307 and 308 of 1960
Petitions under article 32 of the Constitution of India for enforcement of Fundamental Rights
Porus A Mehta J B Gagrat and G Gopalakrishnan for the petitioner
H J Umrigar R H Dhebar and T M Sen for the respondents
March 23
The Judgment of the Court was delivered by section K DAS J
These are two writ petitions in respect of two orders dated August 3 1960 b which the Joint Chief Controller of Imports Madras cancelled two import licences Nos
A 863296 and 836640 dated January 18 1960 and February 2 1960 respectively granted in favour of the petitioner Messrs Sinha Govindji of Bangalore Road Bellary for the purpose of importing cellulose nitrate sheets of the value of Rs 75000 each for two licensing periods AprilSeptember 1959 and October March 1960
The complaint of the petitioner firm is that respondents 1 and 2 have cancelled the licences in circumstances which amounted to a denial of its right to be given a reasonable opportunity of being heard as provided by cl 10 of the Imports Control Order 1955 before the impugned orders were passed 542 and thus arbitrarily and without authority of law deprived the petitioner of its fundamental right to carry on its business under article 19 of the constitution
The point for decision is a short one and we need only state such facts as bear upon that point
The petitioner s case is that the proprietor of the firm is a citizen of India carrying on a business of the manufacture of celluloid and plastic bangles etc at Bellary in the Mysore State
The petitioner was granted the two licences referred to above and thereafter entered into firm commitments for the import of cellulose sheets to the clause of Rs 99000
On March 4 1960 the petitioner was surprised to receive two letters from the Assistant Controller of Imports Madras calling upon the petitioner to let him know the extent to which the licenses had been utilised and asking the petitioner not to enter into fresh commitments against the said licenses without specific and prior approval of the Controllers  office
This led to some correspondence between the petitioner and the Control authorities details whereof are not necessary for our purpose
On May 27 1960 the petitioner received two notices only one of which we need set out in full
It stated It is hereby notified that in exercise of the powers conferred by cl 9 of the Imports Control Order 1955 the Government of India in the Minis
try of Commerce and Industry propose to cancel licence No A 83664060AUM dated the Second February 1960 valued at Rs 75000 Rupees Seventy five thousand only for import of Cellulose Nitrate Sheets from the Soft Currency area except South Africa granted by the Joint Chief Controller of Imports and Exports Madras to Messrs Sinha Govindji No 18 Bangalore Road Bellary 2 unless sufficient cause against this is furnished to the Joint Chief Controller of Imports and Exports Madras within ten days of the date of issue of this notice by the said Messrs Sinha Govindji No 18 Bangalore Road Bellary 2 or any Bank or any other party who may be interested in it
In view of what is stated above Messrs Sinha 543 Govindji Bellary or any Bank or any other party who may be interested in the said licence No83664060AUM dated Second February 1960 are hereby directed not to enter into any commit Departments against the said license and return it immediately to the Joint Chief Controller of Imports and Exports Madras
Sd J K Sarkar Deputy Chief Controller of Imports and Exports
 The notices be it noted did not state on what grounds falling within cl 9 of the Imports Control Order 1955 it was proposed to cancel the licences of the petitioner
Clause 9 of the Control Order states four grounds for cancellation of a licence and we may read the clause here omitting those grounds which are not relevant for our case 9 Cancellation of Licences The Central Government or any other officer authorised in this behalf may cancel any licence granted under this Order or otherwise render it ineffective a if the licence has been granted through inadvertence or mistake or has been obtained by fraud or misrepresentation b c d By a letter dated May 30 1960 the petitioner referred to the earlier correspondence on the subject and said inter alia Now clause 9 of the Import Control Order 1955 under which action is proposed to be taken envisages the cancellation of a licence on various grounds
Your notice does not disclose on which of these grounds the proposed action is sought to be taken
Without knowing on what ground the proposed cancellation is to be effected it is impos sible for me to show cause against it
I may however state that I have not done anything justifying the cancellation of the licence under the said Rule and that as far as I can see there is no ground whatsoever for such cancellation
 544 Then on August 4 1960 the petitioner received two orders dated the previous day by which the two licences in favour of the petitioner were cancelled
The orders stated we are quoting only one of the orders which are similar in terms Whereas Ms Sinha Govindji Bangalore Road Bellary or any bank or any other person have not come forward furnishing sufficient cause against Notice No 1LCL60CDN1 dt
27 5 1960 proposing to cancel licence No A 86329660AUMdt 18 1 60 valued at Rs 75000 for the import of Cellulose Nitrate Sheets from the Soft Currency Area except South Africa granted to the said Ms Sinha Govindji Bangalore Road Bellary by the Joint Chief Controller of Imports and Exports Madras Government of India in the Ministry of Commerce and Industry in exercise of the powers conferred by clause 9 of the Imports Control Order 1955 hereby cancel the said licence No A 86329660AUM dt
18 1 60 issued to the said Ms Sinha Govindji Bellary
 It will be noticed that the orders also did not state on what ground the licences were cancelled
The petitioner complained that the cancellation of the two licences led the Customs authorities to hold back the goods of the petitioner which had already arrived at port and were awaiting clearance resulting in heavy demurrage etc
 but the real ground on which the petitioner challenges the two cancellation orders is that to quote the words of the petition no real opportunity at all to show cause against the proposed cancellation was given to the petitioner in total disregard of the provisions of cl 10 of the Imports Control Order 1955
We may read here that clause
Applicant or licensee to be heard
No action shall be taken under Clauses 7 8 or 9 unless the licenseeimporter has been given a reasonable opportunity of being heard
 On behalf of the respondents it has been stated that after the issue of the two licences a letter dated February 16 1960 was received from the Director Small Industries Service Institute Bangalore to the 545 effect that the petitioner had no machinery and equipment to manufacture the relevant articles from the imported raw material
On receipt of this letter a joint investigation was held by the Assistant Director of Industries Bell try and the Deputy Director Small Industries Service Institute Hubli and it was found at the time of inspection that the petitioner firm had no machinery and equipment at the premises nor did they possess any municipal licence or factory licence
On July 2 1960 the Chief Controller of Imports  Exports wrote to the petitioner giving the above information and asking the petitioner to show cause why further issue of licences should not be suspended under cl 8 of the Imports Control Order 1955
We quote below the relevant extracts from this letter Gentleman I write to refer to your letter dated the 21st May 1960 and 30th May 1960 on the above subject and to say that a joint investigation conducted by the Deputy Director Small Industries Service Institute Hubli and Assistant Director of Industries Government of Mysore Bellary revealed that at the time of inspection of your firm by them no machinery and equipment existed in your premises and that you had no Municipal licences or Factory licence or Factory
In view of this it is clear that you had obtained the Essentiality Certificate from the Director of Industries fraudulently and by misrepresentation of facts and thereafter obtained the licences in question by producing the said Certificate to the Joint Controller of Imports  Exports Madras
The above action on your part directly contravenes the Import Trade Control Regulations within the meaning of para
6vii of Chapter V of the Import Trade Control Hand Book of Rules and Procedure 1956 read with clause 8b of the Imports Control Order No 1755 dated the 7th December 1955
In view of this the request made by you in the letters under reference cannot be acceded to
69 546 On the other hand you are called upon under clause 10 of the said Imports Control Order 1955 to show cause within 15 fifteen days from the date of receipt of this letter as to why further issue of licences to you should not be suspended under clause 8 of the said Imports Control Order No 1755 dated the 7th December 1955 for contravening the Import Trade Control Regulations
If your reply does not reach the undersigned within the stipulated period it will be assumed that you have no defence to urge in your favour and this office will proceed to adjudicate action against you without making any further reference to you
 The contention urged on behalf of the respondents is that the letter dated July 2 1960 stated the necessary ground for the cancellation of the licences to the petitioner and as the petitioner furnished no sufficient cause against cancellation the orders of cancellation were made on August 3 1960
The argument on behalf of the respondents is that the provisions of cl 10 of the Imports Control Order 1955 have been sufficiently complied with by reason of what was stated in the letter of July 2 1960
On a careful consideration of the facts and circumstances as stated in the affidavits of the parties we have come to the conclusion that the petitioner has had no reasonable opportunity of being heard before the cancellation orders were made on August 3 1960
The cancellation orders are therefore bad and must be quashed
Our reasons are the following
It is not disputed that the notice dated May 27 1960 did not state any ground for the proposed cancellation it merely referred to cl 9 without stating on which of the four grounds mentioned therein it was proposed to take action
Naturally the petitioner stated in its letter dated May 30 1960 that without knowing on what ground the proposed cancellation was to be made the petitioner firm was not in a position to show cause
So far there is no dispute between the parties and it is not seriously urged by the respondents that if the notice stood by itself it could be held to have given the petitioner a reasonable 547 opportunity of being heard within the meaning of cl 10
The respondents however rely on the letter dated July 2 1960 in support of their contention that the petitioner has had a reasonable opportunity of showing cause against the cancellation of the two licences
On behalf of the petitioner it has been submitted not without justification that the letter dated July 2 1960 related to a different matter viz the suspension of the grant of further licences under cl 8 for which also a reasonable opportunity to be heard had to be given to the petitioner under cl 10
In its operative part the letter stated you are called upon to show cause within 15 days from the date of this letter as to why further issue of licences to you should not be suspended under cl 8
It therefore related to proposed action under cl 8
The respondents have however pointed out that the subject matter of the letter as indicated therein referred to the notices dated May 27 1960 for cancellation of the licences and it also referred to the earlier correspondence on the same subject viz the petitioner s letters dated May 21 1960 and May 30 1960 therefore the contention is that the petitioner must Know as a result of the reference to the subject matter and earlier correspondence that the grounds given in the letter related to proposed action both under cl 8 and cl 9 even though the operative portion related to cl 8 only
It is true that the contents of the letter dated July 2 1960 should be considered from the point of view of substance rather than that of technical rules of construction of statutory instruments
So considered it is difficult to hold that the letter asked the petitioner to show cause against cancellation of its licences parti cularly in the light of the contents of the subsequent letters of the Department which would be referred to presently
Even if we assume that it did so what is the position Within 10 days of the receipt of the letter which was received by the petitioner on July 5 1960 the petitioner s solicitor asked for a copy of the joint investigation proceeding and the report submitted as a result thereof The letter also asked for 548 other relevant documents in order to enable the petitioner to show cause
It said that the petitioner would show cause as soon as the relevant documents were received and it also said that 6
personal hearing would be asked for and prayed that in the meantime no further action should be taken
No reply was given by the respondents to the aforesaid letter of the petitioner s solicitor till August 6 1960 that is three days after the cancellation orders had been made
The petitioner was not given a copy of the report of the investigation till as much later date nor was any in formation given to the petitioner that the copy would not be available and the petitioner must show cause at once
As a matter of fact the petitioner was told nothing in reply to the letter dated July 15 1960 till three days after the cancellation orders had been made the cancellation orders blandly stated that no cause had been shown when in fact the petitioner had specifically asked for an opportunity to show cause
By their letter dated August 6 1960 the respondents said that the matter would be considered on receipt of a letter of authority from the solicitor in proper form and on stamped paper without stating that in the meantime cancellation order had been made
without waiting for any explanation
on August 10 1960 the solicitor submitted a written authority saying that it was unnecessary to all for it arid that the two licences had been cancelled arbitrarily and without giving the petitioner an opportunity of being heard
The correspondence then continued with regard to the proposed action under cl 8 and the petitioner challenged the correctness of the report of the joint investigation proceeding on many essential particulars including the alleged absence of machinery arid equipment
It is not necessary to enter into details of that correspondence because the proposed action under cl 8 is not the subject matter of the present proceeding
It is enough to state that from what happened after the receipt of the letter dated July 2 1960 it is abundantly clear that the petitioner has bad no real opportunity of being heard with regard to the ground alleged in the letter before the cancellation orders were made 549 on August 3 1960
There was in our opinion a clear violation of the requirement of cl 10 which embodies the principles of natural justice
The cancellation orders are therefore bad and must be quashed
We allow the writ petitions and order accordingly
The petitioner is entitled to its costs there will be one rearing fee
Petitions allowed


Summary:
The petitioner who was carrying on the business of the manufacture of celluloid and plastic bangles etc
was granted two licences dated January 18 1960 and February 2 1060 for the purpose of importing cellulose nitrate sheets for two licensing periods AprilSeptember 1950 and OctoberMarch 1960 On getting information that the petitioner had no machinery or equipment at the premises nor possessed any municipal licence or factory licence the Imports and Exports authorities issued a notice dated May 27 1960 to the petitioner to the effect that the Government of India proposed to cancel the licences granted to him in exercise of the powers conferred by cl 9 of the Imports Control Order 1955 unless sufficient cause against this was furnished within ten days of the date of issue of the notice
The petitioner replied that as the notice did not disclose on which of the grounds specified in cl 9 the proposed action was sought to be taken it was not possible to show cause against it and that in any case he had not done anything justifying the cancellation of the licences under the said rule
On July 2 1060 the Chief Controller of Imports and Exports wrote to the petitioner giving the information received as aforesaid and said In view of this it is clear that you had obtained the Essentiality Certificate from the Director of Industries fraudulently and by misrepresentation of facts and thereafter obtained the licences in question 
You are called upon under cl 10 of the Imports Control Order 1955 to show cause within fifteen days from the date of receipt of this letter as to why further issue of licences to you should not be suspended under cl 8 of the said Imports Control Order 1955 for contravening the Imports Trade Control Regulations 
On August 4 1960 the petitioner received two orders dated August 3 1961 by which the two licences in favour of the petitioner were cancelled
The petitioner challenged the validity of the aforesaid orders on the grounds inter alia that no real opportunity at all to show cause against the proposed cancellation was given to him in total disregard of the provisions of cl
co of the Imports Control 541 Order 1955 which required that No action shall be taken under cls
7 8 or 9 unless the licensee has been given a reasonable opportunity of being heard and that the cancellation of the licences arbitrarily deprived the petitioner of his fundamental right to carry on his business under article 19 of the Depi Constitution of India
The correspondence between the petitioner and the Import authorities showed that after the receipt of the letter dated July 2 1960 the petitioner had no real opportunity of being heard with regard to the ground alleged in the letter before the cancellation orders were made on August 3 1960
Held that on the facts of the case there was a clear violation of the requirements of cl 10 of the Imports Control Order 1955 which embodied the principles of natural justice and that the orders dated August 3 1960 canceling the licences granted to the petitioner were bad and must be quashed