2005 (1) TMI 573 - HC - Indian Laws

Summary

Issues:
1. Cancellation of Duty Free Replenishment Certificate (DFRC) Licences without show cause notice.
2. Bona fide purchase of licences and entitlement to use them for import.
3. Licences being subject to "Actual User" condition.
4. Transferability of licences and prohibition on transfer to non-actual users.
5. Remedy available to the petitioner against the parties from whom licences were purchased.

Analysis:

1. The petitioner challenged the cancellation of DFRC Licences without a show cause notice. The original licence holders did not surrender the licences, leading to show cause notices issued to them. The cancellation order was passed due to non-response to these notices, and the petitioner's claim of not receiving a show cause notice was dismissed.

2. The petitioner contended that as a bona fide purchaser of the licences, it was entitled to use them for import, especially since the licences were labeled as "Transferable." However, the Court found that the licences were also subject to other conditions, including the "Actual User" condition, which the petitioner did not meet, rendering the licences unusable for import.

3. The DFRC Licences were issued under specific conditions, including the "Actual User" requirement for certain categories of goods. Since the petitioner was not the actual user, it was not entitled to utilize the licences for import purposes, as per the policy guidelines governing such transactions.

4. Despite the mention of "Transferable" on the licences, the Court emphasized that the transfer of licences to non-actual users was prohibited by the import and export conditions specified for the goods covered by the licences. The Court highlighted that ignorance of the law regarding such conditions did not exempt the petitioner from the policy restrictions.

5. The Court noted that the petitioner had further transferred the licence to another party, which weakened its claim for relief on equitable grounds. The Court concluded that the petitioner's remedy lay against the parties from whom it had initially purchased the licences, and not against the respondents who cancelled the licences based on non-compliance with policy conditions.

In the final judgment, the Court dismissed the petition, ruling that the petitioner was not entitled to any relief sought due to its failure to meet the "Actual User" condition and the prohibition on transferring the licences to non-actual users. The Court affirmed that the petitioner's remedy lay against the parties from whom it had acquired the licences, and not against the respondents who enforced the policy conditions.