Natural justice in import licence cancellation requires notice and hearing for a letter of authority holder before adverse action.

A holder of a letter of authority under an import licence was treated as having direct rights and liabilities under the licence, because the authority allowed it to place orders, open letters of credit, make remittances, arrange movement of goods, and clear goods through Customs. Since cancellation of the licence exposed the holder to confiscation and penalty proceedings and therefore had civil consequences, the Imports (Control) Order required a reasonable opportunity of being heard before action was taken. Cancellation without notice or hearing breached natural justice, and an unsupported assumption of forgery could not substitute for proper inquiry and cross-examination. The cancellation orders were therefore invalid, with liberty to issue fresh notices and decide the matter again after hearing the affected parties.

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Issues: Whether a holder of a letter of authority under an import licence was entitled to notice and hearing before cancellation of the licence affecting its rights and liabilities.

Analysis: The letter of authority enabled the holder to act upon the licence for placing orders, opening letters of credit, making remittances, arranging movement, and clearing goods through Customs under Section 147 of the Customs Act, 1962. The statutory definition and the procedure in Paragraph 382 of the Hand Book of Import-Export Procedures, 1980-81 showed that the holder was more than a mere stranger to the licence. Cancellation of the licence exposed the holder to confiscation proceedings and penalty proceedings under the Customs Act, with direct civil consequences. Clause 10 of the Imports (Control) Order, 1955 required a reasonable opportunity of being heard before action under Clause 9(1) was taken. The cancellation orders were passed without notice to or hearing the letter of authority holder and therefore offended elementary principles of natural justice. The reasoning also noted that the quasi-judicial authority could not proceed on an unsupported assumption of forgery without proper inquiry and the opportunity to cross-examine the relevant officer.

Conclusion: The letter of authority holder was entitled to be heard before cancellation of the import licences, and the cancellation orders passed without such hearing were invalid. The impugned orders were quashed, with liberty to issue fresh show-cause notices and decide the matter afresh after hearing the affected parties.

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