Supreme Court of India
ASSISTANT COLLECTOR OF CENTRAL EXCISE, CHANDAN NAGAR, WEST BENGALversusDUNLOP INDIA LTD. AND ORS.
- Citation
- 1984 INSC 223
- Decided
- 30 November 1984
- Disposal
- Appeal(s) allowed
- Bench
- O CHINNAPPA REDDY
Holding
The Supreme Court held that the interim orders granting exemption to Dunlop were unsustainable; a prima facie case and bank guarantee are insufficient, and the balance of convenience must favor the government in revenue matters.
Summary
The Central Excise Department denied Dunlop India Ltd. an exemption on excise duty, alleging the company had previously cleared goods without paying duty and only relied on bank guarantees obtained under interim court orders. Dunlop filed a writ petition in the Calcutta High Court under Art. 226 seeking an interim order to restrain the levy, and the High Court granted a partial exemption on the basis of a prima facie case and a bank guarantee. The Department appealed, and the Supreme Court held that a prima facie case alone is insufficient for granting interim relief in matters of public revenue; the balance of convenience must favor the government and a bank guarantee does not substitute for liquid cash. The Court emphasized that statutory remedies must be exhausted and that Supreme Court decisions are binding on lower courts. Consequently, the interim orders of the High Court were vacated and the appeal was allowed.
Issues considered
- The adequacy of a prima facie case as a basis for granting interim relief in writ petitions under Art. 226 involving public revenue.
- Whether furnishing a bank guarantee can justify the grant of an interim order restraining excise duty collection.
- The requirement of balance of convenience and public interest in granting interim orders in revenue matters.
- The applicability of statutory remedies versus extraordinary jurisdiction of the High Court.
- The effect of a per incuriam label on the authority of lower courts to disregard Supreme Court decisions.
Legislation cited
- Central Excise and Salt Act, 1944
- Central Excise Rules, 1944s. Rule 8 (I)
- Constitution of Indias. Article 141, s. Article 144, s. Article 226
Subjects
interim reliefwrit petitionArticle 226public revenuebalance of conveniencebank guaranteeper incuriamhierarchical judicial systemexcise duty exemptionstatutory remedies
Judgment
190
ASSISTANT COLLECTOR OF CENTRAL EXCISE,
A CHAND~N NAGAR, WEST BENGAL
v.
DUNLOP INDIA LTD. AND ORS.
B No1ember 30, 1984
[0. CHINNAPPA REDDY, A. P. SEN AND E. S. VENKATARAMIAH, JJ.]
Constitution of India 1950, Articles 226 and 141
G Interim orders in writ petition-Grant of-Situations and circuffistances-
What are-Matters involving public revenue-Not sufficient showing a prima facie
case-Furnishing of bank guarantee not a clrcum1tance-Balance of convenience ta
be in favour of grant of interim order-Likelihood of prejudice to public interest
to be shown.
Supreme Co11rt decisions binding on all Courts-Judgment per incuriam-
D Prlnclple of-High Court not entitled ro disregard Judgment of' Supreme Court
labelling it per incur/am.
The Government of India by a notification dated April 6, 1984, exempted
tyres from a certain percentage of Excise Duty to the extent that the manu·
facturers had not availed themselves of the exemption grant~d under certain
other earlier notifications.
E
The Customs and Excise Department was of the view that the Respon·
dent.company who was a manufacturer of Tyres, Tubes and various other
rubber products was not entitled to the aforesaid exemption as it had cleared
the goods earlier without paying Central Excise Duty but on furnishing Bank
Guarantees under various interim-orders of cou.rts.
F The Company claimed the benefit of exe~ption to the tune of about Rs.
6 crores and filed a Writ Petition in the High Court and sought an interim order
restraining the Central Excise authorities from the levy and coUection of excise
duty. The High Court held that a prima facie case had been made out in favour
of the company and by an interim order allowed the benefit of the exemption
to the tune of about Rs. 2 crores and directed that the goods be released on
furnishing a Bank Guarantee.
G
In the Department's appeal, the Division Bench confirmed the above
order with a slight modification to the effect that the Collector of Central Excise
could encash 30 per cent of the Bank Guarantee.
Allowing the appeals by the Department, this Court,
HELD ; I. The orders of the Single Judge as well as the Division Bench
ff are wholly unsustainable an4 sqoqlq never have l>Qen 111•4e. Eveq assuminf the
A.C. CENTRAL EXCISE V. DUNLOP LTD. 191
company had established a prima facie case, it was not a sufficient justification
for granting the said interim orders. There was no question of any balance of A
convenience being in favour of the respondent-Company, it was certainly in
favour of the Government of India. [20IB-CJ
2. Governments are not r..n on mere Bank Guarantees. Very often some
courts act as if furnishing a Bank Guarantee would meet the ends of justice.
,, No Governmental business, for that matter no business of any kind can be run
on mere Bank Guarantees. Liquid cash is necessary for the running of a B
Government as indeed any enterprise. [201C[
3, Where matters of public revenue are concerned, it is of utmost impor-
tance that interim orders are not to be granted merely because a prima facie
case has been shown. More is required. The balance of convenience must be
• clearly in favour of the making of an interim order and there should not be the
slightest indication of a likelihood of prejudice to the public interest. [20JDJ
c
4. Article 226 is not meant tg short circuit or circumvent statutory pro-
cedures. It is only where statutory remedies are entirely ill-suited to meet tbt
demands of extraordinary situations, as for iastance where the very vires of the
statute is in question or where private or public wrongs are so inextricably
mixed up and the prevontion of public injury and the vindication of public D
justice require it, that recourse may be had to Art. 226. The Court must also
have good and sufficient reason to by.pass the alternative remedy provided by
statute. Matters involving the revenue where statutory remedies are available
are not such matters. The vast majority of the petitions under Art. 226 are
filed solely for the purpose of obtaining interim orders and thereafter to prolone
the proceedings by one device or the other. This practice needs to be strongly
discouraged. [194F-H ; J95A] E
5. There are, cases which demand that interim orders should be made in
the interests of ju~tice. Where gross violations of the law and injustices are
about to be, or are perpetrated, it is the bounden duty of the court to intervene
and give appropriate interim relief. In cases where denial of interJm relief may
lead to public mischief, grave irreparable private injury, or shake a citizen's
faith in the impartiality of public administration, a court may well be justified F
in granttng interim relief against public authority.
Saniarias Trading Company Pvt. Ltd. v. S. Samuf!/ and Ors., [1985] 2
• S.C.R. 24, Si/iguri Municipality v. Amalendu Das, [1984] 2 SCC 436, Titaghur
Paper Mills Co. ltd. v. State ofOrissa, [1983] 2 SCC 433, Union of India v. Oswa/
Woollen Mills Lrd., [1984) 2 SCC 646 and Union of India v. Jain Shudh Vanaspati G
lid., C.A. No. 11450of1983; referred to.
6. In India, under Art. 141, the law declared by the Supreme Court shall
bt binding on all courts and under Art. 144 all authorities civil and judicial
shall act in aid of the Supreme Court. [200B)
7, In \be hierarchical srstem of Couns which e~is\s in OUf country it is H
192 SUPREME COURT REPORTS (1985] 2 S.C.R.
necessary for each lower tier, including the High Courts to accept loyally the
A
decisions of the higher tiers. The better wisdom of the Court below must
yield to the higher wisdom of the Court above. [!99E-F]
8. The label per incuriam is relevant only to the right of an appellate
court to decline to follow one of its own previous decisions, not to its right
to disregard a decision of a higher appellate court or to the right of a judge
B of the High Court to disregard a decision of the Supreme Court. [199H ; 200A]
..;
Cassel and Co. Ltd. v. Broome, [l972] A.C. 1027 and Rnokes v. Barnard,
(1964] A.C. 1129, referred to.
1984.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4742-43 of
,
0 Appeal by Special leave from the Judgment and Order dated
the 9th August, !984 of the Calcutta fligh Court in FMAT No. 2139
of 1984 and 2023 of 1984.
K. Parasaran, Attorney General, V. J. Francis, Chandrasekharan,
N.M. Pop/i and Miss Savitha Sharma for-the Appellant.
D
F. S. Nariman, D. N. Gupta and Harish Salve for the
Respondent.
The Judgment of the Court was delivered by
CHINNAPPA REDDY, J. It is indeed a great pity-and, we wish
we did not have to say it but we are afraid;we will be signally failing
in our duty if we do not do so-some courts, of late, appear to have
developed an unwarranted tendency to grant interim orders-interm
orders with a great potential for public mischief-for the mere asking.
We feel greatly disturbed. We find it more distressing that such interim
F orders, often ex-parte and non-speaking, are made even by the High
Courts while entertaining writ petitions under Art. 226 of the Consti-
tution, and in the Calcutta High Court, on oral application too.
•
Recently in Samaries Tradiag Company Pvt. Ltd. v. S. Samuel &
Ors('). we had occasion to condemn and prohibit this practice of
entertaining oral applications under Art. 226 and passing interim
G orders thereon. In several other cases, Siliguri Municipality v.
Amelendu Das(•), Titagur Paper Mills c,.. Ltd. State of Orissa,(•) Union
(I) [1985] 2 S.C. R. 24.
(2) [1983] 2 s.c.c 436
(3l p9B3J 2 ~.c.c i33
A.C. CENTRAL EXCISE v. DUNLOP LTD. ( Chinnappa Reddy, J.) 193
of India v. Oswal Woollen Mills Ltd(1l., Union of India v. Jain Shubh A
Vanaspati Ltd.('), this Court was forced to point out how wrong it was
to make interim orders so soon as an application was but presented,
when a second thought (or a second's thought) would expose the
impairment of the public interest and often enough the existence of
a suitable alternative remedy. Despite the fact that we have set our . B
face against interferring with interim orders passed by the High
Courts and made it practically a rigid rule not to so interfere, we
were constrained to interfere in those cases,
In Si/iguri Municipality v. Amale11d11 Das, (supra) A. P. Sen and
M. P. Thakkar, JJ. had to deal with an interlocutary order passed 0
by the Calcutta High Court restraining the Siliguri Municipality
from recovering a graduated consolidate rate on the annual value
of buildings in terms of the amended provisions of the Bengal
Municipal Act. We ireiterate the following observations made
therein :
D
"We are constrained to make the observations which
follows as we do feel dismayed at the tendency on the part
of some of the High Courts to grant interlocutory orders for
the mere asking. Normally, the High Court should not, as
a rule, in proceedings under Article 226 of the Constitution
grant any stay of recovery of tax save under very exceptio- E
nal circumstances. The grant to stay in such matters,
should be an exception and not a rule.
"It is needless to stress that a levy or impost does not
become bad as soon as a writ petition is instituted in order
F
• to assail the validity of the levy. So also there is no
warrant for presuming the levy to be bad at the very thres-
hold of the proceedings. The only consideration at that
juncture is to ensure that no prejudice is occasioned to the
• rate payers in case they ultimately succeed at the conclu-
sion of the proceedings. This object can be attained by
requiring the body or authority levying the impost to give an
undertaking to refund or adjust against future dues, the levy G
of tax or rate or a part thereof, as the case may be, in the
event of the entire levy or a part thereof being ultimately held
s.c.c. 646
(I) [1984] l.2
(2) C A. No.11420 of !98J ff
1
194 SUPREME COURT REPORTS [1985) 2 s.c.R.
A to be invalid by the court without obliging the tax-payers to
institute a civil suit in.order to claim the amount already
recovered from them. On the other hand, the Court cannot
be unmindful of the need to protect the authority levying the
tax, for, at that stage the Court has to proceed on the
hypothesis that the challenge may or may not succeed.
B The Court has to show awareness of the fact that in a case
like the present a municipality cannot function or meet its
financial obligations if its source of revenue is blocked by
an interim order restraining the municipality from recover-
ing the taxes as per the impugned provision. And that the
municipality has to maintain essential civic services like
c water supply, street lighting and public streets etc., apart
from cunning public institutions like schools, dispensaries,
liabraies etc. What is more, supplies have to be purchased
and salaries have to paid. The grant of an interlocutory
order oft his nature would paralyze the administration and
D dislocate the entire working of the municipality. It seems
that these serious remifications of the matter were lost sight
of while making the impugned order".
In Titaghur Paper Mills Co. Ltd. v. State of Orissa A. P. Sen
E E. S. Venkataramiah and R. B. Misra, J J. held that where the sta-
tute itself provided the petitioners with an efficacious alternative
remedy by way of an appeal to the Prescribed Authority, a second
appeal to the Tribunal and thereafter to have the case stated to the
High Court, it was not for the High Court to exercise its extraordi-
nary jurisdiction under Art. 226 of the Constitution ignoring as it
F were, the complete statuory machinery. That it has become neces-
sary, even now, for as to repeat thi• admontion is indeed a matter
of tragic concern to us. Article 226 is not meant to short circuit or
circumvent statutory procedures. It is only were statutory remedies
are entirely ill-suited to meet the demands of extraordinary situa-
tions, as for instance where the very vires of the statute' is in question
G or where private or public wrongs are so inextricably mixed up and
the prevention of public injury and the vindication of public justice
require it that recourse may be had to Art. 226 of the Constitution.
But then the Court must have good and sufficient reason to by-pass
the alternative remedy provided by statute. Surely matters involving
the revenue where statutory remedies are available are not such
matters. We can also take judicial notice of the fact thatthe va~t
A.C. CENrR•t EXClSB v. DUNLOP Lro:(Cltin•12ppa Reddy, J.)
majority of the petitions under Art. 226 of the Constitution are filed
solely for the purpose of obtaining interim orders and therafter
prolong the proceedings by one device or the other. The practice
certainly needs to be strongly couraged.
j
-! In Union of India v. Oswal Woollen Mills Ltd., we had occa- B
sion to consider an interim order passed by the Calcutta High
Court in regard to a matter no part of the cause of action relating
to which appeared to arise within the jurisdiction of the Calcutta
High Court. In that case the interim order practically granted the
-, very prayers in the writ petition. We were forced to observe,
' - c
"It is obvious that the interim order is of a drastic
character with a great potential for mischief. The principal
prayer in the writ petition is the challenge to the order
made or proposed to be made under Clause 8 B of the
Import Control Order. The interim order in terms of pra-
yers (j) and (k) has the effect of practically allowing the 0
writ petition at the stage of admission without hearing the
opposite parties. While we do not wish to say that a dras-
tic interim order may never be passed without hearing the
opposite parties even if the circumstances justify it, we are
very firmly of the opinion that a statutory order such as the
E
one made in the present case under Clause 8-B of the Im-
port Control Order ought not to have been stayed without
at least hearing those that made the order. Such a stay
may lead to devastating concequences leaving no way of un-
doing the mischief. Where a plentitude of power is given
under a statute, disigned to meet a dire situation, it is no F
answer to say that the very nature of the power and the
consequences which may ensue is itself a sufficient justifica-
tion for the grant of a stay of that order, unless, of course,
• there are sufficient circumstances to justify a strong Prima
facie inference that the order was made in abuse of the
power conferred by the statute. A statutory order such as
G
the one under Clause 8-B purports to be made in the public
interest and unless there are even stronger grounds of
public interest an expert interim order will not be justified.
The only appropriate order to make in such cases is to issue
notice to the respondent and make it returnable within a
short period. This should particularly be so where the
0Jli9es of the principals respondents and relevent records Q,
196 SUPRllMB COURT REPORTS (1985] 2 S.C.R.
lie outside the ordinary jurisdiction of the court. To grant
A
interim reliief straightway and leave it to the respondenU
to move the court to vacate the interim order may jeopar-
dise the public interest. It is notorious how if an interim
order is once made by a court, parties employ every device
and tactic to ward off the final hearing of the application.
It is, therefore, necessary for the courts to be circumspect '
B in the matter of granting interim relief, more particularly so
where the interim relief is directed against orders or actions.
of public officials acting in discharge of their public duty
and in exercise of statutory powers. On the facts and cir-
cumstance of the present case, we are satisfied that no
interim relief should have been granted by the High Court
c in the terms in which it was done",
We repeat and deprecate the practice of granting interim order
which practically give the principal relief sought in the petition for
no better reason than that a prima facie case has been made out,
D without being concerned about the balance of convenience, the pub-
lic interest and a host of other relevant considerations. Regarding
the practice of some clever litigants of resorting to filing writ peti-
tions in the far-away courts having doubtful jurisdiction, we had this
to observe :
E " ............ Having regard to the fact that the registered
office of the Company is at Ludhiana and the principal
respondents against whom the primary relief is sought are
at New Delhi, one would have expected the writ petition to
be filed either in the High Court of Punjab and Haryana or
in the Delhi High Court. The writ petitioners however,
F
have chosen the Calcutta High Court as the forum perhaps
because one of the interlocutory reliefs which is sought is ;>-
in respect of a consignment of beef tallow which has arrived
at the Calcutta Port. An inevitable result of the filing
.'
of writ petitions alsewhcre than at the place where the
G . concerned offices and the relevant records are located is
to delay prompt return and contest. We do not desire to
probe frrther into the question whether the writ petition
was filed by design or accident in the Calcutta High Court
when the office of the Company is in the State of Punjab
and alJ-the principal respondents are in Delhi. But we do
H feel disturbed that such writ petitions are of ten deliberetely
A.C. CENTRAL EXCISE v. OUNLOI> LTD. (Chinnappa Reddy, J.) 197
filed in distant High Courts, as part of a manoeuvre in a
legal battle, so as to render it difficult for the officials at
Delhi to move applications to vacate stay where it becomes
necessary to file such applications".
In Union of India v. Jain Slzudha Aanaspati Ltd. (supra),
B
Chandrachud, CJ., A. P. Sen, R. N. Misra, JJ. allowed an appeal
against an interim order making the following observations :
"After hearing learned counsel for the rival parties, we
are of the opinion that the interim order passed by the
, High Court on November 29, 1983 is not warranted smce c
• it virtually grants to the respondents a substantial part of
the relief claimed by them in their writ petition. Accor-
> '
dingly, we set aside the said order".
We have come across cases where the collection of public
revenue has been seriously jeopardised and budgets of Governments D
and Local Authorities affirmatively prejudiced to the point of
precariousness consequent upon interim orders made by courts. In
fact instances have come to our knowledge;where Governments have
been forced to explore further sources for raising revenue, sources
which they would rather well leave alone in the public interest, be-
cause of the stays granted by courts. We have come across cases E
where an entire Service is left in a stay of flutter and unrest because
of interim orders passed by courts, leaving the work they are
supposed to do in a state of suspended animation. We have come
across cases where buses and lorries are being run under orders of
court though they were either denied permits or their permits had
been cancelled or suspended by Transport Authorities. We have F
come across cases where liquor shops are being run under interim
orders of court. We have come across cases where the collection of
monthly rentals payable by Excise Contractors has been stayed with
the result that at the and of the year the contracter has paid nothing
' but made his profits from the shop and walked out. We have come
G
across cases where dealers in food grains and essential commodities
have been allowed to take back the stocks seized from them as if to
permit them to continue to indulge in the very practices which
were to be prevented by the seizure~ We have come across cases
where land reform and important welfare legislations have been
stayed by courts. Incalculable harm has been done by such interim
orders. All this is not to say that interim orders may naver be
198 SUPREME COuRT REPORTS [1985] 2 s.c.ll..
A~ made againt public aurhorities. There are, of course, cases which
demand that interim orders should be made in the interests of
justice. Where gross violations of the law and injustices are per-
patrated or are about to be perpetrated, it i$ the bounden duty of
the court to intervene and give appropriate interim relief. In cases
where denial of interim relief may lead to public mischief, grave
B irrepatable private injury orshak<a citizen's faith in the impartia.
lity of public administration, a Court may well be justified in gran-
ting interim relief against public authority. But since the law
presumes that public authorities function properly and bonllfide
with due regard to Jhe public interest, a court must be circumspect
in granting interim orders of far reaching dimensions or orders
c causing administrative, burdensome inconvenience or orders preven-
ting collection of public revenue for no better reason than that the
parties have come to the Court alleging prejudice, inconvenience or
harm and that a prima facie case bas been shown. There can be
and there are no bard and fast rules. But prudence, discretion and
D circumspection are called for. There are several other vital consi-
derations apart from the existence of a primafacia case. ThereJ is
the question of balance of convenience. There is the question of
irreparable injury. There is the question of the public interest. ......
There are many such factors worthy of consideration. We often
wonder why in the case indirect taxation where the burden has
E already been passed on to the consumer, any interim relief should
. at all be given to the manufacturer, dealer and the like !
There is just one more thing that we wish to say. In Si/iguri
v. Amalendu Das, the Court was put to the necessity of pointing
out the following :
F
"We will be failing in our duty if we do not advert to
feature which causes us dismay and distress. On a pre-
' ,. •
vious 'occasion, a Division Bench had vacated an interim
order passed by a learned single Judge on similar facts in
f
a similar situation. Even so when a similar matter giving
G
rise to the present appeal came up again, the same learned
judge whose order bad been reversed earlier, granted a
'·
non-speaking interlocutory order of the aforesaid nature.
This order was in turn confirmed by a Division Bench
without a speaking order articulating reasons for granting
.~ ..
a stay when the earlier Bench bad vacated the stay. We
H
A.d. dBNTRAL BXC!SE v. DUNLOP LTD. (Chinnappa"Reddy. J.) 199
mean no disrespect to the High Court in emphasizing the
necessity for self-imposed discipline in such matters in
obeisance to such weighty institutional considerations like
the need to maintain decorum and comity. So also we
mea11 no disrespect to the High Court in stressing the need
for self-discipline on the part of the High l:ourt in passing
. interim orders without entering into the question of ampli- B
tude and width of the powers of the High Court to grant
interim relief. The main purpose of passing an interim
order is to evolve a workable formula or a workable
arrangement to the extent called for by the demands of the
situation keeping in mind the presumption regarding the
constitutionality of the legislation and the vulnerability of c
the challenge, only in order that no irreperable injury is
occasioned. The Court has therefore to strike a delicate
balance after considering the pros and cons of the matter
lest larger public interest is not jeopardized and institu-
tional embrassment is eschewed".
D
We desire to add and as was said in Cassel and Co. Ltd. v.
Broome(') we hope it will never be necessary for us to say so again
that 'iu the hierarchical system of Courts' which exists in our
country, 'it is necessary for each lower tier', including the High
Court, 'to accept loyally the detcisions of the higher tiers'. "It is
inevitable in a hierarchical system of Courts that there are decisions B
of the Supreme appellate tribunal which do not attract the
nnamimous approval of all members of the judiciary ................... ..
But the judicial system only works if someone is allowed to have
the last word and that last word, once spoken, is loyally accepted"(2).
The better wisdom of the Court below must yield to the higher
wisdom of the Court above. That is the strength of the hierarchical F
• judicial system. In Cassel v. Broome, commenting on the Court
of Appeal's comment that Rookes v. Barnard(8J was rendered per
incuriam Lord Diplock observed,-
"The Court of Appeal found themselves able to
disregard the decision ofthis House in Rookes v. Barnard G
by applying to it the label per incuriam That label is
relevant onlyto the right of an appellate court to decline to
(1) [1972] AC 1027
(2) (See observations of Lord Hailsham and Lord Dipock in Broome v.
Cassell).
(3) (1984] A.C. 1129.
H
200 SUPRBMB COuRT REPORTS [198512 s.c.R.
A follow one of its own previous decisions, not to its right to
a
disregard a decision of higher appellate court or to the
right of a judge of the High Court to disregard a decision
of the Court of Appeal."
It is needless to add that in India under Act. 141 of the
B Constitution the law d-eclared by the Supreme Court shall be
binding on all courts within the territory of India and under Art.
144 all authorities, civil and judicial in the territory of India shall
act in aid of the Supreme Court.
Now coming to the facts of the present case, the respondent,
c Dunlop India Limited is a manufacturer of tyres, tubes and various
other rubber products. By a notification dated April 6, 1984 issued
by the Government of India, Ministry of Finance (Department of
Revenue) in exercise of the powers conferred by Rule 8 (I) of the
' .
Central Excise Rules, 1944, tyres, falling under Item No. 16 of the
First Schedule to the Central Excise and Salt Act, 1944, were
D
exempt from a certain percentage of excise duty to the extent that
the manufacturers had not availed themselves of the exemption
granted under certain other earlier notifications. The Department
was of the view that the Company was not entitled to the exemption
as it had cleared the goods earlier without paying central excise
E duty, but on furni~hing Bank Guarantees under various interim
orders of courts. The Company claimed the benefit of the exemp-
tion to the tune of Rs. 6.05 crores and filed a writ petition in the
Calcutta High Court and sought an interim order restraining the
central excise authorities from the levy and collection of excise duty.
The learned single judge took the view that a primafacie case had
F been made out in favour of the Company and by an interim order
allowed the benefit of the exemption to the tune of Rs. two crores
ninety three lakhs and eighty five thousand for which amount the >-
•
company was directed to furnish a Bank Guarantee, that is to say,
the goods were directed to be released on the Bank Guarantee being /
I
furnished. An appeal was preferred by the Assistant Collector of
G Central Excise under clause 10 of the Letters Patent and a Division *
Bench of the Calcutta High Court confirmed the order of the learned
single Judge, but made a slight modification in that the Collector
of Central Excise was given the liberty to encash 30% of the Bank
Guarantee. The Assistant Collector of Central Excise has preferred
this appeal by special !eaue. By our interim order dated November
B 15, 1984, we vacated the orders granted by the learned single Judge
A.c. cENTii.AL EXCISE~- DUNLOP LTD. (Chinnappa Reddy, .I.) 101
as well as by the Division Bench. We gave two weeks' time to the A
respondent Company to file a counter No. counter has, however
been filed. Shri F.S. Nariman, learned counsel, however appeared
for the respondent. We do not have the slightest doubt that the
orders of the learned single judge as well as Division Bench are
- wholly unsustainable and should never been made. Even assuming
that the company had established a prima facie case, about which
we do not express any opinion, we do not think that it was sufficient
B
justification for granting the interim orders as was done by High
Court. There was no question of any balance of convenience being
in favour of the respondent-Company. The balance of con-
venience was certainly in favour of the Government of India.
Governments are not run on mere Bank Guarantees. We notice
e
that very often some courts act as if furnishing a Bank Guarantee
" ' would meet the ends of justice. No governmental business or for
that matter no business of any kind can be run on mere Bank
Guarantees. Liquid cash is necessary for the running of a Govern-
ment as indeed any other ente1prise. We consider that where matters
of public revenue are concerned, it is of utmost importance to realise D
that interim orders ought not to be granted merely because a
prima facie case has been shown. More is required. The balance
of convenience must be clearly in favour of the making of an
interim order and there should not be the slightest indication of a
likelihood of prejudic to the public interest. We are very sorry to
remark that these considerations have not been borne in mind by
the High Court and interim order of this magnitude had been
granted for the mere asking. The appeal is allowed with costs. E
N.V.K. Appeal allowed.
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