Case: Oryx Fisheries Pvt.Ltd Vs. Union Of India

2. The appellant, a Private Limited Company engaged in the production, procurement and processing and export ofand other related products, agreed to supply MT of pealed and undeveined (PUD) shrimps to one Cascade Marine Foods LLC (hereinafter referred to as, "Cascade", a company incorporated under the relevant laws of UAE at Sharjah. The Purchase Contract dated 26.09.2006, was signed by Pristine Food Inc., a local agent of Cascade, and as per the details of the contract, the PUD Shrimps were to be Blockmandatory labels on both individual block and master carton and the destination was Sharjah, UAE. By a subsequent amendment dated 19.10.2006 to the purchase contract, the PUD quantity was increased to a total of 24 MT without changing other terms of the purchase contract. Prior to the dispatch of the consignment, inspection was carried out by Sakson Fisheries Consultants, local agents of Cascade, on 18.10.2006, whereby it was found that there was no bad odour. Rather there was a fairly fresh smell and the quality of the consignment was found to be satisfactory.3. On 25.10.2006, the consignment was dispatched from Mumbai, which arrived at Sharjah Port on 02.11.2006 via Delivery Order, dated 06.11.2006. The Director of Customs, Sharjah, was requested to authorize the release of the PUD Shrimps to Cascade. Following this, on 07.11.2006 Sharjah Customs, vide its Customs Declaration Form, stated that the consignment was not to be released before Health Inspection. It appears from the facts that the customs and health authorities of UAE, had inspected the PUD Shrimps quality and quantity and they were satisfied that it was fit for human consumption. The health authorities resealed the consignment and numbered it as MSLA 18 J 550015, as against the original seal no. YME 166813. It appears from the Store Receipt voucher No. 9232 dated 12.11.2006 of Cascade, the buyer, that they had taken possession of the consignment. After a lapse of more than 10 days, Cascade alleged that the PUD Shrimp was of very poor quality as it transpired from their analysis report dated 21.11.06.4. As per the minutes of the meeting held on 17.12.2006 in the office of Cascade at Sharjah which was attended by Mr. S.D. Puranik and Mr. P.R. Sakthivel, respectively Managing Director and Director Marketing of the appellant and Mr. Vijay Paranjape, Group QA Managerand Ajit Pillai, General Manager, Cascade Marine Foods LLC, the appellant agreed to compensate Cascade to the extent of the value of the defective goods and the minutes of the meeting were signed by all the aforementioned individuals.5. It has been mentioned in the note attached to the letter dated 03.09.2007 sent by Cascade to the Secretary, Ministry of Commerce, Government of India that Cascade was asked by the appellant on 21.12.2006 to issue necessary samples to Mr. Celestine of M/s Starfish Trading FZE and several samples were handed over to him. The fact that the samples were handed over to M/s Starfish Trading FZE has been disputed because the appellants stand before this Court was that Cascade failed tothe necessary samples to the said M/s Starfish Trading FZE.6. The appellant called upon Cascade to hand over the consignment to one Freshly Frozen Foods LLC and as a result of that 1081 cartons of goods were delivered to the cold store designated by Freshly Frozen Foods on 14.04.2007 vide Cascade Store Issue Voucher 0390. Freshly Frozen Foods could retrieve only 25 kgs from 4 MT of product they had thawed out and they had directed Cascade to take back the material. When the Municipality Audit found out that the validity of PUD shrimp packages had expired they compulsorily destroyed the entire consignment of shrimps and the destruction cost was debited to Cascade. As a result, Cascade by its facsimile transmission dated 13.08.2007 informed the appellant that they rejected the entire consignment and they enclosed a Debit Note No.CMF/DN/108/07 for US$ 86,104.00 which represented the material cost and destruction charges and requested the appellant to settle the same at the earliest.7. On 3.09.2007 Cascade by its letter addressed to Chairman, Marine Products Export Development Authority (for short, MPEDA), made a quality complaint on the shipment effected by the appellant for a value of US$ 83000 and a claim of total loss arising from intentional cheating by way of delivery of decomposed shrimp, unfit for human consumption.8. The Deputy Director, MPEDA, the third respondent by its letter dated 12.09.2007 forwarded the quality complaint made by Cascade and sought clarification from the appellant regarding the same. To that the appellant vide its letter dated 18.09.2007 stated that the consignment that they had sent was of standard quality and also pointed out that they were very doubtful whether the sample shown to the appellants officers during their visit to Cascades factory and the analysis report dated 21.11.2006 pertained to the consignment sent by them.9. In addition to this, Cascade, through its advocates, served a legal notice on the appellant on 23.09.2007 asking it to pay US$ 83104 plus destruction costs within 7 days of receipt of the notice and on failing to do so, appropriate legal proceedings would be filed in India and UAE to recover the said amount. The appellant, through its Advocate, replied on 17.10.2007 denying that the entire consignment of shrimps exported by the appellant had deteriorated in quality. In furtherance they also denied any liability to compensate Cascade for the value of the goods along with storage charges, distribution costs of USD 83104 plus destruction costs as alleged.10. The third respondent vide its letter dated 25.10.2007, addressed to the appellant, directed it to settle the dispute with Cascade urgently by 10.11.2007, which was duly replied to by the appellant in the negative by its letter dated 11.11.2007. After a series of correspondence between the appellant and the third respondent, finally the third respondent decided on 20.11.2007 to convene a joint meeting on 5.12.2007 between the appellant and Cascade to find out an amicable settlement of the issue in the presence of the officers of MPEDA. The appellant in order to amicably settle the dispute offered Cascade 25% of the value of the goods exported, by way of deferred payment against adjustments, from future supplies, in the presence of officers of MPEDA, Cochin.11. However, Cascade refused to accept the same. Then the third respondent issued a show cause notice dated 23.01.2008. As per the show cause notice the MPEDA called upon the appellant to show cause why their certificate of registration should not be cancelled.12. The appellant replied to the show cause notice vide its letter dated 4.2.2008 seeking to refute the allegations levied upon it and further stated that MPEDA would not be justified in canceling its certificate of registration on the abovementioned grounds.13. Third respondent without giving any reason and without giving the appellant any personal hearing held, vide its order dated 19.3.2008, that the registration certificate of the appellant stood cancelled.14. Being aggrieved by the said order, the appellant appealed before the second respondent under Rule 44 of the Marine Products Export Development Authority Rules, 1972 (hereinafter referred to as, "the MPEDA Rules"). The appellate body fixed a personal hearing on 28.04.2008. The appellant vide letter dated 26.05.2008 addressed to the appellate body stated that despite several attempts made by the appellant to resolve the dispute with Cascade as advised by the MPEDA, the attempts proved futile and once again requested appellate body to adjudicate the dispute on merits as well as to revoke the order of cancellation.15. The second respondent vide its letter dated 20.06.2008 informed the appellant that no more personal hearing was required and directed them to send any further evidence of proof of settlement with Cascade, if any. Onthe second respondent passed an order holding, inter alia,appellant in a very unethical way, had reneged on the promises made earlier. It is also clear that the appellant company has made every attempt to disown its responsibility for supplying poor quality seafood to M/s. Cascade Marine Foods LLC, Sharjah. Even during the personal hearing before the undersigned on the 28th April, the appellant was given ample time to settle the matter. Time was also given beyond the deadline fixed. However, the appellant seems to have taken a decision not to settle the complaint.The appellants contention that they were pressured to sign the documents is quite illogical and unjustifiable because if they had any difference of opinion they could have recorded then and there. Hence there is ample evidence that this is definitely a case of cheating of M/s. Orxy Fisheries by shipping substandard material to M/s. Cascade Marine that brought heavy loss to one of the leading buyers in UAE. Such erring and unrepentant exporters if they continue to export seafood from India could easily damage the reputation of India among buyers abroad.In view of the facts and circumstances as mentioned above, this appellate authority finds no lapse on the part of the Deputy Director in canceling the registration of the appellant as an exporter.I, therefore disallow the appeal and uphold the order of cancellation issued by the Deputy Director, RO, Mumbai.Being aggrieved, by the order dated 19.03.2008 and 19.08.2008, the appellant preferred a Writ Petition No.2251 of 2008, before the High Court of Bombay. The High Court found no error of law on the face of record, and upheld the findings of the appellate authority and dismissed the writ petition by an order dated 16.10.2008.17. Assailing the High Courts order, this Court was moved on a Special Leave Petition whereupon this Court on 28.11.2008 issued notice and continued the stay granted by the High Court on 16.10.2008.

Court's reasoning:
39. On the question whether the entire proceeding for cancellation of registration initiated by the show cause notice and culminating in the order of cancellation is vitiated by bias we can appropriately refer to the succinct formulation of the principle by Lord Reid inRidge v. Baldwin and others (1964 A.C.40). The Learned Law Lord, while dealing with several concepts, which are not susceptible of exact definition, held that by fair procedure one would mean that what a reasonable man would regard as fair in the particular circumstances (see page 65 of the Report). If we follow the aforesaid test, we are bound to hold that the procedure of cancellation registration in this case was not a fair one.40. On the requirement of disclosing reasons by a quasijudicial authority in support of its order, this Court has recently delivered a judgment in the case of Kranti Associates Pvt. Ltd. & Anr. v. Sh. Masood Ahmed Khan & Others on 8th September 2010.41. In M/s Kranti Associates (supra), this Court after considering various judgments formulated certain principles in para 51 of the judgment which are set out below a. In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially.b. Aauthority must record reasons in support of its conclusions.c. Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well.d. Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial andor even administrative power.e. Reasons reassure that discretion has been exercised by the decision maker on relevant grounds and by disregarding extraneous considerations.f. Reasons have virtually become as indispensable a component of a decision making process as observing principles of natural justice by judicial,and even by administrative bodies.g. Reasons facilitate the process of judicial review by superior Courts.h. The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the life blood of judicial decision making justifying the principle that reason is the soul of justice.i. Judicial or evenopinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants faith in the justice delivery system.j. Insistence on reason is a requirement for both judicial accountability and transparency.k. If a Judge or aauthority is not candid enough about his/her decision making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism.l. Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons orSince the requirement to record reasons emanates from the broad doctrine of fairness in decision making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See (1994) 19 EHRR 553, at 562 para 29 and Anyavs. University of Oxford, 2001 EWCA Civwherein the Court referred to Article 6 of European Convention of Human Rights which requires, "adequate and intelligent reasons must be given for judicial decisions".o. In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "Due Process".42. In the instant case the appellate order contains reasons. However, absence of reasons in the original order cannot be compensated by disclosure of reason in the appellate order.