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TMI Blog2003 (4) TMI 490X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the goods it has been decided to place the following firm/persons on advice memo. All licensing branches are hereby advised not to all the following firms and persons to avail of CCS/Licences of any category or any other benefit under the EXIM Policy. The IEC Section shall also not issue any IEC to the Directors/partners mentioned herein : Name of Firm Address of the Firm IEC No. Mangli Impex Ltd. 4-Safeway House D-Block, Central Market, Prashant Vihar, Delhi- 110085 0592005372 and 059306533 J.K. Impex 187, Singhal Pur Market, Shalimar Bagh, New Delhi 0598054685 Vikas Trading Corpn. 26 Shivaji Market, Narela, Delhi- 110040 0598052721 Dadri Inorganics (P) Ltd. 4/624, Ashram Road, Charkhi Dadri, Distt. Bhiwani, Haryana 3398001491 The details of CCS/Licences/any other benefits thus not allowed and hence pending disposal on account of this advice memo may be intimated to this branch as expeditiously as possible. This issues with the approval of the AEC on File. 3. Reading of this advice Memo would show that there was some investigation regarding alleged fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to check any damage to the interest of Government of India and the practice is not only to place a particular firm/company on Denied Entity List but also its partners/Directors so that they cannot get further licences/CCS/any other benefits under the policy by floating a number of other firms/companies to defraud the Government. The respondents have further stated that keeping in view urgency of the matter the petitioners and their directors were placed under Denied Entity List without granting them opportunity of personal hearing but subsequently vide letter dated 11th September, 2001 respondent No. 3 has already replied to the advocates of petitioners about circumstances leading to placing it on Denied Entity List. In this letter dated 11th September, the respondents, inter alia, disclosed as under : In this regard, we have received a report that matter is under investigation with DRI and CBI. As the firm has misdeclared the description of goods of exports. The firms have been kept on Advice Memo, keeping in view the provisions of Foreign Trade (Regulation) Rules, 1993, 7(1)(i)]. 6. The respondents have also stated that the matter is entrusted to the CBI and the investigat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer authorised by the DGFT in this behalf. Section 8 deals with suspension and cancellation of IE Code No. and Section 9 lays down the provision for issuing, suspension and cancellation of licences. Relevant for our purpose, is Section 9 which is in the following terms : Section 9 : Issue, suspension and cancellation of licence. - (1) The Central Government may levy fees, subject to such exceptions, in respect of such person or class of persons making an application for a licence or in respect of any licence granted or renewed in such manner as may be prescribed. (2) The Director General or an officer authorised by him may, on an application and after making such inquiry as he may think fit to grant or renew or refuse to grant or renew a licence to import or export such class or classes of goods as may be prescribed, after recording in writing his reasons for such refusal. (3) A licence granted or renewed under this section shall - (a) be in such a form as may be prescribed; (b) be valid for such period as may be specified therein; and (c) be subject to such terms, conditions and restrictions as may be prescribed or as specified in the licence with reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading statement or any document which is false or fabricated or tampered with. 13. The position which emerges from the aforesaid provisions of the Act, EXIM Policy as well as Rules can be summed up in the following manner : (a) Before a person can undertake import or export, he is to obtain IE Code Number. (b) Likewise he is to get import licence as prescribed under Section 9 of the Act. (c) Grant of such a licence is not a right as stipulated in para 4.7 of the EXIM Policy 1997-2002 and the DGFT is given power to refuse to grant or renew a licence but in accordance with the provisions of the Act and the Rules. (d) Since a person cannot import/export without such a licence and the conduct of business in import and export depends thereon, the DGFT or the licensing authority can reject the application for issue or renewal of licence. But this refusal cannot be in an arbitrary manner. That is why sub-section (2) of Section 9 provides that if the licensing authority or the Director General has to refuse grant or renewal of licence, it has to record in writing his reasons for such refusal. Further in order to ensure that power is exercised objective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . However, as noted above, the effect of Advice Memo is that petitioners are precluded from making application for grant of licence and it would be a case of blacklisting/debarment and for such an action, dehors the provision of Section 9(4) of the Act, provisions of principles of natural justice would be attracted before such an action and law on this point is well settled. 18. One may refer to the judgment of the Supreme Court in the case of M/s. Erusian Equipment and Chemicals Ltd. v. State of West Bengal and another reported in AIR 1975 SC 266. In that case the Court observed : Para 12 : Under Article 298 of the Constitution the Executive power of the Union and the State shall extend to the carrying on of any trade and to the acquisition, holding and disposal of property and the making of contracts for any purpose. The State can carry on executive function by making a law or without making a law. The exercise of such powers and functions in trade by the State is subject to Part III of the Constitution. Article 14 speaks of equality before the law and equal protection of the laws. Equality of opportunity should apply to matters of public contracts. The State has the right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case law, Indian as well as English. Arijit Pasayat, CI (as he then was) speaking for the Court formulated the legal position in the following manner : Para 4 : The expression natural justice and legal justice do not present a water-tight classification. It is the substance of justice which is to be secured by both, and whenever legal justice fails to achieve this solemn purpose, natural justice is called in aid of legal justice. Natural justice relieves legal justice from unnecessary technicality, grammatical pedantry or logical prevarication. It supplies the omissions of a formulated law. Para 5 : The adherence to principle of natural justice as recognised by all civilised states is of supreme importance when a quasi juridical body embarks on determining disputes between the parties. These principles are well-settled. The first and foremost principle is what is commonly known as audi alteram partem rule. It says that none should be condemned unheard. Notice is the first limb of this principle. It must be precise and unambiguous. It should appraise the party determinatively the case he has to meet. Time given for the purpose should be adequate so as to enable him to make his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bort P. Collier, speaking for the judicial committee of Privy Council, used the phrase the requirements of substantial justice , while in Arthur John Specman v. Plumstead District Board of Works, [1884-85 (10) App. Case 229, 240], Earl of Salbourne, S.C. Preferred the phrase the substantial requirement of justice . In Vionet v. Barrett, 1885 (55) LJRD 39, 41, Lord Fasher, M.R. defined natural justice as the natural sense of what is right and wrong . While, however, deciding Hookings v. Smethwick Local Board of Health [1890 (24) QBD 712], Lord Fasher, M.R. instead of using the definition given earlier by him in Vionet v. Barrel (supra) chose to define natural justice as fundamental justice . In Ridge v. Baldwin [1963 (1) WB 569, 578] Haran LJ, in the Court of Appeal described natural justice as fairplay in action . This was noted in Maneka Gandhi v. Union of India [(1978) (2) SCR 621]. In re R.N. (An Infaot) [1967 (2) B 617, 530] Lord Parker, CJ, preferred to describe natural justice as a duty to act fairly . In Fairmount Investments Ltd. v. Secretary to State for Environment (1976 WLR 1255) Lord Russell of Willowan somewhat picturesquely described natural justice as a fair c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was dealing with provisions of Imports (Control) Order, 1955 framed thereunder. Clause 8 of this Control Order empowers Central Government or the Chief Controller of Imports and Exports to debar a person from importing goods or from receiving licences or allotment of imported goods for a specified period if such person is guilty of any of the acts of commission or omission enumerated in the clause. This power thus was almost akin to the powers to issue/cancel/suspend the licence under the Foreign Trade (Development and Regulations) Act, 1992. Dealing with this power under clause 8 and requirement of observance of principles of natural justice, the Court observed : As we have seen, both Clauses 8-A and 8-B contemplate action of an interim nature pending investigation into allegations under Clause 8. Ordinarily, in the absence of anything more, it would not be necessary to give an opportunity to the person concerned before proceeding to take action under Clause 8-A or Clause 8-B. But while Clause 8-B deals with the right to obtain licences and the right to obtain allotments, Clause 8-A deals with rights which have flowered into licences and allotments. A person to whom licences ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... next question for consideration is whether the decision to keep in abeyance should be communicated to the person concerned. There can be no two opinions on this. Ours is a Constitutional Government, an open democracy founded upon the rule of law and not a cloak and dagger regiment. It is inconceivable that under our constitutional scheme a decision of the kind contemplated by Clause 8-B which may have the effect of bringing to a standstill the entire business activity of the person affected and which may even spell ruin to him, should be made and implemented without being communicated to that person. Interwined is the question of observance of natural justice and how can natural justice be satisfied if the decision is not even communicated? It would be most arbitrary and quite clearly violative of Arts. 14 and 19 (1) (g) of the Constitution if Clause 8-B is to be interpreted as excluding communication of the decision taken. There is nothing in Clause 8-B to suggest that the decision is not to be communicated. On the other hand, the expression without assigning any reason implies that the decision has to be communicated, but reasons for the decision have not to be stated. Reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 is pending. The question is not whether any particular type of goods should be allowed to be imported or allotted to any person that is a question of policy but whether it is not in the public interest that a particular person should be prevented from obtaining import licences or imported goods of any description pending investigation into the allegations under Clause 8-B. That would depend on the nature of the allegations, the extent of involvement of the person concerned and, most important, the element of the public interest. If the allegations against a person involve him deeply in trafficking or racketeering in import licences and imported goods, the authority may consider it inexpedient in the public interest to keep in abeyance any application of his for the grant of a licence or allotment of goods. On the other hand, even if the allegations are grave, if the effect of an order under Clause 8-B is likely to result in loss of considerable foreign exchange or to shut down an industry throwing, large number of workers out of employment, the authority should restrain itself in larger public interest, from making an order under Clause 8-B or may make an order confining the abe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Clause 10 provided that no action under Clause 8-A could be taken without giving a reasonable opportunity to the person concerned and the Court clearly held that Clause 8-A contemplates a post-decisional hearing. Clause 8-A is analogous to Section 9 (4) of the Foreign Trade (Development and Regulations) Act, 1992. 26. However, there may be a case where licences have not yet been issued and allotment may yet have to be made. Once action under Clause 8 is initiated, the appropriate authority may be satisfied that it would not be in the public interest to issue licences or making allotments to the person concerned, without ascertaining further details with regard to the allegations made against him. In such cases Clause 8-B empowered the authority to make an order of abeyance. The Court held that for making such an order of abeyance pending further investigation, there was no provision while Clause 10 provides for a reasonable opportunity for taking action under Clause 8-A. In these circumstances, the Court posed the following question : Does it mean that principle of natural justice of procedural fairness is to be altogether excluded when action is taken under Clause 8-B? 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plated and ad interim orders may be made ex parte. When such an order is made the aggrieved party shall have right to make an appropriate representation seeking, review of the order and asking the authorities to rescind or modify the order and principles of natural justice would be satisfied if the aggrieved party is given an opportunity at his request. 31. No doubt, in the instant case, after the impugned Advice Memo was issued, the petitioners sent legal notice dated 30th July, 2001 for cancellation of the order and reply dated 11th September, 2001 was sent. However, it may not be treated at par with post-decisional hearing inasmuch as the petitioners had demanded cancellation of the Advice Memo and in reply it was stated that because the matter was under investigation the petitioners had been kept on Advice Memo. Post-decisional hearing, in conformity with the principles of natural justice, would demand that the petitioner s are communicated about the allegations against it so that it is afforded an opportunity to meet those allegations. Thus keeping in view the principles laid down in Liberty Oil Mills (supra), it cannot be said that it was necessary to give pre-decisional he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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