1981 (5) TMI 111 - HC - Companies Law

Summary

Issues Involved:
1. Fundamental right to carry on trade or business under Article 19(1)(g) of the Constitution.
2. Validity and duration of the permission granted by the Reserve Bank of India (RBI).
3. Violation of principles of natural justice due to the absence of a show-cause notice.
4. Application of the principle of promissory estoppel.
5. Compliance with administrative instructions issued by the Ministry of Finance.
6. Allegation of contempt of court.

Issue-wise Detailed Analysis:

1. Fundamental Right to Carry on Trade or Business Under Article 19(1)(g):
The petitioner argued that the revocation of permission to hold ice-shows violated his fundamental right to carry on trade or business under Article 19(1)(g) of the Constitution. The court held that the restriction imposed by the administrative instructions was patently in public interest and there was no breach of Article 19(1)(g). The need for preserving and augmenting foreign exchange was emphasized as a vital national interest, justifying the restriction on the petitioner's activities.

2. Validity and Duration of the Permission Granted by the RBI:
The petitioner contended that the permission granted by the RBI on March 1, 1979, was without any time-limit and should remain valid until his foreign exchange reserves in India were exhausted. The court found that although no express time-limit was set, the permission was inferred to be for a limited duration based on the information provided by the petitioner himself. The court concluded that the initial permission did not extend beyond May 1980, as both parties had proceeded on this understanding.

3. Violation of Principles of Natural Justice Due to Absence of a Show-Cause Notice:
The petitioner claimed that the impugned order was bad in law for violating the principles of natural justice as no show-cause notice was issued before revoking the permission. The court noted that the petitioner was already furnished with copies of the instructions issued by the Ministry of Finance and had the opportunity to challenge the grounds in court. Therefore, the court found no necessity for a fresh show-cause notice, deeming it a futile exercise since the RBI was bound to follow the Ministry's instructions.

4. Application of the Principle of Promissory Estoppel:
The petitioner invoked the principle of promissory estoppel, arguing that the RBI could not revoke the permission as it would cause serious detriment to his investment. The court rejected this submission, stating that the permission was limited in duration and related to the first set of shows. The petitioner failed to demonstrate an express and unequivocal promise for perpetual permission. The court emphasized that individual equities have a doubtful claim in the sensitive area of foreign exchange administration.

5. Compliance with Administrative Instructions Issued by the Ministry of Finance:
The respondent justified the revocation of permission based on the administrative instructions issued by the Ministry of Finance in 1962 and reiterated in 1980, which prohibited the engagement of foreign cabaret artistes, musicians, and other floor-show artistes. The court upheld the respondent's action, emphasizing the importance of preserving foreign exchange and the government's discretion in preventing activities that could potentially reduce foreign exchange reserves. The court found that the ice-shows fell within the scope of the prohibited activities mentioned in the instructions.

6. Allegation of Contempt of Court:
The respondent alleged that the petitioner committed contempt of court by holding an ice-show in Madras during the pendency of the writ petition. The court found that since the shows were held before the decision of the writ petition and there were no prohibitory orders, the petitioner could not be held guilty of contempt. The court dismissed the contempt petition, noting that the context had changed as the shows were conducted before the show-cause notice was deemed effective.

Conclusion:
The writ petition was dismissed with costs, and the rule was discharged. The court upheld the RBI's revocation of permission based on the administrative instructions and found no violation of the petitioner's fundamental rights or principles of natural justice. The contempt petition was also dismissed, absolving the petitioner of any contempt of court.