IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION CIVIL APPELLATE JURISDICTION CIVIL APPELLATE JURISDICTION WRIT PETITION NO.7969 OF 2007 WRIT PETITION NO.7969 OF 2007 WRIT PETITION NO.7969 OF 2007 M/s Hira Exports .. Petitioner M/s Hira Exports .. Petitioner M/s Hira Exports .. Petitioner Versus Versus Versus Union of India & anr ..Respondent Union of India & anr ..Respondent Union of India & anr ..Respondents ---- ---- ---- Mr.Simil Purohit with Mr.H.K.Sudhakara,Mr.Rohra i.b Mr.Simil Purohit with Mr.H.K.Sudhakara,Mr.Rohra i.b Mr.Simil Purohit with Mr.H.K.Sudhakara,Mr.Rohra i.b Khaitan & Co for Petitioners Khaitan & Co for Petitioners Khaitan & Co for Petitioners Mr.A.M.Sethna with Ms.A.Gokhale and Mr.A.M.Sethna with Ms.A.Gokhale and Mr.A.M.Sethna with Ms.A.Gokhale and Mr.H.P.Chaturvedi for Respondents Mr.H.P.Chaturvedi for Respondents Mr.H.P.Chaturvedi for Respondents ---- ---- ---- CORAM: F.I.REBELLO AND CORAM: F.I.REBELLO AND CORAM: F.I.REBELLO AND R.S.MOHITE, JJ R.S.MOHITE, JJ R.S.MOHITE, JJ DATED: 30th November, 2007 DATED: 30th November, 2007 DATED: 30th November, 2007 PC PC PC 1. The petitioner’s name was entered in what is 1. The petitioner’s name was entered in what is 1. The petitioner’s name was entered in what is described as the ’ Denied Entities List’. Provision described as the ’ Denied Entities List’. Provision described as the ’ Denied Entities List’. Provision for such a list is under rule 7 of the Foreign Trade for such a list is under rule 7 of the Foreign Trade for such a list is under rule 7 of the Foreign Trade Regulation Rules, 1993. It is the case of the Regulation Rules, 1993. It is the case of the Regulation Rules, 1993. It is the case of the petitioner that they were not given an opportunity petitioner that they were not given an opportunity petitioner that they were not given an opportunity before their name was included in the list. The before their name was included in the list. The before their name was included in the list. The effect of the name appearing in the ’Denied Entities effect of the name appearing in the ’Denied Entities effect of the name appearing in the ’Denied Entities List’ has civil consequences. They were also not List’ has civil consequences. They were also not List’ has civil consequences. They were also not given an opportunity of being heard before their given an opportunity of being heard before their given an opportunity of being heard before their name was entered in the ’Denied Entities List. name was entered in the ’Denied Entities List. name was entered in the ’Denied Entities List.’ 2. On behalf of the revenue, Mr.A.S.Shinde, Deputy 2. On behalf of the revenue, Mr.A.S.Shinde, Deputy 2. On behalf of the revenue, Mr.A.S.Shinde, Deputy Director General of Foreign Trade has filed an Director General of Foreign Trade has filed an Director General of Foreign Trade has filed an affidavit. It is his contention that name of the affidavit. It is his contention that name of the affidavit. It is his contention that name of the : 2 : : 2 : : 2 : petitioner was kept under ’Denied Entities List" on petitioner was kept under ’Denied Entities List" on petitioner was kept under ’Denied Entities List" on 12th May, 2006 on the basis of a letter dated 25th 12th May, 2006 on the basis of a letter dated 25th 12th May, 2006 on the basis of a letter dated 25th March, 2004 by the Director of Revenue Intelligence March, 2004 by the Director of Revenue Intelligence March, 2004 by the Director of Revenue Intelligence (DRI) Raigad who by his letter and/or communication (DRI) Raigad who by his letter and/or communication (DRI) Raigad who by his letter and/or communication reported that the petitioner was engaging in reported that the petitioner was engaging in reported that the petitioner was engaging in fradulent exports. It is contended that the fradulent exports. It is contended that the fradulent exports. It is contended that the guidelines for maintaining the list are incorporated guidelines for maintaining the list are incorporated guidelines for maintaining the list are incorporated in the circular dated 31st December, 2003. The in the circular dated 31st December, 2003. The in the circular dated 31st December, 2003. The reasons for placing the petitioner’s name in the reasons for placing the petitioner’s name in the reasons for placing the petitioner’s name in the ’Denied Entities List ’ was also passed at the ’Denied Entities List ’ was also passed at the ’Denied Entities List ’ was also passed at the behest of the Director General of Foreign Trade. We behest of the Director General of Foreign Trade. We behest of the Director General of Foreign Trade. We have now been given the reasons which reads as under have now been given the reasons which reads as under have now been given the reasons which reads as under : The letters received from the DRI, The letters received from the DRI, The letters received from the DRI, Raigad says that the office of the DRI on Raigad says that the office of the DRI on Raigad says that the office of the DRI on booking of the above case issued alert booking of the above case issued alert booking of the above case issued alert against various exporters for withholding against various exporters for withholding against various exporters for withholding their drawback/DEPB till completion of the their drawback/DEPB till completion of the their drawback/DEPB till completion of the verification of the authenticity of their verification of the authenticity of their verification of the authenticity of their exports. exports. exports. 3. We have heard learned counsel for the parties. 3. We have heard learned counsel for the parties. 3. We have heard learned counsel for the parties. The relevant para is para 2 of the guidelines for The relevant para is para 2 of the guidelines for The relevant para is para 2 of the guidelines for maintaining the ’Denied Entities List.’ The same maintaining the ’Denied Entities List.’ The same maintaining the ’Denied Entities List.’ The same reads as under : reads as under : reads as under : " Instances have come to the notice when " Instances have come to the notice when " Instances have come to the notice when external agencies such as DRI, CBI, ED etc external agencies such as DRI, CBI, ED etc external agencies such as DRI, CBI, ED etc request for information in connection with request for information in connection with request for information in connection with some investigations or sometimes recommend some investigations or sometimes recommend some investigations or sometimes recommend licensing authorities to withold further licensing authorities to withold further licensing authorities to withold further licencing facilities to the firms under licencing facilities to the firms under licencing facilities to the firms under investigation. In such cases, if routine investigation. In such cases, if routine investigation. In such cases, if routine information has been called for, the same information has been called for, the same information has been called for, the same should be provided. If recommendations to should be provided. If recommendations to should be provided. If recommendations to suspend/cancel licenses are also contained suspend/cancel licenses are also contained suspend/cancel licenses are also contained : 3 : : 3 : : 3 : in the communication then the information in the communication then the information in the communication then the information supplied should be adequately examined supplied should be adequately examined supplied should be adequately examined from the point of view denial of benefits from the point of view denial of benefits from the point of view denial of benefits under the Rules/Act. If evidence is found under the Rules/Act. If evidence is found under the Rules/Act. If evidence is found to be insufficient, agencies may be to be insufficient, agencies may be to be insufficient, agencies may be informed that more evidence will be needed informed that more evidence will be needed informed that more evidence will be needed before denial of the benefits can be before denial of the benefits can be before denial of the benefits can be pronounced under the Rules/Acts and will pronounced under the Rules/Acts and will pronounced under the Rules/Acts and will mention the reasons why the licensing mention the reasons why the licensing mention the reasons why the licensing authority thinks that there is no authority thinks that there is no authority thinks that there is no sufficient evidence to invoke rules sufficient evidence to invoke rules sufficient evidence to invoke rules relating to the refusal oflicense. If relating to the refusal oflicense. If relating to the refusal oflicense. If external agencies have supplied evidence external agencies have supplied evidence external agencies have supplied evidence to the satisfaction of the licensing to the satisfaction of the licensing to the satisfaction of the licensing authority, he shall place the firm in the authority, he shall place the firm in the authority, he shall place the firm in the DEL after issuing a speaking order against DEL after issuing a speaking order against DEL after issuing a speaking order against the erring firm without disclosing the the erring firm without disclosing the the erring firm without disclosing the source of information in the denial source of information in the denial source of information in the denial order." order." order." 4. Revenue relies on the said para for their 4. Revenue relies on the said para for their 4. Revenue relies on the said para for their action. A reading of para 2 would indicate that action. A reading of para 2 would indicate that action. A reading of para 2 would indicate that exercise in such cases has to commence when external exercise in such cases has to commence when external exercise in such cases has to commence when external agencies such as DRI recommends to the licensing agencies such as DRI recommends to the licensing agencies such as DRI recommends to the licensing authorities to withheld the licence facilities to authorities to withheld the licence facilities to authorities to withheld the licence facilities to the firms under investigation. There are two the firms under investigation. There are two the firms under investigation. There are two aspects of the matter. If there is recommendation aspects of the matter. If there is recommendation aspects of the matter. If there is recommendation to suspend/cancel the licences then it is for the to suspend/cancel the licences then it is for the to suspend/cancel the licences then it is for the authority invoking its jurisdiction to examine the authority invoking its jurisdiction to examine the authority invoking its jurisdiction to examine the information supplied and consider whether there is information supplied and consider whether there is information supplied and consider whether there is adequate material to deny the benefit under the adequate material to deny the benefit under the adequate material to deny the benefit under the Rules/Act. It is only then in such cases can the Rules/Act. It is only then in such cases can the Rules/Act. It is only then in such cases can the authority invoke its power under the rules. The authority invoke its power under the rules. The authority invoke its power under the rules. The other aspect of the matter is that the external other aspect of the matter is that the external other aspect of the matter is that the external agencies must have supplied the evidence to the agencies must have supplied the evidence to the agencies must have supplied the evidence to the satisfaction of the licensing authority. The satisfaction of the licensing authority. The satisfaction of the licensing authority. The competent authority then shall place the firm in the competent authority then shall place the firm in the competent authority then shall place the firm in the DEL after issuing a speaking order against the DEL after issuing a speaking order against the DEL after issuing a speaking order against the : 4 : : 4 : : 4 : erring firm without disclosing the source of erring firm without disclosing the source of erring firm without disclosing the source of information. information. information. 5. From a reading of the said provision name of the 5. From a reading of the said provision name of the 5. From a reading of the said provision name of the present petitioner could have been entered into the present petitioner could have been entered into the present petitioner could have been entered into the ’Denied Entities List’ only after complying with the ’Denied Entities List’ only after complying with the ’Denied Entities List’ only after complying with the said procedure. According to the revenue itself said procedure. According to the revenue itself said procedure. According to the revenue itself there is no final order yet. What has been done is there is no final order yet. What has been done is there is no final order yet. What has been done is as a temporary measure. A consideration of para 2 as a temporary measure. A consideration of para 2 as a temporary measure. A consideration of para 2 would indicate that there is a power to suspend in would indicate that there is a power to suspend in would indicate that there is a power to suspend in compliance with the regulatory requirements. There compliance with the regulatory requirements. There compliance with the regulatory requirements. There must be material before the authority before it can must be material before the authority before it can must be material before the authority before it can proceed to pass an order. proceed to pass an order. proceed to pass an order. 6. In the instant case, from the affidavit filed on 6. In the instant case, from the affidavit filed on 6. In the instant case, from the affidavit filed on behalf of revenue there is nothing to show that behalf of revenue there is nothing to show that behalf of revenue there is nothing to show that there was any material except the bear communication there was any material except the bear communication there was any material except the bear communication received by the respondents from the DRI. The received by the respondents from the DRI. The received by the respondents from the DRI. The requirement of para 2 of the Circular dated 31st requirement of para 2 of the Circular dated 31st requirement of para 2 of the Circular dated 31st December, 2003 was not satisfied before the action December, 2003 was not satisfied before the action December, 2003 was not satisfied before the action was taken. In the light of that, the inclusion of was taken. In the light of that, the inclusion of was taken. In the light of that, the inclusion of the name of the petitioner in the ’Denied Entities the name of the petitioner in the ’Denied Entities the name of the petitioner in the ’Denied Entities List’ was without authority of law and the order has List’ was without authority of law and the order has List’ was without authority of law and the order has to be set aside on this count alone. to be set aside on this count alone. to be set aside on this count alone. 7. The effect of the petitioner’s name being 7. The effect of the petitioner’s name being 7. The effect of the petitioner’s name being entered in the ’Denied Entities List’ results in entered in the ’Denied Entities List’ results in entered in the ’Denied Entities List’ results in civil consequences. The Circular itself in para 3 civil consequences. The Circular itself in para 3 civil consequences. The Circular itself in para 3 (c) contains a provision that the authority would (c) contains a provision that the authority would (c) contains a provision that the authority would : 5 : : 5 : : 5 : strictly adhere to the principles of natural strictly adhere to the principles of natural strictly adhere to the principles of natural justice. In other words, this would require giving justice. In other words, this would require giving justice. In other words, this would require giving an opportunity to the parties likely to be effected an opportunity to the parties likely to be effected an opportunity to the parties likely to be effected before passing the order. In the instant case, this before passing the order. In the instant case, this before passing the order. In the instant case, this was not complied with. was not complied with. was not complied with. 8. We further make it clear that if the respondents 8. We further make it clear that if the respondents 8. We further make it clear that if the respondents have otherwise power, it is always open to exercise have otherwise power, it is always open to exercise have otherwise power, it is always open to exercise the jurisdiction after applying the parameters as the jurisdiction after applying the parameters as the jurisdiction after applying the parameters as set out in para 2 of the Circular dated 31st set out in para 2 of the Circular dated 31st set out in para 2 of the Circular dated 31st December, 2003. December, 2003. December, 2003. Rule is made absolute in terms of prayer clause Rule is made absolute in terms of prayer clause Rule is made absolute in terms of prayer clause (a). No order as to costs. (a). No order as to costs. (a). No order as to costs. (F.I.Rebello,J) (F.I.Rebello,J) (F.I.Rebello,J) (R.S.Mohite, J) (R.S.Mohite, J) (R.S.Mohite, J)