1996 (7) TMI 154 - SC - Customs

Validity of the Customs House Agents Licensing Regulations 1984 - Regulation 8 which introduced an arbitrary and irrational provision regarding grant of temporary licence before an applicant qualifies at the examination to be held Held that - Regulation 8 of the 1984 Regulations appears to have been framed on the basis of the aforesaid recommendation of Report of the Committee for Subordinate Legislation regarding grant of temporary licence for a period of one year which period can be extended up to 2 years on conditions prescribed in the proviso to Regulation 8. If Regulation 8 has been framed on the pattern suggested by the Committee for Subordinate Legislation we are unable to appreciate as to how Regulation 8 can be held to be invalid arbitrary or ultra vires It cannot be said that by postponing the qualifying examination for a period of one year and on fulfilling the conditions of the proviso to Regulation 8 up to 2 years in respect of temporary licensee any procedure has been prescribed or adopted. From reading Regulations 6 8 and 20 it is apparent that the 1984 Regulations have given due weight to the experience as well as to the merit. Appeal dismissed.

Issues Involved
1. Validity of the Customs House Agents Licensing Regulations, 1984.
2. Comparison with previous regulations (1960 Rules and 1965 Regulations).
3. Conditions for granting a temporary license.
4. Requirement and timing of examinations for Customs House Agents.
5. Allegations of arbitrariness and irrationality in Regulation 8.
6. Recommendations from various committees and their impact on the regulations.
7. Judicial precedents concerning similar regulations.

Detailed Analysis

1. Validity of the Customs House Agents Licensing Regulations, 1984
The appellants challenged the validity of the 1984 Regulations, arguing that they introduced arbitrary and irrational provisions, particularly regarding the grant of temporary licenses before an applicant qualifies through an examination. The Court upheld the validity of the 1984 Regulations, stating that they were framed based on recommendations from the Committee for Subordinate Legislation, which suggested issuing temporary licenses initially for a period of two years and converting them into permanent licenses based on satisfactory turnover and efficiency.

2. Comparison with Previous Regulations (1960 Rules and 1965 Regulations)
Under the 1960 Rules and 1965 Regulations, applicants were required to pass an examination before being granted a license. The 1984 Regulations, however, allowed for the issuance of temporary licenses before passing the examination, provided certain conditions were met. The Court noted that the 1984 Regulations introduced several changes, including the requirement of one year of experience in customs clearance and financial viability supported by a bank certificate.

3. Conditions for Granting a Temporary License
Regulation 8 of the 1984 Regulations allowed applicants to operate as Customs House Agents on a temporary license for one year, extendable up to two years under specific conditions. The Court found that this provision was not arbitrary or irrational as it incorporated checks and balances, including the requirement for applicants to have experience and to pass a qualifying examination within a specified period.

4. Requirement and Timing of Examinations for Customs House Agents
The appellants argued that the 1984 Regulations allowed individuals to act as Customs House Agents without their suitability and qualifications being tested, unlike the earlier regulations. The Court held that the 1984 Regulations still required applicants to pass a written or oral examination within one year of obtaining a temporary license, thus ensuring that their qualifications were eventually tested.

5. Allegations of Arbitrariness and Irrationality in Regulation 8
The appellants contended that Regulation 8 was arbitrary and irrational as it allowed individuals to act as Customs House Agents without passing an examination. The Court dismissed this argument, stating that Regulation 8 included provisions for temporary licensing based on recommendations from the Committee for Subordinate Legislation, which emphasized the need for practical experience and subsequent examination.

6. Recommendations from Various Committees and Their Impact on the Regulations
The Court referred to the recommendations from the Study Team on the Customs Department (1967) and the Committee for Subordinate Legislation (1983), both of which suggested tightening the rules for clearing agents and issuing temporary licenses to monitor performance. The 1984 Regulations were found to be consistent with these recommendations, thereby validating their provisions.

7. Judicial Precedents Concerning Similar Regulations
The appellants cited previous judgments, including Chandrakant Krishnarao Pradhan v. Collector of Customs and D. V. Bakshi v. Union of India, to argue against the 1984 Regulations. The Court found these judgments inapplicable as they did not address the specific issue of temporary licensing before passing an examination. The Court also highlighted that the utility of temporary licenses was recognized in the D. V. Bakshi case for assessing the performance of license-holders.

Conclusion
The Supreme Court dismissed the appeal, upholding the validity of the Customs House Agents Licensing Regulations, 1984. The Court found that the regulations were neither arbitrary nor irrational and were consistent with recommendations from relevant committees. The provisions for temporary licensing and subsequent examination were deemed appropriate for ensuring the qualifications and performance of Customs House Agents.

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