Messrs Fedco (P) Ltd. & ANR Vs. S.
N. Bilgrami & Ors [1959] INSC 149 (9 December 1959)
GUPTA, K.C. DAS SINHA, BHUVNESHWAR P.
GAJENDRAGADKAR, P.B.
SUBBARAO, K.
SHAH, J.C.
CITATION: 1960 AIR 415 1960 SCR (2) 408
CITATOR INFO :
E 1963 SC1811 (104) R 1982 SC 902 (23)
ACT:
Import Licence, Cancellation
of-Constitutional validityReasonable opportunity of being heard, meaning
of-Imports Control Order, 1955, cls. 9, 10-Constitution of India, Arts.
19(1)(f) and (g), Art. 31.
HEADNOTE:
The petitioner company applied to the Chief
Controller of Imports and Exports, Government of India, New Delhi, for five
import licences and obtained them from the joint Chief Controller of Imports
and Exports, Bombay, purporting to grant the same on the authority of the
former, and placed orders for goods covered by these licences, some of which
actually arrived in Bombay. Before the goods could be cleared, the company
received a notice from the Chief Controller stating that whereas there were reasons
to believe that these five licences had been obtained by fraud, the Government,
in exercise of the power specified in cl. 9 of the Imports Control Order, 1955,
proposed to cancel them unless sufficient cause was shown before the Chief
Controller. The petitioner company by a telegram requested the Chief Controller
to furnish particulars of the alleged fraud and give an opportunity to inspect
the relevant papers and documents relied upon by him. By a letter it gave an
explanation stating that the petitioners were the victims of foul play by someone
bent upon causing damage to them and bringing them in the bad books of the
authorities. In that letter the company reserved to itself the right to add to,
amend or alter the explanation after it had obtained inspection of the said
papers and the particulars of the alleged fraud. The representatives of the
company met the Chief Controller as also the Director of Administration of his
office and renewed the request for the said particulars and the inspection. No particulars
were furnished, nor was inspection allowed, but the Chief Controller told the
representatives that the issue of the licences had not been authorised by him
and the same had been fraudulently obtained and the Director of Administration
told them that the recommendations against which the disputed licences were
granted by the joint Controller were not genuine, but the said representatives,
instead of denying the fraud alleged, ascribed it to some other party as they
had done before. It was contended on behalf of the petitioners that cl. 9(a) of
the Imports Control Order, 1955, infringed Arts. 19(1)(f) and (g) and 31 of the
Constitution and that no reasonable opportunity was given to the petitioners of
being heard as required by cl. 10 of the Imports Control Order.
409 Held (per Sinha, C.J., Gajendragadkar,
Das Gupta and Shah, JJ.), that cl. 9 of the Imports Control Order does not give
unbridled authority to cancel a licence nor is there any scope for arbitrary
action in this regard in view of the provision of cl. 10 of the Order which
amply fulfils the requirement of natural justice.
It is not correct to contend that before a
licence can be cancelled under cl. 9, it must be shown not merely that fraud
was committed but that the licensee was also a party to the fraud. The entire
scheme of control and regulation of imports by licences being based on the
grant of licences on a correct statement of fact, that basis disappears if the
grant is obtained by fraud or misrepresentation, and it is wholly immaterial
whether the licensee is or is not a party to such fraud or misrepresentation.
The provision for cancellation of a licence under cl. 9, therefore,
constitutes. a reasonable restriction on the rights conferred by Art. 19(1)(f)
and (g) of the Constitution and, being imposed by a valid law, cannot
contravene Art. 31.
There can be no absolute standard of
reasonableness and what constitutes reasonable opportunity of being heard in
the peculiar facts and circumstances of each case is a matter to be decided by
the Court. The Court has to satisfy itself that the person against whom action
was proposed had a fair chance of convincing the authority that the grounds on
which such action was proposed were either non-existent or did not justify it.
So judged, it could not be said that the omission to give the petitioners, in
the instant case, who were more concerned to show that the company was not a
party to the fraud than that no fraud had at all been committed, further
particulars or inspection of the papers amounted to a denial of reasonable
opportunity of being heard.
Per Subba Rao, J. Judged in the light of well
recognised principles, there can be no doubt that the Chief Controller of
Imports, acting under cls. 9 and 10 of the Imports Control Order, 1955, performs
a quasi-judicial function and is bound to follow the principles of natural
justice in cancelling a licence.
Rex v. Electricity Commissioners, Ex Parte
London Electricity joint Committee Co., [1924] 1 K.B. 171, Rex v.
London County Council, Ex Parte Entertainments
Protection Association Ltd., [1913] 2 K. B. 215 and Province of Bombay v.
Khusaldas S. Advani, [1950] S.C.R. 621, referred to.
The language of cl. 10 clearly indicates that
when the charge is one of fraud, the affected party is entitled to know the
particulars of the alleged fraud and to inspect the documents on which it is
based and to a personal hearing.
It was impossible, in the facts and
circumstances of this case, to hold that the petitioners, who did not admit
having committed the fraud and must be assumed to be innocent, were afforded
reasonable opportunity of being heard within the meaning of 410 cl. 10 of the
Order to prove their innocence. Unless the particulars were given to them and
the documents shown to them it was not possible for them to know if any fraud
was at all committed and if so by whom. The order of cancellation of the
licences was, therefore, arbitrary and must be quashed.
ORIGINAL JURISDICTION: Petition No. 171 of
1958.
Petition under Article 32 of the Constitution
of India, for enforcement of fundamental rights.
Purshottam Tricumdas, Porus A. Mehta, S. N.
Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the petitioners.
C. K. Daphtary, Solicitor-General of India,
N. S. Bindra, B. H. Dhebar and T. M. Sen, for the respondents.
1959. December 9. The judgment of Sinha,
C.J., Gajendragadkar, Das Gupta and Shah, JJ., was delivered by Das Gupta, J.
Subba Rao, J., delivered a separate judgment.
DAS GUPTA J. The first petitioner is a
Company registered under the Indian Companies Act having its registered office
in Bombay and 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. In this petition for enforcement of fundamental
rights under the Constitution they pray for the issue of a writ of certiorari
or other appropriate writ, direction or order quashing an order made by the
first respondent, 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 411 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 Exports, Government of India,
New Delhi, intimating that their application had been forwarded to the Joint
Chief Controller of Imports and Exports, Bombay with the necessary comments and
asking the Company to contact this officer, the Joint Chief Controller of
Imports and Exports, Bombay, direct in the matter. The petitioner Company wrote
in each case to the Chief Controller of Imports and Exports, New Delhi,
acknowledging receipt of these letters and at the same time to the Joint Chief
Controller of Imports and Exports, Bombay, requesting that the licences should
be issued to them at an early date. After the licences were received by the
Company from the office of the Joint Chief Controller of Imports and Exports,
Bombay, the Company placed orders for the goods covered by these licences and
some of the goods actually arrived at Bombay. Before however any of these goods
could be cleared the Company received a notice dated September 24, 1958,
stating that whereas there was reason to believe that these five licences had
been obtained fraudulently, the Government in the exercise of the powers
specified in para. 9 of the Imports Control Order, 1955, proposed to cancel the
said licences unless sufficient cause against that was furnished to the Chief
Controller of Imports and Exports, New Delhi, within 10 days of the date of the
issue of the said notice'. On September 26, the petitioner Company's solicitors
sent a telegram to the Chief Controller of Imports and Exports, New Delhi,
requesting him to give particulars of the alleged fraud and to give them an
appointment for inspection of papers 412 and documents relied upon by him. On
September 27, Company wrote a letter to the same officer in which they gave a
written explanation pointing out various facts and stating that they were
victims of foul play by some person interested in causing damage to them and
involving their reputation and in order to bring them in bad books with the
authorities. In the concluding portion of this letter the Company stated:
" We also reserve our right to add to, amend or alter the explanations
contained in this letter hereafter and to submit such further explanations as
may become necessary after taking inspection of all the papers and after
getting the particulars of the alleged fraud. We shall thank you to give us
also an opportunity of a personal hearing in the matter." This written
explanation 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.
The ten grounds set out in Cls. 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) of the Import Control Order under which
the order of cancellation has been made is itself unconstitutional, being
violative of the petitioners' 413 rights under Art. 19(1)(f) & (g) and Art.
31 of the Constitution ;
(2) The Order of cancellation has been made
without compliance with the mandatory requirement of cl. 10 of the Imports
Control Order to give the licensee "a reasonable opportunity of being
heard ";
(3) The first respondent, Mr. Bilgrami, bad
no authority in law to make any order under cl. 9 of the Import Control Order;
(4) The petitioners have been denied equal
protection of laws under Art. 14 of the Constitution inasmuch as other persons
similarly situated have been given a proper opportunity and a personal hearing
before taking any action against them, while the petitioners have been denied a
proper opportunity to show cause for the cancellation of licences and personal hearing
in the matter.
Of these four grounds, the third ground,
viz., that Mr. Bilgrami had no authority in law to make an order under cl. 9 of
the Imports Control Order was made in apparent ignorance of the fact that the
Chief Controller of Imports and Exports, became competent to make an order
thereunder in consequence of an amendment made in the Order, in 1958. As the
clause originally stood the relevant words were: " The Central Government
or any other officer authorised in this behalf may cancel any licence granted
under this order............By the amendment made on February 27, 1958,the
words ,or the Chief Controller of Imports and Exports " were inserted
after the words "the Central Government " in this clause. The
position on the relevant dates in September and October, 1958, therefore was
that the Chief Controller of Imports and Exports, New Delhi, had authority to
cancel any licence granted under the Imports Control Order without being
specially authorised in that behalf. It was apparently in view of this position
which was pointed out by Mr. Bilgrami in his affidavit in opposition that the'
learned Counsel for the petitioners did not press this ground at all. Nor did
he press the fourth ground, viz., that the petitioners' right under 53 414 Art.
14 of the Constitution has been infringed. It is obvious that if the order has
been made without the petitioners having been given a reasonable opportunity of
being heard that itself would entitle them to the relief prayed for. The
question whether or not other persons were given a fair opportunity of being
heard is entirely irrelevant.
In opposition to this application, Mr.
Bilgrami, the first respondent, contends inter alia that the provision for
cancellation of a licence under cl. 9 of the Order does not contravene any of
the fundamental rights granted under Art.
19(1)(f) and (g) and Art 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, arid
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, containing
recommendations for issue of licences purporting to have been issued from the
office of the Chief Controller of Imports and Exports, New Delhi, under the
signature of one Shri M. L. Gupta, Deputy Chief Controller of Imports and
Exports. The respondent contends that the purported signatures of Shri M. L.
Gupta on these letters were not genuine. Mr. Bilgrami also contends that though
these letters purported to state that the issue of licences was authorised by
him he did not in fact give any authority, and that when the petitioners'
representatives interviewed him on September 30, 1958, they were told of the
" general nature of the fraud " and that he further told them that
the issue of the licences had not been authorised by him as they purported to
be and that they had been obtained 415 fraudulently. The respondents further
contend that when again on October 14, 1958, the petitioners had an interview
with Mr. Sundaram, the Director of Administration in the office of the Chief
Controller of Imports and Exports, Mr. Sundaram told them expressly that the
recommendations against which the disputed licences were granted to the petitioners
were not genuine.
The first contention on behalf of the
petitioners is that cl. 9(a) of the Imports Control Order is itself invalid as
it violates a licensee's rights under Art. 19(1)(f) and (g) and Art. 31 of the
Constitution. Clause 9(a) is in these words :Cancellation of Licence:-The
Central Government or the Chief Controller of Imports and Exports 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................
As in the present case there is no question
of the licences having been granted through inadvertence or mistake it is not
necessary for us to consider whether the provision for cancellation of licences
on the ground that they have been granted through mistake or inadvertence is
invalid. The question in the present case is whether the provision for
cancellation of licences on the ground that they have been obtained by fraud or
misrepresentation is " a reasonable restriction in the interests of the
general public " on the exercise of the petitioners' right under Art.
19(1)(f) and 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 bad 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 cl.
10 of the Order provides that no action shall
be taken under clauses 7, 8 or 9, 416 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 shown
that the licensee himself has been a party to the fraud. It appears to us that
in most cases, if not in all cases, where a licence is obtained by fraud or
misrepresentation it would be reasonable to think that the person in whose
favour the licence has been obtained, cannot but be a party to the fraud or
misrepresentation. The petitioners' Counsel submitted that it is possible to
imagine a case where an enemy of the person in whose favour the licence is
granted procures such grant by means of fraud with the deliberate motive of
accusing this person later on of fraud and thereby subjecting him on the one
hand to criminal prosecution and on the other hand damaging his reputation and
ruining his business. It is unnecessary for us to decide in the present case
whether this may ever happen. Clearly however the fact that fraud by which the
grant of the licences has been induced by an enemy is wholly immaterial on the
present question. The entire scheme of control and regulation of imports by
licences is on the basis that the licence is granted oil a correct statement of
relevant facts. That basis disappears if grant of the licence is induced by fraud
or misrepresentation. Whether the licensee himself or some others party is
responsible for the fraud or misrepresentation, the fact remains that in such
cases the basis of the grant of licence has disappeared. It will be absolutely
unreasonable that such a licence should be allowed to continue. We are
therefore of opinion that the provision that licence may be cancelled, if it is
found, after giving a 417 reasonable opportunity to the licensee to be heard,
to have been obtained by fraud or misrepresentation is a reasonable restriction
in the interests of the general public on the exercise of the fundamental right
of a citizen guaranteed under Art. 19(1)(f) and (g) of the Constitution. The
cancellation being under a valid law there can be no question of any right
under Art. 31 of the Constitution having been infringed.
This brings us to the main contention pressed
on behalf of the petitioners, viz., that the licensee has not been given a
reasonable opportunity of being heard before the order of cancellation was
made. There can be no doubt that if a reasonable opportunity to be heard as
against the proposed order of cancellation has not been given the order would
be an unjustified interference with the petitioners' 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.
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 justiciable 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 to inspect the papers though
repeatedly asked for was not given. It is now necessary to consider all the
circumstances in order to arrive at a conclusion whether the omission to give
particulars of fraud and 418 inspection of papers deprived the petitioners of a
reasonable opportunity to be heard.
There can be no invariable standard for
" reasonableness" in such matters except that the Court's conscience
must be satisfied, that the person against whom an action is proposed has bad a
fair chance of convincing the authority who proposes to take action against him
that the grounds on which the action is proposed are either non-existent or even
if they exist they do not justify the proposed action. The decision of this
question will necessarily depend upon the peculiar facts and circumstances of
each case, including the nature of the action proposed, the grounds on which
the action is proposed, the material on which the allegations are based, the
attitude of the party against whom the action is proposed in showing cause
against such proposed action, the nature of the plea raised by him in reply,
the requests for further opportunity that may be made, his admissions by
conduct or otherwise of some or all the allegations and all other matters which
help the mind in coming to a fair conclusion on the question. The action
proposed in the present case viz., the cancellation of the five licences was proposed
on a tentative conclusion by Mr. Bilgrami on the basis of the material in his
possession that the five licences bad been obtained fraudulently. The main
grounds on which this tentative conclusion appears to -have been based were
that four applications-three dated June 17 and one dated June 26, 1958, similar
in all particulars to the four which are now found in the office of the Joint
Controller of Imports and Exports, Bombay, had been actually received but had
been rejected and were lying in the Chief Controller's Office; that four
similar applications, bearing the same dates and same particulars which were
lying in the Bombay Office and also a fifth application dated July 22, were
accompanied by five forwarding letters purporting to have been signed by Mr. M.
L. Gupta recommending the prayer for licence and containing a statement that
the first respondent had authorised such issue of licences on those
applications but these signatures purporting to have been of Mr. M. L. Gupta
were not really his 419 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 be 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 30th September,
1958. I told them that the issue of the licences had not been authorised by me
as they purported to be and that they had been obtained fraudulently, though at
that stage I was unable to say how exactly and by whom the fraud was committed.
As also the investigation by the Police was already in progress, it was not
possible to give minute particulars of the fraud. When the petitioners were
told as above, the petitioners' chairman started raising contentions suggesting
that the fraud might have been committed by reason of the Gujarati
Maharashtrian and anti-Muslim feeling amongst the employees of his firm."
The affidavit in reply was sworn by Mr. Rangwala himself.
We find therein repeated denials of Mr.
Bilgrami's assertion that the Company's representatives were told of the "
general nature of the fraud ". It was worth noting however that as regards
the categorical statement made in para. 23 as to what 420 Mr. Bilgrami told Mr.
Rangwala and others and what they told him there is no clear denial. Dealing
with para. 23 of Mr. Bilgrimi's affidavit in para. 20. of his own affidavit in
reply Mr. Rangwala after saying that the first respondents, statement does not
say anything as to how exactly and by whom the fraud was committed but simply
added that the first respondent did not say anything beyond the fact that the
licences had been obtained by fraud. It is significant that no specific denial
was made of Mr. Bilgrami's assertion that to Mr. Rangwala, Mr. Parekh and Mr.
Huseini Doctor he had himself stated that the " issue of the licences had
not been authorised by him as they purported to be ". No less important is
the fact that Mr. Rangwala does riot deny the assertion made by Mr. Bilgrami
that he (Mr. Rangwala) in the course of that interview on September 30,
suggested that the fraud might have been committed by reason of certain
feelings amongst the employees of his firm. It is reasonable therefore to
believe that besides stating that the licences had been obtained fraudulently
Mr.Bilgrami definitely informed the Company's representatives on September 30,
1958, that though issue of the licences had been purported to be authorised by
him-with apparent reference to the forwarding letters recommending the issue of
the licencesthis had not actually been authorised and further that on receipt
of this information the Company's representatives instead 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 perpetrated the fraud.
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 421
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, (Administration) on October 14, 1958." Though annexing a copy of
this letter to his affidavit in reply Mr. Rangwala did not state that this
statement in the concluding portion of the letter was not true. This justifies
the conclusion that Mr. Bilgrami's assertion that Mr. Sundaram told the
Company's representatives that the forwarding letters containing the
recommendations on the basis of which the licences had been issued were not
genuine is true. Mr. Bilgrami's statement in para. 29 of his affidavit is that
when Mr. Sundaram informed the Company's representatives of this they had no
explanation to give.
Dealing with para. 29 of this affidavit in
para. 23 of his own affidavit Mr.Rangwala did not state that Mr. Sundaram did
not tell them that the licences issued were on the basis of documents which
were not genuine, or that on being so told they had no explanation to offer.
On a consideration of the entire background
in which the notice for cancellation was issued, what was stated by the
petitioners in their letter dated September 27, and what we find to have taken
place at the interviews on the 30th September and the 14th October, specially
the fact that the Company's reprepresentatives appeared to have been more
concerned to show that the Company was not a party to the fraud than to show
that there was no fraud practised at all, we are of opinion that the omission
to give further particulars or inspection of papers did not deprive the
petitioners of a fair chance of convincing Mr. Bilgrami that the grounds on
which cancellation of the licences was proposed did not exist, or even if they
existed, 54 422 they did not justify cancellation of the licences. We are
therefore of opinion that the opportunity that was given to the petitioners in
the present case amounted to a reasonable opportunity of being heard against
the action proposed.
The petitioners are therefore not entitled to
any relief.
The petition is accordingly dismissed with
costs.
SUBBA RAO J.-I have had the advantage of
perusing the judgment of my learned brother, Das Gupta, J. I regret my
inability to agree with his conclusion.
The facts are fully stated in the judgment of
my learned brother and I shall, therefore, briefly restate only the material
facts. The first petitioner, M/s. Fedco (Private) Limited (hereinafter called
the Company) 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 In regard to each of these applications, received a letter purporting
to be from the Chief Controller intimating them that their applications had
be-en 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 24, 1958, another two were dated August 16, 1958, and the fifth
was dated September 4, 1958. On the basis of the said licences, orders were 423
placed with a foreign company in West Germany and goods of considerable value
actually arrived in the Bombay port. By letter dated September 23, 1958, the
Joint Controller asked the Company to return the said five licences granted to
them without entering into any commitments. After some correspondence between
the Company and the Chief Controller, the former received a notice dated
September 24, 1958, from the latter to the effect that the Government had
reason to believe that the said licences were obtained fraudulently and
therefore they proposed to cancel the said licences unless sufficient cause was
shown against such action being taken within ten days of the issue of the said
notice. On October 16, 1958, the Company received an undated order from the
Chief Controller purporting to cancel the said five licences. The Company and
their manager filed the present petition under Act. 32 of the Constitution
praying for a writ of certiorari or other appropriate writ quashing the order
of the Chief Controller cancelling the said five licences and directing the
Collector of Customs, Bombay, to assess the goods of the Company which had been
imported into India and allow them to clear the same.
Mr. Purshottam Trikamdas, learned Counsel for
the petitioners in support of his contentions raised before us two points,
viz., (1) cls. 9 and 10 of the Imports Control Order, 1955, (hereinafter called
the Order) where under the licences were cancelled infringe the fundamental
rights of a citizen under Art. 19(1)(f) and (g) of the Constitution inasmuch as-the
said provisions constitute an arbitrary and unreasonable restriction on the
said rights; and (2) the Chief Controller has not complied with the provisions
of cl. 10 of the Order as he failed to give the Company reasonable opportunity
of being heard before the licences granted to them were cancelled and therefore
the act of the Chief Controller in cancelling the licences infringes the rights
of the Company under Art. 19(1)(f) and (g) of the Constitution.
The first point need not be considered as I
am clearly of the view that no " reasonable opportunity " within the
meaning of cl. 10 of the Order was given to the 424 petitioners by the Chief
Controller. The material parts of cls. 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 cl. 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 quasijudicial 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.(1), elaborated by Lord Justice Scrutton
Rex v. London County Council, Ex Parte Entertainments Protection Association
Ltd. (2) and authoritatively restated by this Court in Province of Bombay v.
Khusaldas S. Advani (3). They laid down the following conditions: (a) the body
of Dersons must have legal authority; (b) the authority should be given to
determine questions affecting the rights of subjects and (c) they should have a
duty to act judicially. All the three conditions are satisfied in this case.
Under the ,said clauses authority is conferred on the Central Government or any
other officer authorized in this behalf to cancel any licence granted under the
Order and the cancellation of a licence certainly affects the rights of
subjects. A clear duty to act judicially is imposed by cl. 10 on the said
authority. He has to give to the affected party " reasonable opportunity
of being heard ". It is therefore clear that under (1) [1924] 1 K.B. 171.
(2) [1931] 2 K.B. 215.
(3) [1950] S.C.R. 621.
425 cls. 9 and 10 of the Order, the Chief
Controller performs a quasi-judicial act and is therefore bound to follow the
principles of natural justice in cancelling a licence.
Clause 10 clearly and without any ambiguity
describes the principles of natural justice by using the three well-known words
and phrase, viz., ' reasonable opportunity " and " of being heard
They imply that when the charge is one of fraud the affected party is entitled
to know the particulars of fraud alleged, to inspect the documents on the basis
of which fraud is imputed to him and to a personal hearing to explain his case
and to absolve himself of the charge made against him. Without these elementary
safeguards provided by the authority, the opportunity to be heard given to the
licensee becomes an empty formality. With this background I shall scrutinize the
relevant facts to ascertain whether any such reasonable opportunity was given
to the petitioners in this case. The question falls to be decided only on the
affidavits filed by the parties. I shall assume for the purpose of this
petition that the affidavit filed by the Chief Controller represents what all
had taken place between him and the representatives of the Company. The notice
dated September 24, 1958, issued to the petitioners laconically states that
'the licences granted by the Joint Controller to the Company were fraudulently
obtained and therefore it was notified that the Government of India, in
exercise of the powers specified in paragraph 9 of the Order proposed to cancel
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 426 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 also personally
told him that in the absence of any particulars of the alleged fraud and
without inspection of the papers relied upon by the Chief Controller, it was
not possible for the petitioner Company to give a complete explanation and that
the petitioners reserved their right to give further explanation on getting the
said particulars and inspection of the said papers. They also requested the
Chief Controller to give the Company a personal hearing to meet the charges
after giving the necessary particulars and the inspection of papers asked for.
The Chief Controller told them that the issue of the licences had not been
authorized by him as they purported to be and that they had been obtained
fraudulently, though at that stage he was not able to say how exactly and by
whom the fraud was committed. He also did not give them the particulars of
fraud. The Director of the Company suggested that the fraud might have been
committed by reason of the Gujarati Maharashtrian and anti-Muslim feeling
amongst the employees of the Company.
On behalf of the petitioner Company, the
Chief Controller was told that it was not possible for the Company to give a
complete explanation and that they reserved their right to give further
explanation. The petitioners were not allowed inspection of the papers. By
their letter dated October 3, 1958, the Company recorded what took place at the
said interview and sent it to the Chief Controller. The petitioners again wrote
another letter to the' Chief Controller reminding him that they had not
received any particulars of the alleged fraud. This letter was personally
handed over to Mr. Sundaram, 497 the Director of Administration in the Office
of the Chief Controller on October 14, 1958. At that interview, Mr. Sundaram,
told the petitioners that the recommendations against which the disputed
licences were granted were not genuine. On October 16, 1958, the Chief
Controller cancelled the said five licences issued to the petitioner Company.
On the aforesaid facts, which we have assumed for the purpose of this petition,
can it be said that the Chief Controller gave the petitioners a
"reasonable opportunity of being heard " to enable them to establish
that no fraud had been committed in getting the said licences ? The learned
Solicitor General, appearing for the respondents, contended that the Company
admitted the fraud, that their only defence was that the fraud might have been
committed by reason of the Gujarati Maharashtrian and antiMuslim 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 cl. 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 relevant
documents so that they might give a further explanation to show cause against
the cancellation of the licences. The affidavit filed by the Chief Controller
only discloses that he, in his conversations with the Solicitor and the
Director of 428 the Company, mentioned to them that he did not issue the
licences. In the affidavit he admits that they asked for particulars and for
the inspection of the documents; but he says that the petitioners were told
sufficiently what was against them and their demand for the inspection of the
papers was mischievous. But what he told them about the particulars of the
alleged fraud is, in his own words:
" I told them that the issue of the
licences had not been authorised by me as they purported to be and that they
had been obtained fraudulently, though at that stage I was unable to say how
exactly and by whom the fraud was committed.
" The conversation with Mr. Sundaram on
October 14, 1958, does not carry the matter further. He has not been authorized
by the Central Government to make an enquiry and the fact that he told the
petitioners that the recommendations against which the disputed licences were
granted were not genuine, even if true, does not carry the matter any further.
The fact, therefore, remains that notwithstanding specific request by the
petitioners no particulars were furnished to them, no facilities for inspection
of the relevant documents given and no date was fixed for the enquiry in regard
to the alleged fraud.
The learned Solicitor General asked, what was
that that the petitioners could have gained if the particulars were given and
if they were allowed to inspect the relevant documents? This is a lopsided way
of looking at things. The question should have been, what reasonable
opportunity to be heard was given to the petitioners to establish their
innocence ? That apart, without apportioning any blame either on the
petitioners or on the respondents, many possibilities can be visualized, viz.,
(i) the petitioners were guilty of fraud;
they knew that their applications were
rejected by the Chief Controller, they got similar applications surreptitiously
introduced in the Bombay Office with forged recommendations under the signature
of the Deputy Chief Controller, New Delhi, Mr. M. L. Gupta, and obtained the
licences by practising fraud on the Joint Chief Controller, Bombay; (ii) a
third party, 429 presumably a rival businessman 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 the original applications being rejected and the fresh applications
substituted in the Bombay Office. The aforesaid are some of the possibilities
and there may be many others. When notice was issued to the petitioners on the
ground of fraud, they were certainly entitled to the particulars thereof. The
Chief Controller could have given the following particulars:
(i) the petitioners' applications were
rejected on a particular date; (ii) the orders of rejection were communicated
to them on a particular date; (iii) that he did not issue any letters to the
petitioners as regards the forwarding of their applications or the recommendations
to the Joint Chief Controller, Bombay; (iv) after the rejection of their
applications, the Office of the Chief Controller did not receive any letters
from the petitioners; (v) that the applications on which the licences were
issued were not the same applications sent to the Delhi Office; (vi) that the
signature of Mr. M. L. Gupta was forged; and (vii) that there is nothing in the
Bombay Office to show that they received any applications from the Delhi
Office. If these particulars were given to the petitioners, they might have by
inspecting the documents proved that there was no fraud, that there was no
order rejecting the applications, that the despatch book showed that the
applications were forwarded to the Bombay Office and that the original
applications were not in that Office, that the despatch book and the receipt
book showed the correspondence that passed between the Chief Controller and the
petitioners, and that the signature of Mr. Gupta on the recommendations was
genuine. It is not as if the petitioners admitted that they committed the
fraud. When they were confronted with the notice, unless the particulars were
given to them and the documents shown to them, it was not possible for them to
know whether a fraud was committed at all and, if committed, how was it
committed. Only for the purpose of explaining that no fraud was committed by
them, they asked for the particulars, for inspection of the relevant documents
and for a personal hearing: all these were denied to them. In the circumstances,
I find it not possible to hold that the petitioners were given reasonable
opportunity of being heard within the meaning of cl. 10 of the Order. The
stakes are high and the order of cancellation was made arbitrarily and in utter
disregard of the principles of natural justice. I should not be understood to
have expressed any opinion on the merits of the case. It may be, or it may not
be, that the petitioners were guilty of fraud; but they should have been given
a reasonable opportunity of being heard before they were condemned as having
committed the fraud and their licences were cancelled. 1, therefore, direct the
issue of a writ of certiorari quashing the order of the Chief Controller
cancelling the licences granted to the petitioners.
ORDER OF COURT In accordance with the opinion
of the majority the Petition is dismissed with costs.
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