Delhi High Court
Mac Exports India And Others vs Apparel Export Promotion Council & Anr. on 15 October, 1999
Equivalent citations: 2000IIIAD(DELHI)248, 2000(53)DRJ525
ORDER C.M. Nayar, J.
1. This judgment will dispose of C.W.P. Nos. 2764/92, 3710/93, 2819/92, 5094/93, 2796/92, 5359/93, 3521/93, 1733/94, 518/93, 2322/93 and 3441/93.
2. The writ petition (C.W.P. No. 2764 of 1992) was initially filed to impugn the notice dated 3rd August, 1992 issued by respondent No. 1, Apparel Export Promotion Council (hereinafter referred to as 'the Council') and for consequential relief such as for release of non-quota entitlement to the petitioner and to invoke the licencing authority that there is no order of suspension against the petitioner and release the Cash Compensatory Support and REP Licences to the petitioner and to hold that the Disciplinary Committee has no jurisdiction to hold inquiry in the matter.
3. The writ petition was subsequently amended as an Order of de-registration was passed in the meanwhile on 11th January, 1993. The averments as made in the writ petition are that under the scheme of Import Export Policy respondent No.1 is the only body that can grant quota of the garments to be exported. The memorandum and Articles of Association show that it has been approved by the Ministry of Commerce, Government of India and, therefore, function as a State within the provisions of Article 12 of the Constitution of India. The petitioner on 24th July, 1992 approached Shri D.K. Nair for release on 14 Non Quota Entitlement Certificates and brought to his notice the judgment of the High Court dated 21st July, 1992 in C.W.P. No. 1919/92 (Mac Exports Vs. AEPC & Others). It is further alleged that the said Shri D.K. Nair directed the petitioner to meet on 27th July, 1992 and also asked for deposit of council charges of Rs. 458/- for the period 1st July, 1992 to 30th December, 1992. This amount was deposited but it is stated that request for release of quota was denied though the petitioner is stated to be entitled to receive Rs. 6 lacs as cash incentive for its best export benefits. The Council sent a letter in January 1992 to Central Licencing Authority informing them that there was suspension order against the petitioner and the said Authority cannot release quota unless there is a letter of Council of revocation of suspension order. A show cause notice was issued to the petitioner on 15th January 1992 which is filed as Annexure-I to the writ petition and reads under :-
"Registered A.D. Apparel Export Promotion Council (Sponsored by Ministry of Commerce, Govt. of India) AEPC/REG/QA/D/DC-726(20)036 JANUARY 15, 1992 M/s. Mac Exports (India) DDA Shopping Centre, Gitanjali, New Delhi-110017.
Sub.: SHOW CAUSE NOTICE ISSUED UNDER PARA 298 OF THE HAND BOOK OF IMPORT EXPORT PROCEDURES 1990-93.
Dear Sir, While reconciling the figures of AEPC with the details received from US authorities it has been noticed that the following Visa was used for export of Rayon Blouses in catg. 641. However, as per our record the said Visa had been issued to you with the details indicated below:
S. Visa No. Cat/Qty as Cat/Qty as
No. per AEPC Per US
record record
1. 506880 639/1200 pcs. 641/1980 pcs.
It is thus evident that you had unauthorisedly exported the garments to USA on the basis of bogus/forged/tampered Visa fraudulently.
The above action on your part attracts the provisions of para 298 (1)(b) of the Hand Book of Import Export Procedures 1990-93.
Now, therefore, you are called upon by the notice issued under para 298 (1)(b) of the Hand Book of Import Export Procedures 1990-93 to Show Cause within 15 days from the date of receipt of this notice as to why action should not be taken against you/your director/partner under para 298(1)(b) of the Hand Book of Import Export Procedures 1990-93 to de-register your firm.
Your reply to this Show Cause Notice alongwith corroborative evidence in support to your explanation should reach the undersigned within the stipulated period failing which it will be presumed that you have nothing to say in your defense and the matter will be decided ex parte on merits and on the basis of information and evidence on record without any further reference to you. If you want to be heard in person also to explain your case, you may say so in your reply to this Show Cause Notice within 15 days from the date of receipt of this notice.
This Show Cause Notice is without prejudice to any action that may be taken against you/your director/partner under any law and regulation in force.
Sd/-
(D.K. NAIR) Director (QP")
4. Subsequent notice of hearing dated 3rd August, 1992 was also sent to the petitioner by respondent No. 2. The petitioner was also asked to surrender the original Visa vide communication dated 22nd May, 1992 which was issued under Category 639 for 1200 pieces and PPE No. 811632 as referred to above in the initial show cause notice dated 15th January, 1992. The said communication dated 22nd May, 1992 has also been filed with the writ petition as Annexure-VIII and reads as under :-
"AEPC/REG/QA/D/DC-726(2)/ May 22, 1992 M/s. Mac Exports (India), 1, DDA Shopping Centre, Geetanjali, NEW DELHI-110017.
Sub.:- SHOW CAUSE NOTICE ISSUED UNDER PARA 298 OF THE HAND BOOK OF IMPORT EXPORT PROCEDURES 1990-93.
Dear Sirs, This has reference to your letter dated 01.05.92 received through your Advocate, M/s. Ram Panjwani & Co. requesting for personal hearing as well as inspection of documents relating to the case.
We had requested you to surrender the original Visa No. 1IN506880 dt. 06.04.91 which was issued to you under category 639 for 1200 Pcs. and PPE No. 811632. You were reminded vide our telex dated 10.01.92. However, your reply is yet to be received. Regarding supply of documents on which reliance has been placed, the documents were supplied to you vide our letter of even number dated 26.02.92. The forged Visa on the basis of which consignment of 1980 Pcs. under category 641 again US Entry Challan No. N8100093077 dated 25.04.91 had been cleared, is yet to be received from US Custom Authorities. It is as such not feasible to supply this document at this stage of investigation. We will be able to provide you the copy of this Visa after receiving the same from US Customs.
The Discipline Committee of AEPC will be meeting on 25.05.92 in Mumtajmahal, Hotel Taj Palace, S.P. Marg, New Delhi and provide you personal hearing at 11.35 a.m. You are requested to attend the personal hearing alongwith documentary evidence in support of your contention and also surrender the original Visa No. 1IN506880 dated 09.04.1991 under category 639 immediately. A Notice for personal hearing has already been delivered to you on 16.05.92.
Thanking you, Yours faithfully, Sd/-
(D.K. NAIR) Sr. Director"
5. The impugned order of suspension was passed by the respondents on 15th January, 1992. The same reads as under :-
"Registered A.D. APPAREL EXPORT PROMOTION COUNCIL SAHYOG BUILDING, 4TH FLOOR, 58, NEHRU PLACE, NEW DELHI-110019.
TEL. 6433300, 6416709
6419063, 6437586
FAX. 6467517
TLX. 031-66037, 66431 AEPC IN
AEPC/REG/QA/D/DC-726 (20) 144
JANUARY 15, 1992
SUSPENSION ORDER NO. AEPC/DC/SUS/92/002
While reconciling the figures of AEPC with the details received from US authorities it has been noticed that the following Visa was used for export of Rayon Blouses in catg. 641. However, as per our record the Visa had been issued to M/s. Mac Exports (India) with the details indicated below :
S. Visa No. Cat/Qty as Cat/Qty as No. per AEPC per US record record
1. 506880 639/1200 pcs. 641/1980 pcs.
It is thus evident that M/s. Mac Exports (India) had unauthorisedly exported the garments to USA on the basis of bogus/forged/tampered Visa fraudulently.
Pending further enquiries into the matter, it has been decided by the Council to keep the Registration-cum-Membership Certificate of M/s. Mac Exports (India), under suspension for a period of three months in terms of sub para 3 of the Rule 298 of the Hand Book of Import Export Procedures 1990-93.
In exercise of the powers vested with AEPC in terms of sub para 3 of the Rule 298 of the Hand Book of Import Export Procedures 1990-93 the Registration-cum-Membership- Certificate No. AEPC/REG, 4466 of M/s. Mac Exports (India) whose partners are Mr. S. Hukam Singh, Mr. S. Harvinder Singh, Mr. S. Savinder Singh and Mrs. Minpreet Kaur is hereby kept under suspension for a period of three months w.e.f. 15.1.92.
This order is issued without prejudice to any further action that may be taken against the firm or its partners under law and regulations in force.
Sd/-
(D.K. NAIR) DIRECTOR (QP)"
6. The period of suspension was further extended by an order issued on April 14, 1992 till 13th July, 1992 without prejudice to any further action that might be taken against the Company or its partners under law and regulations. The prime allegation against the petitioner on the basis of which it was issued a notice of de-registration is explained in the show cause notice dated 15th January, 1992 which reads as under :-
"Registered A.D. Apparel Export, Promotion Council, (Sponsored by Minis-
try of Commerce, Govt. of India) AEPC/REG/QA/D/DC-726(20)036 JANUARY 15, 1992 M/s. Mac Exports (India), DDA Shopping Centre, Gitanjali, New Delhi-110017.
Sub.: SHOW CAUSE NOTICE ISSUED UNDER PARA 298 OF THE HAND BOOK OF IMPORT EXPORT PROCEDURES 1990-93.
Dear Sir, While reconciling the figures of AEPC with the details received from US authorities it has been noticed that the following Visa was used for export of Rayon Blouses in catg. 641. However, as per our record the said Visa had been issued to you with the details indicated below :
S.No. Visa No. Cat/Qty as Cat/Qty as per AEPC Per US record record
1. 506880 639/1200 pcs. 641/1980 pcs.
It is thus evident that you had unauthorisedly exported the garments to USA on the basis of bogus/forged/tampered Visa fraudulently.
The above action on your part attracts the provisions of para 298(1)(b) of the Hand Book of Import Export Procedures 1990-93.
Now, therefore, you are called upon by the notice issued under para 298 (1)(b) of the Hand Book of Import Export Procedures 1990-93 to Show Cause within 15 days from the date of receipt of this notice as to why action should not be taken against you/your director/partner under para 298(1)(b) of the Hand Book of Import Export Procedures 1990-93 to de-register your firm.
Your reply to this Show Cause Notice alongwith corroborative evidence in support to your explanation should reach the undersigned within the stipulated period failing which it will be presumed that you have nothing to say in your defense and the matter will be decided ex parte on merits and on the basis of information and evidence on record without any further reference to you. If you want to be heard in person also to explain your case, you may say so in your reply to this Show Cause Notice within 15 days from the date of receipt of this notice.
This Show Cause Notice is without prejudice to any action that may be taken against you/your director/partner under any law and regulation in force.
Sd/-
(D.K. NAIR) DIRECTOR (QP)"
7. The petitioner was granted an opportunity of hearing and it was duly represented by the counsel and a detailed order of de-registration was passed on 11th January, 1993 as a consequence thereto which was duly communicated to the petitioner. The case of the petitioner as well as of other Companies was examined at length as will be indicated from the minutes of the meeting of the Disciplinary Committee held on 5th December, 1992. The order of de-registration for a period of two years was passed against the petitioner as well as other Companies as will be clear from reading of the aforesaid minutes of the meeting dated 5th December, 1992. The case of the petitioner was dealt with in the minutes in the following manner :-
"APPAREL EXPORT PROMOTION COUNCIL NEW DELHI MINUTES OF THE MEETING OF THE DISCIPLINE COMMITTEE HELD ON 5TH DECEMBER, 1992 IN NEW DELHI The 6th meeting of the Discipline Committee was held on 5.12.92 in Udyog Bhawan, New Delhi. The following were present :-
(i) Shri S. Narayana, Joint Secretary, MOT: Chairman, Discipline Committee.
(ii) Smt. Neerja Rajkumar, Director General: Member
(iii) Shri K.K. Jain : Member
(iv) Shri Virender Uppal : Member
(v) Shri D.K. Nair : Member Secretary.
2. Confirmation of Minutes:- The item was deferred since the minutes of the 5th Meeting had not been circulated in advance.
3. M/s. Mac Exports (India)-DC No. 726 (20):
It was explained to the Committee that on a court case that had been filed by M/s. Mac Exports (India) against the suspension and disciplinary proceedings initiated by AEPC, there was a court directive that there should not be any suspension beyond 21.7.92. Therefore, the suspension has lapsed on 21.7.92. The court has withdrawn the earlier stay against the disciplinary proceedings in its decisions dated 6.11.92 and directed that AEPC, may take a final decision in the main matter and the applications filed by the petitioner within a month and in case the order goes against them, the same shall not be given effect to until further orders.
The Committee discussed the case and went through all the documents available on record including the oral and written arguments submitted on behalf of the exporter and passed the following order :-
M/s. Mac Exports (India), 1 DDA Shopping Centre, Geetanjali, New Delhi-110017 had obtained a textile visa and certification of shipping bills from the Apparel Export Promotion Council, New Delhi for export to USA, as per details given below:-
Visa and Description Catg. Qty. Value Name and Certifi- No. (Rs.) Address
cation of Importer
No.
1 In 506880 Rayon/Cotton 639 1200 54000 M/s. Manjeet
Dt. 9.4.91 Knitted/ Intl. Ind. 25
Ladies Top West 26 St.
NY-10010.
USA.
While reconciling details relating to shipments passed by the AEPC, in various quota categories with the corresponding details of shipments cleared by US Customs, it was noticed by AEPC that a visa with the same number as indicated on the one issued to M/s. Mac Exports (India) by AEPC, had been presented to the US authorities for 1980 Pcs. in catg. 641 and the shipment was cleared by US Customs.
Since AEPC had not issued a visa or shipping bill certification with the above number to any exporters in India for export in catg. 641 and the only visa that had been issued with this number had been issued to M/s. Mac Exports (India), New Delhi in Catg. 639, M/s. Mac Exports (India), New Delhi were requested vide letter No. AEPC/REG/QA/A/110/91 dated 23.10.91 to confirm whether the visa and shipping bills certification obtained by them had been utilised by them for exporting the consignment. They were requested to furnish Proof of shipment, if the shipment had been effected or to surrender the unutilised documents, if the shipment had not been effected. They were reminded vide telex message dtd. 27.11.91. Ultimately, vide their letter dated 28.10.91. M/s. Mac Exports (India) surrendered the shipping bills that had been certified by AEPC, but they did not surrender the visa that had been obtained by them.
M/s. Mac Exports (India) were requested repeatedly by AEPC vide letter No. AEPC/DZ/POS dated 9.1.92 and vide telex dated 10.1.92 to surrender the visa that had been obtained by them in catg. 639.
However, they surrendered only the shipping bills without surrendering the visa and did not give any reason for not surrendering the visa.
It was apparent that M/s. Mac Exports (India) had misused the visa that had been obtained from AEPC in catg. 639 and exported a consignment in catg. 641 which was cleared by US authorities against a forged Visa presented to them with the same No. as indicated by AEPC on the visa issued to M/s. Mac Exports (India) in catg. 639.
A show cause notice was issued to M/s. Mac Exports (India) on 15.1.92 as to why the company should not be deregistered for the unauthorised export of 1980 pcs. in catg. 641 to USA by forging, tampering a visa using the same visa number as indicated by AEPC in the visa issued to them in catg. 639.
On 24th January, 1992, the exporter wrote to AEPC in reply to show cause notice requesting for evidence of export and release of shipment in catg. 641 in USA and the original documents. On 26th February, 1992 AEPC replied enclosing a copy of the state ment which showed the details of this particular visa as issued by the AEPC and the details of the visa as received by US authorities including the US customs entry number, port of entry, date of entry, category and quantity. The letter indicated that the information relating to the receipt of visa and shipment in USA was a copy of the Namesake statement issued by USA. The exporter had also asked in their letter dated 24th January, 1992 for a personal hearing. On 3rd March, 1992, the exporter was called for a personal hearing before the Discipline Committee held on 10th March, 1992 in New Delhi. No body turned up to represent the exporter in this meeting. A letter was received from the exporter stating that they may be heard on the three applications separately submitted by them before further proceedings in the case. However, the exporter's advocate Shri Panjwani submitted an application on 6th March, 1992 which mentioned that the AEPC's show cause notice does not clarify whether the visa number was forged or category was forged or quantity was forged and who committed the forgery. He stated that he will not be able to defend himself properly without inspecting the original forged document and getting a copy of it. They also reserved their right to file a comprehensive reply after examining the forged document. They submitted two more applications on 6th March, 1992 itself which cited some legal positions and case laws regarding their case. On 12th March, 1992, they also submitted a letter to AEPC stating that they could not attend that personal hearing on 10th March, 1992 because Mr. Savinder singh who looks after the case was ill and the case may be ajourned. On 31.3.1992 the lawyer of the exporter again wrote to AEPC reiterating the points made in the earlier three applications they had submitted on behalf of the exporter on 6th March, 1992. They also denied the charges on behalf of their client. On Ist May, 1992, another letter was received from the Lawyer of the exporter reiterating the contentions they had already submitted earlier. The exporter was again called for a personal hearing held on 25th May, 1992. Mr. Savinder Singh, partner of the company attended the meeting along with his lawyer. They explained that they had filed a writ petition in the High Court of Delhi. They also brought the copy of a court order with them. Shri Panjwani requested that the documents on the basis of which the show cause notice has been issued and the suspension has been made, may be supplied to them. He requested the Committee: (i) to permit M/s. Mac Exports (India) and their counsel to inspect the statement and the documents on the basis of which the charges have been framed in the show cause notice dated 15.1.92 (ii) to supply photocopies of the alleged bogus/forged/tampered visa on the basis of which the company was suspended and show cause notice was issued. On 22nd May, 1992, AEPC again wrote to the exporter reiterating their request for surrender of the original visa dated 9.4.91 which has been obtained by the exporter from AEPC for cag. 639 for 1200 pcs. This letter also indicated that documents available had been submitted to them on 26th February, 1992 and the forged visa was yet to be received from US Customs authorities. The committee noticed that all documents available were provided to the exporter for examination and copies were also made available.
As per the Court Order the exporter was at liberty to press their three applications also before AEPC and in case AEPC pass any final order before the next date of the personal hearing, the order shall not be given effect till further order.
On 3rd August, 1992, the exporter was called for a personal hearing before the Discipline Committee held on 10th August, 1992. Shri Ram Panjwani, Advocate attended the personal hearing on behalf of M/s. Mac Exports (India). He argued on all aspects and also stated that since a new Import Export Policy for the period 1992-97 has already been announced by the Government, the Council have no jurisdiction to continue the proceedings initiated in January, 1992 under the provisions of the Policy that expired in March, 1992. He argued that clause 4, Chapter I of the new Policy does not save the para 298 of the old procedures, which conferred the authority on AEPC to suspend. Shri Panjwani argued that Export Import Policy has a limited period of validity and proceedings initiated under the Policy are coterminous with the policy itself. In the present case the show cause notice was issued under the Export Import Policy as prevailing during January, 1992 under Para 298 of the Hand Book of Import Export Procedures. The Import Export Policy and the Hand Book of procedures as prevalent during January 1992 had a validity only upto 31st March, 1992 since a new policy for the period 1992-97 was announced by Govt. effective from 1.4.92. Shri Panjwani contended that the proceedings initiated under the earlier policy did not have any legal validity beyond 31.3.92.
Shri Panjwani pointed out that the notice for personal hearing indicates that the exporter should bring documents to establish his contention. According to him this is not proper since all documents to prove the case have to be provided by the Council instead of the exporter being asked to produce documents to establish his contentions. He also argued that the guidelines of the Discipline Committee stipulates that cases will be referred to the Committee only after investigation by the office whereas in the present case, the office does not have the copy of the alleged forged visa with them and, therefore, the investigation is still not complete. He, therefore, contended that the case is not ripe enough for the Discipline Committee to take a decision. Shri Panjwani pointed out that a case is pending in the Hon'ble High Court of Delhi against the deregistration proceedings initi-
ated by AEPC against M/s. Mac Exports (India) and the court has issued a stay order stipulating that no final decision should be taken by the Discipline Committee until the application filed by the exporter is disposed of by the Court. The next hearing for the case is fixed for 18th August, 1992 and Shri Panjwani pointed out that the Discipline Committee cannot take a decision in the case because a stay order has been issued by the High Court. He mentioned that the stay order was given by the High Court only on 7.8.92 which was a Friday and, therefore, a copy of the order could not be obtained by him as on 10.8.92 (Monday) when the meeting was taking place.
The Committee pointed out to Shri Panjwani that the decision of the Court dated 21.7.92 had only indicated that no fresh suspension order may be issued and the Discipline Committee may take a decision on the proceedings. Shri Panjwani submitted that after the decision dated 21.7.92, he had filed another application in the Hon'ble High Court and a stay has been ordered by the Court on 7.8.92. He pointed out that the Hon'ble High Court has also issued a notice to AEPC for 18.8.92 indicating that AEPC may hear the party on the three applications submitted by them to AEPC without taking any final decision in the matter relating to deregistration.
Accordingly, the Committee decided to hear the arguments of the Advocate on the three applications submitted to them. Explaining the contentions in the three applications Shri Panjwani pointed out that the Policy under which the present proceeding had been initiated by the Council has been superseded by the new Import Export Policy 1992-97 and, therefore, all the proceedings initiated under the old policy are invalid beyond 31.3.92. He explained that para 4 of the current policy protects only those actions which are not inconsistent with the new policy. Since the deregistration proceedings are inconsistent with the new policy, the proceedings are not valid beyond 31.3.92. He also clarified that para 4 of the new policy saves only "anything done" and pending proceedings are not something 'done'. Shri Panjwani cited two laws and argued that pending proceedings cannot be treated as something done.
However, the Committee noticed that the proceedings were initiated during January 1992 under the Policy prevailing at that time and hence could correctly be decided under the same Policy. Moreover, the provision for deregistration was also available even under the new Policy for 1992-97. Shri Panjwani argued that no action can be taken on an alleged forgery unless the forged document is presented to the notice and an opportunity is given to him to cross-examine the source from which the forged document has been obtained. He also clarified that the visa that had been taken by M/s. Mac Exports (India) had been lost and a police complaint had been lodged in April, 1991 in this regard. When the Committee asked him why this information had not been submitted to AEPC so far, in spite of repeated requests, Shri Panjwani stated that since the jurisdictional and procedural issues had not been sorted out, the company had not given any explanations on substantive issues including details of the whereabouts of the visa. He also submitted that since AEPC was still awaiting the alleged forged visa copy from the U.S. Govt., the case cannot be decided until the visa copy was available. He argued that it is quite possible that the forgery, if it has taken place could have been done by the importer rather than the exporter. Shri Panjwani indicated that further written arguments will be submitted by him latest by 17.8.92 and before any decision is taken, his arguments submitted orally to the Committee and the written arguments to be submitted before 17.8.92 may be taken into account.
The Committee informed Shri Panjwani that they were prepared to sit as long as necessary to listen to all his arguments, but all oral arguments should be made in the current sitting, since it will not be possible to give personal hearing in instalments. They also agreed to take into account any subsequent written arguments.
Subsequently, the written arguments of Shri Panjwani were received on 17th August, 1992 where he contended that the Discipline Committee heard the arguments only on one of the three applications. He contended that the Committee had no jurisdiction to continue the old proceedings. He contended that under clause 4 of the new Import Export Policy, Para 298 of the old procedure which granted the authority to AEPC to proceed against exporter does not get saved and therefore, AEPC has no jurisdiction to suspend or proceed against exporters. He also cited two case laws in this regard. He requested for further oral arguments. Committee noticed that Shri Panjwani was specifically told in the hearing on 10.8.92 that they were prepared to hear all his arguments on all the pending applications and points. In fact he had presented his arguments in full. The correctness of the proceedings under the Policy existing during 1992 was also dealt with in the oral hearing. On further oral hearing, the Committee noticed that Shri Panjwani was specifically told to present all his oral arguments on 10.8.92 and he did so. He had also been informed that it would not be possible to arrange another sitting for this.
On 6.11.92, the High Court vacated the stay on AEPC and directed that AEPC may take a final decision in the main matter and the applications filed by the petitioner within one month and in case the order goes against the petitioner, the same shall not be given effect to, till further orders. AEPC was also directed to place before the Hon'ble Court on the next date of hearing the order passed by AEPC.
The Discipline Committee of AEPC met on 5th December, 1992 in New Delhi and examined this case on the basis of all details, data and arguments available on record. The committee noticed that the jurisdictional issues which have been raised by the exporter and his Lawyer are not tenable since the Hand Book of Import Export Procedures under the new Import Export Policy also has the necessary stipulation of de-registration of exporters by AEPC for violating the conditions of registration. Unauthorised exports and forgery of export documents are violations of the condition of registration with the AEPC and therefore, even under the new Import Export Policy, AEPC has jurisdiction to initiate de-registration proceedings and decide such issues. Moreover, the offence under reference was committed during 1991 when the new Policy had not come into effect. The action was initiated under the Policy of 1991-93 and still the case can be decided under the same Policy, though again imilar provisions are available in the current Policy, hence this contention has no force.
On the issue of jurisdiction of the Director (Quota Policy) to issue show cause notices, the Committee noticed that the Director (Quota Policy) is a Member and Secretary of the Discipline Committee which has been authorised by the Executive Committee of AEPC to dispose of disciplinary matters relating to misconduct by exporters registered with AEPC. Thus, the Member Secretary of the Committee has the jurisdiction to issue show cause notice replies to which are examined and decided by the Discipline Committee itself. Besides this, the Order can be made by the Discipline Committee but there is no such requirement in law for issuing show cause notice.
On the issue of permitting examination of documents and supply of copies of documents, the Committee observed that all available records were offered for inspection or taking of copies. The Committee was informed that a copy of the visa bearing the same number as had been given by AEPC to M/s. Mac Exports (India) for export of 1200 pcs. in Catg. 639 has since been provided to Govt. for India by US authorities. The visa does not have the name of M/s. Mac Exports (India) appearing in the column for exporter. However, the number and the date of the visa and the Importer appearing in the visa are the same as appearing in the visa that AEPC had issued to the exporter.
The Committee took into account the fact that unauthorised exports on the basis of forged visas and other means have been resulting in serious damage to genuine exporters in terms of money and credibility with their buyers and embracement to Govt. with reference to quota management in India. Over the years importing countries have refused to clear shipments exported by India in several occasions on the ground as per import figures quotas stipulated for India have already been utilised though according to export figures of India significant quantities continued to be available. Subsequent, reconciliation of import & export figures in such cases showed that the discrepancies between export and import figures and occurred because of unauthorised exports mostly against forged visas. The industry has been repeatedly demanding that Govt. should take stern actions against exporters found to be indulging in unauthorised exports since they not only damage the name and image of the genuine Indian exporters but also cause huge financial losses to them by way of unutilised quotas and unserviced orders repeatedly year after year.
The Committee noticed that in the case of unauthorised exports to USA, significant progress for identifying exporters who indulge in such unauthorised exports could be made for the first time with reference to unauthorised exports in catg. 641 to USA during 1991. A total of over 400 cases have so far been detected where exporters have obtained visas for AEPC in some slow moving or non-quota products and sent shipments in catg. 641 by forging visas with the same number and date but different quantity value and catg. and in many cases with different name of exporter appearing in the visa.
The Committee observed that the copy of the forged visa which has been supplied by US authorities in September, 1992 has the same number and date as the visa that had been issued by AEPC to M/s. Mac Exports (India), though, the name of M/s. Mac Exports (India) does not appear on the visa copy. The name of the buyer appearing in the copy of the forged visa is the same as appearing in the visa given by AEPC to M/s. Mac Exports (India). The GRI No. indicated by M/s. Mac Exports (India) to AEPC and incorporated by AEPC in the visa issued to M/s. Mac Exports (India), also appears on the forged visa. It is quite evident that the same visa which was issued to M/s. Mac Exports (India) has been put to use for exporting offending goods. This fact is evident from the fact that inspite of repeated reminders the exporter could not produce the original visa that had been issued to him by AEPC.
The Committee specifically observed that inspite of repeated requests from AEPC before and after issuance of show cause notice, the exporter has not surrendered the copy of the visa which had been issued to them by AEPC. They have surrendered the shipping documents claiming that the shipment never went. It is intriguing that the exporter neither surrendered the original visa which he had obtained nor explained why he was not in a position to do that until the personal hearing on 10.8.92. The loss of visa as argued during the personal hearing is obviously an afterthought and therefore, the Committee did not find it acceptable.
After a detailed discussion, and on the basis of material available on record and giving due consideration to all aspects and circumstances as per record the Committee came to the conclusion that M/s. Mac Exports (India) had obtained a visa in catg. 639 which was generally available during 1991, specifically for the purpose of forging another visa with the same number and date using another name of exporter for making an unauthorised export to their buyer M/s. Manjeet Intl. Inc in catg. 641 and actually used the forged visa for exporting 1980 pcs for the value of Rs. 1,46,520 to their buyer. Apart from violating the Quota Policy and procedures and law, this action on the part of the exporter has also contributed to an embargo which was declared on India's exports in catg. 641 during 1991 which resulted in huge losses to hundreds of genuine exports in India.
The Committee, therefore, decided that M/s. Mac Exports (India) be deregistered for a period of two years."
8. Similar orders were passed in the case of M/s. Rajendra Traders and Priti Garments which were also deregistered for the reasons as stated in the minutes but there is no serious challenge to the findings recorded by the Council in respect of these cases.
9. The respondent Council has filed counter affidavit wherein the following pleas have been taken :-
(a) A statutory appeal is available under Paragraph 223 of the Hand Book of Procedure for the years 1992-97 and, therefore, the petitioner is not entitled to invoke the constitutional jurisdiction of this Court under Article 226.
(b) The petitioner has committed fraud and forgery which has tarnished the image of the country as Visa has been forged and misused and unauthorisd amendments have been made in the same. Therefore, no relief can be granted to the petitioner in the facts and circumstances of the present case.
(c) Despite repeated opportunities the petitioner failed to produce the record such as original Visa and belatedly took the plea that the same was lost. The Order of de-registration was passed against the petitioner by Board Members of the Council. All the members of the Disciplinary Committee are members of the Board of Directors. The Board of Directors can, however, delegate powers and no grievance can be made by the petitioner on the constitution of the Committee which passed the impugned Order.
10. The learned counsel for the petitioner has vehemently contended that the Order of de-registration is unconstitutional, bad in law and cannot be sustained as only the Council is empowered to pass such order and this order having been passed by one Shri D.K. Nair cannot be sustained.
11. There is no provision in law that the judicial power can be delegated. Reference is made to Paragraph 298 relating to de-registration of exporters in the Hand Book of Procedure which read as follows:-
"De-registration of Exporters
298. (1) The Registering Authority may de-register an exporter for a specified or indefinite period for one or more export products where the exporter :-
(a) has ceased to have the qualification required for registration or the conditions of registration have been violated.
(b) has indulged in any form of unfair, corrupt or fraudulent practice, or failed to fulfill any export obligation; or
(c) has failed or being a partnership, any of its partners has failed, or being a limited company, any of its whole time or Managing Director has failed, to utilise satisfactorily any quota allocated for export earlier.
(2) An exporter will ordinarily be given a show cause notice, before he is de-registered.
(3) Pending enquiries into any complaint received against a registered exporter, or for any other good and sufficient reason to be recorded in writing, the Registering Authority or the Chief Controller of Imports & Exports or the Additional Chief Controller of Imports and Exports or the Export Commissioner in the office of the CCI&E or the concerned Joint Chief Controller of Imports & Exports may keep the operation of the registration of an exporter under suspension for a specified period.
(4) Where an Export House/Trading House/Star Trading House is registered with the Federation of Indian Export Organisations and also with the respective Export Promotion Council/Commodity Board, the de-registration of such exporters by FIEO will apply automatically to his registration with the respective Export Promotion Council/Commodity Board. Likewise if such an exporter is de-registered by the Export Promotion Council/Commodity Board it will automatically apply for his registration with the FIEO for the respective export product(s).
(5) Where a Star Trading House/Trading House/Export House/registered exporter is de-registered for malpractices by any registering authority or Export Promotion Council or FIEO or by CCI&E or the Additional Chief Controller of Imports & Exports or the Exports Commissioner or the concerned Joint Chief Controller of Imports & Exports for having indulged in any form of unfair, corrupt or fraudulent practices or fails to fulfill any export obligation, it shall automatically stand de-registered with all other registering authorities including Export Promotion Councils/Commodity Boards/FIEO.
(6) Where a company or a firm is de-registered or its registraion is kept under suspension, the de-registration/suspension order will also mention the names of proprietors/partners/directors of the firm/company."
12. Paragraph 288 of the Hand Book of Procedures may also be reproduced as below :-
"Registering Authorities
288. (1) In order to be able to obtain export benefits, exporters are required to be registered with the registering authorities. The names and address of Registering Authorities for different export products are given in Appendix XV-A. (2) Exporters for whom no registering authority has been specified can get themselves registered with the Export Promotion Officers at the ports, namely, Bombay, Madras and Calcutta. They will have jurisdiction over Western, Southern and Eastern zones respectively. In respect of the Northern Zone, the registering authority will be the Joint Chief Controller of Imports and Exports, Central Licensing Area, New Delhi.
(3) Exporters exporting products covered by more than one product group are required to get themselves registered with an Export Promotion Council related to their main line of export business. In addition, in case the total f.o.b. value of exports of all the export products during the preceding licensing year is upto Rs. 10 lakhs, they are also required to get themselves registered with the Export Promotion Officers at the ports, namely, Bombay, Madras and Calcutta with their jurisdiction over Western Southern and Eastern Zones respectively and with the Joint Chief Controller of Imports & Exports, Central Licensing Area, New Delhi, with his jurisdiction over Northern Zone. However, in case the total f.o.b. value of exports of all the export products during the preceding licencing year is more than Rs. 10 lakhs, they are also required to get themselves registered with FIEO, PHD House, Siri Institutional Area, Hauz Khas, New Delhi.
(4) A registered exporter seeking recognition as an Export House/Trading House/Star Trading House has to be registered with the Federation of Indian Export Organisations.
(5) The FIEO will be the registering authority for all product groups.
(6) The Registration-cum-Membership Certificate issued by FIEO/Export Promotion Council/Officers/Commodity Boards shall clearly indicate the export products for which registration as a registered Exporter or Export House or Trading House or Star Trading House is being allowed. The export benefits shall be restricted to only such products which are indicated on the RCMC's issued by the registering authorities concerned.
(7) Where registration is required under any statute with a Government agency, such requirement would have to be complied with separately by the exporter. Export Houses/Trading Houses/Star Trading Houses will be required to send to them copies of their detailed schemes and action programme for export and quarterly and annual returns of exports commodity-wise and country-wise, in the manner as may be prescribed by FIEO from time to time. They are also required to send a copy of the reports, as mentioned hereinabove, the Chief Controller of Imports & Exports (Statistical Division), Udyog Bhavan, New Delhi. Failure to submit the relevant information to FIEO and the CCI&E will make them liable to withdrawal of such status."
13. It is contended on the basis of the above provisions that the Registering Authority is the Council under Paragraph 288, therefore, there cannot be any delegation and only the Council can pass an Order under paragraph 298. Reliance is placed on the judgments reported as Barnard and Others Vs. National Dock Labour Board and Another 1953 (1) All ER 1113 to reiterate that "the power of suspension conferred by cl. 16(2)(b) on the local board was a judicial or quasi-judicial function and the local board had no power to delegate it or subsequently to ratify a decision by a person to whom the power of suspension had been improperly delegated, and, therefore, the suspension of the plaintiffs by the port manager was a nullity; the court had power in their discretion to make a declaration relating to the validity of the decision of a statutory tribunal; and in the circumstances would grant the plaintiffs a declaration that their suspension was wrongful and a nullity.
The judgment reported as Vine Vs. National Dock Labour Board 1956 (1) All ER 1, also laid down the proposition that there had been non-compliance with the scheme by the defendants, in that the Local Board had no power under the scheme to delegate its functions to a disciplinary Committee and that the proceedings before the Committee were, therefore, a nullity. The relevant passage has been cited in the judgment of Parker, L.J. in the following manner at pages 10 and 11:-
"Parker, L.J.: I agree with the conclusion reached by my Lord. The decision to dismiss the plaintiff by giving him seven days notice was a decision, it is said, of a body called the disciplinary committee, not the decision of the local board which under cl. 16 alone could give him seven days notice. In these circumstances the plaintiff claims that the notice was a nullity, and reliance is placed in particular on the decision of this court in Barnard Vs. National Dock Labour Board (1). Counsel for the defendants points out that the position here is somewhat different. In Barnard Vs. National Dock Labour Board (1) there was a clear delegation to an outside person, the port manager, whereas here the delegation was to two members of the board itself. Counsel puts it in this way: he says that it is just as if the local board had decided that for certain purposes, namely for the purposes of discipline, a quorum of two should suffice; and he adds that the local board in appointing the committee, were doing no more than anticipate what Denning, L.J., said in a passage of his judgment in Barnard Vs. National Dock Labour Board (1) [(1953) 1 All E.R. at p. 1118]:
"It was suggested that it would be impracticable for the board to sit as a board to decide all these cases, but I see nothing impracticable in that. They have only to fix their quorum at two members and arrange for two members, one from each side, employers and workers, to be responsible for one week at a time."
The position, as it seems to me, is this. I agree with counsel that there would be nothing wrong in a local board having a different quorum (say a quorum of two) for disciplinary matters against the quorum of seven which they fix for normal business. That means no more than this, that the local board is the party to decide disciplinary matters, although only two will suffice to form a quorum; and if that were the position here [and I think it was the position which Denning, L.J., had in mind in Barnard Vs. National Dock Labour Board (1), (1953) 1 All E.R. at pp. 1118, 1119], it could not be said that the decision of the disciplinary Committee was not that of the local board. But in the present case the disciplinary Committee is to consist of two persons. In other words, it is not the decision of the local board. No other members of the local board may attend, and the committee is to consist, and to consist only, of two. In those circumstances it seems to me that the position is exactly as in Barnard Vs. National Dock Labour Board (1) the local board having no powers, express or implied, of delegation in what is admittedly a quasijudicial matter."
14. Strong reliance is placed on the judgment of the House of Lords in Vine Vs. National Dock Labour Board 1956 (3) All ER 939 to highlight the proposition that where the Local Board had no power to delegate its disciplinary functions the dismissal of an employee was a nullity. The duty of law as stated by Viscount Kilmuir, L.C. is stated in the following passage:-
"By letter dated Nov. 6, 1952, Mr. Chapman, on behalf of the National Board, gave notice to the plaintiff that a disciplinary committee would consider his case on Nov. 13, and requested him to be in attendance. On Nov. 13 a disciplinary committee (consisting of two members of the local board), one representing the employers and one representing the dock workers was convened in accordance with the rules and standing orders of the local board, to which I have already referred, and heard the complaint made against the plaintiff and his explanation. The minutes of the meeting of the disciplinary committee show that, after a careful consideration of all the facts and circumstances of the case, including the plaintiff's previous record, the committee agreed that he should be given seven days' notice to terminate his employment with the National Board on grounds which they stated as follows:-
"Failure to report for work at 8 p.m. on Oct. 29, 1952, after being allocated at 12.45 p.m. call that day, in addition to failure from time to time to comply with terms of local agree ments."
In accordance with the decision of the committee, notice in writing was on the next day given to the plaintiff to terminate his employment with the National Board on Saturday, Nov. 22. By letter dated Nov. 16, 1952, the plaintiff gave notice of appeal against this decision and was given a statement of the case against him. On Nov. 20, 1952, the plaintiff's appeal was heard and disallowed without variation. He was consequently informed that the notice terminating his services remained operative, and he ceased to work for the National Board from Nov. 22, 1952.
On these facts and provisions of the scheme, counsel for the National Board submitted that the National Board had an independent power, under cl. 17 of the scheme, which they could, and did, exercise through the disciplinary committee, who acted on their behalf. I do not think that it is necessary to decide whether they could exercise a power independent of that of the local board under cl. 16, because I am quite certain that they did no such thing. The happenings that I have set out above occurred as the result of the procedure laid down by cl. 15(4) and cl. 16(2) being put into operation by the disciplinary committee on behalf of the local board. Counsel's first submission is as unreal as it is ingenious and, therefore, fails.
I now turn to the contention that the local board could delegate its functions to the disciplinary committee. I have had the advantage of seeing in print the opinion which my noble and learned friend, LORD SOMERVELL OF HARROW, is about to express and, on this part of the case, I find myself in complete agreement with it. It was urged that the very idea was negatived by the fact that this was a quasi-judicial act. I am not prepared to lay down that no quasi judicial function can be delegated, because the presence of the qualifying word "quasi" means that the functions so described can vary from those which are almost entirely judicial to those in which the judicial constituent is small indeed [see Cooper Vs. Wilson (1), (1937) 2 All E.R. 726 at p. 740, per SCOTT, L.J.]. As so much has been said on this point I think it is right to say that there is a judicial element here in the sense discussed by DONOVAN, J., in R. Vs. Metropolitan Police Comr. Exp. Parker (2) [(1953) 2 All E.R. 717]. Nevertheless, that is not the end of the matter. It is necessary to consider the importance of the duty which is delegated, and the people who delegate. In this case, the duty is to consider whether a man will be outlawed from the occupation of a lifetime. The scheme will not work unless discipline is maintained by the wise use of that power. I do not make any reflection on the ability or sense of justice of the pairs of gentlemen who from time to time form the committee. I notice that the pair would always consist of one representative of the employers and one of the workers, but my view is that this duty in this scheme is too important to delegate unless there is an express power.
I reach the same conclusion when I consider this from the aspect of who may delegate. The duty is placed on the local board. It is obviously possible that cases may occur in which not only the man but his trade union and employers may want a decision of the whole board. Again, I think that they are entitled to have it unless the scheme says otherwise. Further, as was mentioned in the argument, if one allows the principle of delegation, it would then be possible, although neither probable nor practicable, for the board to delegate its functions to a committee which was not a microcosm of itself but a body on which employers and employed were no longer equally represented. For all these reasons I do not think that delegation was possible. The decision of the disciplinary committee was, therefore, a nullity which, it is conceded, cannot be cured by appeal."
15. Therefore, on the above basis, it is contended that the duty was placed on the Council to pass an Order of de-registration which could not be delegated to respondent No.2 through D.K. Nair or the Disciplinary Committee.
16. Next it is argued by learned counsel for the petitioner that the Council was exercising judicial powers and was duty bound to follow the precedents which are required from such judicial or quasi-judicial bodies. Reference is made to the following paragraph from the judgment reported as Cooper Vs. Wilson 1937 (2) All ER 726 (at page 740) :-
"In the Report of the Ministers Powers Committee, at p. 73, an attempt was made to define the words "judicial" and "quasi-judicial":
A true judicial decision pre-supposes an existing dispute between two or more parties, and then involves four requisites : (1) The presentation (not necessarily orally) of their case by the parties to the dispute; (2) if the dispute between them is a question of fact, the ascertainment of the fact by means of evidence adduced by the parties to the dispute, and often with the assistance of argument by or on behalf of the parties on the evidence; (3) if the dispute between them is a question of law, the submission of legal argument by the parties; and (4) a decision which disposes of the whole matter by a finding upon the facts in dispute and an application of the law of the land to the facts so found, including, where required a ruling upon any disputed question of law. A quasi-judicial decision equally pre-supposes an existing dispute between two or more parties and involves (1) and (2), but does not necessarily involve (3), and never involves (4). The place of (4) is in fact taken by administrative action, the character of which is determined by the Minister's free choice.
Broadly speaking, I think the above definitions there given are correct, but I would make an addition, and that is that, on such issues as were tried before the watch committee on Aug. 29, the quasi-judicial approaches in point of degree very near to the judicial. This does not, of course, mean that, because the watch committee was then exercising nearly judicial functions, it was tied to ordinary judicial procedure. The principles both of its duties and of its freedom are explained in the oft-cited passage in the opinion of Lord Loreburn, L.C., in Board of Education Vs. Rice (12), at p. 182, which was quoted by Viscount Haldane, L.C., in Local Government Board Vs. Arlidge (13), at p. 132 and need not be re-quoted. But whether the watch committee's function was judicial or only quasi-judicial makes no differences to the present case, because on behalf of the appellant there are made before us only three criticisms of its conduct of the hearing of Aug. 29, and those are as much applicable to the one function as to the other."
17. In Marathwada University Vs. Seshrao Balwant Rao Chavan the proposition of law as referred to in paragraph 20 has been relied upon to contend that only the Council had the power to suspend and de-register. This paragraph reads as follows :-
"20. Counsel for the appellant argued that the express power of the Vice-Chancellor to regulate the work and conduct of officers of the University implies as well, the power to take disciplinary action against officers. We are unable to agree with this contention. Firstly, the power to regulate the work and conduct of officers cannot include the power to take disciplinary action for their removal. Secondly, the Act confers power to appoint officers on the Executive Council and it generally includes the power to remove. This power is located under Section 24(1) (xxix) of the Act. It is, therefore, futile to contend that the Vice-Chancellor can exercise that power which is conferred on the Executive Council. It is a settled principle that when the Act prescribes a particular body to exercise a power, it must be exercised only by that body. It cannot be exercised by others unless it is delegated. The law must also provide for such delegation. Halsbury's Law of England (Vol. I, 4th end., para 32) summarises these principles as follows:
32. Sub-delegation of powers.- In accordance with the maxim delegatus non potest delegare, a statutory power must be exercised only by the body or officer in whom it has been confided, unless sub-delegation of the power is authorised by express words or necessary implication. There is a strong presumption against construing a grant of legislative, judicial or disciplinary power as impliedly authorising sub-delegation; and the same may be said of any power to the exercise of which the designated body should address its own mind."
18. Similarly paragraph 29 is cited to establish that judicial functions in any case cannot be delegated. This paragraph makes the following reading:-
"29. These principles of ratification governing transactions of a company where the general body is the repository of all powers cannot be extended to the present case. We were also referred to the decision of the Court of Appeal in Barnard Vs. National Dock Labour Board and in particular the observation of Denning, L.J.: (All ER 1118 and 1119).
While an administrative function can often be delegated, a judicial function rarely can be. No judicial tribunal can delegate its functions unless it is enabled to do so expressly or by necessary implication. In Local Government Board Vs. Alridge the power to delegate was given by necessary implication, but there is nothing in this scheme authorising the board to delegate this function and it cannot be implied. It was suggested that it would be impracticable for the board to sit as a board to decide all these cases, but I see nothing impracticable in that. They have only to fix their quorum at two members and arrange for two members, one from each side, employers and workers, to be responsible for one week at a time.
Next, it was suggested that, even if the board could not delegate their functions, at any rate they could ratify the actions of the port manager, but, if the board have no power to delegate their functions to the port manager, they can have no power to ratify what he has already done. The effect of ratification is to make it equal to a prior command, but as a prior command, in the shape of delegation would be useless, so also is a ratification."
19. It is next contended that the Order of de-registration has violated the principles of natural justice. Therefore, the decision is a nullity. Reference is made to the judgments reported as Messrs. Fedco (P) Ltd. & Another Vs. S.N. Bilgrami & Others , State of Uttar Pradesh & Anr. Vs. Sri C.S. Sharma Town Area Committee, Jalalabad Vs. Jagdish Prasad and Others AIR 1978 Supreme Court 1407.
20. The following passage of the judgment in Messrs. Fedco (P) Ltd. & Another (supra) has been relied upon to state that reasonable opportunity has to be granted when the authority is exercising quasi-judicial powers:-
"The first point need not be considered as I am clearly of the view that no "reasonable opportunity" within the meaning of cl. 10 of the Order was given to the petitioners by the Chief Controller. The material parts of cls. 9 and 10 of the Order read:
Clause 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;".
Clause 10. "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."
It is not disputed that the Central Government delegated its powers to act under these clauses to the Chief Controller. The first question is, what is the scope of the enquiry under cl. 10 of the Order? Is it purely an administrative act or is it a quasi-judicial act? The criteria to ascertain whether a particular act is a quasi-judicial act or an administrative one have been laid down with clarity by Lord Justice Atkin in Rex Vs. Electricity Commissioners, Ex Parte London Electricity Joint Committee Co., elaborated by Lord Justice Scrutton in Rex Vs. London County Council, Ex Parte Entertainments Protection Association Ltd. and authoritatively restated by this Court in Province of Bombay Vs. Khusaldas S. Advani. They laid down the following conditions:(a) the body of persons must have legal authority; (b) the authority should be given to determine questions affecting the rights of subjects and (c) they should have a duty to act judicially. All the three conditions are satisfied in this case. Under the said clauses authority is conferred on the Central Government or any other officer authorized in this behalf to cancel any licence granted under the Order and the cancellation of a licence certainly affects the rights of subjects. A clear duty to act judicially is imposed by cl. 10 on the said authority. He has to give to the affected party "reasonable opportunity of being heard". It is therefore clear that under cls. 9 and 10 of the Order, the Chief Controller performs a quasi-judicial act and is therefore bound to follow the principles of natural justice in canceling a licence."
21. Similarly it has been held in State of Uttar Pradesh & Anr. (supra) that full opportunity has to be granted and inquiry was vitiated when an officer was not given opportunity to produce his defense witnesses. The principles of natural justice were held to have been violated.
22. In Town Area Committee, Jalalabad (supra), the rule of audi alteram partem was upheld and it was held that local body conducting departmental enquiry against its employee could not act without granting reasonable opportunity.
23. The plea of bias has also been highlighted by Mr. Panjwani as it is contended that D.K. Nair who communicated the order to the petitioner was biased. The following paragraphs in the amended writ petition (C.W.P. No. 2674/92) have been cited to show the bias of Shri D.K. Nair :-
"22. That Shri D.K. Nair has bias in the matter. He has shown bias against the petitioner. He suffers from conscious and unconscious bias and, therefore, he lacks qualification to act as Member Secretary of the Disciplinary Committee.
23. That the law disqualifies Shri D.K. Nair from adjudicating the case of the petitioner because the circumstances point to a real likelihood that Shri D.K. Nair has bias, by which is meant an operative prejudice whether conscious or un-conscious in relation to the petitioner and the enquiry before him.
24. A reasonable opportunity of being heard in a sense means an opportunity of being heard by an unbiased tribunal.
25. Question which the respondents are raising go to the root of the matter. Whereas commentators and decisions of the Supreme Court state that conscious or unconscious bias disqualifies the officer holding judicial or quasi-judicial proceedings.
26. The adjudication proceedings which respondent is holding are judicial proceedings. Respondent shall decide the question of facts as well as the question of law. The decision of respondent is final. Thus the respondent is acting in a judicial manner and holding judicial enquiry and the show cause notice is a part of the said judicial enquiry.
27. Supreme Court has laid down the Principles of Bias in 1957 SCR 575 (580 and 583): It is well settled that every member of a tribunal that is called upon to try issue in judicial or quasijudicial proceedings must be able to act judicially: and it is of the essence of judicial decisions and judicial administration that judges should be able to act impartially, Objectively and without bias. If it is true that in judicial or quasi-judicial proceedings justice must not only be done but must appear to be done to the litigating public, it is equally true that when a lawyer is charged for professional misconduct and is given the privilege of being tried by a tribunal of the Bair Council, the enquiry before the Tribunal must leave no room for a reasonable apprehension in the mind of the lawyer that the tribunal may have been even indirectly influenced by any bias in the mind of any of the members of the tribunal."
24. Reference is also made to Halsbury's Laws of England, 4th Edition, Volume I to paragraph 69 which reads as follows:-
"69. Likelihood of bias. In a wide range of other situation the impression may be received that an adjudicator is likely to be biased. A person ought not to participate or appear to participate in an appeal against his own decision, or act or appear to act as both prosecutor and Judge, the general rule is that in such circumstances the decision will be set aside. Normally it will also be inappropriate for a member of a tribunal to act as witness. Likelihood of bias may also arise because an adjudicator has already indicated partnership by expressing opinions antagonistic or favourable to the parties before him, or has made known his views about the merits of the very issue or issues of a similar nature in such a way as to suggest prejudgment because he is so actively associated with the institution or conduct of proceedings before him, either in his personal capacity or by virtue of his membership of an interested organisation, as to make himself in substance, both judge and party, or because of his personal relationship with a party or for other reasons. It is not enough to show that the person adjudicating holds strong views on the general subject matter in respect of which he is adjudicating, or that he is a member of a trade union to which one of the parties belong where the matter is not one in which a trade dispute is involved.
The fact that an administrator may incline towards deciding an issue before him one way rather than another, in the light of implementing a policy for which he is responsible, will not affect the validity of his decision, provided that he acts fairly and with a mind not closed to argument, and similar standards may be applied to other persons whose prior connection with the parties or the issues are liable to preclude them from acting with total detachment. It is unnecessary to establish the presence of actual bias, although the courts are not precluded from entertaining such an allegation. It is enough to establish a real likelihood that in the circumstances of the case an adjudicator will be biased. Alternatively, it may be sufficient to establish that a reasonable person acquainted with the outward appearance of the situation would have reasonable grounds for suspecting bias. In some situations a more exacting test will be adopted, and the court may set aside a determination if justice has not been manifestly seen to be done, such a test has been applied in cases where a clerk to a tribunal has retired with the tribunal, and given the impression of participating in its decision."
25. In Managing Director, ECIL, Hyderabad and others Vs. B. Karunakar and Others the concept of reasonable opportunity and principles of natural justice were explained while the Court was dealing with the concept of enquiry against a delinquent officer. Paragraphs 48 and 61 of this judgment may be reproduced as under :-
"48. It is settled law that the disciplinary authority, by what ever name called, has power and jurisdiction to inquire into the misconduct by himself or by his delegate and to impose the penalty for proved misconduct of a delinquent. It is a condition precedent that the charge-sheet, statement of facts in support thereof and the record, if any, need to be supplied to the delinquent. The record, if bulky and not having been supplied, an opportunity for inspection and to have copies thereof at his expenses, be given as per rules, regulations or standing orders. The delinquent must be given reasonable opportunity to submit his written statement. In case he denies the charges and claims for inquiry, disciplinary authority or the enquiry officer, if appointed, shall conduct the inquiry. The department should examine the witness or prove the documents to establish the charge of the imputed misconduct. The delinquent shall be givn an opportunity to cross-examine the witnesses, if he so desires to examine himself and to examine his witnesses in rebuttal. After giving an opportunity of being heard the enquiry officer should consider the entire records and the evidence and should submit his report to the disciplinary authority with reasons and findings or conclusions in support of the proof or disproof of each of the charge or charges, as the case may be. He shall transit the record of inquiry and his report to the disciplinary authority."
"61. It is now settled law that the proceedings must be just, fair and reasonable and negation thereof offends Articles 14 and 21. It is well-settled law that the principles of natural justice are integral part of Article 14. No decision prejudicial to a party should be taken without affording an opportunity or supplying the material which is the basis for the decision. The enquiry report constitutes fresh material which has great persuasive force or effect on the mind of the disciplinary authority. The supply of the report alongwith the final order is like a postmortem certificate with putrefying odour. The failure to supply copy thereof to the delinquent would be unfair procedure offending not only Articles 14, 21 and 311(2) of the Constitution, but also the principles of natural justice. The contention on behalf of the Government/management that the report is not evidence adduced during such inquiry envisaged under proviso to Article 311(2) is also devoid of substance. It is settled law that the Evidence Act has no application to the inquiry conducted during the disciplinary proceedings. The evidence adduced is not in strict conformity with the Indian Evidence Act, though the essential principles of fair play envisaged in the Evidence Act are applicable. What was meant by evidence in the proviso to Article 311(2) is the totality of the material collected during the inquiry including the report of the enquiry officer forming part of that material. Therefore, when reliance is sought to be placed by the disciplinary authority, on the report of the enquiry officer for proof of the charge or for imposition of the penalty, then it is incumbent that the copy thereof should be supplied before reaching any conclusion either on proof of the charge or the nature of the penalty to be imposed on the proved charge or on both."
26. It is next contended that the term of the Committee which imposed the punishment on the petitioner had expired on 31st December, 1992 and the order of de-registration having been passed on 11th January, 1993 is, therefore, a nullity. This plea can be disposed of at this stage as being without any merit. The term of the Committee as to expire on 31st December, 1992 but was extended till the new sub-committees for the year 1993 were formed. A resolution in this regard was also passed by circulation which reads as follows :-
"Resolved that the tenure of the existing sub-committees formed by the Chairman (with amendments from time to time) already circulated to members, is hereby extended till the new sub-committees for the year 1993 are formed by the Executive Committee.
27. At this stage reference may be made to the relevant provisions as contained in the Memorandum and Articles of Association of the Council. Article 1 defines the Council as a Company. The Executive Committee is referred to in Article 42. This provision reads as follows :-
"EXECUTIVE COMMITTEE
42. (a) For the purpose of managing the affairs of the Council, there shall be an Executive Committee. The numbers of Members of the Executive Committee shall not be more than 30 (including the Chairman and the Vice-Chairman, but excluding, the Government Nominees) elected by the Council or nominated by the Chairman, as herein provided in Article 45. There will be four Government Nominees on the Executive Committee.
(b) The Executive Committee may not resign notwithstanding any vacancy so long as its number is not reduced below 10, excluding Government Nominees."
28. Composition of Executive Committee is stated in Article 45 which may also be reproduced as below :-
"45. The Executive Committee shall consist of the following:-
Nine Members from Western region, that is from Maharasthra, Gujarat, Madhya Pradesh, Kutch, Saurashtra and Goa.
Nine Members from the Northern Region, that is from Delhi, Rajasthan, Haryana, Punjab, Uttar Pradesh, Himachal Pradesh and Jammu and Kashmir.
Six Members from Southern Region, that is from Tamilnadu, Karnataka, Kerala and Andhra Pradesh.
Three Members from the Eastern Region that is from West Bengal, Andaman and Nicobar Islands, Arunachal Pradesh, Assam, Bihar, Manipur, Meghalaya, Mizoram, Nagaland, Orissa and Tripura.
Four Government Nominees.
Three Nominees of the Chairman as provided in Article 50."
29. Articles 57 and 58 defines the powers and functions of the Executive Committee and read as follows :-
"FUNCTIONS AND POWERS OF THE EXECUTIVE COMMITTEE:
57. The Committee may exercise all such powers of the Council, including, powers to frame, modify, and/or rescind, bye-laws, rules and regulations and do all such acts and things as are not contrary to the Act or any other law or by the Memorandum or by the Articles of Association of the Council required to be exercised by the Council in General Meeting, subject nevertheless to these Articles, to the provisions of the Act or any other Act and to such regulations being not inconsistent with the aforesaid Articles or provisions as may be prescribed by the Council in General Meeting, but no requisition made by the Council in General Meeting shall invalidate any prior act of the Committee which would have been valid, if the Articles had not been made, provided that, the Committee, shall not except with the consent of the Council in General Meeting:
(a) sell, lease, or otherwise, dispose of the whole or substantially the whole of the undertaking of the Council or where the Council owns more than one undertaking of the whole or substantially the whole of any such undertaking;
(b) invest, otherwise than, in trust securities or scheduled banks the amount of compensation received by the Council in respect of the compulsory acquisition of any such undertaking as is referred to in clause (a) or of any premises or properties used for any such undertaking and without which it cannot be carried on or can be carried on only with difficulty or only after a considerable time.
FUNCTIONS OF THE COMMITTEE:
"58. The functions of the Committee shall be as follows:-
(a) to administer the general affairs of the Council.
(b) to determine what work shall be undertaken and to arrange for the conduct of such work.
(c) to receive and deal with reports and recommendations of Sub- Committees.
(d) to arrange for the publication of reports and other documents issued by the Council.
(e) to collaborate with kindred activities of other Export Promotion Councils in India, foreign countries and with international organisations working in the field.
(f) to control the finances of the Council.
(g) to control the Staff of the Council.
(h) to make alter, and repeal from time to time, all such by-laws as may be deemed necessary or expedient for the proper conduct and management of the Council.
(i) to provide a Seal of the Council and also provide for its safe custody.
(j) to do all such other lawful acts as would be conducive to the interests of the Council.
30. Articles 64 and 65 relating to delegation and proceedings read as below :-
"64. The Committee may delegate any of its powers to Sub-Committee consisting of such Member or Members of their body as it thinks fit and it may from time to time revoke and discharge any such Committee either wholly or in part and either as to persons or purposes. Every Sub-Committee so formed shall in the exercise of the powers as delegated, conform to any regulation that may from time to time be imposed on it by the Committee. All acts done by any such committee in the conformity with such regulation and in fulfilllment of the purposes of their appointment, but not otherwise, shall have the force and effect as if, done by the Executive Committee.
"65. The meetings and proceedings of any Sub-Committee consisting of two or more Members shall be governed by the provisions herein contained for regulating the meetings and proceedings of the Committee so far as the same are applicable thereto and are not superseded by any regulations made by the committee under the last preceding clause."
31. It is established that the impugned order of de-registration was communicated by Shri D.K. Nair, respondent No.2 and the decision was taken by the Committee as framed for the purpose of dealing with such cases. The relevant details of the functioning of the Council as a Company are stated in the affidavit filed by Mr. H.K. Kanwal dated 15th March, 1993 which may be reproduced as below :-
"2. The Respondent is a company registered under Section 25 of the Companies Act. Board of Directors of the Respondent is known as Executive Committee.
3. As per Articles of Association, there are 27 elected members of the said Committee and 4 are Government nominees and co-opted members.
4. All the members of the Disciplinary Committee are amongst the members of the Executive Committee. They, in the eyes of law, are the members of the Board of Directors of the Respondent, I say that Shri D.K. Nair, though called Member/Secretary, but he is only a Secretary to the Disciplinary Committee. I say that various Sub-Committees are formulated and every Sub-Committee has a Secretary, though called Member Secretary.
5. I say that decision has been taken for deregistration of the Petitioner in the meeting of 5.12.1992 by the members of the Disciplinary Committee namely Shri S. Narayanan, Joint Secretary in the Ministry of Testile, Smt. Neerja Raj Kumar, the Director General, Shri K.K. Jain and Shri Virendar Uppal, who are members of the Executive Committee. Shri D.K. Nair is the Secretary of the same Sub-Committee. All the members of the Disciplinary Committee are from the members of the Executive Committee. It was so in the year 1992 and also continued to be so in the year 1993. On 11.1.93 also the position was the same as was in the year 1992 especially on 10.8.92.
6. I say that in the reply dated 20.2.93, as per oversight, it is stated that Shri D.K. Nair is a member, but in fact, he is Secretary to the Disciplinary Committee though called as Member Secretary. I say that the decision for de-registration has been taken by the Disciplinary Committee. The decision has been taken by the said members who are also members of the Executive Committee and in the eyes of law are members of the Board of Directors."
32. On the above basis it is clear that Shri D.K. Nair was merely communicating the Order passed by the Disciplinary Committee and in no way could be held guilty of bias as he was merely a Member Secretary of the Committee. The Company has to operate through its Board of Directors and as such it cannot be said that the Council has only to operate in its own name. In City Equitable Fire Insurance Company, Limited 1925 Chancery Division 407 the concept of operation of the Company through its Board of Directors has been explained in the following manner :-
"It has sometimes been said that directors are trustees. If this means no more than that directors in the performance of their duties stand in a fiduciary relationship to the company, the statement is true enough. But if the statement is meant to be an indication by way of analogy of what those duties are, it appears to me to be wholly misleading. I can see but little resemblance between the duties of a director and the duties of a trustee of a will or of a marriage settlement. It is indeed impossible to describe the duty of directors in general terms, whether by way of analogy or otherwise. The position of a director of a company carrying on a small retail business is very different from that of a director of a railway company. The duties of a bank director may differ widely from those of an insurance director, and the duties of a director of one insurance company may differ from those of a director of another. In one company, for instance, matters may normally be attended to by the manager or other members of the staff that in another company are attended to by the directors themselves. The larger the business carried on by the company the more numerous, and the more important, the matters that must of necessity be left to the managers, the accountants and the rest of the staff. The manner in which the work of the company is to be distributed between the board of directors and the staff is in truth a business matter to be decided on business lines. To use the words of Lord Macnaghten in Dovey Vs. Cory (1): "I do not think it desirable for any tribunal to do that which Parliament has abstained from doing - that is, to formulate precise rules for the guidance or embarrassment of business men in the conduct of business affairs. There never has been, and I think there never will be, much difficulty in dealing with any particular case on its own facts and circumstances; and, speaking for myself, I rather doubt the wisdom of attempting to do more."
33. In Ram Parshad Vs. State of Punjab the following view is reiterated in paragraph 34 of the judgment which reads as follows :-
"34. There remains a minor contention which is that the Staff rules were not properly made by the Board of Directors. It is stated that Cl. 3 of the Regulation Order, which provides for a minimum number of six members, was not complied with and that since the Staff rules were made by four members instead of six, they were invalid. As pointed out by the learned Judges of the High Court, under the law governing corporations a majority of the members of the corporation is entitled to exercise the powers of the corporation and that the rule regarding corporations is equally applicable to a company. We are in agreement with this view."
34. Further in Suburban Bank Private Ltd. Trichur Vs. Thariath and Another AIR 1968 Kerala 206 the management and affairs of the company is held to be vested in the Board of Directors. Paragraphs 4 and 6 of this judgment may be reproduced as below :-
"4. Ext. D-1 is the Articles of Association of the plaintiff Bank. It will be seen from Art. 14 of Ext. D-1 that the business of the company is to be managed by the directors who may exercise all such powers as are not required to be exercised by the company in general meeting. There is no provision in any of the articles enabling the General Body of shareholders to interfere in the day-to-day management of the business of the Bank and the conduct of such business is left by the articles entirely to the Board of Directors. Ext. D-7 is a copy of the Rules and Regulations of the plaintiff-Bank, and Rule 1 states that subject to the provisions contained in the Memorandum and Articles of Association, the Board of Directors shall be in full control of all the business, finance and affairs of the Bank."
"6. Applying the aforesaid principles to the present case, it is seen from Exts. D-1 and D-7 that the management of the affairs of the company was vested in the Board of Directors and they were not subject to any control in that respect by the company in general meeting. It is true that if the company in general meeting disapproved the management by the Directors, they could remove the directors, but the general meeting could not, as the articles stood, directly interfere with the management of the business by the directors. There is no case for the respondents that any special resolution had been passed by the company in general meeting so as to constitute a valid modification of the Articles of Association. It has, therefore, to be held that the directors had acted fully within their powers in deciding to enforce the liability under the promissory-note, notwithstanding the recommendation contained the resolution Ext.P-10 passed by the shareholders at their general meeting. The view taken by the lower appellate court that the Board of Directors had no authority to over-ride the decision of the General Body is, therefore, incorrect."
35. In view of the above, it is clear that the Council is to act on the basis of the provisions as provided in its Articles of Association such as Article 42 which will indicate that for managing the affairs of the Council there shall be an Executive Committee. The functions and powers of the Committee are clearly stated in Articles 57 and 58. Articles 64 and 65 vests the powers in the Executive Committee to delegate to sub-committee consisting of such member or members as it thinks fit. Similarly in Article 65 it is specified that meetings and proceedings of any Sub-Committee consisting of two or more members shall be governed by the provisions as contained in the Articles for regulating the meetings and proceedings of the Committee so far as the same are applicable thereto and are not superseded by any regulations made by the Committee. The Discipline Committee was formed to go into the matters of discipline arising out of defaults committed by exporters and it was well within the powers of such a Committee which was legally formed to pass an order of de-registration. Reading of the order will clearly indicate that ample opportunity was granted to the petitioner to represent its case including fullfledged hearing to the learned counsel appearing before the said Committee. Grave allegations were made against the petitioner Mac Exports (India). The concluding portion of the order which reads as under will show that there was proper application of mind and no fault can be found with the same:-
"The Committee observed that the copy of the forged visa which has been supplied by US authorities in September, 1992 has the same number and date as the visa that had been issued by AEPC to M/s. Mac Exports (India), though, the name of M/s. Mac Exports (India) does not appear on the visa copy. The name of the buyer appearing in the copy of the forged visa is the same as appearing in the visa given by AEPC to M/s. Mac Exports (India). The GRI No. indicated by M/s. Mac Exports (India) to AEPC and incorporated by AEPC in the visa issued to M/s. Mac Exports (India), also appears on the forged visa. It is quite evident that the same visa which was issued to M/s. Mac Exports (India) has been put to use for exporting offending goods. This fact is evident from the fact that inspite of repeated reminders the exporter could not produce the original visa that had been issued to him by AEPC. .
The Committee specifically observed that inspite of repeated requests from AEPC before and after issuance of show cause notice, the exporter has not surrendered the copy of the visa which had been issued to them by AEPC. They have surrendered the shipping documents claiming that the shipment never went. It is intriguing that the exporter neither surrendered the original visa which he had obtained nor explained why he was not in a position to do that until the personal hearing on 10.8.92. The loss of visa as argued during the personal hearing is obviously an after thought and therefore, the Committee did not find it acceptable.
After a detailed discussion, and on the basis of material available on record and giving due consideration to all aspects and circumstances as per record the Committee came to the conclusion that M/s. Mac Exports (India) had obtained a visa in catg. 639 which was generally available during 1991, specifically for the purpose of forging another visa with the same number and date using another name of exporter for making an unauthorised export to their buyer M/s. Manjeet Intl. Inc in catg. 641 and actually used the forged visa for exporting 1980 pcs for the value of Rs. 1,46,520 to their buyer. Apart from violating the Quota Policy and procedures and law, this action on the part of the exporter has also contributed to an embargo which was declared on India's exports in catg. 641 during 1991 which resulted in huge losses to hundreds of genuine exports in India. + The Committee, therefore, decided that M/s. Mac Exports (India) be de-registered for a period of two years."
36. In the above background the averment of learned counsel for the petitioner that the order was passed by Shri D.K. Nair without application of mind cannot be sustained as the record will clearly show that the Discipline Committee applied its mind to the facts and circumstances of the case and the pleadings placed before it and passed a speaking order after providing an opportunity of hearing to the petitioner and its counsel. The order purported to be passed by the Discipline Committee can, therefore, be treated as an order passed by Apparel Exports Promotion Council (AEPC). It will not be open for this Court to reappraise the evidence and material placed before the Committee and arrive at different conclusions than the conclusions which are based on appreciation of facts and evidence placed on record. These petitions are, therefore, devoid of merit and are dismissed accordingly.
37. The learned counsel for the petitioner has stated in the case of M/s. Mac Exports India Ltd. Vs. Apparel Exports Promotion Council (CWP No. 2764/92) that the petitioner company has progressed in the past years and is doing extremely well and it will be too harsh to inflict the punishment of de-registration to the petitioner at this belated stage. The petitioner company was protected by an interim order made by this Court to the effect that till the matter is finally decided the order of de-registration shall not be given effect to.
38. In the facts and circumstances of this case it will be open for the petitioner to represent to respondent No.1 to condone the default and pass any other order in lieu of de-registration on the plea that it will cause hardship to the petitioner at this stage particularly when the impugned order has remained in abeyance till date.