Madras High Court
M/S.Sri Amman Chemicals vs The Chief Controller Of Explosives on 11 August, 2016
Author: T.S.Sivagnanam
Bench: T.S. Sivagnanam
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED:11.08.2016
Date of Reserving the Order
Date of Pronouncing the Order
29.07.2016
11.08.2016
Coram
The Hon'ble Mr.Justice T.S. SIVAGNANAM
W.P.Nos.20826 & 20827 of 2016
M/s.Sri Amman Chemicals,
9/22, C.B.Complex, New Madurai by Pass Road,
L.N.S., (PO), Karur 639 002.
Rep., by its Partner P.Kumaresan. ... Petitioner in both W.Ps.,
Vs
1.The Chief Controller of Explosives,
Petroleum & Explosives Safety Organisation,
A Block, 5th Floor, CGO Complex,
Seminary Hills, Nagpur,
Maharashtra 440 006.
2.The Joint Controller of Explosives,
Petroleum & Explosives Safety Organisation
A and D Wing, Block 1-8, II Floor,
Shastri Bhawan, 26, Haddows Road,
Nungambakkam, Chennai 600 034.
3.The Commissioner of Customs,
Chennai III Customs Commissionerate,
Custom House, 60, Rajaji Salai,
Chennai 600 001.
4.The Deputy Commissioner of Customs (SIIB),
Custom House, 60, Rajaji salai,
Chennai 600 001. ... Respondents in both W.Ps.,
Prayer in W.P.No.20826 of 2016 :-This Writ Petition is filed under Article 226 of the Constitution of India, seeking for a Writ of Certiorarified Mandamus, to call for the records of the first respondent connected with impugned order No.P-5(AN) Ports/2014, (A1743), dated 19.08.2015, and quash the same and consequently, direct the first respondent to issue the P5 license to the petitioner firm viz., Sri Amman Chemicals, Karur.
Prayer in W.P.No.20827 of 2016 This Writ Petition is filed under Article 226 of the Constitution of India, seeking for a Writ of Certiorari, to call for the records of the second respondent connected with impugned order No.A/HQ/TN/P3/18, (A1100), dated 20.05.2016, and quash the same.
For petitioner .. Mr.Vijay Narayan Sr Counsel for
Mr.N.Viswanathan
For Respondent .. Mr.G.Rajagopalan
Addl., Solicitor General of India
Assisted by Mr.B.Rabu Manohar, SPC,
COMMON ORDER
The petitioner is a dealer in Ammonium Nitrate and was granted a licence in Form P-3 to store and trade in Ammonium Nitrate in terms of Ammonium Nitrate Rules, 2015, (Rules), framed under the Explosive Act, 1884, (Act). The petitioner applied for grant of licence in Form P-5 for import licence of Ammonium Nitrate, which was a pre-requisite for import, though the said product was freely importable and not a restricted item. The petitioner's application for import licence, was rejected by order dated 19.08.2015, on the ground that issue of licence in Form P-5, is considered only in favour of Ammonium Nitrate users, in the interest of National Security. This order dated 19.08.2015, is challenged in W.P.No.20826 of 2016. By an earlier order dated 20.05.2016, the licence granted to the petitioner in Form P-3, dated 03.12.2014, to possess for sale of Ammonium Nitrate from a store house exceeding 30MT, was suspended as an interim measure, as per the provisions of Section 6E of the Act read with Rule 42 of the Rules. By the same order, the petitioner was directed to show cause within 21 days as to why the licence should not be cancelled. This order of suspension as an interim measure, is challenged in W.P.No.20827 of 2016.
2. The learned Senior counsel appearing for the petitioner advanced submissions, firstly, on the correctness of the order dated 20.05.2016 and thereafter, made submissions on the correctness of the order dated 19.08.2015, rejecting the application of the petitioner for issue of licence in Form P-5. Therefore, this Court proceeds to consider the Writ Petitions in the said order.
3. The petitioner is a partnership firm, which was established in the year 2008 and engaged in the business of trade in Ammonium Nitrate. The petitioner has been sourcing the goods indigenously and also importing the same on payment of appropriate duties of customs. The petitioner would state that the goods are mostly sold to the buyers, who are basically engaged in agricultural operation/activities. The petitioner found that the product was available at a much competitive price abroad namely in China and from 2012, the petitioner had been importing the product through various Ports in southern India.
4. After the introduction of the 2012 Rules, namely, Ammonium Nitrate Rules, 2012, the petitioner applied for a licence after complying with the required formalities and the petitioner was granted the licence dated 03.12.2014, valid upto 31.03.2019. As import of the said product required a licence from the competent authority in Form P-5, the petitioner submitted an application on 05.08.2015. However, the same came to be rejected by the impugned order dated 19.08.2015. While so, the goods which were imported by them, pursuant to a purchase order dated 06.05.2015, arrived at Chennai Port and the petitioner filed Bill of Entry dated 24.09.2015, and owing to the fact that the application made by the petitioner for grant of licence in Form P-5, was rejected, the Customs Authorities seized the goods on 12.11.2015. The Customs Authorities filed a petition under Section 110A of the Customs Act, 1962, before the Additional Chief Metropolitan Magistrate (EO1) Court, Egmore, Chennai, praying for a certification of the correctness of the inventory, which was seized under Mahazar dated 12.11.2015, after taking photographs and drawing of the representative samples by making a visit to the bonded warehouse so as to enable the department to dispose of the seized goods as provided under law. Even prior to the filing of the petition by the Customs Authorities, the first respondent by communication, dated 11.02.2015, informed the Principal Commissioner of Customs, Chennai, that considering the huge quantity of the said Ammonium Nitrate consignment to the tune of 740MT and the impact of its destruction over the environment, it would be appropriate to consider auctioning the consignment to the firm/individual authorised under Ammonium Nitrate Rules, 2012, after observing necessary formalities. This was reiterated by the second respondent by letter dated 23.02.2016. The petitioner submitted a representation dated 29.04.2016 to the Deputy Commissioner of Customs, (SIIB), wherein among other things, they stated that the representation may be considered and it may be ordered either for storage of the goods at the petitioner's licenced premises or in the alternate to grant provisional release of the goods subject to requisite conditions that may be imposed under Section 110A of the Customs Act, pending adjudication. Subsequently, the petitioner submitted a representation to the Assistant Commissioner of Customs (Group-3), Chennai on 19.05.2016, requesting for bonding of the goods under Section 49 of the Customs Act, 1962. These requests made by the petitioner before the Customs Authorities were pending, and while so, by the impugned order, dated 20.05.2016, the petitioner's licence in Form P-3 was suspended as an interim measure. As mentioned earlier, the order dated 20.05.2016, apart from placing the petitioner's licence in Form P-3 under suspension as an interim measure, called upon the petitioner to show cause as to why his licence should not be cancelled. The petitioner has submitted his reply dated 01.06.2016 to the second respondent.
5. Mr.Vijay Narayan, learned Senior counsel assisted by Mr.N.Viswanathan, learned counsel appearing for the petitioner, submitted that the order of suspension has been passed by the second respondent, who has no jurisdiction to either suspend or revoke the licence, as the Licencing Authority, in terms of Schedule I, appended to Rule 28 of the Rules, is the Chief Controller of Explosives or Controller authorised by the Chief Controller and not the second respondent and therefore, the order of suspension is illegal and void.
6. It is further submitted that Ammonium Nitrate is not an item falling within the scope of Explosives and special type of Explosives spoken under the Explosives Act and has been separately defined under Rule 2(b) of the Rules. Therefore, the power under Section 6E(3)(d) of the Explosives Act, could not have been invoked. It is reiterated that the second respondent, not being the Licencing Authority, an order passed for interim suspension is without jurisdiction and furthermore, Rule 42(5), provides for suspension as an interim measure without an opportunity of hearing only when there exists a violation of the provisions of the Act or Rules or any conditions of licence and when such violation, in the opinion of the Licencing Authority, is likely to cause imminent danger to the public and in the absence of any such opinion having been recorded, the interim suspension is bad in law. Further, the second respondent has not recorded any reasons for ordering interim suspension and the order is in gross violation of the principles of natural justice, as the petitioner was not afforded an opportunity of hearing as mandated under Rule 42(5)(i) of the Rules. It is further submitted that the proceedings initiated by the Customs Authorities on the advice of the first respondent to sell the goods by auction to other licensees holding licence in Form P-3 in exclusion of the petitioner, is violative of Section 110A read with Section 125 of the Customs Act which provides for the petitioner being entitled to redeem the goods on reasonable conditions and the goods not being prohibited goods, the petitioner has vested right to seek for redemption under Section 125 of the Customs Act. It is further submitted that though the petitioner submitted their explanation to the show cause notice as early as on 01.06.2016, till date no orders have been passed and no notice of personal hearing was issued to the petitioner, though there is a specific request made by the petitioner in that regard in the explanation.
7. The learned Senior counsel, with regard to the challenge to the order dated 19.08.2015, by which the petitioner's application for issue of licence in Form P-5 for import of Ammonium Nitrate was rejected, submitted that the order of rejection is illogical and arbitrary causing grave prejudice to the petitioner. The reason assigned in the impugned order that licence could be considered only in favour of Ammonium Nitrate users, is contrary to the statutory provisions and violates the petitioner's fundamental right guaranteed.
8. Referring to Rule 5 of the Rules, deals with the pre-requisite for grant to licence and stated that no licence shall be granted unless all the relevant provisions laid down under the Rules and all conditions contained in the licence forms under Part-2 of schedule II are complied with and the Rules nowhere state that licence will be restricted to only actual users. Referring to Rule 6, which deals with general restrictions, it is submitted that sub-rule 4 of Rule 6 deals with restriction on imports and the restrictions are as mentioned in clauses (a) to (d), under Rule 6(4) and the reason assigned in the impugned order is not one of the reasons or restrictions on import or export. Therefore, it is submitted that a total ban on issuance of licence to other than actual users, is contrary to the provisions of the Act. It is further submitted that the petitioner had a valid licence in Form P-3 for storage and sale of Ammonium Nitrate from 2014, and carrying on business all these years and earlier also, the petitioner has effected imports of the product from other countries and while so, to reject the petitioner's licence on grounds not contemplated under the Rules or under the Act is illegal and the reason assigned is highly extraneous.
9. Finally it is submitted that the sequence of events should be taken note of by this Court as on the date when the petitioner had filed the application for grant of licence to import i.e., on 05.08.2015, he had a valid licence for storage and sale in Form P-3. Though the application for licence to import was rejected on 19.08.2015, the licence in Form P-3 continued to remain valid and therefore, the petitioner requested for redemption of goods, which had been imported by them in terms of Section 125 of the Customs Act, on 29.04.2016 and 19.05.2016. Such request was not considered and subsequently the licence in Form P-3 was suspended as an interim measure. Thus, it is submitted that the action initiated by the respondents 1 and 2, is clearly with an intention to deny the petitioner the right to the imported goods, thereby affecting his right to trade. In support of the contention that the petitioner's right to secure a licence cannot be negatived by any policy decision not stipulated under the Act or the Rules, reliance was placed on the decision of the Hon'ble Supreme Court in the case of Thirumuruga Kirupananda Variyar Thavathiru Sundara Swamigal Medical Educational & Charitable Trust vs. State of Tamil Nadu & Ors., reported in (1996) 3 SCC 15.
10. Mr.G.Rajagopalan, learned Additional Solicitor General of India, assisted by Mr.B.Rabu Manohar, learned Senior Panel counsel appearing for the respondents at the out set, submitted that the Writ Petition challenging the order of rejection of licence in Form P-5 is an appealable order and without exhausting the appeal remedy, the petitioner is not entitled to approach this Court. With regard to the jurisdiction of the second respondent to suspend the licence, reference was made to Section 17A, which deals with power to delegate and the authority namely, the first respondent is entitled to delegate his powers to the second respondent. Further, by referring to Schedule I under Rule 28 of the Rules, which prescribes the authority for issuing licences, the Licencing Authority for issuing licence in Form P-5 is the Chief Controller and the Licencing Authority for issuing licence in Form P-3 is the Chief Controller or Controller authorised by the Chief Controller. In this regard, a tabulated statement attested by the Chief Controller was produced before this Court to show that the second respondent was authorised by the Chief Controller for the purposes of interim suspension and issuance of show cause notice. At this juncture, the learned Senior counsel appearing for the petitioner objected to the said document stating that it is only a tabulated statement and it cannot be taken as an authorisation. Referring to the order of interim suspension and the reasons contained therein, it is submitted that the subjective satisfaction of the second respondent is evident from the reasons stated therein and the product namely, the Ammonium Nitrate having been declared as an explosive within the meaning of Explosives Act by notification issued by Government of India, dated 21.07.2011, the reasons assigned in the impugned order are sufficient to place the petitioner's licence under suspension. Further, it is submitted that the petitioner if aggrieved by the rejection of the application for grant of licence in Form P-5, ought to have invoked the alternate remedy by way of appeal before the Central Government under Rule 44 of the Rules.
11. With regard to the action initiated for disposal of the consignment, it is submitted that prolonged storage of the consignment is not only fraught with public safety, but also poses a security threat and therefore, the first respondent requested the third respondent to initiate necessary action with an advice to store the detained consignment in an isolated place under guard, away from naked flame or any substance of flammable nature liable to spontaneous ignition. Thus, the policy decision having been taken in the interest of the National Security, this Court exercising jurisdiction under Article 226, will not examine the correctness of the policy in particularly when the decision was taken in the interest of National Security.
12. Heard the learned counsels appearing for the parties and perused the materials placed on record.
13. The undisputed facts are that the petitioner was issued a licence in Form P-3 to possess for sale of Ammonium Nitrate from a store house exceeding 30MT or in tanks. This licence was issued on 03.12.2014, to remain valid till 31.03.2019. The licenced premises is situated in Aravakurichi Taluk, Karur District. The licence was granted subject to the provisions of the Act and the Ammonium Nitrate Rules 2012. The licence was liable to be suspended or revoked for any violation of provisions of the Act or Rules or the conditions of licence or if it is found that the licenced premises does not conform to the description shown in the plan annexed to the licence. By the impugned order, dated 20.05.2016, this licence in Form P-3 has been suspended.
14. The learned Senior counsel appearing for the petitioner contended that the respondents having invoked power under Section 6E read with Rule 42(5)(i), of the Rules and the same having been done without affording an opportunity to the petitioner is in violation of principles of natural justice. Referring to the proviso under sub-rule (1) of Rule 42, it is submitted that before suspending or cancelling a licence under the said rule, the holder of the licence shall be given an opportunity of being heard. It is further submitted that the respondent by invoking sub-rule (5) of Rule 42, the opportunity of being heard may not be given to the licencee, if the licence is suspended as an interim measure for violation of any provisions of the Act and such power could have been invoked only if in the opinion of the Licencing Authority, such violation is likely to cause imminent danger to public and from the impugned order, it is clear that the authority has not recorded his opinion as to under what circumstances, the alleged violation is likely to cause imminent danger to the public.
15. To examine this contention, we may look into the relevant provisions of the Act and the Rules. The Act was enacted to regulate the manufacture, possession, use, sale, transport, import and export of explosive. In exercise of power conferred under Section 18(1) of the Act, the Government of India vide notification, dated 16.09.2011 invited objections and suggestions on the draft of the Ammonium Nitrate Rules, 2011 and after the expiry of the 45 days from the date on which, the notification was made available to the public, the Government of India in exercise of the powers conferred under Sections (5) and (7) of the Act enacted the Ammonium Nitrate Rules, 2012. By this Rule, the Government sought to regulate manufacturing, conversion, import, export, stevedoring, bagging, transport, possession, sale and use of Ammonium Nitrate, these Rule came into force with effect from 11.07.2012. Under Rule 5 of the Rules, the existing manufacturers, converters, users, sellers, importers and exporters, transporters etc., were given six months period to apply for licence and one year to comply with the provisions of the Rules. Subsequently, this six months period to apply for licence was extended upto 18 months i.e., upto 01.11.2014.
16. Section 6E of the Act deals with variations, suspension and revocation of licences. Sub-section (1) of Section 6E gives power for the Licencing Authority to vary the conditions of licence. Sub-section (2) empowers the Licencing Authority to vary all conditions of licence on application of the holder except such of them as have been prescribed. Sub-section (3) empowers the Licencing Authority to suspend a licence for such period as it things fit or revoke the licence under the circumstances set out in clauses (a) to (c), under the said sub-rule. Sub-section (4) empowers the Licencing Authority to revoke a licence on the application of the licencee. In terms of sub-section (5) while varying the conditions of licence either under sub-section (1) or suspending or revoking the licence under sub-section (3), the Licencing Authority shall record in writing the reasons thereof and furnish to the holder of the licence on demand a brief statement of the same, unless in any case, the Licencing Authority is of the opinion that it will not be in the public interest to furnish such statement. In cases where a Court convicts holder of a licence of an offence under the Act or the Rules, the Licencing Authority may also suspend or revoke a licence. On such conviction being set aside on appeal or revision, the suspension or revocation shall become void; Sub-section (7) gives power to the Appellate Court or to the High Court to exercise the power under sub-section (6), exercising its power of revision. The Central Government may also suspend or revoke the licence or direct the Licencing Authority to do so under sub-section (8). On such suspension or revocation, the licencee shall surrender the licence without delay in terms of sub-section (9).
17. Chapter II of the Rules, deals with General Provisions under which Rule 6 specifies the 'General Restrictions'. For the purposes of this case, Rule 6(4) would be relevant which deals with restriction on import or export. The said Rule mandates that no Ammonium Nitrate shall be imported or exported except at its ports notified by the Central Government; shall not be imported into India by sea except through the ports, which are duly approved for this purpose by the Government of India; Ammonium Nitrate imported into India by sea shall not be stored in the port. Chapter VII of the Rules deal with grant or refusal of approval, licence, amendment, transfer and renewal.
18. Under the said Chapter, Rule 42, deals with suspension and revocation or cancellation of licence. Sub-rule (1) of Rule 42, deals with the circumstances under which the licence stand cancelled or suspended and the proviso provides that before suspending or cancelling a licence under sub-rule (1) of Rule 42, the holder of the licence shall be given an opportunity of being heard. Sub-Rule (5) commences with a non obstante clause stating that notwithstanding any thing contained in sub-rule (1), an opportunity of being heard may not be given to the holder of the licence before his licence is suspended or cancelled in cases set out in clauses 1(i) and 2(i) under the said sub-rule. The said Rule reads as follows:-
42.Suspension and revocation or cancellation of licence:-(1) Every licence granted under these rules shall:-
(a)stand cancelled, if the licence holder is convicted and sentenced under any criminal offences or ordered to execute under Chapter VIII of the Code of Criminal Procedure, 1973 (2 of 1974), a bond for keeping peace for good behaviour,
(b) stand cancelled, if the No Objection Certificate is cancelled by the District Authority or the State Government.
(c) be liable to be suspended or cancelled by an order of the licensing authority for any contravention of the Act or these rules or of any condition contained in such licence, or by order of the Central Government, if it is satisfied that there are sufficient grounds for doing so;
Provided that before suspending or cancelling a licence under this rule, the holder of the licence shall be given an opportunity of being heard.
(2) The suspension or cancellation shall take effect from the date specified therein.
(3) An order of suspension or revocation of a licence shall be deemed to have been served if sent by post to the address of the licence holder entered in the licence.
(4) The suspension of a licence shall not debar the holder of the licence from applying for the renewal.
(5).Notwithstanding anything contained in sub-rule (1), an opportunity of being heard may not be given to the holder of the licence before his licence is suspended or cancelled in cases:-
(i) where the licence is suspended by a licensing authority as an interim measure for violation of any of the provisions of the Act or these rules or of any conditions contained in such licence and in his opinion such violation is likely to cause imminent danger to the public.
Provided that where a licence is so suspended, the licensing authority shall give the holder of the licence an opportunity of being heard before the order of suspension is confirmed; or
(ii) where the licence is suspended or cancelled by the Central Government, in the public interest or in the interest of the security of the State, such opportunity should not be given.
19. Thus, as per the scheme of the Rule, there is a clear distinction drawn to the power exercised by the competent authority while exercising the powers under Rule 42(1) and 42(5). Thus, the power under Rule 42(1) is a power granted to the competent authority to suspend or cancel a licence and before doing so, the licencee shall be given an opportunity of being heard. However, in contra distinction, the power under sub-Rule (5) could be exercised without an opportunity of being heard. Therefore, a holder of a licence under the Act and Rules cannot claim an opportunity of being heard when the suspension is made resorting to power under sub-Rule (5) of Rule 42.
20. On a plain reading of the said sub-rule, it is seen that this power is a power exercisable as an interim measure. Rule 42(5)(i), is exercisable by a Licencing Authority to suspend a licence as an interim measure for the violation of any of the provisions of the Act or the Rules or any conditions contained in such licence. While doing so, the Licencing Authority is required to form an opinion that such violation is likely to cause imminent danger to the public. The proviso provides that if the Licencing Authority is to confirm such order of suspension, he is required to give the holder of the licence an opportunity of being heard. It is submitted that in the impugned order, there is no recording of the opinion of the Licencing Authority that the alleged violation committed by the petitioner is likely to cause imminent danger to the public and in the absence of such opinion, the impugned order is not sustainable and more so, for the reason that opportunity was not granted to the petitioner before passing such an order.
21. On a perusal of the impugned order, it is seen that a letter dated 17.05.2016, was received by the respondent from the office of the Principal Commissioner of Customs informing that the petitioner has received 696MT of Ammonium Nitrate at Chennai Port and 500MT to Visakapattinam Port without a valid licence in Form P-5 and further imported 740MT of Ammonium Nitrate from Korea at Chennai Port. It has been alleged that the petitioner had supplied Ammonium Nitrate to a firm in Bangalore which did not possess any licence in Form P-3. Further, it is alleged that the petitioner sold 92MT of Ammonium Nitrate to M/s.Tamil Nadu Cement Corporation Ltd., which has been denied by the alleged buyers. Therefore, the respondent recorded in the impugned order that the petitioner has fabricated the sale document. Further, it is stated that the petitioner has supplied Ammonium Nitrate to the tune of 75kgs to 292000kgs to several quarries which did not possess the licence in Form P-3, and thus the respondent stated that in view of the above stated unauthorised illegal activities, reported by the Customs Authority, the Licence granted to the petitioner is being suspended as an interim measure.
22. On a careful reading of the impugned order, it is evidently clear that the respondent on receipt of the information from the Principal Commissioner of Customs, Chennai, has taken note of the materials placed before it and it appears on further investigation on selected buyers (as stated in the counter affidavit), mentioned that the entire quantity of Ammonium Nitrate was used in Mines and Quarries for blasting operations and not used for agricultural purposes.
23. Therefore, in my view the respondent taking into consideration the information received by it, has formed an opinion that licence granted to the petitioner requires to be placed under suspension as an interim measure and the reasons for exercising the power of interim suspension is vivid on a reading of the impugned order. Therefore, the petitioner is not correct in contending that the Licencing Authority has not recorded his opinion, while exercising the power of the interim suspension. If ultimately, the allegations are established, it is a serious matter especially when, Ammonium Nitrate has been declared as a explosive substance for which the Ammonium Nitrate Rules were framed and came into force on 11.07.2012. That apart, in terms of proviso in Rule 42(5), the respondent has granted an opportunity to the petitioner to show cause as to why the Licence should not be cancelled. Therefore, the impugned order cannot be stated to be devoid of reasons nor it can be stated that the competent authority did not form an opinion before passing the order of interim suspension. Thus, the contention raised by the petitioner in this regard does not merit acceptance.
24. The next contention raised was that the Joint Chief Controller of Explosives, South Circle is not the competent authority to exercise the power of interim suspension, as he is not the Licencing Authority. Rule 28 of the Rules, deals with authority issuing licenses and the said rule states that the licenses for specific purposes may be granted by the authorities specified in schedule I. The petitioner was issued a licence in Form P-3 and in terms of the serial No.3(b) in Schedule I, the Licencing Authority is the Chief Controller or Controller authorised by the Chief Controller.
25. The learned Additional Solicitor General of India is right in contending that in terms of Section 17A, the Central Government may, by notification, direct that any power or function, which may be exercised or performed by it under the Act other than the power under Sections 5, 6, 6A, 14 and 17 may, in relation to such matters and subject to conditions, if any, be exercised or performed by such officer or authority subordinate to the Central Government or such State Government or such officer or authority subordinate to the State Government. Therefore, the powers conferred under the provisions of the Act except the power under the five sections mentioned therein could be delegated. A contention was raised that there is no notification placed before this Court issued by the Central Government to show that such power has been delegated. It may not be necessary to go into the aspect as to whether the Joint Chief Controller, who issued the impugned order was a delegate pursuant to the delegation of power being granted under Section 17A, since in terms of Rule 28, read with Schedule I, the Licencing Authority for issuing a licence in Form P-3 is the Chief Controller or Controller authorised by the Chief Controller.
26. The learned Additional Solicitor General produced before this Court a chart, attested by the Chief Controller to show the delegation of powers granted by the Chief Controller. By virtue of the said chart, it is seen that the Joint Chief Controller has been delegated with the power for interim suspension and issuance of the show cause notice.
27. The learned Senior counsel contended that the chart does not have a proper authentication and the same cannot be taken as an order delegating the power to the respondent. I am not inclined to accept the said stand in the light of the fact that the said chart/document has been attested by the Chief Controller. Thus, I am inclined to accept the same as valid proof to show that the Joint Chief Controller of the Explosives, who had passed the order of interim suspension, was entitled to exercise the powers to suspend a licence in Form P-3 as an interim measure and to issue show cause notice. The document having been attested by the Joint Controller of the Explosives cannot be disbelieved or discarded as contended by the petitioner. Therefore, the order passed by the Chief Controller of the Explosives suspending the petitioner's P-3 licence as an interim measure, does not suffer from lack of jurisdiction. Therefore, the contention that the impugned order suffers from the vice of lack of jurisdiction deserves to be rejected.
28. It was further contended that though the petitioner had submitted their reply to the show cause notice with regard to proposal to cancel the petitioner's licence on 01.06.2016, till date no orders have been passed, would show that the authorities are biased against the petitioner.
29. On the allegations made by the petitioner, there can be no inference of bias and in the absence of any specific allegation and without naming those individuals, such vague averments cannot be taken to infer bias and therefore, such contention stands rejected. However, this Court may consider to issue appropriate directions to the authority to conclude the proceedings at the earliest.
30. Thus, having held that the order of interim suspension has been made in a proper manner and the Licencing Authority has exercised the power in the manner stipulated under Rule 42(5)(i) and the Authority who passed the order having been vested with jurisdiction, the same does not suffer from any illegality and accordingly, the challenge to the order of interim suspension, dated 20.05.2016 should necessarily fail.
31. The next issue is as to whether the order of rejection of the petitioner's application for issuance of licence in Form P-5, for import of Ammonium Nitrate is just and proper. The contention raised by the petitioner is that Rule 6 of the Rules, deals with 'general restrictions' and the 'restriction on import or export' is in terms of sub-rule (4) of Rule 6, which reads as follows:-
Rule 6(4):- Restriction on import or export:- (a) No person shall import or export any Ammonium Nitrate except under and in accordance with the conditions of licence granted under these rules;
(b) No Ammonium Nitrate shall be imported or exported except at its ports notified by the Central Government;
(c) The Ammonium Nitrate shall not be imported into India by sea except through the ports which are duly approved for this purpose by the Ministry of Shipping and Transport, Government of India, in consultation with the Chief Controller and declared as Customs Ports by the Commissioner of Customs;
(d) The Ammonium Nitrate imported into India by sea shall not be stored in the port.
32. It is argued that the restrictions on import or export of Ammonium Nitrate, can be only under the circumstances stated in clauses (a) to (d) in sub-rule (4) of Rule 6, and the reason assigned in the impugned order stating that application for licence in Form P-5 will be considered only in favour of Ammonium Nitrate users is not one of the restrictions, as contemplated under the Rules and the reasons stated in the impugned order is extraneous and contrary to the provisions contained in the Ammonium Nitrate Rules and hence, unsustainable.
33. Prior to July 2012, there was no specific Rule to regulate the use of Ammonium Nitrate and after the Rules came into force, Ammonium Nitrate or any combination containing more than 45% of the Ammonium Nitrate by weight including emulsions, suspensions, melts or gels was declared as an explosives substance within the meaning of Explosives Act.
34. This Court can take judicial notice of the fact from various news reports that the presence of Ammonium Nitrate in the bombs, which exploded in various parts of the country, raised a debate on the availability of the substance, primarily who used to make explosives and fertilisers. The report reveals that though the Government enacted the Rules to regulate the sale of Ammonium Nitrate, it was still easily available and is being used by terror groups to make bombs and a report of the Intelligence Bureau suggested that during 2012 alone, 4000Ts of Ammonium Nitrate had gone missing. It is further reported that in 2013, there were around 20000 consumers of Ammonium Nitrate and all these persons had applied for licence after the Ammonium Nitrate Rules were framed, the reason being classification of the Ammonium Nitrate changed from an innocuous fertiliser ingredients to the Explosive device. The report further states that it has been a matter of concern for investigating agencies, as they have found that Ammonium Nitrate has been used in every blast case in the recent past and although the police have arrested several persons they have not been able to trace the origin of the chemical in even a single case. It is further reported that the Police say that large quantity of Ammonium Nitrate has gone missing, since the past four years (2013) and at an average, there has been no account for nearly 16000Ts of Ammonium Nitrate in the past four years (2013). It is further reported that even if 20kgs of Ammonium Nitrate gets into the hand of the bomb maker he can easily make 20 bombs out of it. That apart, it is stated that Ammonium Nitrate can be stored for two years without damage1.
35. The Government of India taking note of the various doubts, which arose after the Ammonium Nitrate Rules were framed, published in their website2, certain clarifications in the form of frequently asked questions (FAQ). The answer to two questions would be relevant to understand the impact of the substance:-
Q. What makes Ammonium Nitrate so explosive?
A. Ammonium Nitrate is not an explosive by itself. However, it is one of the ingredients used for manufacture of explosives. It is classified as an oxidizer (5.1) as per UN classification for Dangerous Goods. Other ingredients like fuel, etc., have to be added to make it an explosive. For such explosive mixtures to explode, initiators like detonators are required.
Q. Why is it necessary to regulate the use of ammonium nitrate?
A. Ammonium Nitrate is a necessary major ingredient for manufacture of explosives and it has been declared as a deemed explosives vide Notification No. G.S.R. S.O. 1678(E) dated 21/07/2011. It has the potential to form an explosive mixture on the addition of ingredients like fuel etc., Hence, it is necessary to regulate the use of Ammonium Nitrate for which the Ammonium Nitrate Rules, 2012 have been framed.
Q. Where does AN find its maximum usage?
A. Ammonium Nitrate find its maximum usage in Explosives Industry.
36. Thus, the use of Ammonium Nitrate having been regulated, the petitioner cannot, as a matter of right, claim that except for the circumstances set out in Rule 6(4), there can be no restriction on import or export of Ammonium Nitrate, and it cannot be a ground to interfere with the impugned order, as the Rule 6 only postulates general restrictions. Thus, while rejecting the application submitted by the petitioner for grant of licence in Form P-5, bearing in mind the interest of the National Security, thought fit to restrict issuance of licence in favour of the Ammonium Nitrate users and the petitioner being a trader, rejected their application.
37. In my view, the restriction imposed is a reasonable restriction in the light of the fact, separate Rules were framed for regulation of the use of Ammonium Nitrate, which has been specifically brought within the definition of an explosive substance. In such circumstances, this Court is not inclined to interfere with the impugned order.
38. The learned Additional Solicitor General submitted that as against the impugned order refusing to grant licence, the petitioner has an alternate remedy of preferring an appeal before the Appellate Authority. The reason for rejection of the licence for import is on the ground that the same will be considered only for Ammonium Nitrate users and such decision has been taken in the interest of National Security. The bonafides of the reason assigned in the impugned order, as being in the interest of National Security cannot be doubted. The right to trade in explosives is subject to the reasonable restrictions and the petitioner cannot contend that he has a fundamental right to trade in explosives. National Security is of paramount importance and an individual interest shall be subservient to the interest of the Nation. Therefore, this Court finds that even if an appeal is filed by the petitioner as against the impugned order, decision having been taken considering the interest of the country, such appeal itself would be a futile exercise. Thus, this Court upholds the reason assigned for rejection of the petitioner's application for issue of licence in form P-5 for import of Ammonium Nitrate as being just and proper and the reason cited in the order, is neither arbitrary nor whimsical, but a reasonable restriction.
39. It was contended by the learned Senior counsel for the petitioner that sequence of events would show that the respondents were acting in a biased manner. Sequence of events which have taken place resulting in the rejection of the petitioner's application for grant of licence in Form P-5, detention of the cargo by the customs authorities on the ground that the petitioner did not possess a licence for import and subsequent event in suspending the petitioner's licence in Form P-3 as an interim measure, though occurred in the said sequential order, it cannot be a reason to infer bias. The authorities exercising power under the provision of the Act and the Ammonium Nitrate Rules are required to take a decision, which will sub-serve National interest and there is no illegality or arbitrariness in the decision making process or in the impugned decision themselves.
40. The decision of the Hon'ble Supreme Court in the case of Thirumuruga Kirupananda Variyar (supra), was a case, where the Hon'ble Supreme Court tested the correctness of the decision of the State Government withholding the issuance of essentiality certificate for starting a medical college on the ground that they have taken a policy decision. Noting that in the matter of establishment of a new medical college rests with the Central Government alone, it was held that the State Government could not refuse essentiality certificate on such policy consideration. In my view the decision is factually distinguishable, as the matters which weighed for consideration in the said case pertain to a establishment of a medical college by a private trust and the findings rendered by the Hon'ble Supreme Court could at best be construed as a finding with particular reference to the fact in issue and cannot be taken to be a laying down a general principle nor could it be applied to the facts of the present case, where the correctness of orders passed under the Explosive Act and the Rules are being tested.
41. An argument was advanced that the petitioner had been earlier importing large quantities of Ammonium Nitrate and he has been a trader and carrying on business without any compliants from 03.12.2014, can hardly be a ground to interfere with the impugned orders. The allegation in the impugned order, dated 20.05.2016 is unauthorised illegal activities in the matter of sale and supply of Ammonium Nitrate, which the petitioner had imported prior to the Rules coming into force. Thus, the earlier imports effected by the petitioner prior to coming into force, can hardly have any impact while testing the correctness of the impugned proceedings.
42. Further, it has to be pointed out that the denial of right of the petitioner to redeem the goods under Section 125 of the Customs Act does not flow from the relief sought for in these Writ Petitions. In other words, unless and until the petitioner succeeds in obtaining a licence in Form P-5 and succeeds in setting aside the order of interim suspension of the licence under Form P-3, the question of petitioner being entitled to redeem the goods would not arise. Therefore, the interim prayer cannot be acceded to in the facts and circumstances of the case.
43. It was submitted that the petitioner had placed purchase order on 06.05.2015 i.e., much prior to the petitioner's application for grant of licence in Form P-5 for import of Ammonium Nitrate and therefore, when it became a necessity to obtain a licence, the petitioner had applied for the same and the impugned consignment could not have been detained by the customs. The date of purchase order is of no relevance, while considering as to whether the petitioner is entitled to import the impugned goods, what would be relevant is the law which prevails on the date when the bill of entry is filed and on such date, though the goods were freely importable unless the importer had a licence in Form P-5, import was impermissible. Thus, the petitioner having not been granted a licence in Form P-5, cannot claim that the impugned consignment should be released to the petitioner. If this is done, it would tantamount to issuing a direction to the authorities to disobey the rules, which cannot be done.
44. In the result, the Writ Petitions are dismissed with the direction to the competent authority to consider the petitioner's reply dated 01.06.2016, to the show cause notice, dated 20.05.2016, afford an opportunity of personal hearing to the petitioner and pass orders on merits and in accordance with law, within a period of 30 days from the date receipt of a copy of this order .
45. In the light of the above, Miscellaneous Petitions are dismissed and the interim order granted on 29.06.2016, stands vacated and the respondents are directed to dispose of the cargo in accordance with law. No costs.
11.08.2016
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Index :Yes/No
Internet :Yes/No
To
.The Chief Controller of Explosives,
Petroleum & Explosives Safety Organisation,
A Block, 5th Floor, CGO Complex,
Seminary Hills, Nagpur,
Maharashtra 440 006.
2.The Joint Controller of Explosives,
Petroleum & Explosives Safety Organisation
A and D Wing, Block 1-8, II Floor,
Shastri Bhawan, 26, Haddows Road,
Nungambakkam, Chennai 600 034.
3.The Commissioner of Customs,
Chennai III Customs Commissionerate,
Custom House, 60, Rajaji Salai,
Chennai 600 001.
4.The Deputy Commissioner of Customs (SIIB),
Custom House, 60, Rajaji salai,
Chennai 600 001.
T.S.SIVAGNANAM, J.
pbn
Pre-Delivery O r d e r in
W.P.Nos.20826 & 20827 of 2016
11.08.2016