1961 (3) TMI 90 - SC - Customs

Supreme Court Invalidates Import License Cancellations Due to Lack of Opportunity to Be Heard

The Supreme Court found that the cancellation of import licenses without providing a reasonable opportunity to be heard violated Clause 10 of the Imports ... Whether respondents 1 and 2 have cancelled the licences in circumstances which amounted to a denial of its right to be given a reasonable opportunity of being heard, as provided by cl. 10 of the Imports (Control) Order, 1955, before the impugned 'orders were passed and thus arbitrarily and without authority of law deprived the petitioner of its fundamental right to carry on its business under Art. 19 of the constitution? Held that:- It is not necessary to enter into details of that correspondence, because the proposed action under cl. 8 is not the subject-matter of the present proceeding. It is enough to state that from what happened after the receipt of the letter dated July 2, 1960, it is abundantly clear that the petitioner has bad no real opportunity of being heard with regard to the ground alleged in the letter, before the cancellation orders were made on August 3, 1960. There was, in our opinion, a clear violation of the requirement of cl. 10, which embodies the principles of natural justice. The cancellation orders are, therefore, bad and must be quashed. We allow the writ petitions . Issues Involved:1. Cancellation of import licenses without reasonable opportunity to be heard.2. Compliance with Clause 10 of the Imports (Control) Order, 1955.3. Grounds for cancellation under Clause 9 of the Imports (Control) Order, 1955.4. Alleged fraudulent acquisition of the Essentiality Certificate.Detailed Analysis:1. Cancellation of Import Licenses Without Reasonable Opportunity to be Heard:The petitioner contended that the cancellation of their import licenses by the Joint Chief Controller of Imports, Madras, was executed without providing a reasonable opportunity to be heard, as mandated by Clause 10 of the Imports (Control) Order, 1955. The Supreme Court found that the petitioner was not informed of the specific grounds for the proposed cancellation in the notice dated May 27, 1960, which merely referred to Clause 9 without specifying the grounds. Consequently, the petitioner was unable to adequately respond or show cause against the cancellation.2. Compliance with Clause 10 of the Imports (Control) Order, 1955:Clause 10 of the Imports (Control) Order, 1955, stipulates that no action shall be taken under Clauses 7, 8, or 9 unless the licensee/importer has been given a reasonable opportunity of being heard. The Court concluded that the petitioner did not receive such an opportunity. The letter dated July 2, 1960, which the respondents claimed provided the necessary grounds for cancellation, was primarily concerned with the suspension of further licenses under Clause 8 and did not explicitly address the cancellation under Clause 9. The petitioner's request for relevant documents to show cause was ignored until after the cancellation orders were issued, further violating Clause 10.3. Grounds for Cancellation Under Clause 9 of the Imports (Control) Order, 1955:Clause 9 allows for the cancellation of licenses on specific grounds such as inadvertence, mistake, fraud, or misrepresentation. The initial notice did not specify which of these grounds applied to the petitioner's case. The respondents later alleged that the petitioner had fraudulently obtained the Essentiality Certificate by misrepresenting facts about their manufacturing capabilities. However, the Court noted that the petitioner was not given access to the investigation report or other relevant documents to refute these allegations before the cancellation orders were finalized.4. Alleged Fraudulent Acquisition of the Essentiality Certificate:The respondents argued that the petitioner had no machinery or equipment to manufacture the relevant articles and had obtained the Essentiality Certificate fraudulently. This was purportedly discovered through a joint investigation by the Deputy Director, Small Industries Service Institute, Hubli, and the Assistant Director of Industries, Bellary. The Court observed that the petitioner was not given a fair chance to contest these findings due to the lack of timely communication and access to the investigation report. This omission further underscored the breach of natural justice principles enshrined in Clause 10.Conclusion:The Supreme Court determined that the petitioner had not been afforded a reasonable opportunity to be heard before the import licenses were canceled, thus violating Clause 10 of the Imports (Control) Order, 1955. The cancellation orders were deemed invalid and quashed. The petitioner was entitled to costs, including one hearing fee. The writ petitions were allowed, and the cancellation orders were nullified.