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Can High Court entertain Writ Petition against Issuance of Show Cause Notice?

It is a common notion that Writ Petition under Article 226 of the Constitution is not maintainable against issuance of Show Cause Notice by any authority under any Law. The Courts are normally loathe to entertain Writs for quashing such Show Cause Notices. In fact, the Apex Court in a catena of cases has ruled that writ petitions are not entertainable against show cause notices but it is not a Rule of Law and there are certain exceptions where the High Court can certainly interfere and quash the impugned Show Cause Notices.

It would be trite to refer to the recent Apex Court judgment in Commissioner of Central Excise, Haldia vs. M/S. Krishna Wax (P) Ltd. (Civil Appeal No. 8609 of 2019 decided on 14-11-2019). The Apex Court reiterated that a writ petition should normally not be entertained against mere issuance of show cause notice. The Court held thus:

"11. It must be noted that while issuing a show cause notice under Section 11A of the Act, what is entertained by the Department is only a prima facie view, on the basis of which the show cause notice is issued. The determination comes only after a response or representation is preferred by the person to whom the show cause notice is addressed. As a part of his response, the concerned person may present his view point on all possible issues and only thereafter the determination or decision is arrived at.........

12. It has been laid down by this Court that the excise law is a complete code in itself and it would normally not be appropriate for a Writ Court to entertain a petition under Article 226 of the Constitution and that the concerned person must first raise all the objections before the authority who had issued a show cause notice and the redressal in terms of the existing provisions of the law could be taken resort to if an adverse order was passed against such person.

For example in Union of India and another vs. Guwahati Carbon Limited (2012) 11 SCC 651 it was concluded:
The Excise Law is a complete code in order to seek redress in excise matters and hence may not be appropriate for the writ court to entertain a petition under Article 226 of the Constitution.

While in Malladi Drugs and Pharma Ltd.vs. Union of India 2004 (166) ELT 153 (S.C.), it was observed:
"…The High Court, has, by the impugned judgment held that the Appellant should first raise all the objections before the Authority who have issued the show cause notice and in case any adverse order is passed against the Appellant, then liberty has been granted to approach the High Court…..in our view, the High Court was absolutely right in dismissing the writ petition against a mere show cause notice."

It is thus well settled that writ petition should normally not be entertained against mere issuance of show cause notice. It is relevant to refer to Union of India vs Coastal Container Transporters in Civil Appeal No. 25699 of 2018 decided on 26 February, 2019 wherein the Court held as under:
7. In the writ petition filed before the High Court, a preliminary objection was raised on behalf of appellant nos.2 and 3 with regard to maintainability of the petition.
  • Firstly, it was pleaded that as the writ petition itself was directed against the show cause notices, such petition was not maintainable.
  • Secondly, on the ground that as the controversy relates to classification of services and even if the show cause notices were to culminate into final order, appeal would lie before the Supreme Court, as such, High Court, in exercise of writ jurisdiction, should refrain from entertaining the petition which involves a classification dispute. It was pleaded that it was not either a case of lack of jurisdiction or a case where the principles of natural justice are violated, so as to entertain the petition in which only show cause notices were challenged.....

13. Learned senior counsel, Sri Radhakrishnan, appearing for the appellants has submitted that the High Court has committed a serious error in entertaining the petition which itself is directed against the show cause notices. It is submitted that as the issue relates to classifiability for the purpose of taxation, more so, against the final order, appeal is provided to the Supreme Court, High Court ought not to have entertained the writ petition at all....

Further, it is contended that it is not a case of either lack of jurisdiction or notices are issued in violation of principles of natural justice, so as to entertain the writ petition at the stage of show cause notice. It is further submitted that as the issue relates to classification of taxable service, the High Court should not have entertained the writ petition at all.

In support of his contention, learned counsel has placed reliance on the judgment of this Court in the case of Union of India & Anr. v. Guwahati Carbon Limited (2012) 11 SCC 651 and also in the case of Union of India v. Hindustan Dev. Corpn. Ltd.

It is submitted that in the aforesaid judgment in the case of Hindustan Dev. Corpn. Ltd. 1998 (100) ELT 14 (S.C.) (supra) it is clearly held by this Court, that writ petition is not to be entertained at show cause notice stage when the dispute relates to classification.....

19. On the other hand, we find force in the contention of the learned senior counsel, Sri Radhakrishnan, appearing for the appellants that the High Court has committed error in entertaining the writ petition under Article 226 of Constitution of India at the stage of show cause notices.

Though there is no bar as such for entertaining the writ petitions at the stage of show cause notice, but it is settled by number of decisions of this Court, where writ petitions can be entertained at the show cause notice stage. Neither it is a case of lack of jurisdiction nor any violation of principles of natural justice is alleged so as to entertain the writ petition at the stage of notice. High Court ought not to have entertained the writ petition, more so, when against the final orders appeal lies to this Court.

The judgment of this Court in the case of Union of India & Anr. v. Guwahati Carbon Ltd. (supra) relied on by the learned senior counsel for the appellants also supports their case. In the aforesaid judgment, arising out of Central Excise Act, 1944, this Court has held that excise law is a complete code in order to seek redress in excise matters and held that entertaining writ petition is not proper where alternative remedy under statute is available.

When there is a serious dispute with regard to classification of service, the respondents ought to have responded to the show cause notices by placing material in support of their stand but at the same time, there is no reason to approach the High Court questioning the very show cause notices. Further, as held by the High Court, it cannot be said that even from the contents of show cause notices there are no factual disputes.

Further, the judgment of this Court in the case of Malladi Drugs & Pharma Ltd. v. Union of India 2004 (166) ELT 153 (S.C.) relied on by the learned senior counsel for the appellants also supports their case where this Court has upheld the judgment of the High Court which refused to interfere at show cause notice stage."

It is apposite to deal with the exceptional circumstances wherein Writ Petition against a show cause notice can be entertained. A show cause notice issued by a competent authority may be challenged by a writ only if the authority is incompetent to issue such a notice as per the statutes governing it or if the issue of such notice is mala fide. Similarly, if the officer issuing Show Cause Notice lacks Jurisdiction or assumes Jurisdiction erroneously/illegally, a Writ Petition against such notice is maintainable. The Madras High Court in the case of M/s. Kavee Marketing Vs. The Assistant Commissioner and Anr. [WP No.12026 of 2012 And MP No.1 of 2012] decided recently on 27-07-2021 observed thus:

"The writ against a show cause notice may entertain only on exceptional circumstances where the authority without issuing such notice is incompetent under the provisions of the Statutes or the Rules. If there is an allegation of mala fide, then also writ can be entertained. In such circumstances, the authorities against whom such allegations on mala fide are raised is to be impleaded as a party respondent in his personal capacity in the writ proceedings."

It is very relevant to refer to the Apex Court Judgment in The Executive Engineer,Bihar vs Ramesh Kumar Singh & Ors 1996 SCC (1) 327 which dealt with the issue in hand and observed thus:

"10. We are concerned in this case, with the entertainment of the Writ Petition against a show cause notice issued by a competent statutory authority. It should be borne in mind that there is not attack against the vires of the statutory provisions governing the matter. No question of infringement of any fundamental right guaranteed by the Constitution is alleged or proved.

It cannot be said that Ext. P-4 notice is ex facie a "nullity" or totally "without jurisdiction" in the traditional sense of that expression -- that is to say even the commencement or initiation of the proceedings, on the face of it and without anything more, is totally unauthorised. In such a case, for entertaining a Writ Petition under Article 226 of the Constitution of India against a show-cause notice, at power or jurisdiction, to enter upon the enquiry in question.

In all other cases, it is only appropriate that the party should avail of the alternate remedy and show cause against the same before the authority concerned and taken up the objection regarding jurisdiction alos, then. In the event of an adverse decision, it will certainly be open to him, to assail the same either in appeal or revision, as the case may be, or in appropriate cases, by invoking the jurisdiction under Article 226 of the Constitution of India."

Another important judgment of the Apex Court in Mahanagar Telephone Nigam Ltd vs Chairman Central Board Direct Taxes 2004 Supp (2) SCR 593 also expounds the same principle. The Court observed thus:

"In this case this is absolutely what has happened. The Appellants wanted to approach the Court only against a show-cause-notice. It is settled law that against a show-cause-notice litigation should not be encouraged. The decision of the High Powered Committee, set out hereinabove, merely emphasizes the well settled position.

It is an eminently fair and correct decision. The purpose of the decision was to prevent frivolous litigation. No right of the Appellants is being affected. It has been clarified that the Appellants could move a Court of law against an appealable order. By not maintaining discipline and abiding by the decision the Appellants have wasted public money and time of the Courts...... "

It would be appropriate to refer to Siemens Ltd. vs. State of Maharashtra (2006) 12 SCC 33, wherein the Apex Court dealt in length with the issue in hand and carved out exceptions wherein the High Court under Article 226 can entertain a writ against a show cause notice. The Court held thus:

"Although ordinarily a writ court may not exercise its discretionary jurisdiction in entertaining a writ petition questioning a notice to show cause unless the same inter alia appears to have been without jurisdiction as has been held by this Court in some decisions including State of Uttar Pradesh v. Brahm Datt Sharma and Anr. AIR 1987 SC 943, Special Director and Another v. Mohd. Ghulam Ghouse and Another, (2004) 3 SCC 440 and Union of India and Another v. Kunisetty Satyanarayana, 2006 (12) SCALE 262], but the question herein has to be considered from a different angle, viz, when a notice is issued with pre-meditation, a writ petition would be maintainable. In such an event, even if the courts directs the statutory authority to hear the matter afresh, ordinarily such hearing would not yield any fruitful purpose [See K.I. Shephard and Others v. Union of India and Others (1987) 4 SCC 431 : AIR 1988 SC 686]. It is evident in the instant case that the respondent has clearly made up its mind. It explicitly said so both in the counter affidavit as also in its purported show cause.

The said principle has been followed by this Court in V.C. Banaras Hindu University and Ors. v. Shrikant [2006 (6) SCALE 66], stating:

"The Vice Chancellor appears to have made up his mind to impose the punishment of dismissal on the Respondent herein. A post decisional hearing given by the High Court was illusory in this case.

In K.I. Shephard & Ors. etc. etc. v. Union of India & Ors. [AIR 1988 SC 686], this Court held :

"It is common experience that once a decision has been taken, there is tendency to uphold it and a representation may not really yield any fruitful purpose."

[See also Shri Shekhar Ghosh v. Union of India & Anr. 2006 (11) SCALE 363 and Rajesh Kumar & Ors. v. D.C.I.T. & Ors. 2006 (11) SCALE 409]. A bare perusal of the order impugned before the High Court as also the statements made before us in the counter affidavit filed by the respondents, we are satisfied that the statutory authority has already applied its mind and has formed an opinion as regards the liability or otherwise of the appellant.

If in passing the order the respondent has already determined the liability of the appellant and the only question which remains for its consideration is quantification thereof, the same does not remain in the realm of a show cause notice. The writ petition, in our opinion, was maintainable."

It would be germane to refer to Union of India vs. Vicco Laboratories 2007(13) SCC 270, the Apex Court dealt with the exceptions to the rule of non-interference in case of issuance of show cause notice & observed thus:

"Normally, the writ court should not interfere at the stage of issuance of show cause notice by the authorities. In such a case, the parties get ample opportunity to put forth their contentions before the concerned authorities and to satisfy the concerned authorities about the absence of case for proceeding against the person against whom the show cause notices have been issued. Abstinence from interference at the stage of issuance of show cause notice in order to relegate the parties to the proceedings before the concerned authorities is the normal rule.

However, the said rule is not without exceptions. Where a Show Cause notice is issued either without jurisdiction or in an abuse of process of law, certainly in that case, the writ court would not hesitate to interfere even at the stage of issuance of show cause notice. The interference at the show cause notice stage should be rare and not in a routine manner.

Mere assertion by the writ petitioner that notice was without jurisdiction and/or abuse of process of law would not suffice. It should be prima facie established to be so. Where factual adjudication would be necessary, interference is ruled out."

It is befitting to refer to State Of U.P And Another v. Anil Kumar Ramesh Chandra Glass Works And Another (2005) 11 SCC 451 wherein the Apex Court elucidated the exception to the general rule of abstinence in case of show cause notice & observed thus:

6. In our view, the High Court proceeded on an incorrect basis. Hence, the decision cannot stand. In any event, this Court had repeatedly held that Article 226 should not be permitted to be invoked in order to challenge show-cause notices unless accepting the fact in the show-cause notices to be correct, either no offence is disclosed or the show-cause notices are ex facie without jurisdiction. That could not be said as far as the eight show-cause notices in question are concerned.

The High Court, therefore, should not have interfered and should have left the respondents to pursue their remedy by way of an appeal under Section 9 of the Act from the order of assessment which, according to the High Court, had admittedly been passed before the writ petition had been filed by the respondent.

From the above binding precedents, it can be summed up that the Courts have carved out the following exceptions in abstinence for exercise of discretionary powers under Article 226 of the Constitution in case of show cause notice:
  • Notice is without jurisdiction
  • Notice is in abuse of process of law
  • Notice issued after inordinate delay
  • Notice is illusory in nature
  • Notice issued with premeditation or pre judgment
  • vires of enactment is challenged
  • Interference by Court should be rare and not in routine
  • Violation of principles of Natural Justice
  • Notice is barred by Limitation
  • Authority is incompetent to issue such a notice as per the statutes governing it
  • Allegation that such notice is mala fide
  • Infringement of Fundamental Rights.
Written By: Inder Chand Jain
Ph no: 8279945021, Email : [email protected]

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