VOTLAS LIMITED ALLWYN UNIT Vs. UNION OF INDIA

JUDGEMENT

(1.) Hyderabad Allwyn Limited, hereinafter referred to as "HAL", which was a premier public undertaking of the Andhra Pradesh Government, expanded its business and three companies came into existence, viz., Hyderabad Allwyn Limited Refrigeration Division, taking in its fold activities of refrigeration, steel furniture, L.P.G. Division, Allwyn watch Division and Allwyn Auto Limited. In this Writ Petition we are concerned with Allwyn Refrigeration Division. During the period March 1, 1982 and Jury 31, 1982 certain amounts of excise duties were found to be payable by HAL for recovery of which show cause notices were issued and order of adjudication was passed on November 30, 1990 in respect of two amounts, viz., (1) Rs.35,69,717-66 which pertains to the period from 1-3-1982 to 31-7-1982 and (2) Rs. 7,11,14,937-68 which pertains to the period from 1-8-1982 to 28-2-1987. The HAL filed appeal against the order of adjudication before the Customs, Excise and Gold (Control) Appellate Tribunal, hereinafter referred to as "CEGAT" under Section 35 of the Central Excises and Salt Act, 1944, hereinafter referred to as the "Act". It appears that on the application filed under Section 35-F of the said Act for stay, initially unconditional interim stay was granted on July 1,1991 but later that order was modified on March 23, 1992 directing HAL to deposit Rs.2 crores before March 31, 1992. However, that amount was not deposited Instead, another application was filed on April 27, 1992 seeking waiver of the deposit of the amount. The HAL eventually became a sick unit on account of accumulated losses which led HAL making an application to the Board for Industrial and Financial Reconstruction, hereinafter referred to as "the BIFR" under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985, hereinafter referred to as "SICA" and a scheme was prepared for amalgamation of the HAL with VOLTAS Limited, which was approved by the Board on April 4, 1994 pursuant to which the amalgamation took effect from April 1, 1993. On September 21, 1994 the Assistant Collector of Central Excise, respondent No.3 herein, issued notice bearing No.C.No.IV/16/62/93-T. 12, demanding the said sums of Rs.35,69,715-66 and Rs.7,11,14,937-68 towards central excise duty and a further amount of Rs.25,00,000/- towards penalty, simultaneously ordering attachment of all the excisable goods, plant and machinery, etc., under Section 11 of the Act and Rule 230 of the Central Excise Rules, 1944, intimating that if the dues are not paid within 10 days of the service of the order the attached goods would be sold. The Andhra Pradesh Government has given an undertaking to the petitioner on May 12, 1994 agreeing to meet the total liability arising out of the excise case pursuant to which the petitioner - M/s. Vohas Limited (Allwyn Unit) will have to pay the money to the excise authorities first and then claim the same from the A.P. Government The petitioner filed this Writ Petition praying for a writ of Mandamus restraining respondents 1 to 3 from giving effect to the said order.

(2.) Respondents 1 to 3 filed a joint counter stating, inter alia, that the legal character of the HAL has changed from a State Government undertaking to a private company. As neither the arrears were paid nor any order of stay was produced from a competent authority, the 3rd respondent had no other option except to pass the impugned order. It is stated that even according to the petitioner it has to discharge the liability of the excise duty first and claim reimbursement from the State Government under the scheme of amalgamation. So it is entirely a matter between the petitioner and the Central Excise Department for recovery of the dues in which the State Government had very limited role. As the petitioner failed to pay the amounts due, orders were passed under Section 11 of the Act read with Rule 230 of the Central Excise Rules, 1944. It is added that the Board had already ordered for payment of contingent liabilities (excise duties) on and when presented It is stated that Section 22 of SICA does not confer any blanket power and that proceedings for winding up or for execution, distress etc., can be stayed only with the consent of the Board Under Clause 6 of the Scheme of Amalgamation the Board consented for continuation of the proceedings, prosecution and enforcement against the transferee-company to the same extent and in the same manner that might be continued against the transferor-company. Therefore, as per the Board's order attachment can be made. It is, however, added that the contingent liability or other liability not disclosed or not known at the time of framing the scheme has to be met out of the additional interest free funds to be brought in by VOLTAS to the satisfaction of IDBI and the amount so paid will have to be made good by the Andhra Pradesh Government It is stated that it was unfortunate that the State Government has represented a confirmed liability to the tune of Rs. 7.46 crores as a contingent liability as a result of which the Board could not give a clear order for the recovery. In these circumstances it is prayed that the writ petition be dismissed.

(3.) In the additional counter-affidavit filed on behalf of respondents 1 to 3 it is stated that the case was said to have been referred to the Committee for Arbitration. It is submitted that the disputes involving the State Government undertakings/ enterprises and the Central Government are specifically barred from referring to the Committee for Arbitration and that any delay in execution of the attachment ordered will hamper the efforts of the Department to recover the long standing dues.