Punjab-Haryana High Court
Vikrant Overseas vs Union Of India & Ors. on 24 February, 1999
Equivalent citations: AIR1999P&H258, 1999(66)ECC624, 1999ECR587(P&H), 2000(123)ELT486(P&H), (1999)122PLR183, AIR 1999 PUNJAB AND HARYANA 258, (1999) 85 ECR 587, (2000) 123 ELT 486, (1999) 122 PUN LR 183, (1999) 2 RECCIVR 397
JUDGMENT Sh. Jawahar Lal Gupta, J.
1. Civil Writ Petition Nos. 18471 and 18876 of 1998 involve identical questions of law and fact. These can, consequently, be disposed of by a common order. A few facts may be briefly noticed.
2. The petitioner is engaged in the business of export and import of goods. On September 8, 1998, the petitioner was granted a licence for the import of 3000 mt. tonnes of "Khas Khas" (poppy seeds). This licence was issued subject to the condition of producing "a valid certificate from the competent authority of the country of origin to the effect that opium poppy has been grown licitly/legally in that country as per requirements of the International Narcotics Control Board ........" The petitioner was permitted to import the poppy seeds from "the country of origin - Pakistan, Afghanistan, Turkey and Australia---------." In this licence, it was stipulated that the petitioner shall have to actually use the imported goods. However, this condition was subsequently deleted.
3. It appears that immediately on the receipt of this import licence, the petitioner entered into an agreement with a supplier in Pakistan for the import of 1500 Mt. tonnes of poppy seeds. A copy of the fax message has been produced as Annexure P-7 with Civil Writ Petition No. 18876 of 1998. A few days later, on September 23, 1998, the petitioner opened a letter of credit in favour of the foreign supplier, viz., "A. Razzak and Company" for 105000 US dollars. Thereafter, on September 28 and September 29, 1998, the petitioner placed two more orders for the additional supply of 577 Mt. tonnes of poppy seeds. Letters of credit were also opened for the additional amounts on November 14 and November 21, 1998. Copies of the orders placed by the petitioner have been produced as Annexure P-11 and P-10, while those of the letters of credit are as Annexures P-12 and P-13 respectively.
4. In pursuance to the order placed by the petitioner on September 8, 1998, the first consignment of poppy seeds weighing 42 Mt. tonnes was received at the Attari Railway Station on October 1, 1998. Certificates regarding the licit growth of poppy seeds in the country of origin, viz., Pakistan had also been issued by the Government, Ministry of Commerce etc. Copies of these certificates have been produced as Annexures P-14 to P-16 with the writ petition. On November 9, 1998, the petitioner was called upon to explain as to why the goods imported by it be not confiscated. A copy of this notice has been produced as Annexure P-15 in Civil Writ Petition No. 18471 of 1998. While this petition was pending, the respondents were not sitting idle. They devised a novel method of defeating the petitioner's claim. On December 8, 1998, the Joint Director General of Foreign Trade, Amritsar, informed the petitioner that "name of both these countries i.e. Pakistan and Afghanistan are hereby deleted from the licence with effect from the date of issue of licence". The petitioner was further informed that this action had been taken under "Para 8 of Foreign Trade (Regulation) Rules, 1993". The petitioner was directed that "this letter may be treated as integral part of the licence".
5. Aggrieved by retrospective amendment of the petitioner's licence, it has approached this Court through the second petition, viz., Civil Writ Petition No. 18876 of 1998.
6. In a nut-shell, the petitioner alleges that the action of the respondents in retrospectively amending the import licence is wholly without jurisdiction and beyond the power under Rule 8. Secondly, it is maintained that the action is wholly arbitrary and violative of the principles of natural justice. Thirdly, it is maintained that the goods having been imported under a valid licence, the respondents have no right or jurisdiction to confiscate the consignments already received or to be received in future and that their action, in issuing the show cause notice, is an abuse of the power under the law. The petitioner, thus, prays that the impugned show cause notice as well as the order dated December 8, 1998 be quashed.
7. Separate written statements have been filed on behalf of the respondents in both the cases. It is maintained that the action is in conformity with the provisions of Rule 8 and that they were competent to retrospectively amend the import licence. It is further maintained that the licence having been retrospectively amended, the import of the poppy seeds on November 9, 1998 from Pakistan was wholly illegal. Thus, both the writ petitions deserve to be dismissed.
8. Counsel for the parties have been heard.
9. The questions that arise for consideration are :-
(i) Do the respondents have the jurisdiction to retrospectively amend an import licence ?
(ii) Can the respondents amend an import licence retrospectively or otherwise without the grant of any opportunity to the importer ?
(iii) Is the action of the respondents in initiating proceedings for the confiscation of the goods legal and thus, tenable ?
REGARDING (i) :
10. With the object of providing for the development and regulation of foreign trade, the Parliament has enacted the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as the Act). The primary object of this Act is to facilitate "imports into and augment export from India ........". Section 9 of the Act inter alia provides for the issue of suspension and cancellation of licence. In Clause (2) "the Director General or an officer authorised by him" is competent to "grant or renew or refuse to grant or renew, a licence to import and export such class or classes of goods, as may be prescribed, after recording in writing his reasons for such refusal." A licence granted under Section 9 has to be in a prescribed form. It is valid for the period which may be specified therein. Terms, conditions and restrictions can also be imposed. The provision also authorises the competent authority to suspend or cancel a licence. Section 19 authorises the Central Government to "make rules for carrying out the provisions of the Act."
11. In exercise of the powers conferred by the Act, the Central Government has framed the rules called the Foreign Trade (Regulation) Rules, 1993. Rule 8 is material for the purposes of this case. It provides as under :-
RULE 8 :
AMENDMENT OF LICENCE :
The licensing authority may of its own motion or on an application by the licensee, amend any licence in such manner as may be necessary or to rectify any error or omission in the licence."
12. On a perusal of the provisions of the Act and the rules, we do not find any power with the licensing authority to retrospectively amend a licence. Mr. Gumber, learned counsel for the respondents, has stated before us that the authority has been amending the licence retrospectively "in routine". The counsel has conceded that there is no provision which may specifically authorise the licensing authority to amend a licence retrospectively.
13. Besides the lack of an express provision, even in principle, we find it difficult to accept the contention as raised on behalf of the respondents that the authority can retrospectively amend a licence. If such a wide power was conceded the results can be catastrophic. A licence may be granted today for the import of a 1000 Mt. tonnes of a particular commodity. The person may place the order. The consignment may be received. One fine morning, the authority may retrospectively reduce the quantity to 1 Mt. ton. Who would make good the loss ? Who would be responsible for the consequences ? There is no answer on behalf of the respondents. In this situation, it is not surprising that neither under the Act nor the rules any power has been reserved with the authorities to modify a licence retrospectively.
14. Even the facts of the present case are revealing. On September 8, 1998, the petitioner was categorically informed that it could import poppy seeds from any of the four countries mentioned in the licence. Pakistan was one of the countries. The only condition imposed in the licence was that there should be a certificate from the country of origin that the seeds had been licitly grown. This certificate was produced by the petitioner. No authority from which the certificate was required, was mentioned. The expression "competent authority" was not defined. On perusal of the record, it has been conceded by Mr. Gumber that even the Department did not know as to who was the competent authority. Still, after the petitioner had placed the orders for the supply of a major part of the permitted quantity and after the lapse of three months, it was informed that it was not entitled to import any goods from Pakistan. Vide order dated December 8, 1998, two countries, viz., Afghanistan and Pakistan were ordered to be deleted from the licence. After consideration of the matter, we are satisfied that such a course of action is not permissible under the provisions of the Act or Rule 8.
15. It is well settled that the executive or a statutory authority has to act in conformity with law. In the present case, the action of the respondents in cancelling the licence did not conform to this rule. Resultantly, the first question is answered against the respondents. It is held that their action in retrospectively amending the import licence was without jurisdiction.
REGARDING (ii) :
16. The issue of a licence admittedly entitles the importer to import the goods as described therein. It gives the importer a valuable right. In pursuance to this right, the importer places an order, undertakes certain liabilities and obligations. Any one who tries to tinker with the stipulation in the licence or vary the conditions thereof, can do so only in conformity with the provisions of law. In the absence of a specific provision, the action must conform to the basic requirement of fair play. It must be in accordance with the principles of natural justice. What is the position in the present case ? On September 8, 1998, the petitioner had been granted an import licence, permitting it to bring 3000 Mt. tonnes of poppy seeds into the country. On December 8, the conditions of the licence were materially varied to the disadvantage of the petitioner. It has been conceded before us that no notice or opportunity was afforded to the petitioner before the issue of the order dated December 8, 1998. This was apparently violative of the principles of natural justice. In pursuance to the licence, the petitioner had placed orders for the import of 2077 Mt. tonnes of poppy seeds. The petitioner had opened letters of credit. First of these was for an amount of 1,05,000 US dollars. Two letters of credit had been subsequently opened. The petitioner had undertaken a substantial financial commitment. By the action of the respondents, the rights of the petitioner were bound to be adversely affected. Substantial liability on account of the price of the goods and charges for demurrage etc. were bound to arise. We are informed by the counsel that the petitioner has paid Rs. 15,00,000/- by way of demurrage for the goods which were retained by the respondents in pursuance to the show cause notice dated November 9, 1998. Still further, it was also pointed out that the quality of the goods was adversely affected as poppy seeds have a limited shelf life. The petitioner had to suffer all these losses on account of the proceedings initiated by the respondents. Yet the respondents acted without the least restraint or regard for the letter or spirit of law. They afforded no opportunity, whatsoever, to the petitioner. To say the least, the action was violative of the elementary rules of natural justice. It cannot, thus, be sustained.
17. Even the second question is accordingly answered against the respondents.
REGARDING (iii) :
18. A perusal of the facts delineated above shows that the petitioner had acted in conformity with the terms of the import licence. It had imported the goods from one of the countries mentioned in the import licence. It had got the certificates from the Government of Pakistan. It was clearly mentioned that the goods had been legally grown. Despite that the goods were not released. Proceedings for confiscation of the goods were initiated. This was so done, despite the fact that the petitioner had imported the goods in conformity with the stipulation in the import licence. Despite that the petitioner was accused of having imported the poppy seeds "in violation of Para 15(2) of the EXIM Policy 1997-2000 read with ...........". The petitioner had submitted a reply immediately on November 9, 1998. Still the goods were not released. It had then approached this Court on December 2, 1998. The matter was listed before a Bench of this Court. Directions for the issue of notice of motion were given. When the matter was listed on December 9, 1998, Mr. Gumber, who had appeared on behalf of the respondents, had sought time. The case was adjourned. Ultimately, the officers were called upon to appear. On January 18, 1999, Hon'ble Mr. Justice G. C. Garg and Hon'ble Mr. Justice N. K. Agrawal passed a detailed order running into 9 pages by which the respondents were directed to release the goods subject to the petitioner's furnishing the security. The petitioner was also directed to deposit the full custom duty. We are informed that the security was furnished and the goods were ultimately released during the period from January 25 to January 28, 1999.
19. It is not disputed that the import of the goods was in strict conformity with the provisions of the import licence. The only argument raised on behalf of the respondents is that the certificate, as issued by the authorities in Pakistan, did not conform to the condition that these had been "grown licitly and legally in that country as per requirements of the International Narcotics Control Board and notified as such by the Department of Revenue, Ministry of Finance, Government of India". Even counsel for the respondents is unable to show as to which requirement laid down by the International Narcotics Control Board had not been fulfilled. In such a situation, we cannot resist the conclusion that the action of the respondents was wholly arbitrary and unfair.
20. Thus, even the third question is answered against the respondents.
21. No other point has been raised.
22. In view of the above, both the writ petitions are allowed. The notice dated November 9, 1998 and the order dated December 8, 1998, are set-aside. It is, however, clarified that the parties shall be entitled to proceed in accordance with law in respect of their respective claims with regard to the custom duty or the loss which may have been suffered by the petitioners with regard to the demurrage etc. Still further, if the authorities pass any order, which give cause of action to the petitioner, it may seek its remedy in accordance with law. We have only dealt with the issues which were raised before us in these two cases. The petitioner shall also be entitled to its costs which are assessed at Rs. 11,000/- in each, case.
23. Before parting with the case, we may also notice that Mr. Gumber had filed Civil Miscellaneous Application for permission to place certain documents on record. However, at the hearing, reference was made only to the document at Annexure R-6 and to no other. Nothing relevant was pointed out from the document and, thus, it has not been noticed.