Import licence debarment requires proven connivance or a specified violation; principal is not automatically liable for an agent's unauthorised act.

An imprest licence holder cannot be debarred for an agent's unauthorised import unless connivance, active association, or a specified violation under Clause 8 of the Imports Control Order is established. Where the letter of authority holder exceeded the permitted scope and imported beef tallow without the petitioners' knowledge, the element of abetment was absent and Paragraph 383 of the Hand Book of Import-Export Procedures did not make the principal automatically liable for the agent's wrongful act. The debarment order was therefore not sustainable.

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Issues: Whether the petitioners, as holders of an imprest licence, could be debarred for five years on the ground that the letter of authority holder exceeded the authority and imported beef tallow without the petitioners' knowledge or participation.

Analysis: The impugned order proceeded on the footing that the letter of authority holder had imported goods beyond the permissible scope and that the petitioners had expressly advised import only of permissible items. On that finding, the element of connivance or active association necessary to sustain a charge of abetment was absent. Clause 8 of the Imports Control Order could be invoked only if one of the specified violations was made out, and no such violation was established against the petitioners. Paragraph 383 of the Hand Book of Import-Export Procedures, 1980-81 did not make the principal automatically guilty for wrongful acts of an agent done without the principal's knowledge.

Conclusion: The debarment order could not be sustained against the petitioners and the challenge succeeded.

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