2015 (9) TMI 143 - HC - Customs

Suspension/Cancellation of License to undertake foreign trade activity - power of DGFT Issuance of Show cause notice - Petitioner alleged that show cause notice was issued then, there was no need or necessity for passing suspension order that too without giving reasonable opportunity of being heard, such being contrary to section 9(4) and principles of natural justice Held that - show cause notice was issued and Petitioner was called for personal hearing If authority was of opinion that explanation given on record was inadequate and that certificate was renewed by collusion or by perpetrating fraud, no basis found for suspension order Nothing, in suspension order, which would hold that some situation which required immediate and emergent attention had taken place If authority suspended licence, it must make order in writing that must indicate some application of mind and relevant material There was absolutely no material in order of suspension Mere pendency of cancellation proceedings without anything could not be foundation for such order Impugned order quashed and set aside Petitioner to co-operate with authority in early conclusion of proceedings initiated pursuant to show cause notice Decided in favour of Petitioner.

Summary

Issues:
1. Suspension and cancellation of license under the Foreign Trade (Development and Regulation) Act, 1992.
2. Compliance with principles of natural justice in suspension orders.
3. Jurisdiction of the High Court in challenging suspension orders.

Analysis:
1. The Writ Petition challenges an order of suspension dated 31st October, 2014, under Section 9 of the Foreign Trade (Development and Regulation) Act, 1992. The Petitioner argues that the suspension order was issued without providing a reasonable opportunity of being heard, as mandated by Section 9(4) of the Act. The Petitioner contends that the suspension order was based on an incident from July 2013, which did not warrant immediate intervention without a proper hearing. The Respondent justifies the suspension citing serious violations and the need for immediate action to prevent further illegalities. The High Court notes the authority's power to suspend pending cancellation proceedings and emphasizes the need for a valid reason supported by adequate material for immediate action.

2. The Court examines the timeline of events leading to the suspension order and finds that while the show cause notice was issued on 14th October, 2014, the Petitioner was called for a hearing on 11th November, 2014. The Court observes that the addendum to the notice refers to a certificate granted to the Petitioner in May 2014, indicating the authority's acknowledgment of the continued authorization. However, the Court finds the reasons provided for the suspension order lacking in substance, as they merely reiterate the contents of the show cause notice without presenting new evidence or justifications for immediate intervention. The Court highlights the necessity for the authority to demonstrate a valid basis for suspension, supported by relevant and cogent material.

3. Consequently, the High Court quashes and sets aside the impugned suspension order, allowing the Writ Petition. The Court directs that the Petitioner's authorization, valid until 2014-15, shall remain effective, subject to the ongoing cancellation proceedings initiated by the authority. The Petitioner is instructed to cooperate with the authority to expedite the proceedings initiated following the show cause notice. The Court clarifies that its intervention should not be construed as expressing an opinion on the allegations in the show cause notice, and no costs are awarded in the matter.