1991 (4) TMI 145 - HC - Customs

Summary

Issues Involved:
1. Legality of the telex message restraining the petitioner from operating the advance licence.
2. Compliance with the principles of natural justice.
3. Validity of the Customs Authorities' refusal to release the imported goods.
4. Authority and jurisdiction of the respondents under the Imports (Control) Order, 1955.

Detailed Analysis:

1. Legality of the Telex Message:
The primary issue is whether the respondents were justified in issuing the telex message restraining the petitioner from operating the advance licence. The petitioner had received an advance licence for importing pig iron under the Duty Exemption Scheme, which was subsequently enhanced. However, the Customs Authorities refused to release the goods based on the telex message from the Joint Chief Controller of Imports & Exports, New Delhi, instructing the petitioner not to operate the licence until further advice.

2. Compliance with the Principles of Natural Justice:
The court emphasized the importance of natural justice, citing the Supreme Court's ruling in Liberty Oil Mills, which stated, "We do not think that it is permissible to interpret any statutory instrument so as to exclude natural justice unless the language of the instrument leaves no option to the Court." The court noted that no opportunity of being heard was given to the petitioner before issuing the telex, which is a violation of the principles of natural justice. The court further stated, "The rules of natural justice have to be fulfilled at the threshold before the power under 9(3) comes into play."

3. Validity of the Customs Authorities' Refusal to Release the Imported Goods:
The Customs Authorities refused to release the goods based solely on the telex message. The court found this action unjustified, as the telex was issued without a pending investigation or any prima facie suspicion of wrongdoing by the petitioner. The court highlighted that the reasons provided by the respondents for initiating an investigation were not substantial and did not justify the harsh action taken against the petitioner.

4. Authority and Jurisdiction of the Respondents under the Imports (Control) Order, 1955:
The respondents claimed to have acted under Clauses 8 and 9 of the Imports (Control) Order, 1955. However, the court found that no proceedings were pending under these clauses, and no show cause notice had been served on the petitioner. The court stated, "The action of the Respondents Nos. 4 to 6 therefore in issuing the telex is not only ultra vires the Imports (Control) Order, 1955, but also in violation of the principles of Natural Justice." The court also noted that the respondents were unable to disclose the source of their power for issuing the telex, and the interim suspension was not supported by any substantive clause of the Order.

Conclusion:
The court held that the writ application must be allowed. The impugned telex was set aside, and the respondents were directed to release and allow clearance of the said goods covered by the advance licence. The court clarified that this order does not restrain the respondent licensing authority from taking action if an investigation is subsequently commenced under the said Order against the petitioner. The petitioner was awarded the cost of the application by the respondents 4 to 6. The prayer for stay made by the respondents was refused.