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Canon Steels (P) Limited v. Commissioner Of Customs .
Factual and Procedural Background
The Commissioner of Customs (Export Promotion), Mumbai passed an adjudication order under the Customs Act, 1962. The assessee carried the matter in appeal to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which delivered its appellate order from its New Delhi office.
Aggrieved, the assessee filed Customs Appeal No. 6 of 2004 before the Delhi High Court. When the Delhi High Court indicated, prima facie, that the appeal might not be maintainable, the assessee withdrew it with liberty to approach the “appropriate” High Court. The assessee then filed Customs Act Appeal No. 4 of 2004 before the Punjab and Haryana High Court, asserting that part of the cause of action had arisen in Chandigarh. On 8 May 2006 that High Court dismissed the appeal for want of territorial jurisdiction and, on 12 October 2006, rejected a review application.
The present civil appeal before the Supreme Court challenges both orders of the Punjab and Haryana High Court.
Legal Issues Presented
- Whether the Punjab and Haryana High Court possessed territorial jurisdiction to entertain an appeal against a CESTAT order passed in New Delhi when the original adjudication order was issued in Mumbai.
- If not, whether the Delhi High Court, where the appeal had earlier been filed and withdrawn, should be directed to restore and hear the matter on merits.
Arguments of the Parties
Appellant's Arguments
- The High Court misread the Supreme Court judgment in Kusum Ingots & Alloys Ltd. v. Union of India (2004) 6 SCC 254; properly interpreted, that decision supports jurisdiction in Punjab and Haryana because part of the cause of action allegedly arose in Chandigarh.
- The withdrawal of the appeal from the Delhi High Court was prompted by the Court’s own observation questioning maintainability; the assessee should not be prejudiced for choosing what it believed to be the correct forum.
Respondent's Arguments
- The assessee had already invoked the jurisdiction of the Delhi High Court and voluntarily withdrew the appeal; that forum alone has jurisdiction because the CESTAT order emanated from New Delhi.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Kusum Ingots & Alloys Ltd. v. Union of India, (2004) 6 SCC 254 | Territorial jurisdiction under Article 226/227 when part of the cause of action arises within a High Court’s territory; relevance of the place where an appellate or revisional order is passed; discretion to refuse jurisdiction on forum conveniens grounds. | Relied on para 25 to hold that issuance of the appellate order from CESTAT, New Delhi, confers jurisdiction on the Delhi High Court. |
| Sri Nasiruddin v. State Transport Appellate Tribunal, (1975) 2 SCC 671 | Meaning of “cause of action” in writ jurisdiction. | Cited to explain that the decision does not support conferring jurisdiction solely on the basis of situs of the legislature. |
| U.P. Rashtriya Chini Mill Adhikari Parishad v. State of U.P., (1995) 4 SCC 738 | Referenced in Kusum Ingots for situs-of-legislation arguments. | Not applied; mentioned while distinguishing appellant’s submission. |
| Bhagat Singh Bugga v. Dewan Jagbir Sawhney, AIR 1941 Cal 670 | Doctrine of forum conveniens in writ jurisdiction. | Quoted within Kusum Ingots to note that a High Court may decline jurisdiction even when a part of the cause of action arises within its territory. |
| Madanlal Jalan v. Madanlal, AIR 1949 Cal 495 | Forum conveniens doctrine. | Same contextual use as above. |
| Bharat Coking Coal Ltd. v. Jharia Talkies & Cold Storage (P) Ltd., 1997 CWN 122; (1992) 2 Cal LT 357 | Forum conveniens doctrine. | Cited within the passage from Kusum Ingots. |
| S.S. Jain & Co. v. Union of India, (1994) 1 CHN 445 (Cal) | Forum conveniens doctrine. | Cited within the passage from Kusum Ingots. |
| New Horizons Ltd. v. Union of India, AIR 1994 Del 126 | Forum conveniens doctrine. | Cited within the passage from Kusum Ingots. |
Court's Reasoning and Analysis
1. The Supreme Court noted that both the original adjudication order (Mumbai) and the CESTAT appellate order (New Delhi) lay outside the territorial limits of the Punjab and Haryana High Court.
2. Drawing directly from para 25 of Kusum Ingots, the Court reiterated that the place where an appellate or revisional order is passed constitutes a part of the cause of action, thereby investing the High Court of that place with jurisdiction.
3. Because the CESTAT order was issued from New Delhi, the Delhi High Court indisputably had territorial jurisdiction. Consequently, the Punjab and Haryana High Court had correctly declined to entertain the appeal.
4. The Court balanced jurisdictional correctness with access to justice. Noting that the assessee had withdrawn the Delhi appeal only after an adverse prima facie observation, the Court invoked its power to ensure no litigant is left remediless and ordered restoration of Customs Appeal No. 6 of 2004 in the Delhi High Court.
5. The Supreme Court expressly refrained from examining the merits of the customs dispute, confining its decision to the jurisdictional issue.
Holding and Implications
DISPOSED OF. The Supreme Court affirmed that the Punjab and Haryana High Court lacked jurisdiction and directed restoration of Customs Appeal No. 6 of 2004 before the Delhi High Court, which is to hear the matter on merits.
Implications: The decision clarifies that the situs of an appellate tribunal’s order is a decisive component of “cause of action” for territorial jurisdiction under Section 130 of the Customs Act and Article 226/227. While no new legal principle is created, the ruling reinforces the practical application of Kusum Ingots and safeguards litigants from being left without a forum.
Dr. Arijit Pasayat, J.— Leave granted.
2. Challenge in this appeal is to the orders passed by the Punjab and Haryana High Court dismissing the Customs Act Appeal No. 4 of 2004, filed under Section 130 of the Customs Act, 1962 (in short “the Act”) dated 8-5-2006, and the order passed in review application dated 12-10-2006. The High Court held that it had no jurisdiction to deal with the matter as the original order was passed by the adjudicating authority at Mumbai and the appellate order was passed at Delhi by the Customs, Excise and Service Tax Appellate Tribunal (in short “Cestat”). Reference was made to the decision of this Court in Kusum Ingots & Alloys Ltd. v. Union of India (2004) 6 SCC 254.
3. In support of the appeal, learned counsel for the appellant submitted that the judgment in Kusum Ingots (2004) 6 SCC 254 is in favour of the appellant and on misreading of the decision the appeal has been dismissed. The learned Additional Solicitor General, on the other hand, submitted that before moving the Punjab and Haryana High Court, the Delhi High Court was moved, and at the request of the appellant, the High Court permitted to withdraw the appeal (wrongly stated as writ petition).
4. The factual position is not in dispute. The adjudication order under the Act was passed by the Commissioner of Customs (EP Mumbai) and the appeal against that order was adjudicated by Cestat. Against the order of Cestat, Customs Appeal No. 6 of 2004 was filed before the Delhi High Court. It is submitted by learned counsel for the appellant that prima facie, the High Court was of the view that the appeal was not maintainable before it and, therefore, the appellant withdrew the said appeal to file it before the appropriate High Court. Since the cause of action arose at Chandigarh it was submitted that the Punjab and Haryana High Court has jurisdiction.
5. At this juncture, it would be appropriate to take note of what has been stated by this Court in Kusum Ingots (2004) 6 SCC 254:
“22. The Court must have the requisite territorial jurisdiction. An order passed on a writ petition questioning the constitutionality of a parliamentary Act, whether interim or final keeping in view the provisions contained in clause (2) of Article 226 of the Constitution of India, will have effect throughout the territory of India subject of course to the applicability of the Act.
24. Learned counsel for the appellant in support of his argument would contend that the situs of framing law or rule would give jurisdiction to the Delhi High Court and in support of the said contention relied upon the decisions of this Court in Nasiruddin v. State Transport Appellate Tribunal (1975) 2 SCC 671 and U.P Rashtriya Chini Mill Adhikari Parishad v. State of U.P (1995) 4 SCC 738 So far as the decision of this Court in Nasiruddin v. State Transport Appellate Tribunal (1975) 2 SCC 671 is concerned, it is not an authority for the proposition that the situs of legislature of a State or the authority in power to make subordinate legislation or issue a notification would confer power or jurisdiction on the High Court or a Bench of the High Court to entertain a petition under Article 226 of the Constitution. In fact, this Court while construing the provisions of the United Provinces High Courts (Amalgamation) Order, 1948 stated the law thus:
‘37. The conclusion as well as the reasoning of the High Court is incorrect. It is unsound because the expression “cause of action” in an application under Article 226 would be as the expression is understood and if the cause of action arose because of the appellate order or the revisional order which came to be passed at Lucknow then Lucknow would have jurisdiction though the original order was passed at a place outside the areas in Oudh. It may be that the original order was in favour of the person applying for a writ. In such case an adverse appellate order might be the cause of action. The expression “cause of action” is well known. If the cause of action arises wholly or in part at a place within the specified Oudh areas, the Lucknow Bench will have jurisdiction. If the cause of action arises wholly within the specified Oudh areas, it is indisputable that the Lucknow Bench would have exclusive jurisdiction in such a matter. If the cause of action arises in part within the specified areas in Oudh it would be open to the litigant who is the dominus litis to have his forum conveniens. The litigant has the right to go to a court where part of his cause of action arises. In such cases, it is incorrect to say that the litigant chooses any particular court. The choice is by reason of the jurisdiction of the court being attracted by part of cause of action arising within the jurisdiction of the court. Similarly, if the cause of action can be said to have arisen part within specified areas in Oudh and part outside the specified Oudh areas, the litigant will have the choice to institute proceedings either at Allahabad or Lucknow. The court will find out in each case whether the jurisdiction of the court is rightly attracted by the alleged cause of action.’
25. The said decision is an authority for the proposition that the place from where an appellate order or a revisional order is passed may give rise to a part of cause of action although the original order was at a place outside the said area. When a part of the cause of action arises within one or the other High Court, it will be for the petitioner to choose his forum.(-25)
30. We must, however, remind ourselves that even if a small part of cause of action arises within the territorial jurisdiction of the High Court, the same by itself may not be considered to be a determinative factor compelling the High Court to decide the matter on merit. In appropriate cases, the Court may refuse to exercise its discretionary jurisdiction by invoking the doctrine of forum conveniens. [See Bhagat Singh Bugga v. Dewan Jagbir Sawhney AIR 1941 Cal 670, Madanlal Jalan v. Madanlal AIR 1949 Cal 495, Bharat Coking Coal Ltd. v. Jharia Talkies & Cold Storage (P) Ltd. 1997 CWN 122, (1992) 2 Cal LT 357, (1992) 2 CHN 80 (Cal), S.S Jain & Co. v. Union of India (1994) 1 CHN 445 (Cal) and New Horizons Ltd. v. Union of India AIR 1994 Del 126.]”
6. The appellate order in this case was issued from Cestat office at New Delhi. In that sense the Delhi High Court has jurisdiction to deal with the matter in terms of what has been stated in para 25 of Kusum Ingots case (2004) 6 SCC 254.
7. The Punjab and Haryana High Court was justified in its view as the original adjudication order and the appellate order were not issued by any authority within its territorial jurisdiction. But no person should be left without a remedy, therefore, even though Customs Case No. 6 of 2004 was withdrawn by the assessee, we direct the restoration of the said order as indisputably, the Delhi High Court has jurisdiction to deal with the matter.
8. Customs Case No. 6 of 2004 in the Delhi High Court, needless to say, shall be dealt with on merits.
9. We make it clear that we have not expressed any opinion on the merits of the appeal.
10. The appeal is accordingly disposed of without any order as to costs.
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