Case ID: 1192

Judgment:
307 and 308 of 1960. Petitions under article 32 of the Constitution of India; for enforcement of Fundamental Rights. Porus A. Mehta	 J. B. Gagrat and G. Gopalakrishnan	 for the petitioner. H. J. Umrigar	 R. H. Dhebar and T. M	 Sen	 for the respondents. March 23. The Judgment of the Court was delivered by section K. DAS	 J. These are two writ petitions in respect of two orders 'dated August 3	 1960	 b which the Joint Chief Controller of Imports	 Madras	 cancelled two import licences	 Nos. A 863296 and 836640 dated January 18	 1960	 and February 2	 1960	 respectively	 granted in favour of the petitioner	 Messrs. Sinha Govindji of Bangalore Road	 Bellary	 for the purpose of importing cellulose nitrate sheets of the value of Rs. 75	000 each for two licensing periods	 April/September	 '1959	 and October/ March	 1960. The complaint of the petitioner firm is that respondents 1 and 2 have cancelled the licences in circumstances which amounted to a denial of its right to be given a reasonable opportunity of being heard	 as provided by cl. 10 of the Imports (Control) Order	 1955	 before the impugned 'orders were passed 542 and thus arbitrarily and without authority of law deprived the petitioner of its fundamental right to carry on its business under article 19 of the constitution. The point for decision is a short one and we need only state such facts as bear upon that point. The petitioner 's case is that the proprietor of the firm is a citizen of India carrying on a business of the manufacture of celluloid and plastic bangles	 etc	 at Bellary in the Mysore State. The petitioner was granted the two licences referred to above and thereafter entered into firm commitments for the import of cellulose sheets to the clause of Rs. 99	000. On March 4	 1960	 the petitioner was surprised to receive two letters from the Assistant Controller of Imports	 Madras	 calling upon the petitioner to let him know the extent to which the licenses had been utilised and asking the petitioner not to enter into fresh commitments against the said licenses without specific and prior approval of the Controllers ' office. This led to some correspondence between the petitioner and the Control authorities	 details whereof are not necessary for our purpose. On May 27	 1960	 the petitioner received two notices	 only one of which we need set out in full. It stated: "It is hereby notified that in exercise of the powers conferred by cl. 9 of the Imports (Control) Order	 1955	 the Government of India	 in the Minis. try of Commerce and Industry propose to cancel licence No. A 836640/60/AU/M dated the Second February	 1960	 valued at Rs. 75	000 (Rupees Seventy five thousand only) for import of Cellulose Nitrate Sheets from the Soft Currency area except South Africa	 granted by the Joint Chief Controller of Imports and Exports	 Madras to Messrs. Sinha Govindji	 No. 18	 Bangalore Road	 Bellary 2	 unless sufficient cause against this is furnished to the Joint Chief Controller of Imports and Exports	 Madras	 within ten days of the date of issue of this notice	 by the said Messrs. Sinha Govindji	 No. 18	 Bangalore Road	 Bellary 2 or any Bank	 or any other party who may be interested in it. In view of what is stated above	 Messrs. Sinha 543 Govindji	 Bellary or any Bank	 or any other party who may be interested in the said licence No.836640/60/AU/M dated Second February	 1960	 are hereby directed not to enter into any commit Departments against the said license and return it immediately to the Joint Chief Controller of Imports and Exports	 Madras. (Sd.) J. K. Sarkar	 Deputy Chief Controller of Imports and Exports. " The notices	 be it noted	 did not state on what grounds falling within cl. 9 of the Imports (Control) Order	 1955	 it was proposed to cancel the licences of the petitioner. Clause 9 of the Control Order states four grounds for cancellation of a licence	 and we may read the clause here omitting those grounds which are not relevant for our case: "9. Cancellation of Licences: The Central Government or any other officer authorised in this behalf may cancel any licence granted under this Order or otherwise render it ineffective: (a) if the licence has been granted through inadvertence or mistake or has been obtained by fraud or misrepresentation; (b) (c) (d) By a letter dated May 30	 1960	 the petitioner referred to the earlier correspondence on the subject and said inter alia: "Now clause (9) of the Import Control Order	 1955	 under which action is proposed to be taken envisages the cancellation of a licence on various grounds. Your notice does not disclose on which of these grounds the proposed action is sought to be taken. Without knowing on what ground the proposed cancellation is to be effected it is impos sible for me to show cause against it. I may	 however	 state that I have not done anything justifying the cancellation of the licence under the said Rule and that as far as I can see	 there is no ground whatsoever for such cancellation. " 544 Then	 on August 4	 1960	 the petitioner received two orders dated the previous day by which the two licences in favour of the petitioner were cancelled. The orders stated (we are quoting only one of the orders which are similar in terms): "Whereas M/s. Sinha Govindji	 Bangalore Road	 Bellary or any bank or any other person have not come forward furnishing sufficient cause	 against Notice No. 1/LCL/60/CDN(1) dt. 27 5 1960	 proposing to cancel licence No. A 863296/60/AU/Mdt. 18 1 60	 valued at Rs. 75	000 for the import of Cellulose Nitrate Sheets from the Soft Currency Area except South Africa granted to the said M/s. Sinha Govindji	 Bangalore Road	 Bellary	 by the Joint Chief Controller of Imports and Exports	 Madras	 Government of India	 in the Ministry of Commerce and Industry in exercise of the powers conferred by clause 9 of the Imports (Control) Order	 1955	 hereby cancel the said licence No. A 863296/60/AU/M dt. 18 1 60 issued to the said M/s. Sinha Govindji	 Bellary. " It will be noticed that the orders also did not state on what ground the licences were cancelled. The petitioner complained that the cancellation of the two licences led the Customs authorities to hold back the goods of the petitioner which had already arrived at port and were awaiting clearance	 resulting in heavy demurrage	 etc. ; but the real ground on which the petitioner challenges the two cancellation orders is that (to quote the words of the petition) "no real opportunity at all to show cause against the proposed cancellation was given to the petitioner in total disregard of the provisions of cl. 10 of the Imports (Control) Order	 1955". We may read here that clause. Applicant or licensee to be heard. No action shall be taken under Clauses 7	 8 or 9 unless the licensee/importer has been given a reasonable opportunity of being heard. " On behalf of the respondents it has been stated that after the issue of the two licences a letter dated February 16	 1960	 was received from the Director	 Small Industries Service Institute	 Bangalore	 to the 545 effect that the petitioner had no machinery and equipment to manufacture the relevant articles from the imported raw material. On receipt of this letter a joint investigation was held by the Assistant Director of Industries	 Bell	 try	 and the Deputy Director	 Small	 Industries Service Institute	 Hubli	 and it was found at the time of inspection that the petitioner firm had no machinery and equipment at the premises	 nor did they possess any municipal licence or factory licence. On July 2	 1960	 the Chief Controller of Imports & Exports wrote to the petitioner giving the above information and asking the petitioner to show cause why further issue of licences should not be suspended under cl. 8 of the Imports (Control) Order	 1955. We quote below the relevant extracts from this letter: "Gentleman	 I write to refer to your letter dated the 21st May	 1960	 and 30th May	 1960	 on the above subject	 and to say that a joint investigation conducted by the Deputy Director	 Small Industries Service Institute	 Hubli	 and Assistant Director of Industries	 Government of Mysore	 Bellary	 revealed that at the time of inspection of your firm by them	 no machinery and equipment existed in your premises and that you had no Municipal licences or Factory licence or Factory. In view of this	 it is clear that you had obtained the Essentiality Certificate from the Director of Industries fraudulently and by misrepresentation of facts and thereafter obtained the licences in question by producing the said Certificate to the Joint Controller of Imports & Exports	 Madras. The above action on your part directly contravenes the Import Trade Control Regulations	 within the meaning of para. 6(vii) of Chapter V of the Import Trade Control Hand Book of Rules and Procedure	 1956	 read with clause 8(b) of the Imports (Control) Order No. 17/55 dated the 7th December	 1955. In view of this	 the request made by you in the letters under reference cannot be acceded to. 69 546 On the other hand	 you are called upon	 under clause 10 of the said Imports (Control) Order	 1955	 to show cause	 within 15 (fifteen) days from the date of receipt of this letter	 as to why further issue of licences to you should not be suspended	 under clause 8 of the said Imports (Control) Order No. 17/55 dated the 7th December	 1955	 for contravening the Import Trade Control Regulations. If your reply does not reach the undersigned within the stipulated period it will be assumed that you have no defence to urge in your favour and this office will proceed to adjudicate action against you	 without making any further reference to you. " The contention urged on behalf of the respondents is that the letter dated July 2	 1960	 stated the necessary ground for the cancellation of the licences to the petitioner	 and as the petitioner furnished no sufficient cause against cancellation	 the orders of cancellation were made on August 3	 1960. The argument on behalf of the respondents is that the provisions of cl. 10 of the Imports (Control) Order	 1955	 have been sufficiently complied with by reason of what was stated in the letter of July 2	 1960. On a careful consideration of the facts and circumstances as stated in the affidavits of the parties we have come to the conclusion that the petitioner has had no reasonable opportunity of being heard before the cancellation orders were made on August 3	 1960. The cancellation orders are	 therefore	 bad and must be quashed. Our reasons are the following. It is not disputed that the notice dated May 27	 1960	 did not state any ground for the proposed cancellation; it merely referred to cl. 9 without stating on which of the four grounds mentioned therein it was proposed to take action. Naturally	 the petitioner stated in its letter dated May 30	 1960	 that without knowing on what ground the proposed cancellation was to be made	 the petitioner firm was not in a position to show cause. So far there is no dispute between the parties	 and it is not seriously urged by the respondents that if the notice stood by itself	 it could be held to have given the petitioner a reasonable 547 opportunity of being heard within the meaning of cl. 10. The respondents	 however	 rely on the letter dated July 2	 1960	 in support of their contention that the petitioner has had a reasonable opportunity of showing cause against the cancellation of the two licences. On behalf of the petitioner it has been submitted	 not without justification	 that the letter dated July 2	 1960	 related to a different matter	 viz.	 the suspension of the grant of further licences under cl. 8 for which also a reasonable opportunity to be heard had to be given to the petitioner under cl. 10. In its operative part the letter stated: "you are called upon to show cause	 within 15 days from the date of this letter	 as to why further issue of licences to you should not be suspended under cl. 8". It	 therefore	 related to proposed action under cl. 8. The respondents	 have	 however	 pointed out that the subject matter of the letter as indicated therein referred to the notices dated May 27	 1960	 for cancellation of the licences and it also referred to the earlier	 correspondence on the same subject	 viz.	 the petitioner 's letters dated May 21	 1960	 and May 30	 1960; therefore	 the	 contention is that the petitioner must Know as a result of the reference to the subject matter and earlier correspondence that the grounds given in the letter related to proposed action both under cl. 8 and cl. 9	 even though the operative portion related to cl. 8 only. It is true that the contents of the letter dated July 2	 1960	 should be considered from the point of view of substance rather than that of technical rules of construction of statutory instruments. So considered	 it is difficult to hold that the letter asked the petitioner to show cause against cancellation of its licences	 parti cularly in the light of the contents of the subsequent letters of the Department which would be referred to presently. Even if we assume that it did so	 what is the position? Within 10 days of the receipt of the letter (which was received by the petitioner on July 5	 1960) the petitioner 's solicitor asked for a copy of the joint investigation proceeding and the report submitted as a result thereof The letter also asked for 548 other relevant documents in order to enable the petitioner to show cause. It said that the petitioner would show cause as soon as the relevant documents were received and it also said that 6. personal hearing would be asked for and prayed that in the meantime no further action should be taken. No reply was given by the respondents to the aforesaid letter of the petitioner 's solicitor till August 6	 1960	 that is	 three days after the cancellation orders had been made. The petitioner was not given a copy of the report of the investigation till as much later date	 nor was any in formation given to the petitioner that the copy would not be available and the petitioner must show cause at once. As a matter of fact the petitioner was told nothing in reply to the letter dated July 15	 1960	 till three days after the cancellation orders had been made. 'the cancellation orders blandly stated that no cause had been shown	 when in fact the petitioner had specifically asked for an opportunity to show cause. By their letter dated August 6	 1960	 the respondents said that the matter would be considered on receipt of a letter of authority from the solicitor in proper form and on stamped paper	 without stating that in the meantime cancellation order	 had been made. without waiting for any explanation. on August 10	 1960	 the solicitor submitted a written authority	 saying that it was unnecessary to (	all for it arid that the two licences had been cancelled arbitrarily and without giving the petitioner an opportunity of being heard. The correspondence	 then continued with regard to the proposed action under cl. 8 and the petitioner challenged the correctness of the report of the joint investigation proceeding on many essential particulars including the alleged absence of machinery arid equipment. It	 is not necessary to enter into details of that correspondence	 because the proposed action under cl. 8 is not the subject matter of the present proceeding. It is enough to state that from what happened after the receipt of the letter dated July 2	 1960	 it is abundantly clear that the petitioner has bad no real opportunity of being heard with regard to the ground alleged in the letter	 before the cancellation orders were made 549 on August 3	 1960. There was	 in our opinion	 a clear violation of the requirement of cl. 10	 which embodies the principles of natural justice. The cancellation orders are	 therefore	 bad and must be quashed. We allow the writ petitions and order accordingly. The petitioner is entitled to its costs; there will be one rearing fee. Petitions allowed.

Summary:
The petitioner who was carrying on the business of the manufacture of celluloid and plastic bangles etc. was granted two licences dated January 18	 1960	 and February 2	 1060	 for the purpose of importing cellulose nitrate sheets for two licensing periods	 April/September	 1950	 and October/March	 1960	 On getting information that the petitioner had no machinery or equipment at the premises nor possessed any municipal licence or factory licence	 the Imports and Exports authorities issued a notice dated May 27. 1960	 to the petitioner to the effect that the Government of India proposed to cancel the licences granted to him	 in exercise of the powers conferred by cl. 9 of the Imports (Control) Order	 1955	 unless sufficient cause against this was furnished within ten days of the date of issue of the notice. The petitioner replied that as the notice did not disclose on which of the grounds specified in cl. 9 the proposed action was sought to be taken	 it was not possible to show cause against it and that in any case he had not done anything justifying the cancellation of the licences under the said rule. On July 2	 1060	 the Chief Controller of Imports and Exports wrote to the petitioner giving the information received as aforesaid and said: "In view of this it is clear that you had obtained the Essentiality Certificate from the Director of Industries fraudulently and by misrepresentation of facts and thereafter obtained the licences in question. . You are called upon under cl. 10 of the Imports (Control) Order	 1955	 to show cause	 within fifteen days from the date of receipt of this letter	 as to why further issue of licences to you should not be suspended	 under cl. 8 of the said Imports (Control) Order	 1955	 for contravening the Imports Trade Control Regulations. . On August 4	 1960	 the petitioner received two orders dated August 3	 1961	 by which the two licences in favour of the petitioner were cancelled. The petitioner challenged the validity of the aforesaid orders on the grounds	 inter alia	 that no real opportunity at all to show cause against the proposed cancellation was given to him in total disregard of the provisions of cl. :co of the Imports (Control) 541 Order	 1955 which required that "No action shall be taken under cls. 7	 8 or 9 unless the licensee. has been given a reasonable opportunity of being heard"	 and that the cancellation of the licences arbitrarily deprived the petitioner of his fundamental right to carry on his business under article 19 of the Depi Constitution of India. The correspondence between the petitioner	 and the Import authorities showed that after the receipt of the letter dated July 2	 1960	 the petitioner had no real opportunity of being heard with regard to the ground alleged in the letter	 before the cancellation orders were made on August 3	 1960. Held	 that on the facts of the case	 there was a. clear violation of the requirements of cl. 10 of the Imports (Control) Order 1955	 which "embodied the principles of natural justice	 and that the orders dated August 3	 1960	 canceling the licences granted to the petitioner	 were bad and must be quashed.