TaxTMI 
TaxTMI 
1959 (12) TMI 1
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....spondent, the Chief Controller of Imports and Exports, Government of India, New Delhi, by which he cancelled five import licences which had been granted to the first petitioner by the Joint Chief Controller of Imports and Exports, Bombay. There is also a prayer for an order on the second respondent, the Collector of Customs, Bombay, directing him to assess the goods of the petitioner Company which have been landed in Bombay having been imported on the strength of these licences and allow the petitioner company to clear them. Of these five licences, two were dated July 24, 1958, two dated August 16, 1958, and the fifth dated September 4, 1958. The total value of the imports authorised by these five licences was Rs. 25,75,000. The petitioners contend that these five licences were granted to the petitioner Company on five applications sent by them by registered post to the Chief Controller of Imports and Exports, Government of India, New Delhi - Three sent on June 17, 1958, one on June 26, 1958, and the last on July 22, 1958. It is further stated that in respect of each of these applications a letter was received by the Company from the office of the Chief Controller of Imports and Ex....
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....xplanation was handed over to the first respondent by the Company's representatives at an interview with him on September 30. At that interview also, it is said, the representatives of the Company pointed out to Mr. Bilgrami that in the absence of any particulars of the alleged fraud and without inspection of the papers relied upon by him it was not possible for the petitioners to give a complete explanation and that they reserved their right to give further explanation on getting the said particulars and inspection of the said papers. The Company's representatives had another interview with Mr. Sundaram, Director (Administration) in the Chief Controller's Office on October 14, 1958. At this interview the petitioners again requested Mr. Sundaram to give them particulars and that they might be permitted to inspect the papers. No particulars were however furnished and no inspection was allowed; but on that very date when they had this interview with Mr. Sundaram the first respondent made the order of cancellation. 2. The ten grounds set out in Clauses A to L of para 15 of the petition as the basis for the relief resolve on analysis into four only. These are :- (1) Clause 9(a) ....
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....ed for. The question whether or not other persons were given a fair opportunity of being heard is entirely irrelevant. 3. In opposition to this application, Mr. Bilgrami, the first respondent, contends inter alia that the provision for cancellation of a licence under clause 9 of the Order does not contravene any of the fundamental rights granted under Article 19(1)(f) and (g) and Article 31 of the Constitution and that the petitioners were given adequate and reasonable opportunity of being heard before the order of cancellation was made. Mr. Bilgrami has stated in the affidavit that while it is true that four applications for licence - three dated June 17, and one dated June 26, 1958, were received in his office, the fact is that all these four applications were rejected and that it is now found that while these four rejected applications were lying in his office, four similar applications bearing the same dates and containing the same particulars and a fifth application bearing the date July 22, 1958, somehow made their appearance in the office of the Joint Chief Controller of Imports and Exports, Bombay, along with five separate letters, one in respect of each application, ....
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.... It has to be noticed first that here is no case of unbridled authority to cancel a licence nor is there any scope for arbitrary action. If a provision for giving a reasonable opportunity of being heard had not been made in the Order itself, it would have been necessary to consider whether this had still to be given, because rules of natural justice required it. No discussion about the requirements of the rule of natural justice is however called for here, as clause 10 of the Order provides that no action shall be taken under clauses 7, 8 or 9, unless the Licensee/Importer has been given a reasonable opportunity of being heard. It is proper to state that the learned Counsel for the petitioners does not attack the validity of the provisions on the ground that it gives unbridled authority to cancel a licence, or that the requirements of natural justice have not been sufficiently fulfilled by clause 10. His argument is that though it may not be unreasonable that a licence should be cancelled if the licensee himself has practised fraud in obtaining it, cancellation is wholly unreasonable if it is made merely on the ground that it has been obtained by fraud, without it being further sho....
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....ioners' right. It is necessary therefore to examine the material on the record to see whether the petitioners have succeeded in showing that no reasonable opportunity has been given. 7. The requirement that a reasonable opportunity of being heard must be given has two elements. The first is that an opportunity to be heard must be given; the second is that this opportunity must be reasonable. Both these matters are justifiable and it is for the Court to decide whether an opportunity has been given and whether that opportunity has been reasonable. In the present case, a notice to show cause against the proposed order was given; it was stated in the notice that the ground on which the cancellation was proposed was that the licences had been obtained fraudulently; and later on, a personal hearing was given. It must therefore be held that the requirement that an opportunity to be heard must be given was satisfied. What the petitioners' Counsel strenuously contends however is that though an opportunity was given that opportunity was not reasonable. In making this argument he had laid special stress on the fact that particulars of the fraud alleged were not given and an opportunity ....
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....f Mr. M.L. Gupta were not really his signatures; that while the forwarding letters purported to state that the issue of these licences prayed for had been authorised by Mr. Bilgrami as the Chief Controller of Imports and Exports, New Delhi, he himself knew that such issue had not been authorised by him. We find that in the very notice that was given to the petitioners' company to show cause against the proposed action of cancellation, it was stated that these licences appeared to have been obtained by fraud. On the question of particulars of fraud, it has been stated by the first respondent in his affidavit that at that stage no particulars of the fraud could be given by him as they were unknown to him, but that he did inform the petitioners' representatives - Mr. Parikh, a Director of the Company, the second petitioner Mr. Rangwala, who is the Chairman of the Company and the Company's solicitor, Mr. Hussaini Doctor of the "general nature of the fraud". In para 23 of his affidavit Mr. Bilgrami has made the following statement :- "I say that the Director of the petitioners' Company, Shri B.K. Parekh and Shri Rangwala and their attorney's partners, Mr. Huseni Doctor saw me on the 30....
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....of saying that no fraud had been practised and that Mr. Bilgrami was making a mistake in thinking that he had not authorised the issue of the licences and that perhaps his memory had failed him took refuge behind the plea that it was not the Company but some enemy of the Company who had preparated the fraud. 10. The petitioners' representatives had also an interview with Mr. Sundaram on October 14, 1958. While we have not got any statement of Mr. Sundaram himself as to what happened in that interview we find apart from Mr. Bilgrami's affidavit in para 24 that Mr. Sundaram also informed the petitioners' representatives at that interview that the recommendations against which the disputed licences were granted to the petitioners were not genuine, (which assertion was repeated in slightly different words in para 29), the fact that the first respondent's letter dated December 18, 1958, a copy of which Mr. Rangwala annexed to his affidavit in reply concluded with the following words :- "It may be stated that the fact that the following letters referred to above were not genuine were mentioned to the representatives of your firm when they interviewed Shri D.R. Sundaram, Director, ....
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.... is a Company registered under the Indian Companies Act having its registered office in Bombay. It is engaged in the business of dyes, chemicals, plastics and various other goods. The second petitioner is the Chairman and a Director of the first petitioner Company. The Company sent five applications by registered post to the Chief Controller of Imports and Exports, New Delhi, (hereinafter called the Chief Controller). Three of the applications were dated June 17, 1958, one was dated June 26, 1958, and the last was dated July 22, 1958. In the said applications the Company prayed for the issue of import licences to enable them to place orders and import different types of goods from West Germany. In regard to each of these applications, the Company received a letter purporting to be from the office of the Chief Controller intimating them that their applications had been forwarded to the Joint Chief Controller of Imports and Exports, Bombay, (hereinafter called the Joint Controller) with the necessary comments. The Company acknowledged the receipt of these letters. Thereafter five licences were received from the Office of the Joint Controller, Bombay, and two of them were dated July 2....
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..... The material parts of Clauses 9 and 10 of the Order read : Clause 9. "Cancellation of Licences. - The Central Government or any other Officer authorised in this behalf may cancel any licence granted under this Order or otherwise render it ineffective :- (a) if the licence has been granted through inadvertence or mistake or has been obtained by fraud or misrepresentation;". Clause 10. "Applicant or Licensee to be heard. - No action shall be taken under Clauses 7, 8 or 9, unless the licensee/Importer has been given a reasonable opportunity of being heard." It is not disputed that the Central Government delegated its powers to act under these clauses to the Chief Controller. The first question is, what is the scope of the enquiry under Clause 10 of the Order? Is it purely an administrative act or is it a quasi-judicial act? The criteria to ascertain whether a particular act is a quasi-judicial act or an administrative one have been laid down with clarity by Lord Justice Atkin in Rex v. Electricity Commissioners, Ex Parte London Electricity Joint Committee Co. - [1924] 1 K.B. 171, elaborated by Lord Justice Scrutton in Rex v. London County Council, Ex Parte Entertainments Protect....
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....l the said licences unless sufficient cause against the proposed action was furnished to the Chief Controller within ten days of the date of the issue of the notice. On receipt of the said notice, the petitioner Company sent a telegram through their Solicitors requesting the Chief Controller not to publish the said notification. On September 26, 1958, the Company's Solicitors sent another telegram to the Chief Controller requesting him to give them the particulars of the alleged fraud and to give them an appointment for inspection of papers and documents relied upon by the Chief Controller. On September 27, 1958, the Company sent a letter to the Chief Controller pointing out the relevant facts and stating that the petitioner Company had accepted the licences honestly and had at no time any reason to doubt the bona fides of the grant of the licences to them; that they suspected they were victims of foulplay by some persons interested in causing damage to them and to their reputation; that Mr. B.K. Parekh, a Director of the petitioner Company, and the Company's Solicitor, Mr. Hooseini Doctor, met the Chief Controller on September 30, 1958, and handed over the explanation to him and a....
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....efence was that the fraud might have been committed by reason of the Gujarati Maharashtrian and anti-Muslim feeling amongst the employees of the Company and that therefore the fact that the Chief Controller told the petitioners that the issue of the licences had not been authorized by him and the fact that Mr. Sundaram told the petitioners on October 14, 1958, that the recommendations against which the disputed licences were granted to the petitioners were not genuine, were, in the circumstances, sufficient disclosure of the particulars of fraud and that, therefore, reasonable opportunity within the meaning of Clause 10 of the order had been given to the petitioners. I find it very difficult to accept this argument. The argument assumes that the petitioner Company accepted the version given by the Chief Controller or by Mr. Sundaram. For the purpose of this petition it must be assumed that the petitioners were innocent. The notice was given to them to show cause why the licences given to them should not be cancelled on the ground of fraud. By letters and in person they requested the Chief Controller to give them the particulars of the fraud, and to allow them to inspect the relevan....
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....y a rival business-man or members of the staff of the Company, evolved a complicated scheme of fraud to cause damage to the Company and their reputation; the Company's enemies came to know that the applications of the Company were rejected, then forged fresh applications, got them surreptitiously introduced in the Bombay Office and got the licences issued in favour of the petitioners; this is a rather far-fetched theory; (iii) after the applications were rejected, fresh applications were filed in the New Delhi Office, got forwarded to the Joint Chief Controller, Bombay, with the directions issued by the Deputy Chief Controller, New Delhi; (iv) the original applications filed by the Company were ordered, and not rejected, by the Chief Controller or his Deputy and they were sent in due course along with the recommendations duly signed by the Deputy Chief Controller to the Joint Controller, Bombay, and that the licences were issued in the usual course : the Office of the Chief Controller, New Delhi, after realizing that licences were issued contrary to rules or orders that licences should not be issued in respect of goods to be imported from soft currency areas, set up a false case of....