1. Cancellation of import licenses under the Imports (Control) Order, 1955 — Challenge based on denial of reasonable opportunity to be heard. (Para 1 , 2 , 3 , 4 , 5 )
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1961 Supreme(SC) 129
SUPREME COURT OF INDIA
B.P.Sinha, C.J.I., A.K.Sarkar, J.R.Mudholkar, N.Rajagopala Ayyangar, S.K.Das, JJ.
Sinha Govindji
Versus
Deputy Chief Controller Of Imports And Exports
Case No. : 307 , 308 of 1960
Date of Decision : 3/23/61
Advocates Appeared: Dhebar R.H. : Gagrat J.R. : Gopalakrishnan G. : Mehta Porus A. : Sen T.M. : Umrigar H.J.
Advocates:
G.GOPALAKRISHNAN, H.J.Umrigar, J.R.GAGRAT, PORUS A.MEHTA, R.H.Dhebar, T.M.SEN
G.GOPALAKRISHNAN, H.J.Umrigar, J.R.GAGRAT, PORUS A.MEHTA, R.H.Dhebar, T.M.SEN
Cancellation of licenses without specifying the grounds for such action or providing the evidence and reports relied upon violates the principles of natural justice and the statutory requirement of providing a reasonable opportunity of being heard.
Headnote:(A) Imports (Control) Order, 1955 - Clauses 8, 9 and 10 - Constitution of India - Article 19 - Cancellation of import licenses - Reasonable opportunity of being heard - Notice of cancellation issued without specifying grounds - Subsequent communication relating to suspension of further licenses under Clause 8 cannot be deemed as sufficient notice for cancellation under Clause 9 - Failure to provide investigation reports despite request - Violation of principles of natural justice - Order of cancellation quashed. (Paras 5, 8, 10)
(B) Natural Justice - Requirement of a reasonable opportunity to be heard is mandatory where statutory provisions provide for it - A notice that does not disclose the grounds for proposed action does not satisfy the requirement of providing a reasonable opportunity. (Paras 3, 9)
Facts of the case:
A firm was granted import licenses for raw materials. The authorities issued notices to cancel these licenses under the relevant control order but did not specify the grounds for such cancellation. Although a subsequent letter mentioned findings of a joint investigation regarding the lack of machinery and fraudulent certificates, the operative part of that letter pertained to the suspension of future licenses rather than the cancellation of existing ones. The firm requested the investigation report to show cause, but the authorities cancelled the licenses without providing the documents or a hearing.
Findings of Court:
The petitioner was not given a reasonable opportunity of being heard before the cancellation orders were passed. The initial notice was deficient as it lacked grounds, and the subsequent letter primarily addressed the suspension of further licenses under a different clause. The refusal to provide the investigation report further denied the petitioner a real opportunity to respond.
Issues: Whether the cancellation of import licenses without specifying grounds in the notice and without providing the underlying investigation report constituted a denial of a reasonable opportunity of being heard under Clause 10 of the Imports (Control) Order, 1955.
Ratio Decidendi: The court held that Clause 10 of the Imports (Control) Order, 1955, embodies the principles of natural justice. A reasonable opportunity of being heard requires that the party knows the specific grounds for the proposed action and has access to the evidence or reports used against them. A notice lacking grounds and a subsequent letter focusing on a different penalty (suspension versus cancellation) do not satisfy this requirement.
Result: Writ petitions allowed.
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2. Petitioner alleges violation of natural justice and statutory requirements for hearing — Respondents contend that a subsequent letter provided sufficient grounds for cancellation. (Para 1 , 5 , 7 )
3. The notice failed to specify grounds for cancellation, and a subsequent letter regarding license suspension did not constitute a reasonable opportunity to show cause. (Para 8 , 9 , 10 )
4. Cancellation of licenses without specifying grounds or providing necessary documents to the licensee violates the requirement of a reasonable opportunity of being heard. (Para 8 , 10 )
5. Writ petitions allowed — Cancellation orders quashed — Costs awarded to the petitioner. (Para 10 )
6. What constitutes a reasonable opportunity of being heard in the context of license cancellation?
A reasonable opportunity requires the authority to specify the exact grounds for the proposed cancellation. Without knowing the specific grounds under the applicable rules, a licensee cannot effectively show cause, rendering the process a violation of natural justice. (Para 3 , 9 , 10 )
7. Does a notice regarding the suspension of future licenses satisfy the requirement for a hearing regarding the cancellation of existing licenses?
No. A notice calling for a show-cause response regarding the suspension of further licenses under one clause does not satisfy the requirement for a hearing regarding the cancellation of existing licenses under a different clause. (Para 10 )
8. Is the failure to provide supporting documents, such as investigation reports, a violation of the right to be heard?
Yes. When a party requests relevant documents to enable them to show cause, the failure of the authority to provide those documents before passing an adverse order constitutes a denial of a real opportunity to be heard. (Para 10 )
S.K.DAS, J.
(1) THESE are two writ petitions in respect of two orders dated August 3, 1960, by which the Joint Chief Controller of Imports, Madras, cancelled two import licences, Nos. A 863296 and 836640 dated January 18, 1960, and February 2, 1960, respectively, granted in favour of the petitioner, Messrs. Sinha Govindji of Bangalore Road, Bellary, for the purpose of importing cellulose nitrate sheets of the value of Rs. 75,000 each for two licensing periods, April/September, 1959, and October/ March, 1960. The complaint of the petitioner firm is that respondents 1 and 2 have cancelled the licences in circumstances which amounted to a denial of its right to be given a reasonable opportunity of being heard, as provided by cl. 10 of the Imports (Control) Order, 1955, before the impugned orders were passed and thus arbitrarily and without authority of law deprived the petitioner of its fundamental right to carry on its business under Art. 19 of the Constitution.
(2) THE point for decision is a short one and we need only state such facts as bear upon that point. The petitioners case is that the proprietor of the firm is a citizen of India carrying on a business of the manufacture of celluloid and plastic bangles, etc., at Bellary in the Mysore State. The petitioner was granted the two licences referred to above and thereafter entered into firm commitments for the import of cellulose sheets to the value of Rs. 99,000. On March 4, 1960, the petitioner was surprised to receive two letters from the Assistant Controller of Imports, Madras, calling upon the petitioner to let him know the extent to which the licenses had been utilised and asking the petitioner not to enter into fresh commitments against the said licenses without specific and prior approval of the Controllers office. This led to some correspondence between the petitioner and the Control authorities, details whereof are not necessary for our purpose. On May 27, 1960, the petitioner received two notices, only one of which we need set out in full. It stated:
"IT is hereby notified that in exercise of the powers conferred by cl. 9 of the Imports (Control) Order, 1955, the Government of India, in the Ministry of Commerce and Industry propose to cancel licence No. A 836640/60/AU/M dated the Second February, 1960, valued at Rs. 75,000 (Rupees Seventy five thousand only) for import of Cellulose Nitrate Sheets from the Soft Currency area except South Africa, granted by the Joint Chief Controller of Imports and Exports, Madras to Messrs. Sinha Govindji, No. 18, Bangalore Road, Bellary-2, unless sufficient cause against this is furnished to the Joint Chief Controller of Imports and Exports, Madras, within ten days of the date of issue of this notice, by the said Messrs. Sinha Govindji, No. 18, Bangalore Road, Bellary-2 or any Bank, or any other party who may be interested in it. In view of what is stated above, Messrs. Sinha Govindji, Bellary or any Bank, or any other party who may be interested in the said licence No. 836640/60/AU/M dated Second February, 1960, are hereby directed not to enter into any commitments against the said license and return it immediately to the Joint Chief Controller of Imports and Exports, Madras. (Sd.) J.K.Sarkar, Deputy Chief Controller of Imports and Exports."
(3) THE notices, be it noted, did not state on what grounds -falling within cl. 9 of the Imports (Control) Order, 1955, it was proposed to cancel the licences of the petitioner. Clause 9 of the Control Order states four grounds for cancellation of a licence, and we may read the clause here omitting those grounds which are not relevant for our case:
"9. Cancellation of Licences: The Central Government or any other officer authorised in this behalf may cancel any licence granted under this Order or otherwise render it ineffective: (a) if the licence has been granted through in-advertence or mistake or has been obtained by fraud or misrepresentation; (b) ......
