UNION OF INDIA Vs. NARENDRA DHIRUBHAI DESAI

JUDGEMENT

(1.) One Dhirubhai was the manager and Karta of his joint family which consisted of himself and his two sons Kirtikumar and Narendra. The said joint family owned 64 power looms and carried on business of manufacturing art silk cloth on the said power looms in the name of Nalini Silk Mills at surat. There was no excise duty on art silk fabric upto 28th February 1954 but with effect from that date sec.8 of the Finance Act 1954 provided for levy of excise duty on art silk fabric by introducing Item No. 12A in the Central Excises and Salt Act 1944 (hereinafter referred to as the Act) in the following terms :-

(2.) The Union of India resisted the suits on various grounds of which two were of a preliminary nature. The first was that the suits were barred under sec. 40(1) of the Act and the second was that the Court had no jurisdiction to entertain the suit Inasmuch as the question whether the art silk fabric manufactured on the said 64 power looms was liable to excise duty or not was within the exclusive jurisdiction of the authorities under the Act and the jurisdiction of the civil Court In respect of such question was barred by necessary Implication. On merits the Union of India disputed the factum of partition and urged that the memorandum of partition which was relied on for the purpose of establishing the partition was not admissible in evidence since it did not bear proper stamp and was not registered. The Union of India also contended that the partition was not a valid partition since it was entered into with a view to circumvent the provisions of the Act and therefore despite the alleged partition the said 64 power looms continued to remain as one unit for the purpose of the applicability of the Act. On these contentions the Union of India submitted that the plaintiff in none of the suits was entitled to the relief claimed by him and that the suits were liable to be dismissed.

(3.) The learned trial Judge who tried the suits accepted the case of the plaintiff in each suit and negativing the preliminary objections of the Union of India held that the plaintiff in each suit was entitled to the declaration and injunction prayed for by him and accordingly granted the relief of declaration and injunction to the plaintiff in each suit. The Union of India thereupon preferred three appeals. one in each suit challenging the decision of the learned trial Judge. The learned District Judge who heard the appeals agreed with the view taken by the learned trial Judge on all the points urged before him and dismissed the appeals. The learned District Judge on a consideration of the oral as well as documentary evidence on record came to the conclusion that the partition alleged by the plaintiffs was established and that the plaintiff in each suit carried on his own independent and separate business of manufacturing art silk fabric on the power looms allotted to him on partition with effect from 20th April 1954. The learned District Judge relied on the memorandum of partition in reaching this conclusion and in regard to the admissibility of the memorandum of partition be held that the memorandum of partition was not an instrument of partition but was merely a record of the partition effected on the previous day and it was therefore not required to be stamped as an instrument of partition nor was it required to be registered and it could not therefore be held to be inadmissible on the ground of want of proper stamp or registration. The learned District Judge negatived the plea of the Union of India that the partition was invalid because it was effected with a view to circumventing the provisions of the Act and pointed out that it was quite proper and legal for the plaintiffs to have effected the partition if by doing so they could legitimately avoid the incidence of excise duty. The learned District Judge also rejected the preliminary objections of the Union of India and held that the Court had jurisdiction to entertain the suits and that the suit were not barred by sec. 40(1) of the Act. The learned District Judge accordingly held that the plaintiff in each suit being the owner of the power looms allotted to his respective share and such power looms being less than 25 the art silk fabric manufactured by him on such power looms was not liable to excise duty under Item 12A of the First Schedule to the Act and in the result he confirmed the decrees passed by the learned trial Judge granting the reliefs of declaration and injunction prayed for by the plaintiff in each suit. The Union of India thereupon preferred three Second Appeals in this Court. These three appeals involve identical questions of law and it would therefore be convenient to dispose then of by a common judgment.