Natural justice requires disclosure of adverse inquiry material before import licence cancellation and blacklisting action is taken.

Cancellation of import licences and blacklisting were held to be vitiated where the licensing authority relied on inquiry reports and other adverse material that had not been supplied to the affected parties. A mere opportunity to appear at the hearing did not cure the defect, because fair hearing required disclosure of the report or at least a proper summary before the parties were called on to answer the charge. The orders were therefore struck down for breach of natural justice, leaving the authority free to proceed afresh only in accordance with fair procedure.

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Issues: Whether cancellation of import licences and blacklisting of the petitioners were vitiated for breach of natural justice because the inquiry reports and material relied upon by the licensing authority were not supplied before adverse action was taken.

Analysis: The show-cause notice was founded on inquiries made by the Director of Industries and the Assistant Collector of Customs, and the impugned orders expressly relied on what transpired in those inquiries. The petitioners asked for the reports or at least their gist, but neither the reports nor a proper summary was furnished before the orders were passed. In these circumstances, the petitioners were required to meet material that had been used to their prejudice without being given a fair chance to answer it. The opportunity to appear at the hearing did not cure the failure to disclose the adverse material relied upon.

Conclusion: The impugned orders were vitiated by breach of the principles of natural justice and were rightly struck down.

Final Conclusion: The challenge to the cancellation and blacklisting orders succeeded, and the authority was left free to proceed afresh only in accordance with natural justice.

Ratio Decidendi: Where adverse action is founded on undisclosed inquiry material, fair hearing requires supply of the report or a proper summary before the party is called upon to answer the charge.

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