Civil Appeal Nos
2705  5383 of 1985
From the Judgment and Order dated 20121984 of the Delhi High Court in Writ Petition No 4037 and 4038 of 1982
LM Singhvi Kailash Vasdev GL Rawal Ms Neerja Sandeep Narain R Narsimha
Abhishek Manu Singhvi and C Mukhopadhya for the Appellants
955 TSKM Iyer RP Srivastava and CVS Rao for the Respondents
The Judgment of the Court was delivered by RANGANATH MISRA J
These appeals by certificate are directed against the common judgment of a full Bench of the Delhi High Court dated December 20 1984 in two writ petitions under Article 226 of the Constitution
The appellants are respectively a Company and its Managing Director
The Company was the holder of Letter of Authority in respect of three licences for import of coconut oil in one case and of two licences in the other and was appointed Letter of Authority Holder in respect of the said licences
It imported two consignments of 5342369 Mts
and 3002557 Mts of refined industrial coconut oil from Sri Lanka and the delivery port was Kandla
The respective ships carrying the aforesaid cargo arrived at the port of destination on 22nd September 1982 and 10th September 1982 and appellant No 1 filed the bills of entry for release of the said cargo in the office of the Assistant Collector of Customs at Kandla
Instead of release of the cargo on the basis of steps taken by appellant No 1 notices to show cause were received by appellant No 1 on the allegation that import of industrial coconut oil was not legal as it was a canalised item
The appellant No 1 was called upon to show cause as to why the cargo may not be confiscated under section 111d of the as also why the appellants may not be penalised under section 112 thereof
The appellants showed cause and took the stand that import of industrial coconut oil was not banned under the Import Policy of the Government for the relevant period and the premises upon which the authorities had proceeded to direct issue of show cause was factually untenable
When personal hearing was afforded on behalf of the appellant No 1 it was pointed out that the notices by respondent No 3 were the outcome of bias and the said statutory authority had not applied his own mind to the matter in controversy
It was also pointed out that Shri Takhat Ram Joint Chief Controller of Imports and Exports had taken undue interest in the matter to the prejudice of the appellants and had brought to bear upon the statutory authority pressure to act against the interests of the appellants
By the adjudication orders dated 17th December 1982 and 20th December 1982 the respondent No 3 came to the conclusion that coconut oil whether edible or not were canalised items and fell within the ambit of Appendix 9 para 51 of the Import Policy of 1980 81
It was not an item under the OGL of 1980 81 Policy
Respondent No 3 further held that either of the consignments was covered by the import 956 licences produced by the appellants and was therefore liable to be confiscated under section 111d of the Act but gave an option to appellant No 1 to redeem the goods on payment of Rs3 crores and Rs2 crores respectively as redemption fines
On 27121982 two writ petitions were filed in the High Court of Delhi challenging the action of the Collector
The said writ petitions were finally placed before a Bench of three Judges of the High Court two of them being Sachar and Khanna JJ came to hold that the writ petitions were liable to be dismissed while the other Judge being Wad J took the view that the action of the Collector was totally untenable and that the writ petition should be allowed and the order of the Collector should be set aside
The majority of the learned Judges were of the further view that the quantum of redemption fine should be considered by the Appellate Tribunal
Sachar J with whom Khanna J concurred directed I would in the circumstances remit the matter to the Appellate Tribunal but only on the question of consideration of the question of quantum of redemption fine
The Appellate Tribunal could hear and dispose of this matter as if it was hearing an appeal filed by the petitioners but only on the question of quantum of redemption fine
 In the absence of any challenge this part of the order of the High Court has become final and has to operate irrespective of the fate of the two appeals
The following common contentions have been advanced by learned counsel for the appellants 1 The import policy of which year would be applicable to the facts of the present case the period during which the licences were issued or the time when import actually took place
2 Whether coconut oil appearing in para 5 of Appendix 9 of the Import Policy of 1980 81 was confined to the edible variety or covered the individual variety
3 Whether in the face of the decision of the Board and Central Government as the statutory appellate and revisional authorities it was open to the Collector functioning in lower ties to take a contrary view of the matter in exercise of quasi judicial jurisdiction and 957 4 Whether the order of the Collector was vitiated for breach of rules of natural justice and collateral considerations in the making of the orders
It is not in dispute that the relevant import policy to be referred to is of the year 1980 81 as all the licences were issued during that period
The Collector found and the High Court has not recorded a different finding that when the licence was first revalidated on 1811982 such revalidation was subject to paragraph 215 of the Import Policy of 1981 82
Again while revalidating some of the licences on 2591982 it was stipulated that during the extended period items which do not appear in Appendix 5 and 7 of Import Policy of 1982 83 could not be allowed to be imported and items which appear in Appendix 26 of the Import Policy of 1982 83 will also not be allowed to be imported
The Collector turned down the plea that the licences allowed the import of items appearing in Appendix 5 and 7 of 1979 80 policy and 1982 83 policy in addition to the items appearing in the OGL and Industrial coconut oil
In the instant case the licences were of either of 1980 or 1981 and were revalidated from time to time
For convenience we may refer to a sample order of revalidation dated 2861982
Revalidation was subject to the following conditions This licence is revalidated for a further period of six months from the date of revalidation with the condition that during the extended period of validity the items which do not appear in Appendix 5 and 7 of the Import Policy of 1982 83 will not be imported
This licence will also not be valid for the import of items appearing in Appendix 26 of the Import Policy of 1982 83 during the extended period of validity
 The High Court has come to the correct conclusion that the terms of the import policy of 1980 81 would apply to the facts of these cases
The basic question is whether at the relevant time import of coconut oil had become canalised through the State Trading Corporation  STC  for short
Rule 3 of the Imports Control Order 1955 made under the Imports and Exports Control Act 1947 provides 31 Save as otherwise provided in this order no person shall import in case of the descriptions specified in Schedule I except under and in accordance with the licence 958 or a custom s clearance permitting grant by the Central Government or by any officer specified in Schedule II
 Para 5 of Appendix 9 ran thus In the case of the various items mentioned therein import will be made only by the State Trading Corporation of India on the basis of foreign exchange released by the Government in its favour
The items mentioned therein are
 It is thus clear that if coconut oil  of the industrial variety was covered by paragraph 5 of Appendix 9 then it would not have been included in Appendix 10 and therefore could not have been imported under OGL
In Appendix 9 no classification of coconut oil is given and therefore all varieties of coconut oil should be taken as covered by the term
There is no warrant for the assumptions that item 1 of paragraph 5 of Appendix 9 covered only the edible variety when coconut oil  as such has been mentioned
It is not disputed that coconut oil  without anything more could cover both the edible as also the non edible commercial or industrial varieties
When a customer goes to the market and asks for coconut oil to buy he is not necessarily supplied the edible variety
Coconut oil is put to less of edible use than non edible
Reliance has been placed on the entry in the Import Policy of 1981 82 where in paragraph 5 of Appendix 9 it has been said thus In the case of the following items whether edible of non edible import will be made only by the STC  1 Coconut oil      All other oilsseeds whether edible or non edible not specifically mentioned above or elsewhere in this policy will also be imported only by STC under these provisions
 In our view no support can be had for the contention advanced by appellants  learned counsel from the change in the language of paragraph 5 in the Import Policy of the subsequent year
Whatever may have been the reason for specifying edible and non edible  classification in 1981 82 if coconut oil  takes within its fold all varieties of it it must follow that in 1980 81 all varieties of coconut oil were 959 included in paragraph 5 of Appendix 9
It is in our opinion unnecessary to refer to authorities and precedents to support such an obvious conclusion
Similarly no support is available from the communication by way of reply received by the appellants from the STC to the effect that import of edible coconut oil alone was canalised through it
When the question before us is as to what exactly was the ambit of the entry No 1 in paragraph 5 of appendix 9 the letter of the STC has no light to throw and the matter has to be ressolved with reference to broader aspects than the letter of the Corporation
Nor can that letter or the representation contained therein be used to build up a plea of estoppel
The STC was not competent to bind the customs authorities in respect of their statutory functioning and if on actual interpretation it turns out that coconut oil  covered what the appellants have imported the fact situation cannot take a different turn on account of the letter of the STC
At the most it may have some relevant when the quantum of redemption fine is considered by the Tribunal in terms of the direction of the High Court
Massive arguments were built up by learned counsel for the appellants on the basis that the decision of the Central Board and the Central Government rendered in similar matters were binding on the collector and he could not have acted to the contrary
Several precedents have been cited during the hearing
In a tier system undoubtedly decisions of higher authorities are binding on lower authorities and quasi judicial Tribunals are also bound by this discipline
In Broome vs Cassell and Co   the Lord Chancellor delivering the opinion of the House observed I hope it will never be necessary to say so again that in the herichical system of courts which exists in this country it is necessary for each lower tier including the Court of Appeal to accept loyally the decisions of the higher tiers This Court in Kaushalya Devi Bogra vs Land Acquisition officer has clearly approved this position
There is aubundance of authority that quasi judicial tribunals too are bound by this rule
That however does not assist the appellants at all
It may be that the Collector of Customs should have felt bound by the decision of 960 the Board or the Central Government but the matter has passed that stage
What we are now concerned with is not disciplining the Collector in his quasi judicial conduct but to ascertain what the correct position in the matter is
Very appropriately appellants  learned counsel has not found fault with the High Court for not following the quasi judicial opinion of the Board or the Central Government nor has he pleaded for acceptance of that by us as a precedent
Once on analysis we reach the conclusion that coconut oil  of every description was covered in paragraph 5 of appendix 9 the quasi judicial decision ceases to be relevant
We propose to say no more on this aspect of the submission
What survives for consideration is the argument relating to the vice of breach of natrual justice and the vice of collateral pressure of the Import Authorities in the making of the order
We must frankly state that this aspect of the argument has not at all impressed us
It has not been disputed that show cause notices were issued cause was shown and considered by the statutory authorities
It may be that more of opportunities than extended were expected by the appellants in view of the fact that large stakes were in issue
The observance of the Rules of Natural Justice is not referable to the fatness of the stake but is essentially related to the demands of a given situation
The position here is covered by statutory provisions and it is well settled that Rules of Natural Justice do not supplant but supplement the law
We have not been able to find any breach in the compliance of the statutory procedure
We are not inclined to agree that the role played by Sri Takht Ram vitiated the order of the Collector
All the contentions fail and these appeals are therefore dismissed
The respondents are entitled to their costs throughout
SL Appeals dismissed


Summary:
One Motilal Sanghi made a gift of Rs25000 each to his four sons on September 1 1955
These amounts were invested by the sons in the firm known as Sanghi Brothers which was constituted by the said Motilal soon after the gifts were made
Motilal Sanghi had an 8 annas share in the firm the four sons had a share of 2 annas each
Motilal Sanghi died on July 21 1961
The Assistant Controller of Estate Duty took the view that the sum of Rs1 lac was liable to be included in the estate of Motilal Sanghi in view of the provisions of Section 10 of the Estate Duty Act as that amount was not retained by the donees to the entire exclusion of the donor
The Appellate Controller however held that section 10 was not attracted to the circumstances of the case
the Division Bench of the Rajasthan High Court in a reference made to it held that section 10 was attracted
It took the view 1 that the said amount was brought back into the partnership business of the donor and the donees and hence it was difficult to say that during the continuance of the partnership the donees enjoyed the amounts gifted to the entire exclusion of the donor and 2 that the donor in one sense or the other had dominion over that property and the property was utilised both for the benefit of the donor and the donees
Before this Court it was contended by the appellant that when the amounts were invested by the donees in the said firm the interest which the deceased got in the amounts invested by the donees as a partner of the firm was in no way related to the gifts and hence merely by reason of that investment it could not be said that the donees had not retained the said amount to the entire exclusion of the donor for the purposes of section 10
It was on the other hand contended on behalf of the respondent that as the said amounts were immediately thereafter invested in the firm it could not be said that the amounts were retained by the donees 211 to the entire exclusion of the donor who had a certain dominion over that property as a partner
Allowing the appeal this Court  HELD 1 The interest which the deceased father retained or obtained in the aggregate sum of Rs1 lac invested by the said four sons in the said firm was an interest merely as a partner in the said firm and was not related to the gifts made by him to his sons
220D E 2 It cannot be said that by reason of constitution of the said partnership and the investment of the said amount by the sons in the partnership the sons had not assumed bona fide possession and the enjoyment of the amounts gifted to them or that they had not retained the same to the entire exclusion of their father
220E F 3 The said amount of Rs1 lac could not be included in the estate of the said deceased under the provisions of section 10 of the Estate Duty Act
220G George Da Costa vs CED  HR Munro vs Commissioner of Stamp Duties   2 EDC 462 Clifford John Chick vs Commissioner of Stamp Duties  1959 37 ITR ED 89  CED vs CR Ramachandra Gounder  CED vs NR Ramarathnam  CED vs Kamlavati and CED vs Jai Gopal Mehra  CED vs RV Viswanathan and CED vs Godavari Bai referred to