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2012 (4) TMI 184 - HC - CustomsWrit Petition - the Deputy Joint Director of Foreign Trade ,the respondent no. 4, after issuing show-cause notice to which the petitioner had replied and was not found to be satisfactory, and after giving an opportunity of personal hearing, to which the petitioner did not respond, had passed an order under section 9 (4) and section 11 (2) of the Act and under Rule 10(b) of the FTRR, cancelling the license of the petitioner and directing payment of customs duty and interest and imposing fiscal penalty - the respondent no.4, passed the order directing imposition of penalty and the Joint Director of Foreign Trade, the respondent no.3, under section 11(4) had passed the order of suspension of Code of the petitioner for non-payment of penalty - Held that - Respondent No. 3 not being the Adjudication Authority had no power and authority or jurisdiction to pass the impugned suspending the Code - as before passing the order of suspension of Code the petitioners were not given an opportunity of hearing - as before the suspension of Code the consent of the Board was not obtained - the said order is without jurisdiction and illegal and cannot be sustained Writ Petition allowed
Issues Involved:
1. Whether an opportunity of hearing should have been granted before passing the order directing suspension of the Importer-Exporter Code (Code) under Section 11(4) of the Foreign Trade (Development and Regulation) Act, 1992 for non-payment of penalty. 2. Whether the respondent no.3 had the power, authority, or jurisdiction to pass the impugned order of suspension of Code dated 7th December, 2010. 3. Whether the consent or approval of the Board under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) was necessary before the order of suspension of Code was issued. Detailed Analysis: Issue 1: Opportunity of Hearing The court examined whether an opportunity of hearing should have been granted before the suspension of the Code under Section 11(4) of the Act. Referring to the Division Bench judgment in Jessop and Company Limited vs. Union of India, it was held that before suspending the Code, an opportunity of hearing should be granted. The judgment emphasized that suspension affects the rights of the petitioner and thus, a hearing is necessary to allow the petitioner to present their case, pay the dues, or explain why the suspension should not occur. The court concluded that the petitioner was entitled to a hearing before the suspension of the Code. Issue 2: Authority and Jurisdiction of Respondent No.3 The court analyzed whether respondent no.3 had the power and authority to suspend the Code. Section 11(4) of the Act specifies that the Code may be suspended by "the Adjudicating Authority" if the penalty is not paid. The court interpreted the definite article "the" to mean that only the specific adjudicating authority that imposed the penalty has the power to suspend the Code. Since the Deputy Director General of Foreign Trade (respondent no.4) imposed the penalty, only respondent no.4 had the authority to suspend the Code. The court rejected the argument that a notification under Section 13 of the Act conferred jurisdiction on respondent no.3, as it only laid down the powers concerning pecuniary limits and did not address suspension of the Code. Therefore, the suspension order by respondent no.3 was without jurisdiction and illegal. Issue 3: Consent of the Board under Section 22 of SICA The court examined whether the consent of the Board for Industrial and Financial Reconstruction (BIFR) was necessary before suspending the Code. Section 22(1) of SICA states that during the implementation of a sanctioned scheme, no proceedings for execution or distress against the properties of the industrial company shall proceed without the Board's consent. The court considered the Code as a property or asset of the business and concluded that suspension of the Code for non-payment of penalty is akin to execution proceedings. Thus, the suspension without the Board's consent was illegal. The court referenced relevant judgments, including Himalaya Rubber Products Limited vs. BIFR and Allied Resins and Chemicals Ltd. vs. Union of India, which supported the requirement of the Board's consent for such actions. Conclusion: The court found that: 1. The petitioner was entitled to a hearing before the suspension of the Code. 2. Respondent no.3 did not have the authority or jurisdiction to suspend the Code, as it was not "the Adjudicating Authority." 3. The suspension of the Code without the consent of the Board was illegal under Section 22 of SICA. Judgment: The impugned order dated 7th December, 2010, suspending the Code was set aside and quashed. The writ petition was allowed with no order as to costs. Urgent photostat certified copies of the judgment and order were to be provided to the appearing parties on a priority basis.
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