TMI Blog1984 (5) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... w to 'air-treatment'. All these questions pertain to the merits of the controversy and it is not for us to embark into a discussion into these matters. In the facts and circumstances of this, case, the real remedy of the party, as we conceive it, is to make a representation to the concerned authority setting out his version of the facts and the law and the prejudice to himself and the public interest as a consequence of the action under clause 8B. - Case No. 22 of 1984 - - - Dated:- 1-5-1984 - . REDDY, O. CHINNAPPA, SEN, A.P. AND VENKATARAMIAH, E.S., JJ. For the Petitioner : Ashok H. Desai, S.S. Ray, A.N. Banatwala, G.E. Vehanvati, B R. Agarwala, P.G. Gokhale, M.M. Jayakar, V.K. Chittre, R.H. Rancholi, M. Jayakar A. Subba Rao For the Respondent : K Parasaran, Attorney General. M.K. Banerjee, Addl. Sol., General, A.K. Ganguli, G. Subramaniam and R.N. Poodar, S.S. Ray, Ashok H. Desai, Summeet Kachawaha, Rani Karanjawala, Ms. M. Karanjawala, Kuldeep Pablay, JUDGMENT CHINNAPPA REDDY, J. A few months ago, orthodox Hindu sentiment was outraged and general public feeling was roused by the discovery that beef tallow imported from abroad was either being sold as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EW DELHI-11 dated, the 9th Nov. 1983 ABEYANCE CIRCULAR No. 28/83-84/HQ. Whereas investigation into certain allegation mentioned under Cl. 8 of the Imports (Control) order, 1955 are pending against the under mentioned concerns, all the licensing authorities are hereby requested to keep in abeyance for six months from the date of issue of this circular any application received from them for the grant of import licence of Customs Clearance Permit and allotment of imported goods through agencies like the State Trading Corpn. Of India Ltd./Minerals and Metals Trading Corpn. of India Ltd. or any other similar agency: SI. Name address of the concern Name address of the branches as available Name of the Prop./partner/Director etc. as available 1 2 3 4 14 M/s. Liberty oil Mills (P) Ltd., 16 Lal Bahadur Shastri Marg, Kurla, Bombay-400070 2. These instructions may be kept secret and if any of the above mentioned firms make any enquiry about the position of their application (s), they may simply be informed the matter is under consideration. 3. This does not, however ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. The circulars also came to be acted upon. Licenses were not granted. Customs Clearance Permits were not issued. Allotments were not made. Several persons against whom `abeyance' orders had been made filed Writ Petitions in different High Courts challenging those orders. Liberty Oil Mills (P) Ltd. was one of those who filed such a Writ Petition in the Bombay High Court. The case has been withdrawn to this Court under Art 139A of the Constitution and it is this case that has been heard by us. We heard Shri Ashok Desai for the Liberty Oil Mills (P) Ltd. and Shri Soli Sorabji, Shri V.P. Raman and Shri Ram Jethmalani for the interveners. We heard Shri Milon Banerjea, Addl. Solicitor Generalably assisted by Sri Gopala Subrahmanyam for the Union of India and the Chief Controller and Deputy Chief Controller of Imports and Exports and Shri M.C. Bhandare and Shri A. Subba Rao for the State Trading Corporation. Liberty Oil Mills (P) Ltd. is a `Trading House' recognised as such in terms of the expression as defined in the `Import Policies' for several years. Their exports for the period 1982-83 are stated to have exceeded Rs. 19 crores. They claim to deal in Vegetable Oils, export of Froze ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtion of the tallow imported by them had ever been diverted for the adulteration of vanaspati. Liberty Oil Mills therefore, claim that there was no justification what for making an order under clause 8B against them. They accordingly seek the issue of Writ to quash the circular. Shri Ashok Desai for Liberty oil Mills (P) Ltd. contended that an order under clause 8B of the Import Control order could. Only be made if the Central Government or the Chief Controller of Imports and Exports was satisfied that the grant of licences and allotment of imported goods would not be in the public interest. In the present case, not only was the requisite satisfaction of the appropriate authority not recorded in the circular said to have been issued under Clause 8B but there was no material whatsoever upon which such satisfaction could have been arrived it. Before June 5, 1981, beef tallow was not canalised and could therefore, be freely imported as an OGL item. It was on June 5, 1981 that the import of beef tallow came to be canalised but such canalisation could not affect licences which had already been granted. Beef tallow could be imported under the preexisting licences as an OGL item even af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al non-application of the mind since there was no nexus between the alleged misuse of licence for importing beef tallow or the misuse of the imported beef tallow and the abeyance of applications for grant of import licences and for allotment of other items. It was also argued that as many as 61 firms were clubbed together and dealt with by single circular and there was no indication whatsoever that the facts relating to each of the firms had been considered separately. The circular was an omnibus one and revealed a total non-application of the mind. It was suggested that the abeyance orders far from advancing the public interest, would, on the other hand, prejudicially affect the public interest by bringing to a halt several industries and throwing hosts of workers out of employment. It would also affect exports from India and reduce foreign exchange earnings. It was submitted that there was no substance in they allegation that Liberty oil Mills Pvt. Ltd. were not actual users of beef tallow but they had none the less obtained letters of authorisation for import of beef tallow as if they were actual users and they had thus misused the import licences of other licencees. It was po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t effect. For that reason also the order was vitiated. He further submitted that an order clause 8B could only be made after the investigation under clause 8 had commenced, that is after a show cause notice had been issued under clause 8. Shri Millon Bannerjee, learned Additional Solicitor General urged that the only question for the consideration of the court was whether there was any relevant material before the authority competent to take action under clause 8B to reach the satisfaction contemplated by that clause. Since the satisfaction contemplated by clause 8B was the subjective satisfaction of the authority concerned, the court was not to concern itself with the sufficiency of the material in arriving at the requisite satisfaction. He however, invited our attention to various facts and circumstances which, according to him, wholly justified the action taken against Liberty oil Mills (P) Ltd. Though Liberty oil Mills itself held several licences, it nevertheless indulged in the collection of a large number of licences of other imported beef tallow as their authorised agents, sold part of the beef tallow to alleged actual users on high seas or purchased the beef tallow after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy and to take a cursory look at the various statutory and non-statutory instruments embodying the policy. The import policy of any country, particularly a developing country, has necessarily to be tuned to its general economic policy founded upon its constitutional goals, the requirements of its internal. and international trade, its agricultural and industrial development plans, its monetary and financial strategies and last but not the least the international political and diplomatic overtones depending on friendship, neutrality or hostility with other countries' (Glass Chotans Importers and Users' Association v. Union of India. There must also be a considerable number of other factors which go into the making of an import policy. Expertise in public and political, national and international economy is necessary before one may engage in the making or in the criticism of an import policy. Obviously courts do not possess the expertise and are consequently incompetent to pass judgment on the appropriateness or the adequacy of a particular import policy. But we may venture to assert with some degree of accuracy that our present import policy is export oriented. Incentives by way of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date is earlier. Paragraph 186 (1) broadly entitles Export Houses to Additional Licences upto the value of 15% of the f.o.b. value of select products made in 1981- 82 and manufactured by small scale and cottage industries, plus 7-1/2% of the f.o.b. value of other exports of select products made in the same year. All such Additional Licences shall be non-transferable. Paragraph 186(7) provides that the Additional Licences will also be valid for import of Raw Materials, Components, Consumables and Spares (including items covered by Appendix V) which have been placed on Open General Licence for Actual Users (Industrial). While Spares so imported may be sold to any person, Raw Materials, Components and Consumables may only be sold to eligible Actual Users. Paragraph 192 requires every Export Houses to maintain proper accounts of all its exports, imports and disposed of imported items and are further required to furnish detailed information in the prescribed forms. Some Export Houses are recognised as 'Trading Houses 'depending on their performance. Trading Houses are entitled to all the facilities available to Export Houses, but their entitlement to additional licences against exports ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same in the Import Policy issued for the period April 1981-March 1982. However, on June 5, 1981 by a Public Notice for the word 'mutton tallow' in the list of canalised items, the expression "tallow of any animal organ including mutton tallow" was substituted. Therefore with effect from June 5, 1981 beef tallow also became a canalised item. One of the questions posed is regarding the effect of the public notice dated June 5, 1981 by which the expression 'tallow of animal origin or including mutton tallow' was substituted for the word 'mutton tallow'. The question posed is whether the ban of import except through the State Trading Corporation was applicable to beef tallow imported into India after June 5, 1981 but against licences issued earlier and in respect of which contacts had already been into. We have already mentioned that on August 24, 1983, the Government of India made an order under Section 3 of the Exports and Imports (Control) Act totally banning the import into India of beef, buffalo and pig tallow. We may mention here that the Import Policy for earlier as well as later years, contain more or less similar provisions as those in the Import Policy for April 1981- Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in exercise of the powers conferred by Section 3 and 4-A of the Imports and Exports (Control) Act. Clause 3 of the Imports (Control) Order prescribes that no person shall import any goods of the description specified in Schedule-I except under and in accordance with the licence or a customs clearance permit granted by the Central Government or by a specified officer. Clause 5 provides for the imposition of conditions subject to which licences may be issued. Clause 6 prescribes the situations when the Central Government or the Chief Controller of Imports and Exports may refuse to grant a licence or direct any other licensing authority not to grant a licence. One of the situations is 'if the applicant is for the time being subject to any action under clause 8, 8A or 8B'. 696 Clause 8(1) empowers the Central Government or the Chief Controller of Imports and Exports to debar a licencee or importer or any other person from importing any goods or receiving licences or allotment of the imported goods through the State Trading Corporation of India, the Minerals and Metals Trading Corporation of India, or any other similar agencies and direct, without prejudice to any other action that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into any of the allegations mentioned in clause 8 is pending against a licensee or importer or any other person, and the Central Government or the Chief Controller of Imports and Exports in satisfied that without ascertaining further details in regard to such allegation, the grant of licence or allotment of imported goods will not be in the public interest, then notwithstanding anything contained in this Order, the Central Government or the Chief Controller of Imports and Exports may keep in abeyance any application for grant of licence from such person, or direct the State Trading Corporation of India, the Minerals and Metals Trading Corporation of India, or any other similar agency to keep in abeyance allotments of imported goods to such person, without assigning any reason and without prejudice to any other action that may be taken in this behalf: Provided that the period for which the grant of such licence or allotment is kept in abeyance under this clause shall not ordinarily exceeds six months." Clause 8C authorises the Central Government to publish or cause to be published the name of such persons or class of persons against whom action under clause 8 or 8A is taken. Clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eners, all of them were unanimous about the necessity for a provision like Clause 8B, and none of them argued that Clause 8B would be ultra vires if the principles of natural justice could be read into it. The learned Additional Solicitor General, as mentioned by us earlier, agreed that natural justice should be read into Clause 8B so as to provide for a post- decisional hearing at the request of the affected party. Let us examine Clause 8B in the scheme and setting of the Imports (Control) Order and consider whether natural justice is excluded and, if not, when and what opportunity may be provided to the affected party. Clause 8, we have seen, empowers the Central Government or the Chief Controller of Imports and Exports to debar a person from importing goods or from receiving licences or allotment of imported goods for a specified period if such person is guilty of any of the acts of commission or omission enumerated in the Clause. An order of this immensity cannot obviously be made without due investigation and without giving a reasonable opportunity to the affected party. Clause 8A and 8B refer to orders which may be made pending investigation into the allegations under Claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seeking evidence or by way of seeking an explanation from the person concerned. On the initiation of a proceeding under Clause 8 by the commencement of investigation, the authority has to address itself to the Question whether any action of an interim nature to prevent further harm or mischief is warranted pending investigation. Licences may have already been issued and allotment of imported goods may have already been made. The authority may consider it desirable to prevent the person from imported goods pursuant to the licences or to prevent him from obtaining the imported goods allotted to him through the specified agencies. If so, the authority may make an order under Clause 8A suspending the importation of goods, the grant of licences or the allotment of imported goods. But Clause 10 provides that no action under Clause 8A may be taken without giving a reasonable opportunity to the person concerned. It is obviously thought that the right such as it may be, to obtain a licence or allotment of goods having become crystalised into a licence or an allotment, an order under Clause 8A may have immediate and grave prejudicial repercussions on the person concerned making it desirable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily have to be pre- decisional where the danger to be averted or the act to be prevented is imminent or where the action to be taken can brook no delay. If an area is devastated by flood, one cannot wait to issue show-cause notices for requisitioning vehicles to evacuate population. If there is an out-break of an epidemic, we presume one does not have to issue show- cause notices to requisition beds in hospitals, public or private. In such situations, it may be enough to issue post- decisional notices providing for an opportunity. It may not even be necessary in some situations to issue such notices but it would be sufficient but obligatory to consider any representation that may be made by the aggrieved person and that would satisfy the requirements of procedural fairness and natural justice. There can be no tape-measure of the extent of natural justice. It may and indeed it must vary from statute to statute, situation to situation and case to case. Again, it is necessary to say that pre-decisional natural justice is not usually contemplated when the decisions taken are of an interim nature pending investigation or enquiry. Ad-interim orders may always be made ex-parte and such or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which at first might seem to conflict with the maxim, it will be found on consideration that they are not inconsistent with it, for the rule, which is one of elementary justice, only requires that a man shall not be subject to final judgment or to punishment without an opportunity of being heard." "The main object of s. 7 is to enable the Post-master- General to take prompt action to prevent the use of the mails for the purpose of defrauding the public or other criminal activity. That purpose might well be defeated if he could take action only after notice and a hearing. Sub- section (1) enables him to act swiftly in performing the duty of protecting the public while sub-s. (2) gives protection to the person affected by conferring the right to a hearing before any order made against him becomes final. "In my opinion, the two interim prohibitory orders in question were validly made." In the Commissioner of Police v. Tanos, the High Court of Australia (Dixon C. J and Webb J.) was considering the question whether an ex-parte order of closure of a Disorderly House may be made. It was observed. "......it is in a broad sense a procedural matter and while the general principle must p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness house; and a man may be suspended on full pay pending enquiries. Suspicion may rest on him; and so he is suspended until he is cleared of it. No one so far as I know, has ever questioned such a suspension on the ground that it could not be done unless he is given notice of the charge and an opportunity of defending himself, and so forth. The suspension in such a case is merely done by way of good administration. A situation has arisen in which something must be done at once. The work of the department or the office is being affected by rumours and suspicions. The others will not trust the man. In order to get back to proper work, the man is suspended. At that stage, the rules of natural justice do not apply;: see Furnell v. Whangarei High Schools Board." In Furnell v. Whangarei High School Bd. the Privy Council upheld the order of suspension of a teacher pending determination of charges against him. It was observed, "Neither in the regulations nor in the Act is suspension classified as a penalty. Section 157 (3) shows that it is not. It must however be recognised that suspension may involve hardship. During suspension salary is not paid and apart from this something of a tempo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding investigation into allegations under clause 8. Ordinarily, in the absence of anything more, it would not be necessary to give an opportunity to the person concerned before proceeding to take action under clause 8A or clause 8B. But while clause 8B deals with the right to obtain licences and the right to obtain allotments, clause 8A deals with rights which have flowered into licences and allotments. A person to whom licences have been granted or allotments made may have arranged his affairs on that basis and entered into transactions with others, and, to him the consequences of action under clause 8A may be truly disastrous whereas the consequences of action under clause 8B may not be so imminently harmful. It is presumably because of this lively difference between clauses 8A and 8B that clause 10 provides for a pre-decisional opportunity in the case of action under clause 8A and does not so provide in the case of action under clause 8B Again, it is presumably because of this difference that clause 10 while providing for an appeal against a decision under clause 8A does not provide for an appeal against a decision under clause 8B. Not that it makes any difference because S. 4M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision is not even communicated ? It would be most arbitrary and quite clearly violative of Articles 14 and 19(i)(g) of the Constitution if clause 8B is to be interpreted as excluding communication of the decision taken. There is nothing in clause 8B to suggest that the decision is not to be communicated. On the other hand, the expression "without assigning any reason" implies that the decision has to be communicated, but reasons for the decision have not to be stated. Reasons of course, must exist for the decision since the decision may only be taken if the authority is satisfied that the grant of licence or allotment of imported goods will not be in the public interest. We must make it clear that 'without assigning reasons' only means that there is no obligation to formulate reasons and nothing more. Formal reasons may lead to complications when the matter is still under investigation. So the authority may not give formal reasons, but the skeletal allegations must be mentioned in order to provide an opportunity to the person affected to make his representation, Chapter and verse need not be quoted. Details may not be mentioned and an outline of the allegations should be sufficient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situations the authorities may pause and have second thoughts, consider the inevitable consequences and be guided by that element of the public interest which outweighs all others. Which element of the public interest should be given greater weight and which grounds should weigh at all are matters for the authority taking action under Rule 8B. Courts do not concern themselves with the sufficiency of the grounds on which action is taken or with the balancing of competing considerations, in favour of and against the action. One of the submissions very strenuously urged before us was that a large number of the applications. for import licencees and allotments of imported goods which have been kept in 'abeyance' relate to goods which are totally unrelated to beef tallow or any other animal tallow and there was no justification whatever for keeping them in 'abeyance'. But an 'abeyance' order under clause 8B is directed not against any particular type of goods but against an importer, licensee or other person against whom an investigation into allegations under clause 8 is pending. The question is not whether any particular type of goods should be allowed to be imported or allotted to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not enter the picture at that stage unless the action is mala fide or patently without jurisdiction. The action will be patently without jurisdiction if it is not based on any relevant material whatsoever. If the authority declines to consider the representation, or if the authority after consideration of the representation eschews relevant considerations and prefers to act on irrelevant considerations or from oblique motive, or the decision is such as no reasonable man properly directed on the law would arrive at on the material facts, it will be open to the party to seek the intervention of the court at that stage. Our attention was drawn to the well-known cases of Barium Chemicals v Company Law Board, Rohtas Industries v. S.D. Agarwal, M.A. Rashecd v. State of Kerala, and the recent cases of Shalini Soni v. Union of India, and Commissioner of Income Tax v. Mahindra and Mahindra and we have considered all of them in arriving at our conclusion. In the present case, the party instead of representing his case to the appropriate authority chose the path of litigation obviously deterred by the clumsy attempt at secrecy made by the concerned authority and the failure to communicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its of the controversy at all. We cannot, for example, consider the question whether the material available justifies a prima facie conclusion that the petitioners have made illegal imports of beef tallow. According to the contention of the petitioners, they were entitled to import beef tallow even after June 5, 1981 if they had valid licences and if they had entered into firm contracts and opened letters of credit before June 5,1981 According to the authorities to is was not permissible; the affect of paragraph 222(3) of the Import Policy was that the amendment which was made on June 5, 1981 took effect from April 1, 1981 and permitted import of beef tallow under OGL only where firm contracts had been entered into and letters of credit had been opened before April 1,1981 but if the contracts had not been entered into and letters of credit had not been opened before April 1, 1981, the imports had to be through the channel of the State Trading Corporation only. Though in the cases of Arvind Exports and Jayant Mills is an appeal and review arising under the provisions of the Customs Act, the question was decided in favour of the parties, the present stand of the Government is that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Again a large number of concerns were lumped together and purported to be dealt with by a single abeyance circular. There was ex-facie nothing in the circular which could point to the authority having applied its mind and considered the case of each concern separately. It is true that the abeyance circular suffers from every one of these infirmities and if there was nothing more, the parties would be well entitled to ask us to quash the circular. But the learned Addl, Solicitor General invited our attention to the statements made by Shri J.P. Sharma, Deputy Chief Controller of Imports and Exports and the author of the abeyance circulars in the counter affidavit filed by him. The learned Additional Solicitor General has also placed before us for our perusal the relevant files of the authority. The counter-affidavit of Shri J.P. Sharma shows that the principal allegations against the petitioners were that they had prima facie indulged in illegal importation of beef tallow and had also misutilised the beef tallow. Why the authority took the prima facie view that the petitioners had illegally imported beef tallow and had mis-utilised the imported beef tallow has been explained by him ..... X X X X Extracts X X X X X X X X Extracts X X X X
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