Case: Kishanchand Ramdas Gajwani Vs. Chief Controller, I and E, New Delhi

N.H. Bhagwati, J.1. These are two petitions under Article 32 of the Constitution filed by the Petitioner against the order dated the 29th May 1953 passed by the Chief Controller of Imports and Exports and the order dated the 11/12th January 1954 passed by the Deputy Chief Controller of Imports and Exports, New Delhi praying for writs of certiorari and also writs in the nature of prohibition and mandamus in regard to the same.2. The case of the Petitioner is that before the partition of British India in August 1947, he was residing and carrying on business in the territory now forming part of West Pakistan. He carried on business at Karachi and at Lahore under the firm name and style of Kishanchand & Company and his main business was that of imports of goods of various descriptions from foreign countries. The Petitioners General Manager, one K.G. Nariman is alleged to have gone in the year 1946 to the United Kingdom and Europe on a priority certificate granted by the then Punjab Government and placed large orders for the exports of goods of various descriptions to the Petitioner at or through the port of Karachi, the orders in respect of domestic earthenware and chinaware being particularly large. The Petitioner states that in the communal riots that took place at Lahore in August 1947 extensive damage was caused to his office and his records including books, bills of lading, bills of entries, invoices, drafts etc. were destroyed. As a result of the partition the Petitioner migrated to India and set up his home in Bombay. He carried on his business in Bombay and Delhi in the firm name and style of Kishanchand & Company (India). The Petitioner claimed to be an established importer who had been displaced from West Pakistan, and applied to the Chief Controller of Imports for the issue of import licences in respect of several commodities on the basis of what had been imported by him at or through the port of Karachi supported by suppliers certificates. He obtained several quota certificates from the Chief Controller of Imports and renewed his applications for import licences from time to time. The Chief Controller, of Imports suspected that the suppliers certificates which had been furnished by, the Petitioner were not obtained bona fide and on the 16th September 1952 he passed an order suspending the issue of all licences to the Petitioner. The Petitioner says that he came to know of the suspension order on or about the 8th October 1952 and correspondence took place between the Petitioner and the Chief Controller of Imports in the course of which the Petitioner complained about the suspension order, gave the requisite information which was called for and called upon the latter to withdraw the suspension order. There were interviews between the General Manager of the Petitioner, the said K.G. Nariman and the Chief Controller of Imports and a notice dated the 28th November 1952 to show cause why action should not be taken against the Petitioner for having deliberately produced false evidence of past imports in regard to items Nos. 1 and 3 notice viz. domestic earthenware and art silk yarn was issued. A second show cause notice dated the 31st March 1953 was also issued in respect of items Nos. 2 and 4 to 11 viz. dry fruits, silk piece goods, woollen piece goods, spun silk yarn, velvet and velveteens, condensed milk and jams and jellies and cheese. There were further interviews on the 6th April 1953 and the 12th May 1953. The Chief Controller of Imports was not satisfied with the explanation given in respect of the art silk yarn and the dry fruits and he made an order on the 29th May 1953 debarring the Petitioner from receiving licences for the said goods for the three licensing periods to wit July to December 1952, January to June 1953 and July to December 1953, stating that on the expiry of the black listing period the Petitioner would have to re-establish his quotas for the said items on the basis of acceptable documents. He stated that the other matters were still under consideration and suspension orders for those items could not be then removed but that having regard to the above decisions in regard to art silk yarn and dry fruits all the quota certificates obtained by the Petitioner on the basis of the suppliers certificates should be treated as cancelled. The Petitioner was required to produce fresh corroborative evidence in support of each suppliers certificate and to prove that he had actually imported the goods in question to the extent therein mentioned and if no such evidence was forthcoming the quotas would have to be re-established on the basis of unimpeachable and direct evidence of past imports made at the Indian ports during the post-partition period. The Petitioner was asked to return to the office all the quota certificates in his possession for cancellation. The Petitioner filed an appeal against the said order to the Ministry of Commerce & Industry. He also filed a review application to the Chief Controller of Imports. Both the appeal and the review application were dismissed but on the Petitioners protest that he was not heard, an opportunity was given to him and he appeared before the Secretary, Ministry of Commerce and Industry who again dismissed his appeal. The Petitioner was given a fresh hearing on the 24th August 1953 by the Deputy Secretary to the Government of India in the Department of Commerce and Industry and he also confirmed the previous order. The suspension order in respect of the other items continued in the meanwhile and there were several interviews between the Petitioner and the Chief Controller of Imports, the last interview being on the 31st December 1953. On the 11/12th January 1954 the Deputy Chief Controller of Imports made an order that no licence or customs clearance permit would be issued to the Petitioner for three licensing periods, viz. July-December 1952, January-June 1953 and July-December 1953 in respect of all the other items even if the same might otherwise be admissible to him and asked the quota certificates issued to the Petitioner in respect of the said items to be surrendered to the appropriate licensing authority for cancellation and the Petitioner was asked to re-establish his quotas on the basis of unimpeachable documents.3. The imports of goods would be normally regulated by Sea Customs Act (Act VIII of 1878) and the notifications issued thereunder. During the emergency created by the last world war controls were found necessary and Rule 84(3) of the Defence of India Rules empowered the Central Government by notified order to make provisions for prohibiting, restricting or otherwise controlling inter alia the imports of goods. A notification of the Government of India was issued on the 1 st July, 1943 which prohibited the bringing into British India by sea, land or air from any place outside India of any goods of the descriptions specified in the schedule thereto except the goods therein mentioned which comprised inter alia goods of specified descriptions covered by special licences to be issued by various authorities. With the termination of the war it was found necessary to continue for a limited period, powers to prohibit or control imports and the Imports and Exports (Control) Act of 1947 (Act XVIII of 1947) was passed which by Section 3(1) thereof empowered the Central Government by order published in the Official Gazette to make provision for prohibiting, restricting or otherwise controlling inter alia the imports of goods of any specified description. Section 5 provided the penalties for the contravention of any order made or deemed to have been made under the Act and Section 6 prescribed the Courts which were to take cognisance of such offences. On the 6th March. 1948 the Central Government in exercise of the powers under Section 3(1) of the Act issued a notified order which inter alia provided for debarring permanently or for a specified period licensees or importers from obtaining licences for import of goods. These provisions were sought to be applied by the import control authorities to the Petitioner and may be set out here :-(b) Where a licences is found to have contravened the order or the terms and conditions embodied in or accompanying a licence, the appropriate licensing authority or the Chief Controller of Imports may notify him that, without prejudice to any penalty to which he may-be liable under the Imports and Exports (Control) Act, 1947 (XVIII of 1947), or any other enactment for the time being in force, he shall either permanently or for a specified period be refused any further licence for import of goods.(c) Where an importer is found guilty of contravention of the proviso to the said notification or of any orders or terms of conditions embodied in or accompanying a licence or an application for a licence or any other import trade control rules or regulations duly promulgated, the appropriate licensing authority or the Chief Controller of Imports may notify him that without prejudice to any penalty to which he may be liable under the Imports and Exports (Control) Act, 1947 (XVIII of 1947), or any other enactment for the time being in force, he shall either permanently or for a specified period be refused any licence for import of goods.These provisions were impugned by the Petitioner as illegal and void, not being within the terms of Section 3(1) of the Act.4. Under Section 3(1) of the Act it was open to the Central Government to make provision for prohibiting, restricting or otherwise controlling in all cases or in specified classes of cases the import of goods of any specified description. Whatever is comprised within this power could be the subject matter of a notified order. But the scope of that power was strictly limited to the prohibiting, restricting or otherwise controlling of the imports of goods. The notified order could provide for the issue of licences, might prescribe the terms and conditions of the licences and might also provide for the suspension and cancellation of the licences under certain circumstances with a view to effectively provide for prohibiting, restricting or otherwise controlling the import of goods. But if the notified order travelled beyond the purview of this power the provision would certainly be bad as not within the Act.5. It was urged that the power contained in the impugned Clauses (b) & (c) was implicit within the power to make provision for prohibiting, restricting or otherwise controlling the import of goods, because if it were not so there would be no effective cheek or control on the licencees or importers and the policy of the Act would not be effectively carried out. A licencee or importer might obtain a quota certificate or a licence on the basis of fraudulent misrepresentations or forged documents which might be subsequently discovered to be such and then the import control authorities would be without a remedy if they were not invested with the power to impose any such punishment as is provided in the impugned clauses. A mere suspension or cancellation of the licence would not be enough and in the exercise of their discretion the import control authorities might as well deprive the licencee or importer thus found guilty, of an opportunity of being considered for further licences along with other bona fide applicants by making him disgorge the unlawful gains he had made earlier and equalising the distribution of the quotas for goods which would be permitted to be imported.6. It was on the other hand urged that even so, the import control authorities might be justified in refusing to grant a licence to the defaulting applicants but would not be justified in imposing a bar on them for any prospective licensing period, because it would be in the nature of a punishment or penalty and not a provision for effectively exercising the power of prohibiting, restricting or otherwise controlling the imports of goods. It was also urged that refusing to grant licences permanently or for specified periods to such defaulting applicants was certainly not within the legitimate exercise of such power as it would operate beyond the life of the Act and would also be liable to abuse at the hands of the import control authorities without the applicant being entitled as of right to have it scrutinised by higher authorities or by judicial tribunals.7. We are however absolved from the necessity of considering this question of the validity of these impugned provisions, because the order dated the 29th May 1953 is tantamount to a refusal to grant the Petitioner licences for the two items therein mentioned for the two licensing periods July-December 1952 and January-June 1953 and the order dated 11/12th January 1954 is tantamount to a refusal to grant the Petitioner licences for the other items therein mentioned for the three licensing periods July-December 1952, January-December 1953 and July-December 1953. As regards the licensing period July-December 1953 which was anticipated in the order dated the 29th May 1953, the learned Solicitor General appearing for the Respondent has undertaken to consider the Petitioners applications for licences to import the two commodities therein mentioned for this period as if they are still undisposed of and unaffected by the order dated the 29th May 1953.8. The result therefore is that the consideration of the question as to the validity of the impugned Clauses (b) & (c) is merely academical and we refuse to go into the same.9. The alternative contention of Petitioner that the orders complained against were mala fide has no substance in it and is summarily rejected.

Decision:
0[ds]A licencee or importer might obtain a quota certificate or a licence on the basis of fraudulent misrepresentations or forged documents which might be subsequently discovered to be such and then the import control authorities would be without a remedy if they were not invested with the power to impose any such punishment as is provided in the impugned clauses. A mere suspension or cancellation of the licence would not be enough and in the exercise of their discretion the import control authorities might as well deprive the licencee or importer thus found guilty, of an opportunity of being considered for further licences along with other bona fide applicants by making him disgorge the unlawful gains he had made earlier and equalising the distribution of the quotas for goods which would be permitted to be imported.We are however absolved from the necessity of considering this question of the validity of these impugned provisions, because the order dated the 29th May 1953 is tantamount to a refusal to grant the Petitioner licences for the two items therein mentioned for the two licensing periods1953 and theorder dated 11/12th January 1954 is tantamount to a refusal to grant the Petitioner licences for the other items therein mentioned for the three licensing periodser 1953 and1953. As regards the licensing period1953 which was anticipated in the order dated the 29th May 1953, the learned Solicitor General appearing for the Respondent has undertaken to consider the Petitioners applications for licences to import the two commodities therein mentioned for this period as if they are still undisposed of and unaffected by the order dated the 29th May 1953.8. The result therefore is that the consideration of the question as to the validity of the impugned Clauses (b) & (c) is merely academical and we refuse to go into the same.9. The alternative contention of Petitioner that the orders complained against were mala fide has no substance in it and is summarily rejected.