Report No. 29
Category 8.-Trafficking in Licences
162. Trafficking in licences, permits etc. (Category 8).-We now come to the eighth category of the offences mentioned by the Santhanam Committee, namely, "Trafficking in licences, permits etc.".
There are no direct statutory provisions creating a specific offence of this nature. Some of the important enactments dealing with the control of industries, imports and exports and foreign exchange1, seem, however, to imply, that ordinarily a licence, permit or similar other document issued under those enactments cannot be transferred for profit, at least where the competent authority imposes such conditions in the licences, etc.
1. For details, see Appendix 8.
163. The subject has been dealt with in the Report of the Committee at various places. The Committee has discussed the procedure for the scrutiny of applications received under the Industries (Development and Regulation) Act, 19511, and illustrated the unfair practices that may arise in the absence of field verification of progress reports, e.g., the licensee utilising the services of subcontractors instead of setting up the factory himself2. The Committee has made certain recommendations3 regarding import and export control also.
It has observed, that corruption in that sphere arose from (i) issue of licences or quota certificates in fictitious names, (ii) issue of licences to actual users on forged certificate and without proper scrutiny of documents, (iii) issue of licences to prospective exporters on the basis of false or forged orders of foreign suppliers, (iv) theft of blank licences, etc. by the staff and supply of the same to parties for value, (v) theft of issued licences by the staff at the time of the despatch or when returned by parties for revalidation, etc., and sale to other parties, (vi) applying for licences even after changes in the constitution or ownership of the importer's business, (vii) trafficking in licences, (viii) applying for licences in the name of fictitious firms, (ix) soliciting of licences, etc4.
As regards import licences granted as export incentives, the Committee was told, that they were transferable and this caused serious damage to the domestic market and foreign exchange resources5. (It also referred6 to the malpractice of material allowed to be imported for use in manufacturing exportablegoods being sold for huge profits, and recommended that such offences should be punishable with imprisonment of at least 3 years and a fine which would be twice the market price of the imported goods).
1. Report of the Santhanam Committee, pp. 243 and 245.
2. Report of the Santhanam Committee, p. 247.
3. Report of the Santhanam Committee, pp. 247 and 249.
4. Report of the Santhanam Committee, pp. 252 to 254, para. 7, items (iii), (iv), (v), (vii), (xv), (xx), (xxvii) and (xxviii).
5. Report of the Santhanam Committee, p. 254, para. 9.
6. Report of the Santhanam Committee, p. 258, paras. 10 and 18.
164. Meaning of 'Trafficking' and points suggested in comments.-The Committee has not suggested any definition of "trafficking". A definition of "trafficking" suggested in one of the comments is, "the outright sale of licenses and permits and allowing any other person besides the one intended, to enjoy the fruits of such licences and permits.".
Another comment states, that "trafficking" takes place when a licence is transferred without the permission of the competent authority, though such transfers are prohibited by law, or when a premium is charged on such transfers in spite of a prohibition under the law.
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