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LJBERTY OIL MILLS & OTHERS

. UNION OF INDIA & OTHERS • May 1, 1984 . .

(0. Cl!!NNAPPA REDDY, A.P. SEN AND E.~. VENKATARAMIAH, JJ.)

Imports (Colltrol) Order, '1955-Promufgated under ss. J and 4-A oft!..

Imports and Exports (Control) Act, 1947-Cfmue BB-AJded lattr by woy cj amenilmem-Jnterprelotion of-Contemplates action of .interim !1Qture-01<ftr/ action mu_st satisfy rule• of naruwl jllstkt!-AutlwrilieJ /WI bound lo gireptt- • ·:decisional hearing-Authorities mrw give prJ,1trlccisiona/ hearlng-DeciJion mJIJtbe communicated to person affected-Order need nol .xive rea.>on$ bUIIt!Jl!l illlikalt

satisfaction furming basis for action and concise statement of aJ/tgalioru-Actic• under Clause BB of dJaslic natttre-IYJust be a11jmctted by .sense of urgency-Sof urgtncy infused by ie1•ual factors-Public .sculiment is otU! sw:fi/Q£tor--PIIbUc

lntere.s to h" parumowtt collsiderarlott-'-11 is for authorities to coruidu jlub~ . lnt<rt!t-Cuurtt nut to concern themselves wjth sufficiency of grou'nd-<:outlstl

consider questloH of mala/ide ur patent luck of jurisdicticm.

Import (Control) 0flfer, 1955-C/ause 8B read with C/au.s~ 11 (4)-lnt<,. pretation.. uf-Cious~ BB applies eqttally to goods coyered by Op<n Gtnm( Licenu.

lnterprelatiotl of ltulllles-Rules of-Courts nut pernritud 10 ltlterpret srQIJIJOfT Instruments so as /o exclude nulllrul justice unless lui11JUQ86 of inslrllm<nt /eal'<IJIJ option to Court, . . . ,_

• N"tural }ustlct!-Rulcs of-Extent of natural jtuti~Must vary Jrem ctJJl 10 ' • case-Interim orr/en Imply /Wtura( justiCe-Seeking comments of person ll<f•rt inYestigution ag"illst him nvllletessury-Dedsion uffcctiey a pusan must /)teo/It" nzunicutcd to the ujfeaed pcrsun-Ajfectcd persvn .11mst be giren post-d<ciJiotl4i opport11/ty /WI puu/Nc. .

Words am/ pltrases-'lllvestigatioll' -IYhett commnus. . . . - Oa bein11 uiscovercd tht beef tallow Imported from abroad. was et being 110hl Ill vanapti or used in its panufaturo by certain un.sct_'lputo~ persons, general public f.:eling was rousd ond there was public agitatton ao demands re mude that 1.:vcco nctiou be tukcn gainst those responsible . . 1u a result of the discoveries tho Centcul Government thou&ht that drastic acuo~ wa• called for. So, a notilio:utlon was issud under s 3(3) of tbo Imports

80 • E · tt dptl ports (Control) Act, 1947 totulty bannln_g tho impact of beef, butl"a 0 bet tallow Inti> Jndill w.e.r. Auaut 24, 1~83. And, on <!ill"crent dateiJ. in Novl!l J

LIDERTY OIL MILI.Sv: UNION

:, ' ' n~ o">cmbor ~983, five circlrs. styled 'ahcyance' c'rculr!l-and markd sC::rct' . • . sued by the Doputy Ch1ef Con•rollcr of Imports and E•porls in respect of were

15 y as 19! concerns directing .licensing authorilits to keep in aboyanet for a ., n of six months from the espcctive dtes of the circulars, any application p< ;, ed from any of them for the grant <?f Import l1c.:nce or customs clearance

f . its' and allotment of impo rtod goods through agencies like the Slates

~ding corporation of India Limited or nny other similar agency. Tboush the ,;.-ullfS did not tbcms, lves. e to any statutory authonty, they wcro, ascl•imed I •od ns agreed to by the parties, presumed to be statutory orders made in e..crcise. { of the power conferred by ct. 8 B of th< Import (Control) Orlicr, 1955: Sc>cr..J {' pc:ons 3gainst whom '•beyance' Orders haJ' been made tiled writ petitions in • dilferent llish Courts challenging tl:osc o+dcrs. Lib<rty Oil f>lills wa.s one . of 'l thoSO who filed such a writ petition in the Bombay H1gh Coun. The case was . ·: v ,, th:rawn to the Supreme Court under ':'-rt, 139A of the Constituuoa.

r 1 u:erty Oil M1lls contenJeu: (I) that the requisito satisfacuon , of Ute • . ; ppropria.tc :tuthorhy which was n~""essary for issuing an ord..:r uont!f: cl. Sll was .. " not only not recorded In the circular but t: '"'was no material whatsoever upon which such satisfaction could have been arrived at; C) that the circulor was not confined to the banned item of animal ~; tk>w or to items which could be said to have oumo cMncction with the t-anned Hem. but cxt<ndcd to nil item, for

hlch aplic>tiOns for the grant of licenc-es or for allotment had been made by l ihmy Oil Mills; (3) that general nature of the order discloscu n total noa application of the mind: {4) that several firms were clul>bed tgethcr and tlc.Jlt

ith by a sinale circula~ and thcce was no indio>tioa whauoevcr that the facts relating to each of the firms hall ba:n considcreli scpar:aely ; (S) that the 'ubcyance circulars' far from auvnncing the public interest would, on the other baed, prcjudicinlly offc:t the public in'terc.>t by bringing to a bait se•ero.l industtie• and throwing hosu of workers out of employment; (6) that there was no ault!tancc io tne ollegation that Uberty Oil Mills were not 'actul users' of beef tallow but th()' l•ad misused the import licenoc~ of other liceos<'C.S' by obtaining letters of authorisation for Import o~ beef tlllw as if they were ootual users; und 17) thJl tho' circumstance that there was put>lk 3gitation about the import or beer tallow ""a total irrelevant circumsronce for making an ordor under cr. 88.

The intervener: contended: (I) that ct. SB should be construed as'providin&

for on oppprtunity to be heard und sin<-c the al"Cyonce orders roauc no provis>:>n

or ~1earin~. they •hvu:J be struck down 35 opposed to the prin-.pi<S or naturul

~Ill", and therefore, arbitrary and viobthe of Article 14 and 19(1)(g) of tho • nstitutin ; (2) tJat !ccret orders aiTcctin~ ights of part.ies _could not awfully

, 01.lde snu:e o<crex:y would militrate ae>nlSt aatural !UStiCC wtl!J agam•t the . ''i!ht or appeal provided by •· 4M of the lm)X'rts and £•Jwrls (Control) Act, and ·

0) that an order under cl. SD could 011ty be nude ufter the investigation under <1. 8 haq commenceJ rh•t i~ ufter a show .-ause ooti<'t hail been issued under cl.8, Dilml • . "'"lithe writ petition~. , . . ·. .

1112LO: It Is not perouis.•iblc to intctpn:t any statutory instrument so. as to luJc ll; JturJI jutice, unlc!l the lanuagc of the intru_mc?t leav~ no piton to • Coun. l'roc.:uural fuimess cmhodyini naturul JUSttce ts to be Jmpltcd when

n~~ a<tion Is token affecting the rishts of partie'S. It may be that the oppurtuy to be h<aru may not .,., prc-do:cisioual ; it rnay no:ccssauly ha1e IQ be post.

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 [1984j 3 ~-c.k.

decisional where the danger to b~ averted or the act to be preve 1 d. . . or where the action to be taken can brook.ne delay, It may riot n e 15 •mminent • f . d"· I . ovenbe,_ sary in some sttuat ons \0 gtve pre ectstona opportunity of makin ··-... _ tation but it would be sufficient but qbligatory to consider any repr!:epreseo• .

may be made by the aggrieved person and that would Satisfy the re . IJoa th, t . procedural fairocss and natural justice. There can be no tape.m:"•tnenb of

extent of naturnljusucc." It may and indeed it must vary from statutsucc or the

• · t d t p d . . e to !tatute 51tuauon to SJ uauon an case o case. recctstonal natural ju r . • usually contemplated when, the decisions taken are of an interim nat

5 tee"' not invesiigatioo or enquiry • • Ad-interim orders may nlways be made •"x"' !'(ndlllt . . partt and such orders may themseles provtdc f?r at~ opportunity to the aggrieved p:uty 1o be hJ:f!rd at a later stage. Even if the tptenm orders do not make Pl1lYision foe such an opportunity, an aggrieved party_ bas, ncverlhelcss, always the right to make n approptiate representation seeking a review of the order and asking the authority to rescind or moJify the order. The principles of natural ju!lit< would be satisfied if the aggrieved party is given an opportunity at his reqll<!l.

There is ne> violation of a princi)lc_ of natural justice if an ~.r-partt •dinterim • order is made unles of course, the statute itself provides for a hearing befe the order is made. Natural justice Will be violated if the authority refuses to consider the request .of "the aggrieved party for an opportunity to make bi> representation against the x.-paru ad-itt!Crim orders. (700H ; 70JA-F)

There is no rule of justice of fair play whkh requires the authorit~ to 5"k tbe comments of the person coocc:rned before embarking upon nn investigation.

lnvt.tigatioo commen= as •ooo as the authority concerned to take the 61't step wbelher by way c>f seei:ing evidence or by way of seeking an e•planation from the person concerned. (699F}

"tn $Orne cases, t:<port~ inerim. orders may be made pending a finll . adjudic.Jtion: But that dves not mean that natural justice is not attracted whca orden or suspension or like orders or an Interim nat uri: arc m~<)e. Some ordm of that nature, intodcd to prevent further mischief of one kind, may lhem!<ll'eS . be product ivc of ifu:er m•schief of another ldnd. An interim order of staY or lospension ti; h hJ; th~ effct o( preventinl! a p~NOR, however, 't<J1l[JOr><~(y,

uy, from pursuing his profenion or line of busin•ss, !D3Y h1ve subsll"1131•

ICciOUI and CYCQ disastrouS .COnSCI]UCltCCS to him and Jtlly ¢'pole him (I) grave risk and hazard. Therefore, tbere mu:11 be observed .ome modicum of rt5Jdual, core n•tural justice, suffident to enable tho atT.:cte.l ~C'IOn to. mnke ao aJu>te representation. The"' coniiderations may not, however, apply to "ues of h~t

lln•in11 whicb involve tllo grant or a prlvilell~ and aro not 1 muer of "' ' Th•l may b: a•J in IJ.n> Clla, it .; tn oaty bJ a(t:r an lniti<41 t:<·[Jatl< t.JttrJJJ

order il made. (70SB-0)

.J. , . • I p~/jef ~I .

Q•-.n v. ll'VI ..... If'' tt al., S6 D.L R. (2Jl 28), Co111 11isslontr o, ,.,., u 1, Tonal, 9~, C.L.R.. 3~1 . Lnis Y. 11•/[tr, (19781 3 All ER 3S4 and Fu tllrs>' . WhW'Mo•rlllih Schools Ed, l97J A(lpeal Cuses 660 and C/tilli/tpul Dof 1973,

M,.f<SIIe 8JII/I•t c, Jmpny, SU,>Nm: CJurt' s Civil App:a I Nos. 197().71

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r .l LIBERTY OIL MILLS v. UNION

~· : . .· . ·. . . : . ent or the Chief Controller of Imports and Exports io debar A ;, Governrn from impor tin& goodS' or from ]<Ceiving licences or allotment of

I a person 11 d d r h f . d gocds tor a pen e perro r sue person if guilty of any of the rmportc commission or omi"ion enumerated in the Clause.· Clause 8A • acts. or, 5 the Central Government or the Chief Controller of Imports and etnPOW r . ' . f d ·; 15 to suspend the rmrortatwn o goo s by any person or grant of . E•pOr ( .

I d d d. licences or allotmnt o Jpor c . goo s pe~ rng rnrttjgotion ioto one or

I!IO<C of the allegal!ons mcntrond m . cl •• 8 wclhout preJudice to any other B

on that miiY be . taktn ngamst hem on that bthalf. Clause 88 empowers

( ·: ~~Central Government. cir. tb_e Chif Controller of Imports and E•porls

10 ke<p in nbeyance apphcn hens for lcccnccs or allotment of imported good' l

wbor< ony inl'estlgatlon 1:; pending rnto ony of 'tbe alkgations mcn•ioned in

cl. s ngainsl a lic<nccc, in>porltr or aoy other pe•'son subject to fulfilment

. •

ofthc requirement of tbc sntisfuction of the approrriate auth<'rity rcgordtng C the rub lie interest. Both clauses 8A and 88, which were inserted in the Import (Control) Order, 1955 later by )V3Y or smond'ment. CC'nt•mplate f

accion of an interim nnture pending inns'igalioil in1o aliC!!ti<>n< imder eL 8. Ordinarily in the nbsrnce of anything rr.orc, •t would not bt ncces- ury' to ghe an orportunity to the per sou concerned before proceedingl

eo take action under cl. SA or cl. SB. But whtl• cl. 8ll de; lo with tho riJhllo oblftln liccncrs and th~ •ight to ol:lta:n allotments. cl. 8A deals with D right! which have flowered into licen<es and allotments. A person to • •hom licences hnve been sra.nted or alk•tmen<s made lil:lY havt arranged his

liJ'alr~ OR that basis nnd entered into transnctionS with Others. and:to him 1he consequences of aciton under cl. SA may be truly disa<trous whcrra• the IX!nsc:quences of action under cl. Sll may not be so imminently harrr•ful. . It . b presumably because of this ltvely diiTor cncc betwten cl. 8A ar.d sn that

cl. 10 provides for a pn:dccisil>nal opportunity in the case of action under E

cl. 8A and docs not so provide in the case of action under cl. SB. Again, il is presumably bau'c or this difference that ct. 10 while providing f<>r an

.. . lpllcal •gainH n decision under cl. SA docs not provido for an appeal against

. 1 decision undi:r cl, 8D. But that docs not me3n that the requirements of

0-'uraljustice ore nol to be ntent at all in the case or action under cl. SB.

he requir<men:s of natural justice .will be mel in the ensc of act!on under F '~ C~ SB by cor.sidering, .ona fide, 11ny rtprescnt:Jtion that may bt made in

:b 1 behalf by tte person asgrieved. Clause 88 itsclfaivesan indication ·,. . at such a post-decisional opportunity on <he rrquc•t of the person c••nccr- ; D<d lacont 1 f •

I · . Is . <mp a ted. The action under cl. SB is to be taken 1 t•·• aut torrty 11 lo.Usfied in the public intcrct that such ation may bt taken wi1hout

"nolnin• f h 1 · r lit:) • Urt cr detail' In rcsord to the all(gations. It clear Y unp tes not::h<n furll•cr facts are ns"ertaincd by the authority or brousht to tt.c G

o; a5e otof d:e authority, such action may bt ri<wed . Th•rcforc, in. tbc

Ollportunctroo under cl. 8B it is not r:ec.:s:>arx to atve prc-dccls•_onnl ..

~?'the I.Y but a post-<lcdsion111 opportunitY must bt i<ven tf so rcqutstcd . Persona atr":tcd, [G9SO; 696D-E; G; 705FH; 706AE) ·

Ptrto The dcciaion to keep' in- 'obeyance' shuld communicated to tl; e It w:U~nerncd otherwise the rules of natural justice will not e sa!isfied.

I~ (i) l¥) : lnO&l &lbitrnry and qult clearly violative of Artceles 14 ad . r lhc Constitution j£ cl. 80 is to be inter!>rctcd PS e.tctuding

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communication qf the decision . taken.

There ·.is nothing In cl. 8B to suggest that the decision is not to be communicated. On the other hand, the expression ''without assi$niog. any reason" implies that the decision has . to .be commliticated, but r.ea~Ms for the. decision have not to-be stated . . Reasons of course, must exist for the decision. since the decision may-,.only be taken if the authority in satisfied that the grant of licence or allotment . ofimported good~ will not be is the publi~ interest.

The expres ion with o:ut assigning reasons' only means that there is no obligation to formulate reasons and 110tbiog more.

Formal reasons may lead to complications when the matter is still under investigatio11.

So the authority' may not. . . give formal reaso!s, but the skeletal allegations must be mentioned in order to provide. an opportunity to the person affected to make his representation. -

[706H; 707A>c]

On what should the. satisfaction . be based ? The action under cl. 8S' . is really in aid of the ultimate -order under cl. 8.

Therefore, in order to invite the satisfaction contemplated by ct. 8B there must be present some . strong suspicion of one or other or more of the grounds mentioned in cl.8.

Since the action which is of a drastic nature is to t:ic taken , ex-parte, it must ncessarily be .animated by a sence of urgency.

Tbe sense of urgency may be infused by a host of circumstances such as the trafficking and unscru~

pulous pe4dling in licences, large scale misuse of imported goods, att~Qlpts .

J:o mnopolise or corner the market, .wholesale prevalence of improper

practices among classes of importers, public sentiment etc, etc .. -It is true that public dministration is not to 'be run on public sentiment and statutory action may only be taken on grounds permHted by the-statute.

Public- sentiment is not in some cases the grond for the action but it is what clothes the ground with that sense of urgency which makes it imperative that swm action be taken. [7070-H] ·

Public intt:rest must nolens volens be the para'l'lount cosideration. !f , the tl1reatened .public mischief is such as to outweigh the likely inj!lry to the party, the authority may take action under cl. 88. If tbe threatened public injury is very slight comp!tred to the harm which may be done to the part~. the authority may DO~ , take action under 'cl. 88. Which elCU!CDt . of the l,)ublic interest should be aiven greater weight and which grounds, should .weigh at all ar~ matters for the authority taking action under cl. ..

• 8B.

Courts do not concern .tbemselve~ 'with the sufficiency of the grounds

o which action is taken owith .the balancing of competing consil,'leration!,

in favour of and against the action.

[708A•D] . . \ .

J\n 'abeyance' order under cl. 8B is directed not against any particular typeof ·, goods but against l!n importer, licensee or other persoQ 'against whom an investigation into anegations under cl, 8 fs pending.

Therefore the question is whether it is not tri the public interest that a particular person shuuld be prevented, from obtaining import licences or

hnpo.rted goods of any description .pding investigation into the allegaions under cl.SB.

That would .rlepend .on the natU't'e of the a\legations, the extent of 1nvblvement of the person concerned an~, most important, the ehintent of the 'public interest wb1ch are for the consideration of th~ . authol'itY 111akina the order under cl. SB' aodnot for the Court.

[708B-G] . • . ~

UBEltfY OIL MILts v. tJNlON

Action under cl. 8B -is or an interim nature and it may be ex-parte, in whiob case the affected -party maymake a suitable representation bringing out an~: the outweighing circumstances id his. favour.· Tfiat is the real . remedy of the party. courts do not enter the picture at !hat . stage . unless

the action is mala fide or patently without jurisdiction.

The action will be

patntly without jurisdic\ion if it is not based on any rlevant . matial ' whatsoever. If the authority declines to consider the representation, orif the authority after cons.idera\ion or from o-blique motive, or tho decision is such. as no reasonable nian properly cire.:ted on the law would arrive at on ihe matcriaUacts, it will be open to the.party to seek. the , intetvntion of the court t that stage.

[70SEG] ·

Barium Chemicals v. Company Law Board {1966} Supp, SCR 311

.J./ Rohtas lr.ilustries. v. S. D. 'Agarwal, [1959] 3 S.C:~. I 08~ M. A. Rasheed . \.,;

v. State f Kerala, [1975] 2 S.C.R". 93, Shalin(Soni v. Unianoj India, -{1981)

1 SCR 952 and Commissioner of Income Tax v. Mahindra and Mahlndra, [1983] .4 S.C.C. 392, referred to. ,

. -The Court cannot consider • the question whether ther.e . is r.ufficitrit relevant matefial in support of tbe allegations m.tde against the petitioners.

Tlie Court may properly consider the qqestion of mala fide or patent !lick oi' jurisdtction .. Therefore in the instant case the Cort cannot cmisider the question whether the m:.terial avllable justifies a prima focie conclus'ioli that tbe petitioners have made Hiegal imports of beef tallow.

[711AB]

Tbe submission that sine~ the ab0yance ·order wa~ never formally

conmiunlcatd to the petitioners, it must be , rea ted as non elt has nG sub

stance. The al?eyance order was undoubtedly communicated to the .concern ed authorities.

Despite the attempt at secrecy made by the concerned authority and the failure to formally communicate the decision to tho party, the eyauce circular was very soon public know:edge aod the petitioners did come to know ofthe orders.

[71013; E-F] · .

The argument that cl. 11 (4) excludes the application of cl. BB to ioods .covered by Open, Gener\\1 LicetJce h s 'no subtance. Clause 8Bexpressly provides that action under the Clau a may be taken "not withe' standing anything contained in this Order". - In view of 'this non; obstante . clause _there is no doubt that cl. 8B applies equally to goods covered l; y

Open General Licnce. [698B-C] ·

The argument-that the order as embodied in ths abeyapce cfrcu.lar did not fulfil the conditions precedent prescribed by the statuto bas some 'substa.lice.

The_ircular did _p.ot contain a recital of the allegations consti tuting the basis of the satisfacti}>n contemplated by Cl. 8B for action. under

tht l)rovision, andwitho:ut arecital of the allegations-it was impossible to say that the action was notbasCd on irrelevant material. It d.id not even recite that which. was thefoimdatioil of any action underct. 813, namely, the

1J. satisfaction of the authority 'that the action was n tbe pul>liciriterest.

Again a large number of concerns were lumped together and purp?rted to

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A ·· b~ deal! with by a single aby11.ncc circular.

Thre WdS e:r.-focic oo:hio tho circular which could poior to the authority having npplied its ITliod gat~ considered tb~ case of his cooccroed separa loly; (t Is true that the a bey• n circular sulfeu from everyone of these info(miios.

But the Court's attc~ ·.'• tlon. was invited to", the statcnents mtdo 1<1 th~ couotaa!Ud•vlt by te : .. Dputy Chief Cootrol)cr of Imports and Exports th~ author of the abcy•lc• ·: circular;, :td th' relcVlot fils p!&ced b•fore tho COU!t for perusal whic I B sh?wl .that tbe pdnc•pJI nllcg.llio:n ag:fin't tho J)elitio.1ers wcr> "tb1t they . • had. prima facie indulged in illegal imp.>, tatio t of b" f tallow nod h•~ atsa

misutil isd the beef tallow. Why the authority took this prima faci< view has been explained in I be counter-affidavit.

From a poru1al of tho tiles it is foun.I th't t:o~ C:t1cs of Lib; tty Oil M•lls as wdl n• other Coilccro! were SCplCafcly a od ind•viduJIIY c"o~ dcred. Thus it does oo: m •ke nny uitT!roncc on tho"peculilr facts of this C\Sc thnt ., sinalc circular .was is; ucd 'co.verlns <! . a large number of concerns.

[712A-B; U:G]

. ·

It is imores.ed upon the nothoritiel that tho so' cnlru<lcd by. stutate wnh tb! ta1k of Ulci•tg prcjudoci•l a; tion oo th~ basi• of their suh]cctivo satisflcthn should." first, bos•ow cardula ttention to tho nllg.uion• furmio1 . the basis of the proposed ncdon nod the probable con<cqucnccs which m1y . ensue ucb acti?n •ntf, t; xt . tko the trouble of reciting in the O'dcr iuucd by . them the Ut is(oction forming the b'l!! ·~ o( the ftCtiO" Ond a COilciSC State• : "tncnt of the :tlleations formill& the b;; SiS of the autisfactioo. 'If the D<CtS• aary recitols are ot fou 1d, thcro may b, ZQrious sequels. . [7! 38-D]

l•l the in<t>nt ca;~, tbe roal remedy of !be parly b. to .. m, kc :1 .reP"· sentation to the c•Jncemed auth:>rity which is directed to considc lcb ropresenutioa if made • . [71 JF] ·

0RIGISAI.. JUtU~ItJfCrtOS Tr.insf.:rred Cas~ No. 22 of 1984.

fJ Arising out of Civil Appeal No; 274 of 1984 from Spcial l Leave Ptition No. 17128 of 1933 from tho .Judgmntund Ord?r .. ·. dated 13th & 23rd December, "1983 of the Dombay High Court tn _ in Writ Petition No."2855 of 1983. · • ,

A1h:1k II. DeJa/, S.S . . Ray, A.N. Ocmatw.Jiu, G.l:.:. Ve/tattvatl, '.j B R. Ag lfWCI/a, . P.G. Guklr!lle, . 11!.11!. Jctycikar, V.K. Chiure, R.H. ._, RllllchrJ/1, M. Jayakar &: A. Suhba Rao for tit.: Petitioner in WP & for Respondent in C.A. No. 274/84.

K. Parasuran, Attorny General. M.K. JJimerjel!, Ajdl. Sol., General, A.K. Ga•rgull, G. Subram{miam and R.N. Poodar, for the

Repontlcnt in T.C. & for the Appellants in CA. No. 274 of 1984.

S.S. Rcty, Ahk II. De;;,/, Stt/111/t; el Kachm1•al; a, Run/ Ktrunjall'ala,

.M~. M. Kuru, jawula, Ku/Jeep /'ah/ay, A.N. Bunat!twa/a,- G.E. Vulumvclll,

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LIBERTY .011: MILL': v. UNION (Chinnappa Reddy,. J.) 681.

' Ms,-Bina Gupta, Rainu Walta, T. M. Ansari and D. N. Misra for the · 4

Interveners. \ ..

The Judgment of the Court was delivered by

CHINNAPP~ REDDY, J. A few months ago; orthodox Hindu sentiment was outraged and genera~ public feeli-Qg was roused by the disc0very that beet: tallow hnpoted from abroad was either being sold as vanasplti or use 1 in its manufacture by certain unscrupul?us persons. There was a furore in the country.

Thee was public agitation: Questions were asked in Parliaent Outside the House, Press and Politician mde capital of it. There were demads 'that severe action be taken against those responsible. Assurances were given in Parliament.

Bureaucracy went into actini. It was discovered that though the import of beef talloW, like other animal tallow, . had been canalised through the State Trading Corporation w1th effect from June 5, .. 1981, there had beenconsiderable importofbeeftallow out-side the chanel of the State Trading Corporation even subsequent to June 5, 1981_, on the ostensible pretext that licences ha, d been issued and firm contracts had aleaqy been. entered . into before that

date. It wa~· also discovered 'that beef tallow had been allowed to be imported -even by 'non-actual users' under letters of authority given by licensees. wh : had obtail; ted import licences against i'he entitlement based on the value of their exports. . A.s a result of these discoveries it . was thought that drastic action was 'Called for.

So, a notification was issued under S. 3 ('3) of the Imports and Exports Control Act totally bam1.ing the import of beef, buffalo and pig tallow into India with effect from August 24, 1~83. And, on 7th, 9th and lOth November and 17th and !1st Decen1ber, fiye circulars, styled ''abeyance circulars' and marked . 'secree were issued by the Deputy Chief Controller of Imports and Exports, in respect of as .many a~ 192 concerns (business houses), directing licensing. authorities to kep in 'abeyance' fo.r a period of six. months from • the respectve dates of th,~. circulars any application received .from .any of them for the grant of import Jic, ence or Cus

toms clearnce Permits and allotment of imported goods through ' agencies like the State Trading Corporation of India Limited, the Minerals and Metals Trading Corporation of India Ltd. or any Other' similar. agency. It may be U)leful to CX; tract one of these 'abeyance.' circulars; all of which are in substanJially similar terms. • The'abeyance circular dated November 9, 1983 which 'lists' we will not use the word 'black-lists'-as many as 61 concerns incluins Liberty Oil Mills (P) Ltd. is as follow$; .

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' GOVERNMENf OF INDIA ·

. MINISTRY OF COMMERCE .

OFFICE OF THE CHIEF CONTROLLER

OF IMPORTS & EXPORTS

UDYOG BHA VAN, NEW DELHI-11

. . .

SECRET

dated, tbe 9th Nv. 1983 . ! .

.. ABEYANCE CIRCULAR No. 28/83-84/HQ.

1 c Whereas investigation into certain allegation mentioned onder , . . Cl. 8 of the .Imports (C:ontrol) order, 1955 are pending against the-"'

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under mentioned concerns, all the licensing authorities are herebY . requested to keep in abeyance for six months from the date of issue

of this circular any application received from them for the grant of import Jicnce of Customs Clearance Permit and allotment of imported goods through agencies like the State Trading Corpn. of India Ltd-./Minerals and Metals Trading Corpn. of India ltd. or auy other similar agency ;. • .

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Sl.

Name & addres . Name & address of . Name of ibc prop.{ N'o. of the concern. the branches as partner; Director etc. available. as available.

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14 M/,. Liberty Oil

Mills (P) Ltd., 16 llll llahadur Shastri Marg, Kurla, llombay--:-400070 • .. • •

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. • . LlliERl~ Oli. MILLS. V~ U~JO~ (C/timtappa Reddy, J.)

. . 2. These instructions may be kept secret and if any of the above mcntiond firms mae any enquiry abOut t6c position of their

! application (s), they may s1mply be informed the matter is under

(.~ .. coosiderntivn. .

3. This does not, however; preclude the licensing autboritie3 from rejecting their applications if they are otherwise illlldmissible or

1'i, suffer from discrepancies in terms of the licensing instructions. Only

' these applications may be kept in abeyance where the party is entitled ~- to licences or Customs. Clearance Permits etc, except for the allega ,.., tioos against tberu. ·

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4. Full details of all applications kept in abeyance as a result . of the above instructions may be reported to tbe Headquarters.

. 5. The receipt of this circular may please b.: acknowled in the .. st3ndard proform<\. • r Sd/·

(J.P. SHARMA) l

DY. CHIEF-CONTROLLER OF

IMPORTS & EXPORTS

; (Issued fro~ file o . 3/42/HQ/83/ECA- 1);,

To say the !cost and to put it mildly, it is a .very. odd circular, tmaoating as it does from a high dignitary of the Government of .

India. Wby the secrecy aod why the instruction to mislead, ns it Were? . Are. statutory orders to be made and given effect in this , "':' furtive manner, almost as if the autboritks tat be are afrnid of

WOunding the susceptibilities of the prsons in respect. of whom 'f the o; d(rs are made 1 We presume thq arc statutory orders mnde in nerc1sc of the powers conferred by clause ,8 B of the Import Control ·: Order, though they do not themselves cite any statutory authority. ;... TJ:e actual direction, tho use of the word 'abcyancc• and the pres-·-

cnptioo of the six-month period are indicative tbat clause 8 B is .. the SOurce or power. In the counter aOidavits fikd on behalf of the ' Government of India and the Chief aod D(putry Chief Controller ' of Import& aut! Exports it is cluimed that the power exercised was

Gt COnferred by clause SB It was 50 asserted by the Add I. Solicitor ·•

eo I ' d d tr'd • The !carded counstl who appeared for the parllcs pro"e e ' . l.

tt basis. So, we may also proceed on that' basis. lncotJ1•. Por•ttng, as the~ did, directions under c; lau'st' SD, vitnllr affecting thlf'' '. . -.. -· ·~ . ·--.~ .....

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SUPREME COURT ~PORTS [!984] 3 s.c.R._ :rt

business of the oncerns concerned, one wo-uld e .. pect the circulars to be communicated to the affected. parties, even. if they were to be kept secret f.rom other prying eyes. That was_ not done tor reasons whi_ch no on.e has been abe to explain to . U:s.

Curisously, enough; _ despite the circular, supplies of. imported goods appear to have been continued to be .made for about a month to some parties. But soon the circulars ceased to be secret. Everyone came to knw of them. True but unauthqrised versions were even publishd in commercial newspapers: The Circulars also came to b~ acted upon.

Licenses were not granted. Customs Clearance Permits . were not . . issued.· Allotments were not made. Several persons against whom 'abeyance' -orders had been made filed Writ Petitions in different High Courts cnallenging those . orders. Liberty Oil Mills (P) Ltd. was one of those who filed such a Writ Petition in .the BombaY..

Hight Court. The case h.as been withqrawn to this Col:lrt under Art 139A of the Constitution and it. is . this• case that has been heard by us. We heard Shri Ashok Desai for the Liberty Oil Mills (P).

Ltd. and Shri Soli Sorabji, . Shri V.P. Raman and. Shri Ram Jethmalani for the intervners. We heard Shri Milon Banerjea, Addl'. Solicitor . Generala.bly assisted by Sri Gopala subrahmanyam . for the Union of India and the Chief Controller and Deputy Chief

controller of Imports and Exports and Shri M.C. Bhandare and Shri A. Subba Rao for the State Trading Corporation . .

 Liberty Oil Mills (P) Ltd. is a 'Trading House' recognised as such in terms of the etrpression as defined in the 'Import Policies' for several years. Their exports for the period 1982~8l are stated to have exceeded RS. 19 crores. They claim to deal in egetable Oils~ export of Frozen Marine Products, Frozen foods, Te)\tiles, Chemicals, Agricultural Products and imports of diverse commoditie~ such as Oil and Oil seeds, Chemicals~ Drugs, etc. They claim to have a factory refining egetable Oil at Kula and ll factory for manufactur~ ing vanaspati at Shahpur. They have plants for processiag frozen food at Madras, Tuticorin, Calcutta and Vishakhapatnm .; they also have sol\>ent extraction and Industrial Oil Plants. They claim that they require a continous and steady flow of various imported goods for their sevetal Industrial activities. They 'allege that if import iicences for which they have applied are not granted to them and . if the imported goods fr. which they have applied are nt allotted to them, their faclories and their plants will have to be closed down; their business will be seriously affected and many of their employees will b(l tbrown out of employmet .. They state .-that . they have nevet

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687 LIBERTY OIL MILLS v. UNION (Chinnappa Reddy, J.) , ..

adulterated .the vanaspati anufacturd in their factory_ at Sbahpur and that the samples taken from their factory on as many as thirty 'six occasions. had never been found to contai.n any type of animal

tatlow. They further state that they had not impor"d any tallow after July, 1982. Such tallow as as , U; nported by them before July,'

1982 was sold to them by other Jicencees to them as actual users. The tallow so purchased was air~ treated by them in .theil: premises at Kurla and s'old by' them to soap manufacturers and other fatty cid pJants. The. import of tallow was on the strength of letters of authority issued by licences in respect of. additio:aal licences and, replenishment licences held.by them. All the a, dditional licences bad been 'issued prior to June 5, 19.81 and import ofOGL items was permitted against the said licences. Beef tallow became canafised from Jupe s. 198! 'but the, canalisatiqn was not retrospective and couJd not affect the licences previously issued. All the contracts for the import ofbeef tallow had been cntcr.ed into before June.S, 1981 and in r..:spect of seven of the . cotracts letters of redit.had also been opened before that date. The beef tallow im'ported upto July,

1982 was duly cleared'by Custom Authorities without any dispue or question. Thereafter the. tallow was Sl!hjected to air-treatment .and soid to soap manufcturers and fatty acid plants. There was never

, . ... \ any allegation ag, Ftinst the petitioners that any portion of the tallow imported by them had ever been diverted for the adulteration of vanaspati. Liberty Oil Mills therefore, claim that there was no . justification whatsoever for making an order under clause 8B against

.them. They accordingly seek the .issue of Writ to quash the .• circular.

Shri Ashok Desai for Liberty dii Mills (P) Ltd. contended tliat an order und:!r cl; wse ~B of the Import Control Order cold only be made if te Central Government. or the Chief Controller 9f Imports .,· and Exports was satisfied that the grant of licences and allcitmeni of imported goods would not be in the public interest. In the present case, not only was. the . requisite satisfaction of the appropriate )uthority not recorded in the circulr said to have been: issued under . _Clause 8B but there was no materhil whatsoever upon which such iatisfaction could have been arrived it. .Before June 5, J98J, beef

t.allow was not cancalised and co, uld therefore, be freely imported. as an OGL item. It wson June 5. 1981 that the import ofbeeftaUow came tq be canalised_' but such canalisation could not affect . liences >vhich had already been .granted. Beef tallow could be imported under the preexistng licences as an OGL item l':ven after June 5, 1981

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. - ' and upt .. the d.~e on which the import of beef tallow was totally

banned. Our attention was 'repeatedly invited to the two cases of A.rv:ind Exports (P) Ltd, and Jayant Oil Mills (P) Ltd., here deing . with appeals and decisions under .Sections 128 and 131 of the Customs

Act, the CeJ!tral_ Board of Excie and, Customs and 'the Govrnment ofthe India to<; k the view

I . uThe licence issued during a Policypeiod is governed by that

policy as amended upto the date of issue of ; be licence and fl; mendments made after the date f issue do not have any -application to tbe licences." and .;:.

"A licence is governed by the Policy which is made applicable _ .to it. Restrictions placed on-the import of good~ in the policy for the subsequent years have to be ignored, unless of courset . any. such restriction has .been specifically made4 applicable to licences issued eariier either generaUy or in the partic~J¥ cases.

In this case the licences were issued during the policy for the

period AM-81 and were gove:med by this policy only particularly para 174(v) thereof. 'These licences were valid for the goods in questi9n as only Mutton Tallow was in the list of cana .Used items.' In t; rms Of para 222(3) of the. policy for the periQd

AM-82 these licences continued to be valid_ for beef tallow as this item continued in the list of OGL Items even after the com- . ing into force of the policy for the period AM82. When vide_

Public_ Notice. No. 29/81 ated June 5, 1981 beef tall()w'was put in the canalised items it is from this date only that it became canalised: Jn the public notice there is no specific pmvision · invalidating_licences previoysly issued so far as beef tallow is concerned,· in cae such licences were valid earlier to import thisitem. In tbe.absence of any specific prohibition the licences poduced by the importer in this.case had to be accepted for the clearance of beef tallow.""'

. Jt. was furthe't contended that the circular order under 'Clause 8B

as ~.!?tuaJcy . issue, d . was not confin'ed to the banned. item ,..of-animal

tallow or to:item~ wbih.uldb~d to have. some cannction with the banned item but extendeq t~ all items for which applica.tions for ' the Sf~\lt, Qflicen~. or fot llqtn,1ent hacJ. been maqe .b.Y Liberty-Oil MiHs-.'(P) Ltd., whether or not.snch items had the reotest connnc: tion with animal tallow Shri. Ashok Dsai connected, that: the, very

geirer~J natue of the order disdosd a total non•applkation of the tnind sipce tee was no e:ll:us pet ween the alle~d misllse oflkee~~

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LIBERTY OIL MILLS v. UNION (Chinnappa Reddy, J.)

for importing beef tallow or the misuse of the imported beef tallow and the abeyance of applications for grant of import licences and for allotment of other items. It was .also argued that as many as 61 firms were Clubbed together and dealt with. by single circular and . there was no indication whatsoever that the (acts relating to each of the firms had been cons, idered separately. The circular was an omnibus. one and revealed a 'total non-application of the min~. It was suggeste~ thatthe abeyance' orders far from advancing the public 'interest, would, on the otlier hand, prejudicially affect the .public

interest by bringing to a halt several industries and throwing hosts of workers out of employment. It would <;~.!so affect exports from India and reduce forign echange earnings. 'It was submitted that there was no substance in the allegation that Liberty Oil Mills Pvt.

Ltd. were not .'actual users' of beef tallow but th.ey had nqne the

less obtained letters of uthorisation for import of beef tallow as if they were actual users and they had thus misused the lmort 'licences of other licencees. It was pointed out that the beef tallow imported by the un<ler letters of authority bad either been sold by them to

~Ct!Jal users On the, high seas or. had been. actually used by them tq produce marketable beef tllow for use by soap manufacturers and fatty a<; id. plants, by subjecting the imported beef tallow to air treatment•. It was also argued, by Shri Ashok De:sai that the circumstances that there was public agitation about the import of beef tallow was a totally irrelevant circumstances for making an ord_er

under claus.e 8B. Shri , V .P. Raman, learned counsel for one of the interveners suggested that clause 8B did not apply to goods covered byOpen General Licence in view of clause 11(4) of the Import Control Order which provided, "Nothing in this order, except paragraph 3-I of sub-clause 3 of Clause 5, Clause 8, Clause SA, Clause 8-C and Clause 10-C shall apply to the import of any goods covered by Open General Licence or Special General Licence issued • by"the Central Government." Shri Soli Sorabjee, who appeared for

mother. interyener, submhted that clause 8B should be construed as providing for an opportunity to b~ heard and since the abeyance _?rders made no provision for hearing, they should be struck down, as opposed to t'lte principles of natural justice, and therefore arbitrary

and violative of Art. 14 and 19(i) (g) of the Constitution. !twas also urged y. the learned counsel that the satisfaction contemplated by clause 8B was not an omnibus satisfaction but a satisfaction _which must, disc!ose an ~~:pplicatin or' the mind to the fats of each individual case and each indhddual application. for licence or allotme 't\ t. Shri Ram Jetb!llalapi1 wlw appe_ared fpr another intervener •

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SUPRF, ME COllRT REFORTS {t984~ 3 S.C.R • . -rj

urged that secret orders affecting rights of parties could not lawfully

be made since secrecy would militate against natural justice and against the right of appal provided by sec. 4-M of theJmports and Exports (Control) Act.

He also submitted that in the .absence . of an express recital 'of satisfaction which was the foundation for the exercise of the jurisdiction under clause 8B, the order must be held not to confotm to clause 8B and therefore, vitiated. He also contrasted clause 8A and clause 8B and argued that the :public ~-·· interest contemplated by clause 8B should be such as to exclude a ·~ pre-decisional. bearing. There was no such public interest involved . in the case. There was ot even . recital to that effect. For that -" reason .also the order was vitiated.· He further submitted that an order clause 8B could only be made after the inVestigation under clause 8 had. commenced, that is after a show cause notice, had been issued under clause 8.'

. Shri Millon Bannerjee; learned Additional Solicitor General urged that the only questi0n for the consideration of the court was whether there was any relevant materjal before the authority com- . petent to take action under clause 8B to reach the satisfaction contemplated by 1hat clause. Since the satisfaction contemplated by ·

Clause 8B was the subjective satisfaction of the authority concerned, the court was not to concern itself with the sufficiency of the

matrial in a.iriving at the requisite satisfaction.

He howeverJ invited opr attention to various facts and circumstances which, according to him,. wholly justifiq the action taken against liberty Oil Mills (P) Ltd. Though Liberty Oil Mills itself held several licences. it nevertheless indulged in the. collection of a large number of licences of other imported beef ta11ow as their. authorised agts, sold part of the beef tallow to alleged actual .users on high seas or puacbased the beef tallow after importation, subjected it to the so-called air-treatment a treatment which could 'by no means be cal1ed a manufacturing

.... process and which lef( the cbarac.ter of beef tallow unaltered-and sold it tQ'innumerable. parties stated to be soap manufacturers and fatty acid plants.' The claim of Liberty Oil Mills (P+ Limited that Liberty

Oil 'Mills was an 'actual users•, who had purchased beef tallow for subjecting it to air treatment was no more than a pretence. It was .. stated that full particula~ 'or the parties to whom the beef tallow was claimed to have been sold ere not made avaiable despite requests for "the same. There , was great public concern about. the manner in which beef tallow had been imported and used by some importers and the. authorities very naturally felt that, it thei.l •

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UBERTY oiL MiLLS v. UNiON (Chinnappa Reddy, !.) 691

duty in the public interest to investigate into .malpractices -conneted

with the import of beef tallow and the misuse of beef tallo~ aftel import. The learned Additional Solicitor General placed before us . the relevant files which accordingto )lim indicated that the case of Liberty 0 il Mills (P) Limited as well as the cases of each of the other firms who were included in the abeyance circular hd been separately considered and satisfaction duly and properly arrived at by tbe appropriate authority on relevant material . The lear ed Additional Solicitor General very fairly did not urge that the decision to keep in 'abeyance' need not be communicated or that the principles of natural justice were not reqQ; ired to be observed.

But he argued that a pre-decisional hearing was not contemplated.

He submitted that rule 8B did not.iute out a post-deCisional hearing and stated .that the appropriate authorities were ready even now to consider faithfully any representation made by the parties affected.

With reference to the views expressed by the .Central Board to Excise and Customs and the Government of India, in the cases of Arvind Exports and. Jayant Oil Mills, Sbri Banne..rjee submitted that those cases did not represent the correct position in law. Those decisions were rendered in proceedirigll under the Customs Act and did not pre.clude .appropriate action under the Import . and Export Control Act and the Import Control Rules. Shri Bannerjee also invited out attention to several provisions of the Import Control Order.

Before considering the questions at issue, it wi11 beuseful to t#'- refer to our Import Policy and to take a cursory look at the various statutory an!l non-statutory instruments embodying the policy. The import policy of any country, particularly a developing country, has necessarily to be tuned to. its general econ..omic policy f(mnded upon its constitutional goals, the requirements of its internal and internation~\ trade, its agricultural and industrial development plans; its

mnetary and financial strategie's and last but not the least the internatinal political and diplomatic overtones depending on 'friendship, neutrality or hostility with other countries' (G/ass.Chotans Importer3 ·

and Users' Association v. Union of India1).

There must also be a considerable number of other factors which go in:to the making of an import policy: Expertise in . public and political, nationa~ and \nternational economy, is necessary before one may engage m the

making or in the criticism ofan import policy. Obviously courts do not possess "the expertise and are consequently. incompetent to pass

(1) [1962] I SCR 862.

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SUf'REME COURT REPORTS Il984] 3 s.c.R. ,..__,..

judgment oc the appropriateness or the adequacy of a particular import policy. But we may venture to assert with some degree of accuracy that our present import policy is export oriented. Incentives by way of import licences are given to promote exports. Paragraph 173 of Chapter 18 of the 'Import Policy' for April 1981 to March:I982 published b~ the Government of India, Ministry of Coqtmerce-in the first week of April every year, an annual '1mport and Export Policy' to. be in force during the financial year is published-expressly states ......... "the objectiye of the scheme of registration of Export Houses and

, J the grant of special facilities to them. is to strengthen their negotiating capacity in' foreign trade and to build up a more enduring relationship between them and their supporting manufacturers".

Paragraphs 183 and 184 enumerate the various import facilities available to Export I:Iouses. Paragraph 185(1) allows Export Huses to import OGL {Open General Licence) items-against REP (Reple nisbment) Licences is$ued in their own names or transferred to them by others. The facility is stated to be .availab1e to them for '~ .import of (a) capital goods Iited _in Appendix !I and placed on.

Open General Licence for Actual_ Users and (b) Raw Material9, components, consumables and spares (excluding items covered by Appendix V) which have been placed on Open General Licence for Actual. Users. Paragraph 185 (I) further stipulates that Capital

Goods so imported shall be transfred by them only to such Actual Users as are authorised to prchase the~ by the concerned-Licensing •A1;1thority and that raw materials, components and consumables so imported may be transferred by . them to eligible Actual Users.

Imported spares may be sold to any person. Paragraph 185 (2) provides. that import replenishment licences issued in their own names or transferred to them by others, against which. Export . HQuses wish to take advantage of the facility provided in Paragraph 185, shaH . be non-transferable. Therefore, the Export HouS'es wisbiug to take advantage of. the facility are required to get the licences concerned endorsed by the licensing authority as under r- .

• 'The licence will also be vaJid for import of OGL items under paragraph 185 of import policy, 1981-82, subject to the conditions, laid down arid; shall be non-transferable."

Paragraph 185 (3) further stipulates that import of OGL items under these provisions sbal1 be subject to the condition' that the shipment of goods shall takes place within the va1idity of the OGL, that is,

March 31, !982 or wllin the' validity peri9d of.tlle import Ikenc~

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LIBERTY orL MILLS v. UNION (Chinnappa Ready, J. ). 693

itself, whichever date is earlir. Paragraph 186 (1) broadly entitles

Eport Houses to Additional . Licences upto the value of 15% of the

f~.b. value ofseiect products made in i981·82 and manufactured by small scale and cottage indus.tries, plus 7-1/2% of the f.o.b. value of other exports of select products made in tbe same year. All such Additional Licences shall be non~ transferable .. Paragraph 186(7) provides that the Additional Licences will also be valid for import of Raw Materials, Compone[)ts, Consumablcs. and Spares (including

items covered y Appendix V) whicl1 have been placed on Open General I.icence for Actual Users (Industrial). While Spares so . imported may be sold to any person, Raw Materials, Components and Consumables may only be sold to eligible Actual Users.

Paragraph 192. requires every Export. Houses to maintain proper accounts of all its exports, 'imports and disposed of imported itemsand are further required to furnish detailed information in the ·

prscribed forms.

Some Export Houses are reognised as 'Trading Houses D 'depening on their performance. Trading Houses are entitled to all the facilities available to Export Houses, but their entitlement to additional Jicences against. exports of products manufactured in the small scale and cottag~< sectors is to be 20 per cent and not 15 per cent.

' , Paragraph 222(1) prescribes that additinal licences issued to Export Houses in 1980-81 hall cease to be valid for items which do .nNappear\n Appendices 5 and 7 of-Import Policy, 198lg2, But it is said that restriction will not apply to the extent that the licence holders have made firm comm:itments by opening irrevocable letters of credit through authorised dealers of foreign exchange before April 1, J<; gl, Paragraph . 222(3) provides that REP licences and . additional hcnces held by .Export Houses shall.cease to be valid for import of any item which could be imported under Open General Licences during 1980-81, but it is no longer so in the Import Policy

1981-82 except for such commitments as have been made by opening irrevocable lettrs of credit through authorised dealers in foreign exchange before April, 1981. We may notice here that Appendices 1,

.. 3, 4 and 6 contain lists of banned items. Appendix 5 and Appendix 7 contain a list of restricted items. Appendix 8 contains a list of items import of which is canalised through public sector agencies, Appendix 2 contains a list of C-apital Goods allowed under Open General Licences and Appendix 10 contains a list of Items allowed to be imported. under Open. General Licences, sub$ct t6 the condi~ .

SUPREMB COURT REPORTS (19&4] 3s.C.R.

A tions. set out therein. It appear~ that prior to 197S, QGL was

copfined to certain restricted items only. But in April, 1978, the Government of India issued Import Trade Control Or.der No. 9 of 1978: the OGL No. 3 of 1978 granting general permissio~ to import . into India from any country of the world, Raw Materials and . Com(lonents by Actual Usrs (industrial) if the items to be importe9

B · were not covered by aey 9f . the lists of banned, restricted and

. canalised items and did not figure in Appendix IX of the Import

Policy for 1978:79. One of the results was that anmal tallow which could not be imported as a!) OGL item .prior to Aprill978, could be so imported after 1.978 as it was not one of the banned, restricted or canalised items. In the Import Policy for Ayrill9SO to March 1981, mutton tallow was included in the list of canalised items. Therefore, white mutton . tallow could be . impqrted thereafter through the agency of the 'State Trading Corporation only, beef tallow could still be imported as an OGL item. The position was the same in the Ip1port Policy isucd for the period. April 1981-March 1982. However, on June 5, 19.81 by a Public Notice for the word 'mutton . tallow' in the list of canalised items, the expression "tallow of any · animal orgin including mutton tallqw" was substituted.. Therefore with effect from June 5, 1981 beef .tallow also became a canalised item. One of the questions posed is regartling the effect of th~ public. notice dated June 5, 1981 by which the expression 'tallow of animal origin or including mutton tallow' was Sl, lbstitutep for the wprd .'mutton tallow'. The question posed is whether the ban of import

except through the State Trading Crporation was applicable to beef tallow imported . into India after June 5, 1981 but against licences issued earlier and in respect of whici1 contacts hlfd already been into. We have already mentioned that on Agust 24, 1983, the Government of India made an order under Section 3 of the Exports and Imports (Control) Act totally banning the import Into India of / beef,, buffalo and pig tallow. .

We may mention here that the Import Policy for earlier as well as later years, contain more or less similar provisions as .those in the Import Policy for April 1981-March 1982. ·

The statutory regulation of imports is COJ)tained in the Imports and Exports (Control) Act, 1947 and the Imports Control Order .1955. Section 2 of the. Imports and Exports (Control) Act

definnarious exprcs$ions .. 'Lettr of. authority' is defined a letter

H-.. meaning as authorising the licensee to permit another person, named in the.said letter, to import goods against the licence grantl)d to thepcensee. Licence is. defined to mean a licence granted and including

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UBERTY OIL MILLS v. UNIO~ (Chinnapp, l Reddy, J.)

69S

a custos clearance permit issued, under any control .order. _Section 3 of the Act is the pivotal sct ion. Section 3(3) empowers the Central Government, n6tw; t1Htaading anything contained in the Customs Act, by order published -in the official Gazette, to prohibit: restrict or impose condtrons o:1 the clearance wheter for human consumption or for shipment' abroad, of any goods or. class of goods imported ioto India. Sectiol'l. 4A empowers the Central Gover*'nent to levy fee in respect of licences granted , or

. renewed under any order. made or deemed to be made under the Act. Sections 4 B, 4 C, 4 D, 4 E and 4 F .are provisions _relating to the power to enter. and inspect the power to search, the

'powr to seize imported' goods or material, the power to stop and

se'ize conveyances. Sections 4 G and 4 H provide for confiscatioiJ and Section 4 I for the levy_-of penalty.

Section 4 J preservs the power to inflict any other punishment under the provisions of the Act or under any other la; v despite the confiscation or penalty imposed under the Act. Section 4 K. povielcs for adjuication and Section 4 L entitles the owner of the goods, matrials, conveyance or animals or other persons concerned to be given a reasonable oppor(unity of making a representation before any order of adjudication of confiscation or imposition of a penalty is made. Section 4 M provides for an appeal against any decision or orer made -under the Act and Section 4 N einpowers the Chief Controller to exercise power of revision in cases. where DQ appe, al . has been preferred. SeCtion 5 makes contraventions of any orde.c, made or deemed to be made under the Act or any condition of a licence granted under such order punis)lable with imprisonment and fine as mentioned in that provision. Section 8 empowers the Central Government , to make rules for arrying out the provPilions ofthe Aot. ·

The Imports (Cntrol) Order, 1955 is an order made by the . Central Government in exercise of the powers conferred by Section

3 and 4A of the Imports and Exports (Control) Act. Clause 3 of the Imports (Control) Order prescrib_es that no person shall import any good:; of the description specified in Schedule-! except unde.J; and inaccordance with the licence or a customs clearance permit granted by the Central Government or by a specified officr. Clause 5 providesfor the imposition of conditions• subject to which licences . ni!lY be issued. Clause 6 prescribes the situations when the Central

Government or the Chief Controller . of Imports and Exports may

refse to grant a licence or direct any other licensing authority not to grant a licente. One of the situations is 'if the applicant is for the time being subject to any action under clause 8, 8A or 8B'! .

' '

SUPREMB COURT RBPOil.TS [1984] 3 sc. R.

 Clause 8( 1) empowers the CeQtral Government or the Chief Control- . Jer of Imports and Exports to . debar a licencee or importer or any

other pe.rson froni imp!>rting any goods. or receiving licences or

aotment of the imported goods through the State Trading Corporation ofiudia, the Minerals and Mctals. Trding Corporation of India, or _any other similar agencies and direct, without prejudice to any other act.ion that may be taken ag'airist him in this half and that no licence or allotment of imported goods shall be granted to him lnd be sbaH not be permitted toim.port' any goods for a specified period for any of the reasons specified in the clause. Two of the reasons men-· tioped in th~ clause.are : "If he fails to comply with -or contravenes or attempts to contravene or abets the contravention of any conditions embodied in or accoJI1panying, a .licence or an application for a licence" and 'If he commits a breach of any law (including any rule, order or regulatio.n) relating to custom or the import or export of g.oods or foreign exchange". Clause 8A empowers the Central

Govetnent or the Chief Controller of Imports to suspend the importation. of goods by any person or grant of licer.ces or allotment of importec1 goods through the State Trading Corporation of India', the Minerals and Metals Trading Corporation of India, or any other . similar agency, to u licensee or im'iJOrt¢r or any other person penaing investigation into on-e or more of the allegations mentioned in. Clause 8 without prejudice to any other notice that may be taken against him init.hat behalf. The first proviso to Clause SA prescribes tbat'thegrant of a licence or allotment of imported goods shall not ordinarily . be suspended under this clause for a period exceeding 15 months.

The second proviso stipulates that on the withdraw I of such_ sus.pension a licenee 91; allotment of imported goods "may be granted to hm for a priod of suspension, subject to such cbnditions, restrictions or limitations as may be deciaed by the authorities aforesaid keeping in view cif the- .foreign exchange position, indigenous production and other relevant factors. Clause 8B empowers the Central Government or the Chief Controller of Imports and Exports to keep in abeyance applications for licences or allotment of imported goods where any investigation is pending into any of the allegation& mentioned in Cla]Jse 8 against a lincensee, importer or any oth~ person subject to the fulfilment of the req~ iremcnt of the satisfaction of the appropriate authority regarding the public-interest. Since we are primarily concerned in this. case with the vires, the width and the intt:rprdation of , Clause. 8B, the whole of it may 9e 'usefully extracted :-

1'88 : Power t9 keep in abeyance applications for licencesor allot meuts of imported goods-Where any investigation into.

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LIBERTY OIL MILLS V. UNION (Chinnappa Reddy, J.) 691

any of the anegations mentioned in clause 8 is pending against a licensee or importer or any other person,-and the Central Government or the Chief Controller of Impo.J; ts and Eltports in satisfied that without ascertaining fuFther details in rgard to such allegation, the grarit of licence or allotment of imported goods will not be in the public interest~ then notwithstanding anything c-ontained. in this Order, the Central Government" or

th~ Chief .ControHer of Imports and Exports may keep in abeyance any application for grant of licence from such.persop,

or direct the State Trading Corporation of India, the Minerals and Metals Trading Corporation of India, or any other similar

agency to keep in abeyance allotments of impoted goods tb

sU<; h prson, without assigning any . reason and without preju. dice to auy, other action that may be taken in this behalf:

Provided that the period ror which the grant of such lice.nct.: or allotment is kept in abeyance under this clause spall not ordinarily exceeds ix months."

'i' • Clause 8C authorises the Cenral Govermnent to publish or . cause to be published the name . of such persons or class of persons

gainst whom action under clause '8 or 8A is taken.. Clause 9 empowers the Central Government or the Chief Controller of Imports and Exports or any other 0fficer authorised in that behalf to cancel any licence granted under the order or otherwise to tender it ineffec

tive for any of the reasons mentioned in the clause. One of . the reasons is ' lf the licensee has committed a breach of any of the conditions of a licence". Another reason is "If the Cent, ral Government is or such officer is satisfied that the licence will not serve the purpose for which it has en grauted." Yet another reason in "If the licensee has'committed a breach of aziy law relating to customs or the rules or regulations relating to' Imports and.Exports.of g?ods or any other law relating to foreign exchange." Clause lO(i) provides that no actioq shall be taken, inter alia, under 'clause 8(1) or Clause 8A or Clause 9(1) against a licensee , or importer or ariy other. person uniess he has been given a reasonable opportunity of being heard. cJausel0(2) enables any person aggrieved by any acriontaken under Clause 8(1) or lS(3) or 8(A) or 9(1) to prd(:r ao appeal to the autho- . rity constituted by the Central Goyernnient for that _purpose. Clause 11 ( 4) prescribes,

"Nothing in this order, except paragrapil (iii} of sub.clause(3) of Clause 5, Clause 8, Clause. 8A, Clause 8C and Clause IOC,

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SUP~EME COURT REPORTS

[1984] 3 $.C.R.

shall appiy "lo the import of any goods covered by Open Genera) Licence or Special General Licence issued by the Central Government.:•

We may notice here the argument of Shri V.P. Raman that.

Clause-11 (4) excludes the application of Clause 8B to good~ covered by Open General Licence .. We find no substance in this submjssion.

Clause 8B expressly provides that action under the clause may be taken "notwithstandinganything contained in this order". In view' of this non-obstante clause, we have no doubt tht Clause SB applies equally to goods povered by Open General Licence.

We may mention at this juncture that Clauses 8A and 8B were not to be found in the Imports (Control) Order 1955 originally but ' were introduced into it later by way of amendment, to make provision for the making of ~.Jterim orders pending investigation into. allegation under Clause 8. . The amendment was af consquence of the lacuna being pointed out by the Bombay High Court in some cases which came before it.

To be fair to the learned counsel for the petitioner and the other learned counsel for the interveners, all ofthem were unanimous

about the necessity for a provision like Clause 8!3, and none of them arg!Jed that Clause 8B would be ultra vires if the principles of natural justice could be read into it. The' learned Additional Solicitor General, . a~ mevtioned by us earlier, agreed -that natural jwtice . . should be read into Clause 8B so as to provide for a post-decisional

hearing at the request of the. affected party. Let us examine Clause

8B in the scheme and setting of the Imports (Control) Order a"Qd consider whe_ther natural justice is excluded and, if no.t, when and what opportl.J~.ity may be provided to the affected party~ ·

' . ' Clause 8,. we have seen, empowers the Central Government or the Chief Controller. of Imports and Exports to debar a person from importing goods or from receiving licences or allotment of imported goods for a specified period if such person is gullity of any of the acts of commission or omission enumerated in the Clause. An order of this immensity cannot obviously be made without due investigation and wit'hout giving a reasonable opportunity to the affected party.

Clause 8A and SB refer to. orders which may be made pending investigatio~ into the alkgations uner Clause 8 and bynecessary impljca~ tion expose the investigative content of Clause 8. Clause 10 expressly stipulates that action under Clause may not be taken unless a reasonable opportunity is given .to the party concerned. Neither

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LIBERTY OIL MILLS' v. U '!IO~ (Chinnappa Reddy, J.) 69.9.

Clauses g nor Clause 10 precribes the procedure to be followed before a final order uude.r Clause 8 is made. Has a show-cause notice to be issued first, then followed by an investigation. and finally con- . eluded by yet another shbw cause notice ? Or is it enough if a showcause notice is issued after the investigation is concluded and the ·

person concerned is asked to explain the evidence gathereci.• against. him ? When may investigation be sad to have commenc.ed ? Should investigatiqn be necessarily preceded by a show-c; mse notice.? We do not think that the Central Government or the Chief Controller is

boud to follow any rigid, hide-bound, pre-determined procedure.

The procedure may be different in each case and may be determined by the facts circumstances and exigencies of each ce. The authority may design its own procedure to suit the requirements of a_n indvi

dual case.

The procedure must be fair and not so designed as. to *defeat well known principls of justice an.d thus deny justice. That. is alf. If the procedure is fair it matters not whether the investigation is precded, interjected or succeeded by a show-cause notice. The. word 'Investigatirn' is not defined but in the context it means no • more than the process of collection.of evidence or the gathering of ' material. It is not necessary that it should commence iih the communication of an accusation to the person whose affairs are to be investigated. , That may follow later.

When facts come to the notice of he Government or the Chief Controlle)' of Imports which prima facie disclose an act or omission of the nature mentioned n Clause 8, the authority may straight away communicate the allegations to the person concerned, s_eek his answer and proceed to further investigate or the authority may cons!der it more prudent to further satisfy itself by seeking other .evidence or material before communicating the al.Jega'tions to the person concerned.

There is 'no rule of justice oi fair play which requires the authority to seek the comruents of the

person. concerned before embarking upon an investigation. Investigation commences as soon as the authority decides to . take the first step whether by way of seeking evidence or by way of seeking an explanation from the person concerned. On the initiation of a proceeding under Clause 8 by the commencement o'T investigation; the authority has to address itself o the Question whether a'ny'action of an interim nature to prevent further harm or mischief is warranted pending investigation: Licences may ave already been issued and allotment of imported goods may have already been made.

The authority may consider it . desirable to prevent the person from im 'ported goqds pursuant .to the licences or to prevent him from

obtaining the imported.g0ods allotted to him througq the specified aBencies. If o, the authority may make an order under , Clause 81\;

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100 . tJPREME COURT REPORts [1~84] 3 s.c.R..

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S.1.5pending the importation of goods, the grant of licences or the allotment of imported goods. But Clause 10 provides that no action under Clause 8A. n:iay be taken without "giving a reasonable opprtu 4 nity to the person concerned . . It is obvously thought thf the right such as it may be, to obtain a licence or allotment of goods having

become.crysalised into a licence or an allotmeut, an order under Clause 8A may have immediate and grave prejudicial reJ:?el'cussions. on the person concerned making it desirable that he should be heard

befre an ordet of suspension is made. So it is that Clause 8A contempla es a pre-decisional hearing: On the. other hand, licences may not yet have been issued and allotments may yet have to be made. The approprite authoi'iiy may be satisfied that it would~ not be in the public interest to issues Jicences or make allotments to the person concerned, without ascertining further. details with regard to · the allegations against him.

In such cases, the authority may make • .an order of 'abeynce' under Claus~ 8B. Though the language of .. · Clause 8B is capable of being read as if it applies to both allotments already made and allotments yet to be made, a reference to the marginal head, in the background of what has been provided for in • Clause 8A, makes it clear that Clause SB applies only to allotments . jet to be made and licences yet t9 be issued. That clearly is the . contextual construction of Clause 88. Read in any other manner, there will be a totally unnecessary . "over-lapping of and a needless conflict between Cfausds SA and 8B, with freedom to, the authority to . to pui:stie action either under Clause 8A or Clause 8B each providing a .different procedure.of of its own. We do not think' that it is per- . . missible for us to read clauses SA and 8B in a manner as to create needJess conflict an.d . confusion when the two Classes. a.rc capable of existing separately, without encroach.ing upon each other. Contextual construction demands such a construction a: d we have no hesitation in adopting it. Clause 10 which ptovides for a reasonable opportu- nity before action is taken under clause 8A, does not make similar provi.sionin the- .case of action under. clause 8A as weU as action under clause S.B are both in the . nature of interim orders of tempo- . rary duration aimed at preventing furt.her harm and mischief pending in\'estigation into the al)eg11tions under. clause 8.

D~:es it men that . the principl.e ::>f natural justice of procedural fairness is to be alto- . gether exclude~ when action is taken under clause 8B? We do-not think that it is permissible to interpret any statutory instruments so as to exclude natural justice, Qnless the language of the instrument . leaves no option. tq the court. Pro.cedural fairness embodying natural

jUstice hr to be implied whenever action is taken effecting the .. rights

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UBERTY OIL MTLLS v. UNION (Chinnappa Reddy, J.) '701 . of parties. It may be that the opportunity to be heard may not be pre-decisioal ;· it may necessarily have to be pre-decisional where _the danger to be averted or the act to be prevented is imminent or where the action to. be taken can brook no delay. - If an area is devastated by flood, one cannot wait to issue show-cause notices for requisitioning vehicles to evacuate population. If there is an outbreak of an epidemic, we presume one does not -have t<? iss, ue , show~ . cause notices to requisition beds in hospitals, public or private. - In such situations, it may be enough to issue post-decisional notices providing for an opportunity. It may not e'en be necessary in some . situations to issue, such notices, but it would be sufficient but obligatory to consider any representation that may be made by the aggrievedperson and that would satisfy the requirements of proce- ·

dural fairness and natural justice .. There Can be no _tape-measure of the extent of natural justice. It may and indeed it must vary from statute to statute, situatio~ to situation and case to case. Again, it . is necessary to say that pre-decisional natural justic~ is not usually contemplated when the. decisions. taken' are. ofan ii!_tri_m nature. pending investigation or enquiry. Ad-interim orders may always be made ex-parte and suc;:h orders tnay themselves provide for an opportunity to the aggrieved party to be beard at a later fage. Even if the interim ordrs d~ not -m-ake provision for such an' opportunity, an aggrieved party has, nevertheless, always the right to make appropriat~ representation seeking a review of the order and asking the

authority to re'Scind or modify the order. The principlesof, natural justice would be satisfied' if the aggrieved party isgiyen an opportunity at the request. There is no violation of principle ofnatural justice if an x-parte ad-interim order is made unless of course, the statute its.elf provides for a hea.ring before the order is made-as inclause 8A. Na:tural justfce will be violated if the authority refuses to consider the request of the aggrieve~ party for an opportunity to make his representation against the ex-parte ad-interim orders. .

- In tbe Qeen v. Randolph et az.t, the Supreme Court of Canada had to consider the question whether an interim order uncter s. 7 of ..

of the Post Office Act prohibiting the delivery of mail directed to or deposited by a pcmon in a Post Office may be made without prior potice to the person affected, pending the final determination which CQuld only be made after hearing the party affe<;:ted. The Supreme . . .

Court said,

(1) S6 D.L.R. (2d) 283

r B

G,.

SUPREME COURT REPORTS

(1984} 3 S.C.R. ·

"tn s. 7 it has not abrogated It (i.e. the a.pptication of the maxim audi alteram paterm) Rather it has provided that befofl:l any final prohibitory order is made, the party affected shalt have notice and a right to an expeditions hearing and has defined the procedure to be follqwed. It would, in my opinion, . be inconsistent with the scheme of the section to hold that before making an interim order the Post-master-General must hold a hearhig. If sl]ch duty existed it would be a duty to notify the party affected of what was-allged against him and to give him a reasonable opportunity to answer. If this were done the hearing prescribed sub-s. (2) would be an unnecessary

repetition.

Generlly speaking the maxim audi alteram partem has reference to the making of decisions affecting the rights' of parties which are final in •their nature, . and this is true also of s. 2 (e) of the Canadian Bill of Rights, 1960 (Can.), c. 44 upon which the respondents relied." .

"The following passage in Broom's Legal Maxims lOth ed~, p. 68 is in point :

Although cases may be found in thebooks of decisions un der particular statutes bidl at first might seem to conflict with the maxim, it will be found on conideration that they are not inconsistent with it, for the rule, which is orie of elementary _justice, only requires that a man shall no~ be subject to final .

judgment or to punishment without an opportunity of being "4heard."

"The main object of s. 7 is to. enable the Postmaster-Gene ral to take prompt action to prevent the use of the' mails for the

purpoe of )iefrauding the public or other criminal activity.

That purpose might well be defeated if he could take action only after notice and a hearing._,.,.Sub-section (1) enables h)m to act swiftly in performjng the duty of protectipg the public while sub-s. (2) gives protection to the person affected by_

conferring t_he right to a hearing before any ordr made against~ him becomes final. · ·

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''In n:iy opnion, the two interim prohibitory orders in ; questionwere validly made." . '

In the Comroission(fr of Po!ie v. Tanos/ the;: High Court c,>f

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LIBERTY OIL MILLS v. UNION (Chinnappa Reddy, J.) ,03

Australia (Dixoll C. J and Webb J.) was considering the question

. A . whether an ex-parte order of closure of a Disorderly House may be . , made. It was observed) ·

" ...... it is in a broad sense a procedural matter and while the general principle must prevail it is apparent that exceptional cases may be imagined in which because of lome special hazard or cause of urgency an immediate declaration is demanded.

A power.to regulate proedure might be treated as authorising regulations allowjng an exparte ord.er in such cases.

Under the power conferr.ed by section J5 upon the Governor-in-Council to make regulations this very course seems to have been adopted.

Regulation I provides that if the judge is of the opinion that reasonable grounds have been shown (i) he may make the decl!; l~

ration immediately aild exparte if this seems to him necessary

or desirable,· or (ii) if he thinks thaf an opportunity should be given to the owner or occupier . or both to oppos'e the making of the declaration he may direct them to be served with a copy'

of the affidavit and to be notified of the day on which the matter wilt be dealt with, such service and ntification to be effected in such manner as may eem to him sufficient : 9hen

the matter tomes on, the Superintendent' or Inspector of Police or counsel or solicitor on his behalf' and the owner and occupier or counsel or solicitor on their behalf may attend and be heard, and the matter shall be disposed of iii public .cham

bers.' This regulation may perhaps be read as leaving the choice

of course at large to the judge. But it ought not so to. be interpreted. It should be .understood as meaning that prima facie the l(ourse provided for in para (iii) should be followed and . : onJy in exceptional or special cases should ap immediate declaration be made. The analogy is that of an interim injunction, but the caution should be greater because the declaration; unless it is framed as provisional or conditional, concludes 'the right subject to rescission.·

"It may be added that probably a declaration improperly made ex-parte may be rescinded or set aside on an application made independently of s. 4(1}.,

 In Lewis ;, r; Heffer1, Lord Denning MR distinguished the observations of Megarry J. in John v. Rees and observed,

(1) [1978] 3 All ER, 35~

SU~''RFm couRT RETORTS [1984] 3 s.c.R.

"Those words... apply, no doubt, to suspensions which are inflicted by way of.punishment, as for instance when a member 'ofthe Bar is suSJ?ended from practice for six months, or when solicitor is suspended from practice . . But they do not apply to suspensions which are made, as a holding operation, pending enquiries. Very often irregularities are disclosed in a govern~ ment department or in a business ho~•se ; and a man Play be suspended on full pay pending enquiries: uspicion may rest on him; and so he is suspended until he is cleared of it. No ' one, so far as I know, has ever questioped .such a suspension on the ground that it could not be done unless he is given i10tice.of the charge and an opportunity of defending himself, and so forth. The suspension .in such a case is merely done by way of 'good administratiQn. .A situation has arisen in which somethingmust be done at once. The work of thei department or the office is. being affected by rumours and suspicions. The others will not trust the man. In order to get back to proper .. work, the man is suspended. At that stage, the rules pf natural justice do not apply ; : see Purnell v. Whangarei High Schools Board. •• ·

In Frnel/ v. Whangarei High" , chool Bd. the Privy Council

'II! ' upheld the order of suspension of a teacher pending determination of charges against him. It was observed, · . '

"Neither in the regulations nor in the Act is suspensioA classi tied as a penalty. Sectiori .1 57 (3) shows that it is not. It must . however . be recognised that suspension may involve hardship . . During suspension salary is not pai<l and apart from this something of a tepporary slur may be .invplwd if a teacher is suspended .. But the regulation~ (by regulation 5) cleady contemplate or lay it down that .tht: written statement of a teacher (under regulation 5(2)) and. the oral personal statement (tinder

regulation 5(3)) will be made after suspension if an~ has taken place. Suspension is discretionary. Decisions as to whether to suspend will often be diffictdt. Members of a board who are appointed or elected to act as the governing body of a school must in the exercise of their responsibilities baveregard not only to the interests of teachers but to the interests of pupils and of parents and of the public. There may be occasions when

ha.vin~ regard to the nature of a. chare jt \'/ill be wise, in tbe

(l) (1973} Appeal Cases 660 .

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LiBERTY OiL MiLLS v. UNION (Chinnappa Reddy, J.)

interests of all .concerned; that pending decision whether the charge is substantiated a teacher should be suspend(:d from

duty; In many cases it can be assumed that c11arges' would be . denied and that only after a full hearing could the true position be ascertained. lt is not to be assumed that a board; constituted 'as it is, will. wantonly exercise its discretion."

We have referred to these four cses only to illustrate how exparte interim orders may be made pending a final adjudication. We however, take. care to say that we do not mean to suggest that Natural Just(~ i-; not attraced when orders of suspension or like

orders of an interim nature· are made. Some orders of that nature, intended t~ prevent further mischief of one kind, inay themselves be

productive or greater mischief of nether kind. An interim order of stay or suspension which has the ffect of prventing a person, however, tempor!ll'ily, say, from pursuing his .PrOfession or line of business, niay have substantial, serious hod even disastrous consequences to him and may expoe him to grave risk and hazard. Therefore, we say that there must be observed some modicum of residual, core ' natural jt;1stlce, -sufficient to enable the effected person to make an adequate representation. (These considerations may not, however;

apply to case• of liquor licensing wbicti involve the grant of a privilege and are riot a matter of. right : See Chfngleput Bottlers v.

Majstic Bottling, CompallJ, Civil Appeal Nos: 11970-71 of 1983).

That may be and in some cases, it can only be after. an initial exparte interim' order is made;

As we have seen, both clauses 8A and 8B contemplate action of

an interim nature pending investigation. into allegations under clause I'

8. Ordinarily, in the absence of anything more, it would not be . necessary to give an opp9rtunity to the person concerned before proceeding to take action' under clause 8A or clause 8B. But while clause 8B deals with the right to obtain licences and the right to obtain allotments, clause 8A deals with rights which hav~ flowered into licences and allotments. A person to whom licences have been G granted or allotments made may have arranged his affairs on that basis and entered into transactions with others, and; to him the consequences of ac.tion under clause 8A may .be truly disastrous whereas tl:le consequences of action under cla"Use 8B may not be so imminently harmfut )tis presumably because of this lively difference between clauses SA and 8B that clause 10 provies for a pre-deci- H sional opportunity in the case of action under clause SA and does . . ' not w provid~ ip the case of actiotl UTlder cli!U£e 8B.

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706. ..• .. _ -;; SUPlt£Mil COURT REPORTS

'[1984] 3 S.C.R.

--r presumably because ofthis dHrerence that clause JO white providing • : - f.or an appeal against a. decision tinder cfause 8A does not provide for A

an appeal against a decision urider c1atise 8B.- -Not that it makes any difference because S. _ 4tvt arid 4N of the Imports and Exports (Control) Act provide for an apptaLarid a revision against any deCision or order made under the Act. which naturally include any

dcision or .made under any subordinate legislation. made under -the

Act, and this right_ of appeai nd revision cannot be whittled down . by the subordinate ie8isJadon. As we mentioned earlier, it does not'

. mean thafthe requirementS of atiual )ustice are not to_be met at all

. m the ca.Se of action under tianse SB. The· requirements bf natural justice will b~ l'llet in the case of actbn..: under . cJ:iuse 8B by copsider.,

g •• bona fide~ any repreSentation that may be made in that behalf . by the person aggtieed. Clause SB . itself-gives an indication tbatsuch a post-decisionalopporttinity .on the. request of the persoii eon- .. '<erned is contemplated. __ We have seen that action underclau-se 8B . . is to be taken if the_' au tbority is' satisfied 'hi the' pubJic interest that

such -action may be. taken without ascertaining. further detail, in regard to tbe aUegaUons. n cleatly implies that when further facts- . are ascertained by the aUthOrity ot. brought to tbe notice' -of the -, autb6Hty. ch -action l:miy be reviewed •. As we have earlier pointed

: out while e~patte interim 6tders tnay ah'vays. be made without a pre- -· dedsional opporhmity or- \ttthou~ the_ o_rdet _ itself providing for a _ E- post~ decisional opportunity. the principleS of natural justice which""

- are never exdudcil will 'be satisfiedif a post-decisional opportvnity .

' G

. is given if demanded. So we hoJd tllllt in the ase of actionunder

- -clause 8B it is not necessary to give a pre.dedsi; nal pportunity but a post decisional ' opportunity must be given if so zequested by _the - . .. . . •· person affected. • "' .

--· -__ The net question for consideration is.\Vhthetthe decision to

- .keep in 'abeyance' should 'be communicated to the. person concerned.

There can be no two opinions on this. _ Ours is a Consthutional Government', an opel:'l 'dernocracyfourided upon the rule of law and not i(cJoak and .1.hgger reimen~ ·. It is io:conceivable that t, mder our eonstitutiona! s::heme a 'decision of the kind contemplated by dause 8B which may 'have the effect of b'rioging to a !startd {still the ntire - " business 'activity of the person affected and which !flay :even 'spell rui:Q.

to him. ' should be made abd implemented 'without .being communicated to'that person. Intertwined fs 'the question of: observance of 'natural justice and bow 'can ·.oa'tural justice: be satisfied if the decision

is not even communicated ? It would be most arbitrary and-quite . clearly violative of Atticle$ -14 and 19(i)(~) of the t; onstituti<?q -r . . . . _. . ' .

.... _

. 1

•.. -- LIBER."IY oiL 1.i1i.Ls v. tH.NoN. (Chinnappa Rddy; j,) . 7ot

' ', + - • - • ' -· • •

,.clause 8B is .to , be interpretd a~ xclud!ng communicatio~ of the , deCision taken.' Cfhere. is oti_n_g , Jn Clause ' 8B t~ ~gest that the

. decision is riot to be communicated. On the other hand, the ex pres .

~\on ·~.without asigt:tingapyre~on'jn; tplies hat ., tpe .deision bas to be.commuuicated,.l; Jut r.eas.ons for the dcision. have riot to be stated. ; Reasons, of Ct;)Urse, ·, mu~~ xist.forthe.eCisiQn ~.ioce. the decision may

only .be Jaken iC the autho.rjty is , satisfid ihat.the '.irant of licence or

. a, lltmnt ot, impor_:ed_goos >YH~ pot i, e: ~n', he mb.Iic interest. We ;, must make :it clear .that \vith9ut asigning , teas9.ns' only means that there· is Jlo ;, opligation io fp!mult~ rea:Sons .a.nd,' nothing .. more. ,

~For mal reasons .m~Y lead , o.oinplic3:tios lle_n: , the .. ~tt.er is still ·:: under ; investigatiqn. ; So be ~_uthoriJy m<, ty not -~h; e formal reasons, - .. :b11t the Se!et~J allegationS ~\,1St , be mentioned , in , OTler to. proyide an _

 f ~PP9.tunity: to . , the _person _affcted ·, to ; mke , s epi'e:s~tl\tion, : Cbaper ppd :vrse.pe.ed, riot, be .. quot::d . .- Details., may .not be. men-- r tioncd and ~-n PU.tl~e of ; te flllgat~'?DS .S~O!lid_ ~)e. suffid:ent .. ..

- "-w ••• •'

. :The furtherquestion .is. on .. what , should . the :~:1tisfaction be

1 based ? ~Since ation under. clause S.B .is. to, be..tak, en pending investi gation in.to allegations under clause 8, . we must take it..t.4at :the action under clause 8B is really in aid of the ultimate order under clause 8. It must follow that in order to invite the satisfaction contemplated by...., clause 8B there must be prs; t -some 'strong sspicion of one or . other r more of the grounds' , mentioned in Clause 8. Since te action whi<; h is of a drastic-nature. is to be taken expartc,•if must necessarily -.-be animated by a sense. of. urgency .. Th() sense of urgency may be

~ . - I . . •. .:. . . - I • · infused by a host of circumstances such as the. traffickmg and unscru.

pulo~~ peddfiogin licences, trge. scale misuse. ofimpo_rted goods,' .. 'attempts ~0 ni'o!lopolise or corner , the market, wholesale p-revalence .

. of iprop:r practices among-classes -f impor£ers,. public Sentime'nt _ etc .. e.tc: : Oe of the submissions very:strenuously . pressed before us was that public setiroent, was wholly . irr~I~, varii in arriving at the .. _sa tisfacton. coriteplated by Cia use. 8B. ·We , are unable . to agree. It.

_is true that public administration. is not to. be run on public Si:ntiment . and statutory action may only be taken on;-gr(!t; nds permitted by the statute. But strong-public sentiment niay jropart a sense of urgency ·

to a situatin such as' tocompel-tbe ·:authorities to proceed to take

.. action. uuet a statute pr0yided. of. course grounds for taking .action

, under the statute ... Public sentiment knot, in. such.cis'es, the ground

fo~ th~ action but it is what clothes the ground with ,1llt sense of urge:1cy which makes it imperative that swift action be taken. That .. is how we understand the referrenc~ to public . sentiment in the

A'

~ .

1o8 [1984] 3 s.c.it: --f'

A counter affidavit fild on behalf of the Union cj India and the _Chief

Controller of Imports and Exports. r

Public interest must nolens yolence be the paramount consideration; If the threatened public mischief is such as to outweigh the likely injury. to the party. the authority may take action under Cla'!lse_

8B~ If the t}lreatened public injury, is very slight C<?mpared 'to the 'harm which may be done to the party, the authority may not take action under Clause 8B. There inay be cases where the 'abeyance' orders may themselves be produQtive of serious public injury as where ' a substantial amount of forign eXchange may be lost or a large number of. workers are likely to' be thrown out of employment etc. In such situations the authorities may pause and have second thoughts, consider the inevitable consequences and be guided by that element of the public interest whiCh ()Utweighs all others. Which element of the public interest should be given greater' weiglrt and' . which' grounds should weigh at all are. matters for the authority taking action under Rule 8B. Courts do not concern themselves. with the sufficiency of the grounds on which action is takea or with the balancing of competing considerations, in favour of and against the action. ' " ' One of the submissions very strenuously urged before us was that a large number of the applications for import lincen¢es and allotments of imported goods which have been kept in 'abeyance'

relat~ to goods which are totally. unrelated to beef tallow or any other" animal tallow and there , wa~ no justification whatever for keeping them in 'abeyance'. But an 'abeyance' order under clause 8B is directed, not against any particular type of goods but against an ' importer. licenee or other person against whom an investigation into allegations under clause 8 is pending.

The question is not . whether any particular type of goods sbou'd be allowed to be impor--

'ted or allotted to any person-that is a question of policy-, butwhetl; ler • it is not in the. public interest that a particular person should be · prevented from obtaining import licences or imported goods of any description pending investigation into the . allegations under clause 8B. That would depend on_ the nature of tbe allegations, the extent of involvement of the peron concerned ahd, most important. the element . of the public interest. 'f the allegations against a person

inovle hil deeply in trafficking or racketeering in import \icences and irr1'ported goods, .the authority may consider it inexpdientin the public interest to _keep in abeyance any applicaion of hi~ for the

.. grant of a licence or allotment of goods. on the other hand even if the -alle~tions are grave~ if the effect of an order under clause 8B is .

. ..,_...~- ,

LiBBRTV OIL MILLS v. VNION (Cittnappa Reddy, i.)

 likely to result in loses or" considerable foreign exchange or. to shut down an if.idustry throwing large number . of workers' out of employment, the authority should restrain itself in larger public interest, from making an order under clause 8B or may mae a.n. order confining the abeyance order to . applications atid goods of certain descriptio~ oa\y instead of making a, general order which. extend') to alt . applications for import licences and allotment of . imported goods. . Again, the allegations. may reve<!l that the involvement o.f the person in illegal a..ctivity' is so remore or minimal that . it would t5e entirly inexpdient to inake an order clause.~B. A. person ho eg itimately purchse's ..,.importe<; l goods or imports gOOQS unde( a licence .lawfully acquired by him and who has used the goods in the manufacture of a different kind of goods in which industry the person . is en, gaged may not be visited with an o.rder

under clat111e 8B merely because the original licensee's actions may be suspph;:ious. , Again where a person's bonafides are not susP._ct ar all but he may be technically at fault or he inay have acted on tr bonafide interpretattion of the rules and regulations, it may -not be a case for making an order under clause SB. Bt -these are all matters for the consideration of tl:e auttority making the order uiider clause . 8B and not for the Court.

We have held that action under Clause 8B is f. an interim nature and it may be ex-parte, in which case the affecteq party may makea suitable representation bringing out all Jhe outwbeighing

J . Circumstances in his favour . . That is the real remedy of the party . . Courts do not enter the picture at that r.tage unless . the action is

lJ.lalafide or patently without'juiisdiction. The action will be patently without jurisdiction if it is not based on any relevant material whatsoever. f the authority delines ' to consider therepresentation, or if the authority after consideration of the representation eschews relevant consWerations and prefers to act on irrelevant considerations or from oblique motive, or the decision is such as no . reasonable man

_, propefly "directed on the . law would arriv~ at on the material facts, it will be open to the party to seek the intervention of.the Court at ·

that stage. Our attention was drawn to tbe well known. cases of Barium Chemicals v. Company Law Board1, Rohtas Industries v. S.D.

Agarwala, M.4. Rasheed v. State of Keralas, and the recent cas-es

(1) [1%6) Supp. SCR 311

(2) [1969]3 S.C.R. 108 . .

(3) [19751 z sc.R. 93

B .

 ...


A of SlmfiniSoni v~ :fJtrfon .Offndia1, 'And @oNJmissivner of /nc(Jme Tax

1'. Maltindra and Mt.t#fttdraz Mid •dm~ conaide.roo all oft.hesi in

-llrrivnrg at our cooolusi6n;

• ' ' In the present case~ the party instead of representing his . case to the appropriate authority ch-ose the path. of rJitigaiion

obviously deterred by the clumsy.· at'tempt at secrecy made by the concerned authority arid the failure to communicate the decisien to ihe party.' One of the sul:mli~ioos made touswas that the:abeyance order was never rorroiiny commurricatodto-the-petitioners and it.was, . therefore, to be_ 'treated a~ non est. :•Reliance :was placed onthe decisions of Bathhittar Singh v. Stttte of Punjab8 and -State qf :Run jab v. Balbir sig'i 4• We do n6t think that fbese decisions are of any facility to us on th'e fa¢ts of'the present case. 1'ln 13achittcir Sirrghs case, what was decided \'.las 'that a decilion taken •in -tthe privacy of a Minister's Chamber, which was DOt communicative to 1hepanty and . which was tevers.ed without ever ,; lt1g communicated was of no effect at all. In B-olbir Sin'gli's Cltse, it '\~''l<;'held:that once an: order was sent out, aQd went out 'beyond thc"ConiTol ohb.e ailthor.ity, the order niust be said to have 'been issued no"'l'latr when the party affected actually received. it. Communication,_ according toilearned • Judges, was the process of setting in motion the despatc~ of the -order. It was .held in that case that forwarping of copies to tne

Accountant General and to the Chef Engineer was sufficient communication. n the , present case, the 'abeyance' order was undoub. tedly communicated to the licensing. authorities, the State Trading Corporation, the Minerals.,.and Metals Trading Corporation and.

oter similar.genci:es. Despite the attempt at secrecy made by the concerned authority and tht failure to formally commnicate the decision to the party, the abeyance circular was very soon public knew ledge.

The affected party also learnt~ about it. but ·· probtlbiy deterred by the attempt at secrecy, chose. the pth .of litigation, instead.of teprcsentil)g hi& case to the appropriate authority.

We might have considered the question of what relief the petitiones were entitled to had the .secreqy.been maintained and knowldge . of the order continued to be h.eld back from the party. But the person affecte.d did come to 'know of theorJer-he filed a copy of the circular a tong with: thewrit petition-, and in ther final natysis, the

-·-~---- -- -·-·----...-~.---__...___ , O> _198ll s.c.R. 962.

(2) [l983 4] s.c.c. 392

(3) 11962] Suppl. S.C.R. 37 ·

(4) [1976) 2 S.C.R. 115

.....

------,.--~- -.....,. __ ~

tmEnTY OIL MILLS V. UNION (CJ.innappa Reddy, , J.). 711

object of communication is oniy to impart knowlcdg~. Since tllcn, a volume of water has flown under the bridge and we must proceed on the basis that the affected party is aware of the decision and so, what next 7 We C30 not, of course, pro:ced to consider the qustion whether there is sfficient relevant material in support of the allegations made against petitioners. In facl we can-not entr upor. the merits of the controversy at all. We cannot, for example, consider the question whether the material a'l':litabte justifies a prima facie conclusion that the petitioners have made illegal imports of beeftallow. Accordiog to the contention of the petitioners, they were entitled to import beef taliO\V even after June 5, !981 if they had. valid licences and if .they had entered into firm contracts and opened . letters of credit before June 5, 1981. According to the authorities to is was not permissible ; the affect of paragrnph 222(.3) of the Import Policy was th1t the amendment which was made on June 5, 1981 took effect from April I, 1981 and permitted import of beef tallow. under OGL only where 'firm contracts had b.:en entered into and letters of credit had been opened prior to April I, 1981 but if the contracts had not been. entered into and letteo of credit had not been opened hefore April I, I 981, the imports had to be through the channel of the Stute Trading Corp oration only. Though in the cases of A rvind Exports nod Jayant Mills is an appeal and review arising under the provisions of the Customs Act, the question was decided in favotir of the parties, the present stand of the" Government is that those decisions are not binding on the authorities functioning under the T mports (Controi) Order and that those decisions had been rendered without reference to paragraph 222(3) as welt paragraph 24 ofAppendix 10 of the Jmpolt Policy of 1980-81 which epressly states:

"Nothing in the Open General Licence shatl affect the applica tion to any goods, of any other prohibition or regulation n!Tccting the import thereof, in force, at the time where they nrc tlctunlty imported.'' . . 'we consider that this i~ not a matter for the court to decide nt this

stage in a peiition under Article 226 of. the Constilution or under

Article 32 of the Constitution questioning an ad-interim order under Clause SD.

Again we cannot enter into. the controversy . whethr there has been mis-ur ilisation of the importd goods by the pclltioncrs and whether the petitioners cun be termed as 'actual users' - within the meaning or that expression in the Import , <:ontrol Ordc.r by the mere fact thut they subject the beer tallow to atr-treatmct:

All thcsequestions pertain to tbo mcr..its of the controvcr1y and 1t ts

9t for us to co; bark info a discussion into these alters.

~--·- .~-· ·

:r

I ;;:.

. :i ,.

SUPREME COURT REPORTS ·: [1984] 3 s.c.R.

. I

But we may properly consider, even at this stage, the question of mala fides 'or patent lack of jurisdjction: There is no suggestion that the action wa'S mala fides. It was, however, argued that the order as embodied in the abeyance Circulardid not fulfll the con~ . - ditions-precedent prescribed by the statute It did not contain a

reital of the allegations constituting the basis of he satisfaction . contemplated by clause 8B for action under that prov}sion, and without a recital of the allegations it was impossible to say that he 'action was not based on irrelevant materiaL' It did 'riot even recite that which was the foundation of any action under clause 8B, namely, the satisfaction of the authority that the action was in the public interest.

On the other hand, it isued a directive to the. licensing authorities to keep in abeyance for a period of six mo.nth~ any application received from the concerns specified for the grant of import licence or customs clearance permit and al!otroent of imported goods through' agencies like the State Trading Corpt.ration of india, Minerals and Metals Trading Corporation of India arid similaragencies, making a bare recital that investigations into certain a}ltgation!' under. clause 8 were pending agahist the concerns. Again a large number of concerns were lumped together and purported lo be dealt with by a single abeyance circular. There was e:~:.fcie nothing in the circlar

wich could point to tP.e a'uthority having ~PQlied its mind and considered. the case of , each concern separately. It is true that the abeyance circuiar suffers from every one -of these jnfirmities and if there was nothing more, the parties' would be well entitled to ask us to quash the circular. But the learned Addl, Solicitor Gener.al invited our attention to the statements rpade by Shri J.P. Sharma, Deputy Chief Coiltro11er of Jmp<?rts and Exports and the author of. the abeyance circulars in the counter affidavit filea by him. The ... r - ' learned A.dditional Solicitor General lias also placed before us for our perusal the relevant filesof the .au!hority.~ The counter-affidavit . • of Sbri J.P, Sharma shows that th.e princip!il allegations against the P, eti't, ioners were that they bad prima facie indulged in illega1' importation of beef tallow and had also misutilised the bf tallow. Why ·

G . the authority tOok. the prima facie view that the petitioners had . illegally imported beef.tallow and had mis:utilised the imported beef,· tallow has been explained by him in the countr-affidavit. Illegal importation of beef tallow and mis-utilisation of the imported leef I" . • . tallow ars ce'rtainly relevant grounds 0n which actio!) may be taken under clause 8B.

We are, of course, not onj:erned with the question ii · of the .sufficiency of material before the authority in arri•ling at its • conclusion. A persual of the fi1es shows that in respect of nine of

t the firws:covered by the !lbeyap.ce circ\llar ated :No, erebr 71 19831

tiBERTY OIL MILtS v, UNION (Chinnappa Reddy, J.)

the decicision to kee) their applications and allotments in abeyance

".as taken at the highest level, that is, at the level of the Minister • for Commerce, Government of fndia. Thereafter the Deputy Chief Controller of Imports and Exports, the files show, considered the cases of 61 concerns including that of Liberty Oil Mills Limited . . and issued the a!>eyance circular dated No.-ember 9, 1983. We find

that the <; ases of Liberty Oil Mills Limited as well as other concerps were separately and individually considered. Their cases having been considered by the authority separately and individually before the circular was issued, we do not think that it makes any difference on the peculiar facts of this case that a single circular was. issued, covering a large number of concerns. Ho}vever, we wish to impress upon the authorities that those entrusted bY, statute 'With the task of taking prejudicial action on the basis of their s.ubjective satisfac- . tion should, first, bestow careful attention to the allegations forming the basis of the proposed action and !he probable consequences which may ensue such action and, next, take the trouble of reciting iQ the order issu.ed by them the satisfaction forming the basis of the action and a concise statement of the allegations forming the basis of the satisfaction .. If the necessary recitals are not found, there may be serious sequels. In cases involving civil liberties, the orders will necessarily have to be quashed. In other cases also, it is possible to envisage similar results depending on the _rights'involved, th~ object of the statute and other facts ansi circumstances. As it is the circulars in question are hopelessly drafted adding to the confusi'On created by .

the sadly drafted Clause 8B. In the facts and circumstances of this, case, the real remedy of the party, as we conceive it, is to make a representation to the concerned authority setting out his version of the facts and the. law and the prejudice to himself-and the public inteyest as a consequence of the action under clause 8B. We would have first directed the authority to communicate, within a specified . time, to the party ihe allegations forming the bMis of the action.

But we do not consider !t necessary to do so as the party is now fully apprised of the allgations against him. In the circumstances, we think that it would be proper if we direct the authority concerned to consider any representation that PlaY hereafter be made by the party within 10 days from the date of its receipt. Subject to this directions, the writ petition is dismiss.ed but without any order as to eosts.

Civil Appeal No. 274 arises out of an interlocutory order made by the Bombay High Court bfore th! wCit ptition was transferred

7i4

SUPREMB COURT REPORTS [1984] 3 s.c.i.

A . to this court. In view of our final decision diposing ofihe main

writ petition, it is unnecessary to pass any orders iu this civil appeal, which is disposed of accordingly.

H.S.K.

Petitions dismls1 e

. .

: ...•. -:_