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TMI Blog1978 (3) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... nt there is a provision for obtaining approval of the Government of India. The said para 9.4 reads as follows : Government approval: Approval satisfactory to the purchaser and its council to the consummation of the transaction contemplated by this agreement shall have been obtained from the Government of India pursuant to the provisions of the Foreign Exchange Regulation Act, 1973, and any other applicable laws, rules or regulations of India, and such approval shall be and remain in full force and effect at all relevant times. At para 10.4 of that agreement similar provisions were made for obtaining Government approval satisfactory to the seller. On 8th of June, 1977, Mr. A.B. Mason, President of Ludlow Jute Company Ltd., addressed a letter to Mr. Mohan Dharia, Minister of Commerce, Government of India, submitting the copy of the said agreement and requesting him for consideration of their pending application for approval of the sale of the assets and to hold a meeting to discuss the, matter at the early convenience of the Ministry. Thereafter, on or about September 8, 1977, Sri Jit Paul who was acting on behalf of the petitioner-company, received a letter from the vice-presi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, inter alia , to the Director of Investment, Department of Economic Affairs, Government of India, for clearance of respondent No. 3's proposal to transfer its Indian business to the petitioner and pursued the same with them. The petitioner, Apeejay (Pvt.) Ltd., also met the Government authorities and represented its case and participated on or about June 28, 1977, in a joint meeting with the representatives of the Government of India and of the respondent No. 3. The petitioner was also in terms of clause 10.4 of the agreement under the obligation to obtain all approvals as were necessary under all applicable laws and regulations for consummation of the transactions contemplated by the agreement dated the 8th June, 1977, between the petitioner and the respondent No. 3. In view of the Government's decision the agreement between them had become inoperative and null and void. An affidavit-in-opposition has also been filed on behalf of the respondents Nos. 1 and 2 and affirmed by Joti Prasad Mukherji, Director (Investment), Ministry of Finance (Department of Economic Affairs). In that affidavit it is stated that the petitioner not being an applicant under the Foreign Exchange Regul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent has not assigned any reason whatsoever. Even in the affidavit-in-opposition, the Central Government did not disclose any reason for such disapproval. In the present writ petition, the petitioner does not seek to enforce any contract, but the petitioner challenges that the order of the Central Government is a nullity as it grossly violated the principles of natural justice and accordingly it should be quashed. Mr. Chakravorthi, appearing on behalf of the respondents Nos. 1 and 2, contended that the petitioner had no legal right. It had no right to get any opportunity of hearing as they did not submit any application. The communication of the Government of India disapproving the proposed transaction was not statutory in character and had not created or imposed any statutory right on the petitioner. Moreover, the petitioner being a private limited company and, as such, it could not claim any fundamental rights under arts. 19 and 31 of the Constitution. No injury of any nature has been caused to the petitioner by reason of any alleged contravention of any of the provisions of any enactment or ordinance or any order, rule, regulation and as such the present petition is not maintai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has got no fundamental rights under arts. 19 and 31 of the Constitution. Certain restrictions have been imposed upon a person resident outside India to acquire the whole or any part of any undertaking in India of any person or company except with the general or special permission of the Reserve Bank of India, under section 29 of the Foreign Exchange Regulation Act, 1973. There is also a proviso to sub-section (2)( c ) of section 29 that no application shall be rejected unless the parties who may be affected by such rejection have been given a reasonable opportunity of making a representation in the matter. So, under the Foreign Exchange Regulation Act, the permission of the Reserve Bank of India was necessary. But it appears that the Reserve Bank of India directed the respondent No. 3 to forward the agreement to the Central Government for getting approval before the permission was granted and, in pursuance of the said direction, the agreement was forwarded to the Central Government for its approval. The condition precedent of enforcing the agreement of 8th June, 1977, is to get the approval of the Central Government which is required under the Foreign Exchange Regulation Act. Cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of disapproval of the Government inasmuch as such approval was the condition precedent of the contract. Thus, the petitioner has been deprived of its right under the contract and its remedy. Even in a suit, the petitioner cannot challenge the decision of the Central Government. In D.F.Q.'s case, AIR 1973 SC 205, as referred to hereinabove, the respondents' right to sue for breach of contract and for damages was not barred. Applying the principles as laid down by the Supreme Court in D.F.O., South Kheri v. Ram Sanehi Singh, AIR 1973 SC 205, I hold that the petitioner has the right to maintain the present writ application challenging the action of the Central Government. To maintain a writ application it is not always necessary that every order passed by the public authorities or the instrumentalities of the State must be statutory in nature. A writ lies even against an executive or administrative order which involves civil consequences, abridges or takes away any right or affects prejudicially the rights of a person even when the foundation of such right is based on a. contract, if it is shown to the satisfaction of the court that such order is passed without ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lfilled, the contract became a nullity. The facts of the present case are quite different and, in my opinion, that decision would be of no assistance to respondent No. 3. In Longlands Farm's case [1968] 3 All ER 552 (Ch D), the plaintiff owned 57 acres of agricultural land. In 1964, he and the defendants, a property development company, executed a document in which it was stated that the defendants were agreeable to purchase the land of the plaintiff subject to the defendants' obtaining planning permission to their entire satisfaction for the development of the land in question. The plaintiff agreed and accepted these terms and acknowledged receipt of 5 in consideration of his holding the property for the defendants. A few days later the defendants registered the document as a contract under the Land Charges Act, 1925. In March, 1967, the plaintiff called on the defendants within 28 days either to apply for planning permission or to agree to the cancellation of the Contract and to vacate the registration at the land charges register. The defendants replied that they were prepared to apply for planning permission if the plaintiff so desired. But, in view of local circumstance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile dismissing the appeal of the petitioner under section 165 of the Army Act and that the order of the Central Government was illegal and ultra vires and should be quashed by a writ of certiorari. The Supreme Court in that case held that there was no express obligation imposed by section 164 or by section 165 of the Army Act on the confirming authority or upon the Central Government to give reasons in support of its decision to confirm the proceedings of the court martial. The Supreme Court considered rr. 61 and 62 of the Army Rules which prescribed the standard form of recording the opinion of the court martial on each charge and of an announcement of that finding. These rules omit all mention of the evidence or the reasoning by which the finding is reached by the court martial. Rules 61 and 62 are to the following effect : "61. Consideration of finding. (1) The court shall deliberate on its finding in closed court in the presence of the judge-advocate. (2) The opinion of each member of the court as to the finding shall be given by word of mouth on each charge separately. 62. Form, record and announcement of finding. (1) The finding of every charge upon which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process. The rule requiring reasons to be given in support of an order is like the principle of audi alteram partem, a basic principle of natural justice, which must inform every quasi-judicial process and this rule must be observed in its proper spirit and mere pretence of compliance with it would not satisfy the requirement of law. Where the fulfilment of condition precedent of a contract does not depend upon the act of the contracting parties but depends upon the approval of the Central Government and such conditions are the requirement of a statute, in that case, either of the contracting parties has a right to challenge the decision of disapproval of the Government on the ground that in the impugned decision no reasons are recorded, or reasons so recorded are irrelevant or they have no rational nexus to the object or such reasons are coloured by policy or expediency and, in such a case, the court is competent to set aside such a decision in a writ proceeding. In the instant case, I have already said that the proviso to sub-section (2)( c ) of section 29 of the Foreign Exchange Regulation Act provides that before any permission is accorded by the Reserve Bank an opportun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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