1959 (12) TMI 1 - SC - Customs

Whether the provision for cancellation of licences on the ground that they have been obtained by fraud or misrepresentation is a reasonable restriction in the interests of the general public on the exercise of the petitioners right under Article 19(1)(f) and (g)? Held that - On a consideration of the entire background in which the notice for cancellation was issued, what was stated by the petitioners in their letter dated September 27, and what we find to have taken place at the interviews on the 30th September and the 14th October, specially the fact that the Company s representatives appeared to have been more concerned to show that the Company was not a party to the fraud than to show that there was no fraud practised at all, we are of opinion that the omission to give further particulars or inspection of papers did not deprive the petitioners of a fair chance of convincing Mr. Bilgrami that the grounds on which cancellation of the licences was proposed did not exist, or even if they existed, they did not justify cancellation of the licences. We are therefore of opinion that the opportunity that was given to the petitioners in the present case amounted to a reasonable opportunity of being heard against the action proposed. Appeal dismissed.

Issues Involved:
1. Constitutionality of Clause 9(a) of the Import Control Order under Articles 19(1)(f) & (g) and Article 31.
2. Compliance with Clause 10 of the Imports Control Order regarding the licensee's right to a reasonable opportunity of being heard.
3. Authority of the Chief Controller of Imports and Exports to make an order under Clause 9 of the Imports Control Order.
4. Alleged denial of equal protection under Article 14 of the Constitution.

Issue-wise Detailed Analysis:

1. Constitutionality of Clause 9(a) of the Import Control Order:
The petitioners argued that Clause 9(a) of the Import Control Order violated their rights under Articles 19(1)(f) & (g) and Article 31 of the Constitution. Clause 9(a) allows the Central Government or the Chief Controller of Imports and Exports to cancel any license obtained by fraud or misrepresentation. The court held that the provision for cancellation on the grounds of fraud or misrepresentation is a "reasonable restriction in the interests of the general public" on the exercise of the petitioners' rights under Article 19(1)(f) and (g). The court emphasized that the scheme of control and regulation of imports by licenses is based on the premise that the license is granted on a correct statement of relevant facts. Therefore, if a license is obtained by fraud or misrepresentation, it is reasonable to cancel such a license. The court concluded that the cancellation under a valid law does not infringe any right under Article 31.

2. Compliance with Clause 10 of the Imports Control Order:
The petitioners contended that the order of cancellation was made without giving them a reasonable opportunity to be heard, as mandated by Clause 10 of the Imports Control Order. The court examined whether the petitioners were given a fair chance to contest the proposed cancellation. It was found that the petitioners were informed of the general nature of the fraud and were given a personal hearing. However, they were not provided with specific particulars of the fraud or allowed to inspect relevant documents. The court held that the omission to provide further particulars or inspection of papers did not deprive the petitioners of a fair chance to contest the proposed cancellation. The court concluded that the opportunity given to the petitioners was reasonable and complied with the requirements of Clause 10.

3. Authority of the Chief Controller of Imports and Exports:
The petitioners argued that Mr. Bilgrami, the Chief Controller of Imports and Exports, had no authority to make an order under Clause 9 of the Imports Control Order. The court noted that an amendment made on February 27, 1958, explicitly authorized the Chief Controller of Imports and Exports to cancel any license granted under the Imports Control Order. Consequently, the court found that Mr. Bilgrami had the requisite authority to cancel the licenses, and this ground was not pressed by the petitioners' counsel.

4. Alleged Denial of Equal Protection under Article 14:
The petitioners claimed that they were denied equal protection of the laws under Article 14 of the Constitution, as other similarly situated persons were given a proper opportunity and a personal hearing before any action was taken against them. The court held that if the petitioners were not given a reasonable opportunity to be heard, that alone would entitle them to relief. The question of whether other persons were given a fair opportunity was deemed irrelevant. Since the court found that the petitioners were given a reasonable opportunity, this ground was not pressed further.

Separate Judgment by Subba Rao, J.:
Justice Subba Rao dissented from the majority opinion. He emphasized that the petitioners were not given a "reasonable opportunity of being heard" as required by Clause 10 of the Order. He argued that the petitioners were entitled to know the particulars of the alleged fraud, inspect the relevant documents, and have a personal hearing to explain their case. Justice Subba Rao concluded that the denial of these elementary safeguards rendered the opportunity to be heard an empty formality. He directed the issuance of a writ of certiorari quashing the order of the Chief Controller canceling the licenses.

Order of Court:
The petition was dismissed with costs in accordance with the majority opinion.

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