1991 (4) TMI 260 - HC - Customs

Court Quashes Notices, Upholds Petitioner's Rights in Import License Dispute

The court found in favor of the petitioner, quashing the notices and suspension order issued by respondents 2 and 3 regarding additional import licenses. ... Admissible exports - prospective operation of policy amendments - vested right arising from governmental promise - equitable/promissory estoppel against the State - suspension and cancellation under Clause 9(3) of the Imports (Control) Order, 1955 - show cause procedure under Clause 10 of the Imports (Control) Order, 1955 - locus standi of a transferee/purchaser of transferable licences - prematurity and alternative remedy in writ jurisdiction - administrative high-handedness/mala fide allegationLocus standi of a transferee/purchaser of transferable licences - prematurity and alternative remedy in writ jurisdiction - Petitioner's standing and prematurity/alternative remedy defence - HELD THAT: - The Court held that the petitioner had locus standi since the additional licences were freely transferable, the petitioner had been declared highest bidder, had paid earnest money and the entire balance consideration, and a formal commitment to transfer was communicated by the licensor. Given these facts the petitioner had a sufficient interest to challenge respondents' notices. The plea of prematurity and existence of an alternative remedy was rejected: by the time the writ was filed the authorities had already issued recall requests and a suspension order in respect of one licence, and no effective statutory appeal lay against such interim notices; further sub-clause (3) of Clause 9 envisages suspension only where cancellation proceedings under sub-clause (1) have been initiated and no such prior notice had been given. Accordingly the petition could not be dismissed on these preliminary grounds. [Paras 6]Petitioner has locus standi; writ not premature and alternative remedy defence fails.Admissible exports - prospective operation of policy amendments - vested right arising from governmental promise - equitable/promissory estoppel against the State - Interpretation of 'admissible exports' in Para 220(1) of the New Policy and effect of Appendix 12 amendment - HELD THAT: - The Court interpreted 'admissible exports made in the preceding licensing year' to mean exports admissible under the policy in force during the period when those exports were made. Because the preceding licensing year (A.M. 90) ended before the New Policy (effective 1-4-1990) could operate, Appendix 12 of the New Policy could not be implicitly read into Para 220(1) so as to render past exports ineligible. The Court observed that where the framers intended the appendices of the New Policy to apply they used express language; absent such express intention, retrospective deprivation of a valuable benefit given as an incentive to exporters cannot be presumed. The burden of proving that a change adversely affecting vested expectations was intended and justified by overwhelming public interest lies on the authority; no such material was placed before the Court. On this construction it was unnecessary to decide finally on estoppel, but the reasoning supports the position that exports admissible under the Old Policy remain so for entitlement purposes. [Paras 12]'Admissible exports' under Para 220(1) are those admissible under the policy in force when exports were made; amendment to Appendix 12 in the New Policy does not retrospectively deprive A.M. 90 exports of admissibility.Suspension and cancellation under Clause 9(3) of the Imports (Control) Order, 1955 - show cause procedure under Clause 10 of the Imports (Control) Order, 1955 - administrative high-handedness/mala fide allegation - Validity of recall notices, suspension order and subsequent show cause/cancellation proceedings in respect of licence No. P/W/3234622 - HELD THAT: - The Court found that respondents failed to establish that additional licence No. P/W/3234622 was issued in error or that cancellation proceedings under Clause 9(1) had been lawfully initiated prior to suspension; the initial letters calling for surrender and the suspension order were issued without clear legal basis or adequate application of mind. Allegations of mala fides were not proved: mere temporal coincidences with parallel litigation did not suffice, though the conduct was described as high-handed. Because the licence related to exports admissible under the Old Policy, and respondents did not discharge the burden of showing any valid ground for cancellation, the impugned recall/suspension/show cause notices were held bad. [Paras 13, 14]Impugned recall letters, suspension order and show cause notice in respect of the licence are invalid and set aside.Vested right arising from governmental promise - equitable/promissory estoppel against the State - Relief consequential to declaration of entitlement and directions regarding transfer and extension of licence validity - HELD THAT: - Having held that the relevant export was admissible and that cancellation/suspension was unwarranted, the Court directed that if the licensor (1st respondent) had returned the purchaser's payment pending litigation, the purchaser must repay the amount within one month and the licensor must effect the transfer forthwith by formal letter as required by policy. Relying on precedent, the Court also directed respondents 2 and 3 to extend the validity of the licence by six months beyond the statutory 18-month period if so desired by the petitioner, thereby removing practical prejudice that would otherwise result from the interim administrative actions. [Paras 15]Petitioner to repay any returned consideration and 1st respondent to transfer licence; respondents 2 and 3 directed to extend licence validity by six months if petitioner so desires.Final Conclusion: Writ petition allowed. The Court upheld petitioner's standing, construed 'admissible exports' in Para 220(1) of the New Policy as referring to exports admissible under the policy in force when the exports were made, quashed the recall letters, the suspension order and the show cause notice in respect of the disputed additional licence, and directed transfer formalities and a limited extension of the licence validity; costs awarded against respondents 2 and 3. Issues Involved:1. Legality of the action taken by respondents 2 and 3 in respect of two additional import licenses.2. Petitioner's locus standi to file the writ petition.3. Applicability of the Import & Export Policy 1990-93 to the licenses in question.4. Doctrine of promissory estoppel and vested rights.5. Allegations of mala fides against the 2nd respondent.Detailed Analysis:1. Legality of the action taken by respondents 2 and 3 in respect of two additional import licenses:The petitioner-firm challenged the notices issued by the 2nd respondent requesting the 1st respondent to forward two additional import licenses for cancellation. The petitioner argued that the action was illegal, without jurisdiction, and not in conformity with the provisions of the Imports (Control) Order, 1955. The court found that the 2nd respondent did not have the authority to call for the licenses or suspend them without initiating proper proceedings under Clause 9(3) of the Imports (Control) Order, 1955. Consequently, the court quashed the impugned notices and the suspension order.2. Petitioner's locus standi to file the writ petition:The court held that the petitioner had locus standi to file the writ petition. It was undisputed that the licenses in question were transferable and that the petitioner had submitted the highest offer for the licenses, paid the earnest money deposit, and the full balance consideration. The court rejected the preliminary objections raised by the respondents regarding the petitioner's locus standi and the writ petition being premature.3. Applicability of the Import & Export Policy 1990-93 to the licenses in question:The court examined whether the new Import & Export Policy 1990-93, which came into force on 1-4-1990, could be applied retrospectively to affect the vested rights accrued under the previous policy. The court concluded that 'admissible exports' in Para 220(1) of the new policy referred to exports made under the policy in force during the export period. Therefore, the new policy could not be applied retrospectively to deny the additional import licenses for exports made during the period when the old policy was in force.4. Doctrine of promissory estoppel and vested rights:The court agreed with the petitioner's contention that a vested right accrued to the 1st respondent based on the eligible exports made during the export period A.M. 90 under the old policy. The court held that the Central Government and the authorities concerned were estopped from denying the additional licenses after the 1st respondent became entitled to them based on the promise held out under the old policy. The court relied on the doctrine of promissory estoppel and cited several judgments to support this view.5. Allegations of mala fides against the 2nd respondent:The petitioner alleged that the actions of the 2nd respondent were motivated by political considerations and influenced by an unsuccessful offerer. While the court did not find sufficient direct evidence to establish mala fides, it noted that the 2nd respondent acted high-handedly and without proper application of mind. The court emphasized the need for authorities to act with due deliberation and care in such matters.Conclusion:The court allowed the writ petition, quashed the impugned notices and the suspension order, and directed the respondents to extend the validity of the additional license if requested by the petitioner. The court also ordered the petitioner to pay the full consideration amount to the 1st respondent within one month, and the 1st respondent to transfer the additional license to the petitioner immediately. The court awarded costs payable by respondents 2 and 3.