respondent subsequently filed an appeal to the Central Board of Revenue invoking section 188 of the Act, and that appeal was dismissed in April 1952. Following the dismissal the respondent instituted a petition under article 226 of the Constitution in the Calcutta High Court. The present appeal does not address the merits of the respondent’s substantive case because the merits had not yet been examined. When the petition was placed before a learned Single Judge, a question was raised concerning whether the High Court possessed jurisdiction to entertain the petition in view of the authority’s decision in Election Commission India v. Saka Venkata Subba Rao. The learned Single Judge deemed the question important and referred it to a larger bench, which ultimately became a Full Bench of the High Court. The Full Bench considered two specific issues: first, whether any writ could be issued against the Central Board of Revenue, which was a party to the petition and permanently situated outside the territorial jurisdiction of the High Court; and second, assuming that no writ could be issued against the Central Board, whether a writ could nevertheless be issued against the appellant, the original authority that had passed the order under challenge, when the appellate authority (the Central Board) had only dismissed the appeal. The Full Bench held on the first issue that the High Court had no jurisdiction to issue a writ against the Central Board of Revenue, relying on the precedent set by Saka Venkata Subba Rao. On the second issue the Full Bench concluded that because the Central Board of Revenue had merely dismissed the appeal against the Collector’s order, the operative order remained the order of the appellant, which was located within the jurisdiction of the High Court, and consequently the High Court did have jurisdiction to issue a writ against the Collector of Customs, Calcutta.

The Full‑Bench held that the High Court possessed jurisdiction to pass an order against the Collector of Customs even though the order had been taken on appeal to the Central Board of Revenue, an authority against which no writ could be issued, and the appeal had been dismissed. The Full‑Bench further directed that the petition be placed before the learned Single Judge for disposal in light of its decision on the question of jurisdiction. After that direction an application for a certificate of appeal to this Court was filed and the certificate was granted, which brought the matter before us. The only question that required decision by this Court was the second question that had been debated in the High Court, namely whether the High Court had jurisdiction to issue a writ against the Collector of Customs Calcutta despite the fact that his order had been taken on appeal to the Central Board of Revenue, against which the High Court could not issue a writ, and the appeal had been dismissed. There appeared to be a difference of opinion among the High Courts on this point. The Rajasthan High Court in Barkatali v. Custodian General of Evacuee Property (1) held that where the original authority that passed the order was within the territorial jurisdiction of the High Court but the appellate authority was outside that jurisdiction, the High Court would still have jurisdiction to issue a writ to the original authority when the appellate authority merely dismissed the appeal and the order of the original authority stood confirmed without any modification. By contrast, the PEPSU High Court in Joginder Singh Waryam Singh v. Director, Rural Rehabilitation, the Nagpur High Court in Burhanpur, National Textile Workers Union v. Labour‑Appellate Tribunal of India at Bombay (2) and the Allahabad High Court in Azmat Ullah v. Custodian, Evacuee Property (3) took the opposite view, holding that even where the appeal was merely dismissed, the order of the original authority merged into the order of the appellate authority, and if the appellate authority lay beyond the territorial jurisdiction of the High Court, no writ could be issued even to the original authority. It may be noted that the Rajasthan High Court later reconsidered the issue after the Supreme Court decision in A. Thangal Kunju Mudaliar v. M. Venkita‑chalam Potti (4) and held that, in view of that decision, its earlier ruling in Barkatali’s case (5) was no longer good law. The High Court, however, did not refer to this later Rajasthan decision, even though the learned Chief Justice who had been a party to the earlier Rajasthan case was also a party to the later decision. The principal reason adopted by the High Courts that held otherwise was that the order of the original authority became merged in the order of the appellate authority when the appeal was disposed of, and therefore, lacking territorial jurisdiction to issue a writ against the appellate authority, the High Court could not issue a writ against the original authority even though the appellate authority had merely dismissed the appeal without modifying the original order.

The Court noted that the authorities cited include A.I.R. (1955) Pepsu 91, A.I.R. (1955) All‑435, A.I.R. (1955) Nag. 148, the 1955 volume of the Supreme Court Reports at page 1196, and A.I.R. (1954) Raj. 214. These authorities dealt with the situation where an appellate authority, although situated beyond the territorial jurisdiction of a High Court, dismissed an appeal without altering the order of the original authority. The Court framed the central question as whether, in such circumstances, the order of the original authority becomes merged in the order of the appellate authority even though the appellate authority merely dismissed the appeal without modifying the original order. It observed that when an appeal is presented, the appellate authority has three possible courses: it may reverse the order under appeal; it may modify that order; or it may simply dismiss the appeal, thereby confirming the original order without any change. The Court accepted that in the first two scenarios, where the original order is either reversed or modified, the operative order is the order of the appellate authority, and consequently, if the High Court lacks jurisdiction to issue a writ against the appellate authority, it cannot issue a writ against the original authority. The issue, therefore, was whether a distinction exists between those two situations and the third situation in which the appellate authority dismisses the appeal and confirms the original order.

In addressing this issue, the Court held that, on principle, it is difficult to draw a meaningful distinction between the three kinds of appellate orders. After the appellate authority has disposed of the appeal—whether by reversal, modification, or simple confirmation—the operative order is the order of the appellate authority. The Court emphasized that a confirmation order is legally as effective as an order of reversal or modification. Consequently, if the appellate authority lies beyond the territorial jurisdiction of the High Court, the High Court cannot validly issue a writ against the original authority even when the appellate authority has merely confirmed the original order. To do so would amount to interfering with the appellate authority’s confirmed order, despite the High Court’s territorial jurisdiction over the original authority. The Court therefore concluded that, once an order of an original authority is taken on appeal to an appellate authority outside the High Court’s territorial jurisdiction, the operative order after the appeal is the appellate authority’s order, and the High Court lacks the power to issue a writ against either the appellate or the original authority in that circumstance.

In this case the Court explained that once an appeal has been finally decided, the order issued by the appellate authority becomes the operative order, and because the High Court lacks territorial jurisdiction to issue a writ against that appellate authority, it cannot subsequently issue a writ to the original authority even if that original authority lies within the High Court’s territorial limits, regardless of whether the appellate authority merely confirmed the original order or dismissed the appeal. The Court observed that this principle—that the appellate order is the effective order after the appeal is disposed of—forms the basis of the rule that a decree of a lower court merges into the decree of the appellate court, and, on the same footing, it would be correct to say that the order of the original authority merges into the order of the appellate authority whatever the nature of the appellate decision, whether it reverses, modifies, or simply confirms the earlier order. The Court noted that this matter has been examined on several occasions after the decision in Saka Venkata Subba Rao’s case (1) (1953) S.C.R. 1144. In A. Thangal Kunju Mudaliar’s case (1), although the specific point was not directly raised, the Court considered the issue (see p. 1213) and endorsed the decisions of the PEPSU, Nagpur and Allahabad High Courts previously referred to. Subsequently, in Commissioner of Income‑Tax v. Messrs Amritlal Bhogilal and Company (2), a similar question arose concerning the merger of an order of the income‑tax officer into the order of the Appellate Assistant Commissioner on appeal, in connection with the Commissioner of Income‑Tax’s revision powers. While that case held that, because of special provisions of the Income‑Tax Act, the registration order of the Income‑Tax officer did not merge into the Assistant Commissioner’s order, the Court nevertheless observed at p. 720 that there can be no doubt that, when an appeal is provided against a tribunal’s order, the appellate authority’s decision is the operative decision in law. If the appellate authority modifies or reverses the tribunal’s decision, that appellate decision is the one that is effective and enforceable; the same applies when the appellate authority merely confirms the tribunal’s decision. Consequently, the original decision merges into the appellate decision, and only the appellate decision remains operative and capable of enforcement. The Court revisited the issue in Madan Gopal Rungta v. Secretary to the Government of Orissa (3), dealing with an order made in revision under the Mineral Concession Rules, 1949, framed under the Mines and Minerals (Regulation and Development) Act, No. 53 of 1948, and held that when the Central Government rejected a review petition against the State Government’s order under those rules, it was effectively rejecting the appellant’s application for a mining lease. That case also considered the relationship between the original and appellate orders, noting that, in view of rule 60 of the Mineral Concession Rules, the Central Government’s order in review is the effective and final order. (1) (1955) 2 S.C.R. 1196. (2) (1959) S.C.R. 713. (3) (1962) (Supp.) 3 S.C.R. 966.

In the matter that came before the Court, the revision was taken under the Mineral Concession Rules of 1949, which were framed under the Mines and Minerals (Regulation and Development) Act, No 53 of 1948. The Court held that when the Central Government rejected the review petition that had been filed against an order of the State Government issued under those Mineral Concession Rules, the effect of that rejection was to deny the appellant’s application for the grant of a mining lease. The Court also examined the relationship between the original order and the appellate order in that case and observed, in view of rule 60 of the Mineral Concession Rules, that the order made by the Central Government on review was the effective and final order. Counsel for the respondent attempted to distinguish the earlier decision in Madan Gopal Rungta’s case on the ground that that decision was largely based on an interpretation of rule 60 of the Mineral Concession Rules 1949. However, the respondent did not pursue that line of argument when section 188 of the Sea Customs Act was brought to his attention. The principal reliance of the respondent, both before the High Court and before this Court, was on the decision in State of Uttar Pradesh v. Mohammed Nooh. In that earlier case a public servant had been dismissed on 20 April 1948, a date that preceded the coming into force of the Constitution. The servant’s appeal against the dismissal order was dismissed in May 1949, also before the Constitution became operative, and his revision against the appellate order was dismissed on 22 April 1950, after the Constitution had come into force. The question that arose was whether the public servant could invoke the constitutional provisions because the revisional order was issued after the Constitution had commenced. The Court held unequivocally that the dismissal order dated 20 April 1948 did not merge into the later appellate and revisional orders. The dismissal order remained operative on its own strength from the date of dismissal, and therefore the public servant’s termination occurred before the Constitution was in force. Consequently, the servant could not avail himself of any benefit that the Constitution might have afforded. The Court further noted that, as stated in Madan Gopal Rungta’s case, the Mohammed Nooh decision was a special case that stood on its own facts. The specific issue in that case was whether a writ under article 226 could be issued concerning a dismissal that was effective from 1948. The relief sought by the petitioner was against an order of dismissal that had originated before the Constitution came into effect and that continued to be effective even after the dismissal of the appeal and the subsequent revision.

In the earlier matter concerning a revision of the dismissal order, the Court observed that the dismissal had occurred in 1948 and therefore could not be examined under Article 226 of the Constitution, because to do so would give the article a retrospective effect. The Court rejected the argument that the principle of merger applied to the present situation, doing so on two specific grounds. First, it held that the principle of merger, which is suitable to decrees issued by courts, does not extend to orders made by departmental tribunals. Second, it noted that the original dismissal order was operative on its own strength and did not acquire any greater efficacy from the later order that dismissed the appeal or the revision. In effect, the Court said that even if the principle of merger were to be treated as applicable to an order of dismissal such as that in Mohammad Nooh’s case, the dismissal would still have taken place before the Constitution came into force, and consequently the dismissed person could not invoke the constitutional provisions with respect to that dismissal, as affirmed by the authorities cited at (1) (1962) (Supp.) 3 S.C.R. 906 and (2) (1958) S.C.R. 595. The earlier case was not concerned with the question of the High Court’s territorial jurisdiction, where the original authority lay within the Court’s territorial jurisdiction but the appellate authority did not; it was limited to the special facts before it. Accordingly, the Court now follows the view expressed in Mudaliar’s case (1) and in the matter of Messrs Amritlal Bhogilat (2), holding that the order of the original authority is merged into the order of the appellate authority and that, after the appeal is disposed of, only the order of the appellate authority remains operative. Therefore, when the appellate authority is situated beyond the territorial jurisdiction of the High Court, the Court cannot issue a writ against the original authority that lies within its territorial jurisdiction, because it lacks jurisdiction to issue a writ against the appellate authority. It is undisputed in the present matter that no writ could be issued against the appellate authority; consequently, the High Court could also issue no writ against the original authority. For these reasons, the Court set aside the order of the High Court, dismissed the writ petition with costs, and allowed the appeal, relying also on the authorities cited at (1) (1955) 2 S.C.R. 1196 and (2) (1959) S.C.R. 713.