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TMI Blog1988 (4) TMI 352X X X X Extracts X X X X X X X X Extracts X X X X ..... India only one foreign national as against 18 Indians. In 1972, the petitioners established a separate branch in Bombay for classification and certification of ships. The branch was established pursuant to an authorisation issued by the Director-General of Shipping, Bombay. By a letter dated 26th July, 1972, the Reserve Bank of India granted permission to the petitioners to carry on such business for five years. As from January 1, 1974, the Foreign Exchange Regulation Act, 1973, came into operation. Under section 29 of this Act, inter alia, a person who is not a citizen of India or a company (other than a banking company) which is not incorporated under any law in force in India or any branch of such company cannot carry on any activity of a trading, commercial or industrial nature without the permission of the Reserve Bank of India. Nor can it open or establish a branch or office in India for this purpose. The petitioners, therefore, made an application on March 30, 1974, to the Reserve Bank of India (the respondent) for permission under section 29(2)(a) of the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as "the FERA"), to continue to carry on the activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er extension of such permission would be granted beyond December 31, 1986. The petitioners made representations to the Deputy Secretary, Ministry of Finance in December, 1986, after receipt of this letter. They also forwarded a representation dated December 12, 1986, to the Reserve Bank of India requesting that they be given a reasonable opportunity for showing that the permission should be granted to them. They also requested that the grounds for refusing extension should be communicated to them. The petitioners also enclosed detailed particulars of various contracts which they had already entered into as also of the proposed contracts under negotiation. The petitioners had seven pending contracts. Most of these contracts were either with the Government of India or with public sector undertakings. For example one of the contracts related to inspection of machinery/components for the Director, Research and Development Establishment Engineers, Ministry of Defence. Another contract was with Vikram Sarabhai Space Centre. A third contract was with the National Fertilizers Ltd. and so on. Of these, only two contracts were with private parties for certification and inspection of goods f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to such conditions, if any, as the Reserve Bank may think fit to impose or reject the application: Provided that no application shall be rejected under this clause unless the parties who may be affected by such rejection have been given a reasonable opportunity for making a representation in the matter... (4)(a) where at the commencement of this Act any person or company (including its branch) referred to in sub-section (1) holds any shares in India .... then, such person or company (including its branch) shall not be entitled to continue to hold such shares unless before the expiry of a period of six months from such commencement .... such person or company (including its branch) has made an application to the Reserve Bank .... for permission to continue to hold such shares. (b) where an application has been made under clause (a), the Reserve Bank may, after making such inquiry as it may deem fit, either allow the application subject to such conditions, if any, as the Reserve Bank may think fit to impose or reject the application: Provided that no application shall be rejected under this clause unless the parties who may be affected by such rejection have been given a reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng terms: "We have been told that wherever Parliament has intended a hearing it has said so in the Act and the Rules and inferentially where it has not specificated it is otiose. There is no such sequitur. The silence of a statute has no exclusive effect except where it flows from necessary implication." In the case of S.L Kapoor v. Jagmohan, AIR 1981 SC 136, at page 142, also the Supreme Court stated, "it is not always a necessary inference that if opportunity is expressly provided in one provision and not so provided in another provision, it is to be considered as excluded from that other provision. It may be a weighty consideration to be taken into account but the weightier consideration is whether the administrative action entails civil consequences." As far back as in 1978, in the case of Smt. Maneka Gandhi v. Union of India, AIR 1978 SC 597, the Supreme Court, while discussing the principle of audi alteram partem, observed (page 629): "The audi alteram partem rule is intended to inject justice into the law and it cannot be applied to defeat the ends of justice, or to make the law 'lifeless, absurd, stultifying, self-defeating or plainly contrary to the common sense of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of natural justice. My attention was invited to a decision of the Delhi High Court in Writ Petition No. 1191 of 1987, in the case of Himalayan Art Gallery v. Union of India, decided on May 26, 1987. In that case, a money changer's licence which was granted under section 7 of the FERA was revoked without giving any notice to the petitioners to show cause against the revocation. In that case, it was submitted by the respondents that several irregularities had come to light. The petitioners had violated the conditions of the licence and the licence was being used to camouflage illegal transactions in foreign exchange. In these circumstances, the Delhi High Court refused to intervene. In the course of its judgment, the Delhi High Court made a distinction between two clauses of sub-section (3) of section 7 of the Act. Clause (i) of section 7(3) permits revocation if it is in the public interest to do so. Clause (ii) of section 7(3) deals with revocation if the money changer has not complied with the conditions subject to which the authorisation was granted. In the latter clause, i.e., clause (ii) of section 7(3), there is a provision that a reasonable opportunity should be given to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d discrimination by the Stake. Arbitrariness can take many forms and shapes. Whenever a person or class of persons is treated unfairly it would amount to an arbitrary act or discrimination forbidden by article 14. The Supreme Court said that the principles of natural justice have come to be recognised as being a part of the guarantee contained in article 14 because of its new dynamic interpretation of the concept of equality which is the subject-matter of that article. Where discrimination is the result of State action, it is a violation of article 14. Therefore, the violation of the principles of natural justice by a State action is violation of article 14. The protection of article 14 extends to all persons-citizens or aliens. My attention was drawn to a decision of the Court of Appeal in England in the case of Schmidt v. Secretary of State for Home Affairs [1969] 1 All ER 904; [1969] 2 Ch 149 ; [1969] 2 WLR 337. In this case, the plaintiffs who were aliens had been given leave to enter the United Kingdom. Their application for subsequent extension of stay was rejected. Their claim that their applications should have been considered on merits and in accordance with the principle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interpretation of article 14 by the Supreme Court. In the present case right from the year 1977, the petitioners were permitted to carry on the control and inspection of land based installations, machinery and plant, as also inspection of machinery and engineering products intended for export. Although such permission was of a limited duration it was throughout renewed without any difficulty. In fact the renewal was usually given some months after the previous permission had expired and was made effective from the date of such expiry till some further period. From this course of conduct, the petitioners were entitled, legitimately, to expect that the permission which was granted to them would be renewed and in any case, would not be withheld without hearing them. It is submitted on behalf of the respondents by Mr. Chagla that looking to the Objects and Reasons of the Foreign Exchange Regulation Act, 1973, the Act is for conservation of the foreign exchange resources of the country and its proper utilisation in the interests of economic development of the country. Under section 76 of the FERA also the Reserve Bank, while granting any permission under the Act, is required to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urprising that despite the availability of Indian technical know-how, the respondents themselves and their various departments and agencies have entered into contracts with the petitioners and are even now negotiating for further contracts with them instead of availing of Indian know-how as alleged by them. In any case, this was also a matter on which the petitioners should have been heard before the orders were passed. There was no supreme urgency which prevented the application of the rule of audi alteram partem in the present case. My attention was also drawn to the case of LIC of India v. Escorts Ltd. [1986] 56 Comp. Cas. 548 (SC); AIR 1986 SC 1370, where, inter alia, the provisions of section 29(1) of the Foreign Exchange Regulation Act came up for consideration. The decision, however, is not directly relevant because it dealt with a set of facts and issues which have no bearing on the present case. The other case which was cited was of Apeejay P. Ltd. v. Union of India [1979] 49 Comp. Cas. 602 (Cal), where the court relied upon section 29(2)(c) of the Foreign Exchange Regulation Act. In that case, the Reserve Bank of India did not itself exercise its powers under section 29( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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