1988 (3) TMI 282 - AT - Customs

Authorities' Bias in License Refusal Decision Overturned for Lack of Impartiality

SHANTILAL G. JAIN Versus COLLECTOR OF CUSTOMS (PREVENTIVE)

The Tribunal found that the authorities failed to adopt objective criteria for refusing the license, did not consider relevant licensing provisions, ... Issue of licence Issues Involved:1. Objective Criteria for Refusing the Licence2. Consideration of Licensing Provisions in the Act3. Ignorance of Government Orders and Instructions4. Demand for Gold in Metropolitan City5. Applicant's Experience in Gold Business6. Rule Under Section 27 (6) (A) of the Act7. Validity of Show Cause Notice8. Use of Unnotified Material by Adjudicating Authority9. Bias of the Deputy CollectorDetailed Analysis:1. Objective Criteria for Refusing the Licence:The appellant argued that the authorities did not adopt objective criteria for refusing the licence. The Tribunal agreed, noting that the adjudicating authority did not act impartially and relied on materials collected behind the applicant's back. The Deputy Collector's order was found to be biased and not based on the allegations made in the show cause notice.2. Consideration of Licensing Provisions in the Act:The authorities were criticized for not considering the licensing provisions contained in the Act. The Tribunal emphasized that the licensing authority must consider all factors set out in Rule 2 of The Rules, not just Clause (f). The authorities wrongly assumed that a decline in turnover automatically precluded the issuance of new licences.3. Ignorance of Government Orders and Instructions:The appellant contended that the authorities ignored orders and instructions from the Government of India. The Tribunal noted that the authorities failed to consider the norms laid down by the Government, which indicated that the average turnover of gold dealers in Greater Bombay far exceeded the norms, thus justifying the issuance of new licences.4. Demand for Gold in Metropolitan City:The appellant argued that the demand for gold in a Metropolitan City should be considered differently from other cities. The Tribunal agreed, highlighting that the authorities did not properly assess the demand for gold ornaments in the specific area where the appellant intended to operate.5. Applicant's Experience in Gold Business:The appellant's experience in the gold business was not considered by the authorities. The Tribunal noted that the applicant had been working in the gold business for six years and that this experience should have been taken into account as per Rule 2(b) of The Rules.6. Rule Under Section 27 (6) (A) of the Act:The appellant argued that without a specific rule under Section 27 (6) (A), the issuance of fresh licences could not be restricted. The Tribunal agreed, citing a Madras High Court decision which held that the absence of such rules meant there was no limitation on the number of licences that could be granted.7. Validity of Show Cause Notice:The appellant claimed that the show cause notice was vague and defective. The Tribunal found that the show cause notice did not provide adequate information about the turnover figures for the relevant years and areas, thus violating principles of natural justice.8. Use of Unnotified Material by Adjudicating Authority:The appellant argued that the adjudicating authority relied on material not notified to the appellant. The Tribunal agreed, noting that the Deputy Collector used turnover figures for areas not mentioned in the show cause notice, thereby acting in a biased manner.9. Bias of the Deputy Collector:The appellant contended that the Deputy Collector acted in a biased manner. The Tribunal found that the Deputy Collector had pre-determined to reject the application and did not act as an impartial judge, thus violating principles of natural justice.Conclusion:The Tribunal concluded that the orders passed by the authorities below were void due to violations of natural justice and improper consideration of relevant factors. The appeal was allowed, and the matter was remanded to the Deputy Collector for fresh consideration within three months, taking into account the observations made in the Tribunal's order.