2025 (3) TMI 794 - HC - Customs

DEPB license cancellation set aside after 20-year delay in adjudication violates natural justice principles

M/s. Saha Traders Versus Zonal Joint Director General Of Foreign Trade (Cla), Government Of India, Ministry Of Commerce And Industry, New Delhi.

Delhi HC set aside DEPB license cancellation letters and related Show Cause Notice (SCN) due to procedural violations. The court found that authorities ... Legality and validity of the purported DEPB license cancellation letter - Non-adjudication of the Show Cause Notice (SCN) issued on 02.05.2005 for nearly two decades - HELD THAT:- The 38 DEPB Scrip Cancellation letters are in respect of the same DEPB Scrips which were subject matter of the impugned SCN which remains unadjudicated till date. As noticed in the order dated 28.01.2025, the non-adjudication of the impugned SCN was conceded by the concerned Deputy Director General of Foreign Trade, who was present in Court on the said date - It is also apparent that the cancellation order/letter dated 07.08.2019 was passed without any prior intimation/notice to the petitioner and almost 15 years after the impugned SCN was initially issued. The basis for issuance of the 38 DEPB Scrip cancellation letters has been set out in the impugned SCN. The factual premise of the same is strenuously contested by the petitioner. As noticed in the present case, despite the impugned SCN remaining unadjudicated for decades, the cancellation order / letter dated 07.08.2019 was issued, which effectively condemned the petitioner unheard. Conclusion - i) The non-adjudication of the SCN for nearly two decades is a valid ground for setting it aside. ii) The cancellation of the DEPB licenses without affording the petitioner a hearing violated principles of natural justice, rendering the cancellation invalid. iii) The issuance of DEPB Scrip cancellation letters without adjudicating the SCN is procedurally flawed, leading to their invalidation. The impugned SCN, the communication dated 07.08.2019 and the 38 DEPB Scrip Cancellation letters referred to in the impugned cancellation order/ letter dated 07.08.2019, addressed to Commissioner of Customs Department (Preventive) by the Foreign Trade Development Officer, are set aside - Petition allowed. ISSUES PRESENTED and CONSIDEREDThe core legal issues considered by the Court were:Whether the non-adjudication of the Show Cause Notice (SCN) issued on 02.05.2005 for nearly two decades constituted a valid ground for setting aside the notice.The legality and validity of the DEPB license cancellation letter dated 07.08.2019, which was issued without affording the petitioner an opportunity for a hearing.Whether the issuance of the DEPB Scrip cancellation letters, without prior adjudication of the SCN, violated principles of natural justice.Whether the petitioner had an alternative remedy, and if so, whether it precluded the Court from entertaining the writ petition.ISSUE-WISE DETAILED ANALYSISNon-adjudication of the SCN- Relevant legal framework and precedents: The Foreign Trade (Development & Regulation) Act, 1992, and relevant case law, particularly M/s VOS Technologies India Pvt. Ltd. Vs. The Principal Additional Director General & Anr., which emphasized the necessity of timely adjudication of matters with potential financial liabilities or penal consequences.- Court's interpretation and reasoning: The Court noted that the SCN had not been adjudicated for nearly two decades, which was an unreasonable delay. The Court referenced the precedent set in M/s VOS Technologies, highlighting that such delays could not be justified and that authorities are obligated to resolve disputes with reasonable speed.- Key evidence and findings: The Court found that the respondents had no convincing explanation for the delay in adjudicating the SCN, and no particulars of any restraining orders were provided.- Application of law to facts: The Court applied the principles from the cited case to conclude that the non-adjudication of the SCN for such an extended period was a valid ground to set it aside.- Treatment of competing arguments: The respondents' argument regarding the availability of an appellate remedy was found untenable, as the delay constituted a gross violation of natural justice principles.- Conclusions: The Court concluded that the SCN should be set aside due to the unreasonable delay in adjudication.Legality of the DEPB License Cancellation- Relevant legal framework and precedents: The principles of natural justice and the requirement for a fair hearing before adverse administrative actions.- Court's interpretation and reasoning: The Court found that the cancellation order dated 07.08.2019 was issued without providing the petitioner an opportunity for a hearing, which violated the principles of natural justice.- Key evidence and findings: The Deputy Director General of Foreign Trade admitted in court that no hearing was afforded to the petitioner before the cancellation order was passed.- Application of law to facts: The Court applied the principles of natural justice to determine that the cancellation order was invalid as it was issued without a hearing.- Treatment of competing arguments: The respondents' failure to provide a hearing was seen as a significant procedural lapse, rendering the cancellation invalid.- Conclusions: The Court set aside the DEPB license cancellation letter due to the lack of a fair hearing.Issuance of DEPB Scrip Cancellation Letters- Relevant legal framework and precedents: The requirement for adjudication of underlying issues before taking consequential actions.- Court's interpretation and reasoning: The Court found that the issuance of the DEPB Scrip cancellation letters was premature, as the underlying SCN had not been adjudicated.- Key evidence and findings: The cancellation letters were based on conclusions drawn from the unadjudicated SCN.- Application of law to facts: The Court determined that the issuance of cancellation letters without prior adjudication was procedurally flawed.- Treatment of competing arguments: The respondents' argument that the petitioner had alternative remedies was rejected in light of the procedural irregularities.- Conclusions: The Court set aside the DEPB Scrip cancellation letters due to the lack of adjudication of the SCN.SIGNIFICANT HOLDINGS- The Court held that the non-adjudication of the SCN for nearly two decades was a valid ground for setting it aside. The Court emphasized that matters with potential financial liabilities or penal consequences must be resolved with due expedition.- The Court found that the cancellation of the DEPB licenses without affording the petitioner a hearing violated principles of natural justice, rendering the cancellation invalid.- The issuance of DEPB Scrip cancellation letters without adjudicating the SCN was procedurally flawed, leading to their invalidation.- The Court affirmed that, despite the availability of alternative remedies, gross violations of natural justice and procedural irregularities justified the exercise of its writ jurisdiction.- The Court set aside the impugned SCN, the DEPB license cancellation letter, and the DEPB Scrip cancellation letters, allowing the petition.