1986 (2) TMI 245 - HC - Customs

Summary

Issues Involved:
1. Authority of the respondents under para 292 of the Import Trade Control Rules to cancel release orders issued under para 97.
2. Whether an executive order under para 292 can deprive the appellants of their right to property.
3. Validity of the respondents' actions in light of alleged misrepresentations by the appellants.
4. Applicability of changes in government policy to previously issued release orders.
5. Legal implications of administrative instructions versus statutory laws.

Detailed Analysis:

1. Authority of the Respondents Under Para 292:
The primary question was whether the respondents, the Minerals and Metal Trading Corporation of India Limited and the Joint Chief Controller of Exports and Imports, acted under the authority of law when canceling release orders under para 292 of the Import Trade Control Rules. The court examined whether these rules, which were administrative instructions issued by the Central Government, had the force of law. It was noted that the rules and procedures for the year 1973-74 were not pursuant to any legislation, but were administrative instructions. The court concluded that para 292, which allows for the cancellation of release orders obtained by fraud or misrepresentation, is part of the administrative rules and procedures and therefore within the respondents' authority.

2. Executive Order and Right to Property:
The appellants argued that an executive order under para 292 is not a law and cannot deprive them of their right to property, as guaranteed under Article 19(1)(f) of the Constitution. The court held that the right to property vested in the appellants by the release orders was subject to the conditions laid down in para 292, which allows for cancellation in cases of fraud or misrepresentation. The court emphasized that property rights can be created by executive powers but cannot be taken away without legal authority. However, in this case, the executive rules provided a comprehensive code for both allotment and cancellation, thus the cancellation was within the respondents' authority.

3. Alleged Misrepresentations by the Appellants:
The respondents issued show-cause notices to the appellants, alleging that the release orders were obtained by misrepresenting the actual consumption of stainless steel. The court noted that the respondents were entitled to investigate and take corrective measures if there was a reason to believe that the release orders were obtained fraudulently. The appellants' contention that they were not guilty of misrepresentation, as found by Muktadar, J., was dismissed by the court, stating that this finding was made at an interlocutory stage and could not operate as res judicata or estoppel.

4. Applicability of Changes in Government Policy:
The appellants argued that the change in government policy could not be applied retrospectively to release orders that had already been issued. The court held that the question of retrospective application did not arise, as the respondents were merely examining whether the release orders were obtained by misrepresentation. The court affirmed that the respondents had the authority to review and cancel release orders if they were found to be obtained fraudulently, regardless of any change in policy.

5. Administrative Instructions Versus Statutory Laws:
The court differentiated between executive acts and legislative laws, emphasizing that the Import Trade Control Rules and Procedures were administrative instructions and not statutory laws. However, it held that these rules formed a complete code for the allotment and cancellation of imported steel quotas. The court cited various precedents to support the view that executive actions, when backed by administrative rules, could have the force of law in the absence of specific legislative provisions. The court concluded that the respondents' actions were within their executive authority and did not violate any statutory provisions.

Conclusion:
The court dismissed the appeals, holding that the respondents acted within their authority under para 292 of the Import Trade Control Rules. The actions taken by the respondents were deemed to be administrative and within the scope of their executive powers. The court affirmed that the appellants' right to property under the release orders was subject to the conditions laid down in the administrative rules, and the respondents were entitled to cancel the release orders if obtained by misrepresentation. The appeals were dismissed with no costs, and an advocate's fee of Rs. 100/- each was awarded.