Court Quashes License Cancellation, Orders Renewal

The court quashed the notice and orders related to the cancellation and non-renewal of a private bonded warehouse license. It directed the respondents to reconsider the license renewal application within one month and maintain the facility at the warehouse location. The court emphasized that statutory discretion should be exercised in good faith, considering relevant factors. Costs of the petition were awarded to the petitioners, with counsel's fee set at Rs. 500.

---

---

Issues Involved:
1. Cancellation of the licence for a private bonded warehouse.
2. Non-renewal of the licence based on the government's policy.
3. Interpretation and application of Section 58 of the Customs Act, 1962.
4. Validity and implementation of the policy contained in Trade Notice No. 87/80-Customs.

Detailed Analysis:

Issue 1: Cancellation of the Licence for a Private Bonded Warehouse
The company was granted a licence on 25th March 1977 under Section 58(1) of the Customs Act, 1962, for a private bonded warehouse at Kymore. This licence was renewed periodically, with the last renewal valid until 31st December 1982. However, by a notice dated 18th September 1982, the Assistant Collector, Central Excise, informed the company that its licence would be deemed cancelled after two months. The company protested but was informed that the government's policy was not to grant licences for private bonded warehouses.

Issue 2: Non-renewal of the Licence Based on Government's Policy
The respondents supported the cancellation and non-renewal of the licence based on a policy decision contained in Trade Notice No. 87/80-Customs, dated 1st August 1980. This policy stated that rather than licensing private warehouses in the interior, public warehouses would be appointed at selected places. The company argued that the policy could not override the provisions of the Act and that each case should be decided on its merits.

Issue 3: Interpretation and Application of Section 58 of the Customs Act, 1962
The court examined the relevant statutory provisions, particularly Section 58, which allows the Assistant Collector of Customs to license private warehouses at any warehousing station where facilities for deposit in a public warehouse are not available. The court held that the availability of these facilities must be considered with reference to the specific warehousing station for which the application is made. The court found that Kymore continued to be a warehousing station without a public warehouse, and therefore, the licence for a private warehouse could not be cancelled or its renewal refused based on the availability of facilities at Bhopal, which is a different warehousing station.

Issue 4: Validity and Implementation of the Policy Contained in Trade Notice No. 87/80-Customs
The court noted that the policy could not contradict the provisions of the Customs Act. A proper implementation of the policy would require appointing public warehouses at warehousing stations in the interior and then not granting or renewing licences for private warehouses at those stations. However, it was not proper to refuse a licence for a private warehouse at a warehousing station without a public warehouse on the ground that there was a public warehouse at a different station. The court emphasized that statutory discretion must be exercised in good faith, considering relevant factors and excluding irrelevant ones. The customs authorities misdirected themselves in law by proceeding on a misconstruction of Section 58 and taking into account the irrelevant fact of the public warehouse at Bhopal.

Conclusion:
The court allowed the petition, quashing the notice dated 18th September 1982, the order dated 23rd September 1982, and the order dated 3rd December 1982. The respondents were directed to consider the company's application for renewal of the licence in accordance with the law within one month and to continue the facility of the private bonded warehouse at Kymore until the application was decided. The petitioners were awarded costs of the petition from the Union of India, with counsel's fee set at Rs. 500.

---