Case Note & Summary
The dispute arose from a central excise refund claim filed by the assessee, which was initially rejected by the Assistant Collector of Central Excise. On appeal, the Collector (Customs) allowed the refund. The Revenue, represented by the Collector of Central Excise, appealed to the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT). The appeal was listed for hearing on 31 August 1987. When the matter was called, the assessee, who was the respondent before CEGAT, was not represented. CEGAT heard the departmental representative and decided the appeal ex-parte against the assessee on merits. Later the same day, the assessee's counsel arrived and, after being informed that the appeal had already been disposed of, filed an application for recall of the ex-parte order, citing Rule 41 of the CEGAT (Procedure) Rules, 1982 and explaining the reason for delay. The departmental representative had no objection to recall but contended that under Rules 20 and 21 of the CEGAT (Procedure) Rules, 1982, CEGAT had no power to recall or set aside an order passed on merits in the absence of a respondent. CEGAT examined Rules 20, 21 and 41 and held that while Rule 20 provided for restoration of an appeal dismissed in default, there was no such provision for an appeal heard ex-parte under Rule 21. Relying on Commissioner of Income-Tax, Madras v. S. Chenniappa Mudaliar, CEGAT held that a decision on merits could not be reviewed or set aside, and Rule 41 could not be used to recall such an order. The assessee appealed to the Supreme Court. The core legal issue before the Supreme Court was whether CEGAT had the power to set aside an ex-parte order passed on merits when the absent respondent showed sufficient cause for non-appearance. The appellant argued that Rule 41 of the CEGAT (Procedure) Rules, 1982 was wide enough to include the power to recall an order passed on merits if necessary to secure the ends of justice. The respondent counsel fairly did not disagree. The Supreme Court referred to Income Tax Officer, Cannore v. M.K. Mohammed Kunhi, where it was held that the express grant of statutory power carried with it the implied authority to use all reasonable means to make the grant effective, and that the Income Tax Appellate Tribunal had wide powers under Section 254 of the Income Tax Act, 1961. The court also relied on Grindlays Bank Ltd. v. Central Government Industrial Tribunal, where the same principles were applied to Industrial Tribunals under the Industrial Disputes Act, holding that if a party was prevented from appearing due to sufficient cause and was faced with an ex-parte award, the tribunal had the power and duty to set aside the ex-parte award and direct a fresh hearing. The Supreme Court held that Rule 20 of the CEGAT (Procedure) Rules dealt with default by the appellant, while Rule 21 empowered CEGAT to hear appeals ex-parte. The fact that Rule 21 did not expressly state that an ex-parte order could be set aside on sufficient cause did not mean CEGAT had no power to do so. Rule 41 gave CEGAT wide powers to make orders necessary or expedient to give effect to its orders, prevent abuse of process, and secure the ends of justice. The court observed that if a respondent was unable to appear due to no fault of his own, the ends of justice required that the ex-parte order against him be set aside. Not to do so on the ground of lack of power would be manifest injustice. Apart from the inherent power that every tribunal and court constituted to do justice has, CEGAT was expressly clothed with power under Rule 41. Therefore, CEGAT had the power to set aside an ex-parte order passed against a respondent if it was found that the respondent had, for sufficient cause, been unable to appear. CEGAT must consider every such application and, if sufficient cause is established, set aside the ex-parte order, restore the appeal to its file, and hear it afresh on merits. The Supreme Court allowed the appeal, set aside the order under appeal, allowed the assessee's application for recall of the ex-parte order dated 31 August 1987, restored Appeal No. 590/84C to CEGAT's file, and directed that it be heard and disposed of on merits. No order was made as to costs.
Headnote
A) Tribunal Powers - Ex-Parte Order Recall - Rule 41 of CEGAT (Procedure) Rules, 1982 empowers CEGAT to set aside an ex-parte order on merits upon sufficient cause for absence - CEGAT (Procedure) Rules, 1982, Rules 20, 21, 41 - CEGAT dismissed assessee's application to recall an ex-parte order passed on merits, holding that Rules 20 and 21 did not permit review of a merits decision and Rule 41 could not be used to recall an order decided on merits. Supreme Court held that Rule 41's wide power to make orders to secure ends of justice, combined with inherent tribunal powers, allowed recall when sufficient cause is shown; the absence of an express provision in Rule 21 did not negate this power. Held: CEGAT must set aside the ex-parte order, restore the appeal, and hear it afresh on merits once sufficient cause is established. (Paras 1-4) B) Statutory Interpretation - Implied Powers of Statutory Tribunals - Express grant of statutory power carries implied authority to use all reasonable means to make the grant effective - Income Tax Act, 1961, Section 254; Industrial Disputes (Central) Rules, 1957, Rule 22 - Supreme Court followed precedents in Income Tax Officer, Cannore v. M.K. Mohammed Kunhi and Grindlays Bank Ltd. v. Central Government Industrial Tribunal, holding that tribunals have inherent and implied powers to set aside ex-parte orders to prevent injustice. Held: power to proceed ex-parte includes power to inquire into sufficient cause for absence and set aside an ex-parte award or order. (Paras 1-4)
Issue of Consideration
Whether CEGAT has power under Rule 41 of the CEGAT (Procedure) Rules, 1982 to set aside an ex-parte order passed on merits in the absence of the respondent when sufficient cause for absence is shown, notwithstanding the absence of an express provision in Rule 21.
Final Decision
Appeal allowed; order under appeal set aside; appellant's application for recalling CEGAT's ex-parte order dated 31 August 1987 allowed; Appeal No. 590/84C restored to CEGAT's file and directed to be heard and disposed of on merits; no order as to costs.
Law Points
- Rule 41 of CEGAT (Procedure) Rules
- 1982 empowers CEGAT to make orders necessary to secure ends of justice
- in exercise of which CEGAT can set aside an ex-parte order if sufficient cause for absence is shown
- absence of an express provision under Rule 21 does not bar recall
- express grant of statutory power carries implied authority to use all reasonable means to make it effective
- tribunals have inherent power to set aside ex-parte orders to prevent injustice
- on sufficient cause being established CEGAT must recall ex-parte order and restore appeal for hearing afresh
