Canalising agency must follow prescribed import procedure and cannot deny a No Objection Certificate through inaction or shifting reasons.

A canalising agency handling canalised imports must scrutinise and register an actual user's demand, arrange supply from indigenous sources where possible, and issue a No Objection Certificate for direct import if it cannot lawfully meet the requirement. The Court found the agency did not process the demand in the prescribed manner, made no genuine effort to secure indigenous supply, and relied on shifting reasons not stated in its original communication. That conduct was arbitrary and contrary to the import procedure, so the refusal to issue the No Objection Certificate was unlawful and the user was entitled to relief.

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Issues: Whether the canalising agency was bound to either meet the actual user's requirement from indigenous sources or, if unable to do so, issue a No Objection Certificate for direct import, and whether its refusal could be sustained on the ground that no import was planned for the relevant year.

Analysis: The Handbook of Import & Export Procedure treated actual users' demands for canalised items as requiring scrutiny and registration, with supply to be arranged through the canalising agency where possible. Where the agency could not make supplies, it was required to issue a No Objection Certificate. The Court found that the agency neither registered and processed the demand in the prescribed manner nor made any attempt to meet the requirement from indigenous sources. Its shifting stand, silence on indigenous availability at the relevant time, and reliance on reasons not disclosed in the original communication were held to be arbitrary and contrary to the statutory procedure. A construction that allowed the agency's inaction to defeat the user's entitlement was rejected as producing an absurd and unjust result.

Conclusion: The refusal to issue the No Objection Certificate was unlawful, and the petitioner was entitled to the relief sought.

Ratio Decidendi: Where a canalising agency fails to follow the prescribed procedure and neither supplies the goods nor lawfully arranges indigenous supply, its inaction cannot defeat the actual user's entitlement to a No Objection Certificate for direct import.

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