Case: M/s. Exen Industries Vs. The Chief Controller of Imports &amp; Exports &amp; Others

could be issued to them. This was repeated by the Under Secretary to the Government of India in his letter, dated December 3, 1965 wherein it was stated that as the machinery and equipment of the original firm had been equally divided, it had been decided that both the firms i.e., the old and the new ones, should be registered with D.G.T.D., and the raw material allocations previously made to the undivided firm should be equally divided between the two firms.3. It is against this decision that the appellants moved an application to the High Court for issue of a writ on the ground that the refusal had been against the policy, procedure and conditions governing the grant and issue of actual users licences as published in the Gazette of Indian as a public notice and embodied in an Official publication called the Import Trade Control Policy popularly known as the Red Book and the Hand Book. In these two publications detailed provisions have been made for the division of the licences in the event of a change in the constitution of a firm (sic) pending applications, pending licences, future licences and future licences entitlements. According to the appellant the two books also lay down conditions for grant of licence to actual users and make separate provisions for division of licences in the case of pending applications for the grant of licences and pending licences in the case of change of constitution of the firm. The appellants claim that these publications however do not make any provisions for division of the licence entitlements for the future inasmuch as actual users are given licences for the licensing period only on the basis laid down by the Red Book and the Hand Book. Paragraph 73 of the Hand Book to which our attention was drawn, lays down the basis of licensing of actual users. They provide for taking into account various matters which are all set out in the petition. Paragraph 88 of the Hand Book provides for changes in the name, constitution or ownership of the actual users business after the issue of the actual users license but before and after the importation of the goods. According to the petition this paragraph does not deal with the division of future licences to actual users inasmuch as the same has to depend on the basis laid down and contained in Paragraph 73 of the Hand Book. The appellants claimed in their petition that the licensing authorities are bound to act judicially and reasonably while granting or refusing licences in exercise of the discretion vested in them by law and they could refuse the licence under the provisions of Clause 6 of the Imports (Control) Order, 1955, and under Paragraph 73 of the Hand Book, but the reason given for refusal to give the balance of import licence to them was not a valid one and the refusal was unfair and arbitrary based on extraneous considerations without proper application of the mind on the part of the respondents. It was in the above circumstances that the appellants approached the High Court for the issue of a writ and the said application was rejected in limine.4. It was submitted before us that clearly the facts laid down in the petition called for some explanation by the respondents to justify their refusal as the ground which was put forward as the basis of the refusal cannot bear scrutiny. It appears to us that the grievance of the appellants is not unjustified. The petition supported as it was by numerous annexures which contain copies of representations made by the appellants to the various authorities and their replies, obviously established a prima facie case for investigation and the High Court should have, to say the least, called upon the respondents to show cause why a rule should not be issued.5. Learned appearing for the respondents did not suggest that a prima facie case for enquiry had not been made out. The grate of actual users licences to manufacturers is of vital importance to them if they are to carry on their business and courts ought not to uphold any refusal of such licences if they appear to be arbitrary or based on extraneous considerations. It may be that the respondents could have satisfied the High Court that there was sufficient cause for refusal apart from the grounds put forward by them in the letters of November 18, 1965 and December 3, 1965. However the High Court though competent to decline to exercise its extraordinary jurisdiction under Article 226 of the Constitution when it finds that the petition is frivolous or without substance should not throw it out in limine if a prima facie case for investigation is made out. The High Court can reject a petition in limine if it takes the view that the authorities whose acts were called in question had not acted improperly or if it felt that the petition raised complicated questions of fact for determination which could not be properly adjudicated upon in a proceeding under Article 226 of the Constitution. We may, in this connection, refer to a recent judgment of this Court in Century Spinning and Manufacturing Co. Ltd. v. The Ulhasnagar Municipal Council, (C.As. Nos. 2130 and 2131 of 1969, decided on February 27, 1970 : (1969) 1 SCC 582 : (1970) 3 SCR 854 : AIR 1971 SC 1021 .) where it was stated that :".............. a party claiming to be aggrieved by the action of a public body or authority on the plea that the action is unlawful, high-handed, arbitrary or unjust is entitled to a hearing of its petition on the merits............... The High Court has given no reasons for dismissing the petition in limine, and on a consideration of the averments in the petition and the materials placed before the court we are satisfied that the Company was entitled to have its grievance against the action of the Municipality, which was prima facie unjust, tried."

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]It appears to us that the grievance of the appellants is not unjustified. The petition supported as it was by numerous annexures which contain copies of representations made by the appellants to the various authorities and their replies, obviously established a prima facie case for investigation and the High Court should have, to say the least, called upon the respondents to show cause why a rule should not bemay be that the respondents could have satisfied the High Court that there was sufficient cause for refusal apart from the grounds put forward by them in the letters of November 18, 1965 and December 3, 1965. However the High Court though competent to decline to exercise its extraordinary jurisdiction under Article 226 of the Constitution when it finds that the petition is frivolous or without substance should not throw it out in limine if a prima facie case for investigation is made out. The High Court can reject a petition in limine if it takes the view that the authorities whose acts were called in question had not acted improperly or if it felt that the petition raised complicated questions of fact for determination which could not be properly adjudicated upon in a proceeding under Article 226 of the Constitution.