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IN THE HIGH COURT OF JUDICATURE AT MADRAS
K. RAVICHANDRABAABU, J.
M/s. Kawarlal & Co., Chennai, By its Proprietor K. Ramlal Jain - Appellant
Versus
Joint Director General of Foreign Trade O/o. The Additional Director General of Foreign Trade, Ministry of Commerce & Industry, 'Kendriya Sadan", Koramangala, Bangalore & Others - Respondents
W.P.No. 25693 of 2019 & W.M.P.No. 25173 of 2019
Decided On : 23-09-2019
Foreign Trade Act, 1992 - Sections 8 - Constitution of India - Article 226 - challenging the order of the first respondent - violating the fundamental rights guaranteed - cancelling the IEC - petitioner attended the personal hearing on 17.05.2019 and sought for time by eight weeks, since the details sought for by the Authorities are in respect of period from 2002-2019 and thus, it requires sufficient time to produce the same. An interim reply to the show cause notice was also filed on the very same day. However, the second respondent passed an order dated 17.05.2019 viz., on the very same day of the personal hearing, suspending the IEC of the petitioner. Immediately, on receipt of the said order, the petitioner gave a representation dated 30.05.2019 in detail. Parallely, the petitioner also filed a writ petition before this Court in W.P.No.19527 of 2019, challenging the said order – Held, No doubt, the first respondent has stated that he ordered the suspension in view of the report submitted by the CBI and on going investigations thereof. I find that the above statement of the first respondent in the impugned order lacks any material details and particulars to support the order of suspension. Needless to say that the Licensing Authority, if intends to suspend or cancel the license, should state specific details and particulars as to the reasons which made him to take such action. In the absence of any such finding or reason, such order cannot be sustained. At the same time, this Court makes it very clear that it is not expressing any view on the merits of the allegations made against the petitioner and the response given by the petitioner against such allegations. This Court is inclined to interfere with the impugned order only on the reason that it does not disclose, reflect or finding for suspending the IEC of the petitioner. Therefore, the matter needs to go back to the first respondent once again for passing a speaking order - No doubt, in the counter affidavit, the respondents raised very many allegations and contentions against the petitioner. Learned counsel appearing for the respondents also reiterated the same. It is a settled proposition of law that a counter pleading cannot improve the impugned order. An order should either stand or fall only based on the reasons stated therein and not by substitution of reasons stated in a pleading filed in support of such order. Therefore, I find that the averments made in the counter affidavit cannot be substituted as the reasons for passing the impugned order - first respondent has only observed that the critical communications vis-a-vis DGFT office and other Government agencies have been perused, all of which are internal communications and confidential in nature and that in view of the report submitted by the CBI and the ongoing investigation thereof and the nature of the violation of the provisions of the laid down Acts the IEC is suspended. Except saying so, the first respondent has not given a specific reason or finding as to why the IEC granted to the petitioner is liable for suspension. Needless to state that the above observation of the first respondent which is general in nature cannot be considered as sustainable grounds in the absence of specific details - petition is allowed
JUDGMENT :
(Prayer : Writ Petition filed under Article 226 of the Constitution of India for issuance of a Writ of Certiorari to call for the records of the order dated 08.08.2019 comprised in File No.No.07/26/JDG/Kawarlal & Co,/AM20 passed by the 1st respondent herein and to quash the same, in so far as the said order has been passed without jurisdiction and authority of law and contrary to the statutory provisions and in total violation to the principles of natural justice and also violating the fundamental rights guaranteed to the petitioner in terms of Art.19(1)(g) and 301 of the Constitution of India.)
This writ petition is filed challenging the order of the first respondent dated 08.08.2019, wherein and whereby, the Importer Exporter Registration granted to the petitioner in IEC Code 0402001630 is suspended under Section 8(1)(a)(b) of the Foreign Trade (Development and Regulation) Act, 1992 read with Foreign Trade (Development and Regulation) Amendment Act, 2010.
2. The case of the petitioner, in short, is as follows:
(a) The petitioner is proprietorship concern engaged in the business of importing and supplying of drugs and others raw materials required for the manufacture of chemicals, drugs, pharmaceuticals, food, etc., The jurisdictional Joint Director General of Foreign Trade, Chennai, granted Importer Exporter Code Registration, herein after called IEC Registration to the petitioner. While so, the second respondent issued a show cause notice dated 15.05.2019, as to why fiscal penalty should not be imposed under Section 11(3) of the said Act, without prejudice to any other action that may be taken against noticee under the said Act or any other law in force for the time being. The allegation made in the show cause notice is that the petitioner has involved in illegal imports of bulk drugs from unregistered manufacturing facilities in China and the Authority has reason to believe that the Noticee has imported with malafide interest which attracts the action under Section 11(2) of the Foreign Trade (Development and Regulation) Act, 1992 read with the Rule of Foreign Trade (Regulations) Rules 1993. It is also stated in the show cause notice that the above said act of the petitioner attracts action under Sections 8 of the Foreign Trade (Development and Regulation) Act, 1992 to suspend the IEC.
(b) The petitioner attended the personal hearing on 17.05.2019 and sought for time by eight weeks, since the details sought for by the Authorities are in respect of period from 2002-2019 and thus, it requires sufficient time to produce the same. An interim reply to the show cause notice was also filed on the very same day. However, the second respondent passed an order dated 17.05.2019 viz., on the very same day of the personal hearing, suspending the IEC of the petitioner. Immediately, on receipt of the said order, the petitioner gave a representation dated 30.05.2019 in detail. Parallely, the petitioner also filed a writ petition before this Court in W.P.No.19527 of 2019, challenging the said order dated 17.05.2019. This Court, by order dated 22.07.2019 passed in the above writ petition, set aside the impugned order therein only to facilitate a personal hearing to be held fresh and redoing the order. This Court has also directed that the personal hearing should be held by the first respondent herein and thereafter, he shall pass orders after considering the objections, records. Pursuant to the said order passed by this Court, the petitioner gave a written submission in detail on 26.07.2019 before the first respondent. Thereafter, the present impugned order dated 08.08.2019 was passed once again by cancelling the IEC however, by not disclosing any reason for such action. Therefore, the present writ petition is filed before this Court.
3. A counter affidavit is filed by the respondents 1 and 2. The crux of the contention raised in the counter affidavit is as follows:
The proprietor of the petitioner company has got criminal antecedents, s
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