TMI Blog1991 (4) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... ny entered into a contract with a foreign concern for importation of 12,750 Metric tonnes of pig iron. The petitioner opened letters of credit in favour of the foreign seller. The said goods were shipped. The petitioner paid Rs. 143.42 lakhs as part payment for the said goods. The petitioner has since paid the entire value of the said goods. On 8th January 1991, the Bills of Entry submitted to Customs were duly processed, scrutinised and passed, by Customs Authorities and the value and quantity of the imported pig iron has been debited by the Customs Authorities upon the said Licence and the Duty Exemption Entitlement Certificate Book. On 19th February 1991 the Customs Authorities issued an order for release of the said goods. On 22nd February 1991 the petitioner Company's office received a telex message from the Joint Chief Controller of Imports Exports New Delhi (Office of the Chief Controller of Imports Exports New Delhi) stating "You are not to operate Advance Licence No. P/W/3259444 dated 9th October 1990 for Rs. 6,00,90,625/- till further advice". On 27th February 1991 the said goods arrived at the Haldia Port. The Customs Authorities refused to release the said g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted to import any goods for a specified period under this Order :- (a) if his application for licence is at any time found to be not in conformity with any provision of this Order; or (b) if such application is found to contain any false, fraudulent or mis-leading statement; or (c) if he is found to have used in support of his application any document which is false or fabricated or which has been tampered with; or (d) if he has, on any occasion, tampered with an import licence or has imported goods without a licence or has been a party to any corrupt or fraudulent practice in his commercial dealing or in obtaining a licence, or is found to have solicited any licence by offering an inducement to the holder of the licence or otherwise; or (e) if his agent or employee has been a party to any corrupt or fraudulent practice in obtaining any licence on his behalf; or (f) if he fails to comply with or contravenes or attempts to contravene or abets the contravention of any conditions embodied in, or accompanying a licence or an application for a licence; or (g) if he commits a breach of any law (including any rule, order or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State Trading Corporation of India, the Minerals and Metals Trading Corporation of India, or any other similar agency to keep in abeyance allotment 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 exceed six months. 9. Cancellation of licences. - (1) The Central Government or the Chief Controller of Imports and Exports or any other officer authorised in this behalf may cancel any licence granted under this Order or otherwise render it ineffective : (a) if the licence has been granted through inadvertence or mistake or has been obtained by fraud or mis-representation; (b) if the licence has been granted contrary to rules or the provisions of this Order; (c) if the licensee has committed a breach of any of the conditions of a licence; (d) if the Central Government or such officer is satisfied that the licence will not serve the purpose for which it has been granted; (e) if the licensee has committed a breach of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing more, it should not be necessary to give an opportunity to the person concerned before proceeding to take action under Clause 8A or Clause 8B". This sentence has been read out of context. The full passage which has been quoted below would show that the reasoning in Liberty Oil Mills runs counter to the submission of the respondents. 4. In fact in the Liberty Oil Mills case (supra) the Supreme Court has stressed the importance of natural justice and has stated "We do not think that it is permissible to interpret any statutory instrument so as to exclude natural justice unless the language of the instrument leaves no option to the Court. Procedural fairness embodying natural justice is to be implied whenever action is taken affecting the rights of parties". 5. The Customs Authorities (being the respondents 1 3 herein) in their affidavit have stated that the only reason for their taking steps to prevent the clearance of the said goods was "in view of the said telex dated 22nd February 1991 from the Chief Controller of Imports Exports." 6. The respondents 4 to 6 being the Chief Controller of Imports and Exports, the Joint Chief Controller of Imports and Exports ECA D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue were granted could not be itself raise any doubt of any illegal activity. 8. The second ground in fact is somewhat contradictory to the first as it is admitted that the export commitments had been fulfilled. Whatever the explanation for the alleged larger scale of rejects is concerned this related to the period 1987-88 and 1989-90, that is much prior to the grant of the Advance licence in this case. 9. The third ground is equally if more tendous. Several questions are left unanswered such as why was a licence granted for Rs. 6 Crores by the respondents themselves for more than the petitioner was entitled? Having granted such licence why was it suddenly necessary to check the genuineness of the documents several months after the licence had been issued? 10. However it is the fourth paragraph of the said affidavit which reveals the very tentative nature of the enquiry being conducted. There is not even a claim to a prima facie suspicion let alone a satisfaction that the petitioner company has violated any provision of Imports (Control) Order, 1955. It is on this very nebulous base that the respondents justify their harsh action against the petitioner. 11. Apart from this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made. The authority may consider it desirable to prevent the person from importing 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 Cl. 8-A suspending the importation of goods, the grant of licences or the allotment of imported goods. But Clause 10 provides that no action under Clause 8-A 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 crystallised into a licence or an allotment, an order under Clause 8-A may have immediate and grave prejudicial repercussions on the person concerned making it desirable that he should be heard before an order of suspension is made. So it is that Clause 8-A contemplates a pre-decisional hearing. As we have seen, both Clauses 8-A and 8-B contemplate action of an interim nature pending 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 und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egarding the principles of natural justice all together. 15. The action of the Respondents Nos. 4 to 6 therefore in issuing the telex is not only ultra vires the Imports (Control) Order, 1955, but also in violation of the principles of Natural Justice. 16. There is therefore also no question of Appeal under the Import Control Order or the Imports (Control) Act, 1947 as the order cannot be held to have been issued under the Act or Order. 17. For all the aforesaid reasons I hold that the writ application must be allowed. The impugned telex is set aside. The respondents are directed to forthwith release and allow clearance of the said goods covered by the said Advance Licence. It is made clear that this order does not restrain the respondent licensing authority from taking action in the event an investigation is subsequently commenced under the said Order against the petitioner. The petitioner will be paid the cost of this application by the respondents 4 to 6. Prayer for stay is made on behalf of the respondents and the same is refused. All parties to act on a signed copy of the operative part of this judgment and order on usual undertaking. - - TaxTMI - TMITax - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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