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Allahbad High Court
N.D.OJHA,MURLIDHAR
The Bullion and Agricultural Produce Exchange (Pvt.) Ltd., Agra - Appellant
Versus
Forward Markets Commission, Bombay - Respondent
Decided On : 03/01/1979
FORWARD CONTRACTS (REGULATION) ACT, 1952 - SECTION 14-A, 14-B - CERTIFICATE OF REGISTRATION - GRANT OF PERMISSION TO CONDUCT FORWARD TRADING IN ANOTHER COMMODITY - OPPORTUNITY OF BEING HEARD - REASONS FOR REFUSAL - NECESSITY.
Fact of the Case:
The petitioner, Bullion and Agricultural Produce Exchange Private Limited, obtained a certificate of registration under Section 14-A of the Forward Contracts (Regulation) Act, 1952, entitling it to carry on business in Arhar Ki Chooni. Forward trading in Arhar Ki Chooni was later banned, and the petitioner applied to the Forward Markets Commission for permission to conduct forward trading in linseed oilcake. The Commission refused permission, and the petitioner challenged the order in a writ petition.
Finding of the Court:
The court held that the requirement of giving an opportunity of being heard in the matter, as well as the requirement of recording reasons for refusal of permission, were applicable to the disposal of an application for permission to conduct forward trading in another commodity, even though the application was not strictly an application for a certificate of registration. The court found that the show cause notice and the impugned order did not provide sufficient information or reasons to enable the petitioner to effectively respond and defend its case.
Issues: 1. Whether the requirement of giving an opportunity of being heard and recording reasons for refusal of permission under Section 14-B of the Forward Contracts (Regulation) Act, 1952, applies to an application for permission to conduct forward trading in another commodity, even though the application is not strictly an application for a certificate of registration. 2. Whether the show cause notice and the impugned order provided sufficient information and reasons to enable the petitioner to effectively respond and defend its case.
Ratio Decidendi: 1. The court held that the requirement of giving an opportunity of being heard and recording reasons for refusal of permission under Section 14-B of the Forward Contracts (Regulation) Act, 1952, applies to an application for permission to conduct forward trading in another commodity, even though the application is not strictly an application for a certificate of registration. The court reasoned that the proceedings before the Commission are judicial in nature and that the bar created by Section 14-A of the Act disentitles an Association to conduct forward trading in any commodity other than the commodity in respect of which a certificate of registration may have been granted. 2. The court found that the show cause notice and the impugned order did not provide sufficient information or reasons to enable the petitioner to effectively respond and defend its case. The court held that the bald assertion that there was no need, presently at any rate, for conducting forward trading in linseed oilcake under the auspices of an Association was not enough to satisfy the requirement of giving an opportunity of being heard. The court also held that the impugned order did not contain any reasons supporting the conclusion that there was no need for conducting forward trading in linseed oilcake, and that this was a violation of the requirement of giving reasons.
Final Decision: The court allowed the writ petition, quashed the impugned order, and directed the Forward Markets Commission to dispose of the application made by the petitioners afresh in accordance with law, keeping in mind the observations made by the court.
"(ii) that the said association shall not conduct forward trading in any commodity other than those specified hereunder except with the previous approval of the Forward Markets Commission."
2. It appears that forward trading in Arhar Ki Chooni was banned by a notification issued under the Act and thereafter petitioner No. 1 made an application to the Commission for permission to carry on forward trading business in linseed oilcake. This application had been apparently made in pursuance of Condition No. 2(ii) of the certificate of registration issued to petitioner No. 1 as stated above. The Commission by its order dated 14th July, 1977, a copy whereof has been filed as annexure-4 to the writ petition, refused permission to petitioner No. 1 to organize forward trading in linseed Oilcake. It is this order which is sought to be quashed in the present writ petition.
3. It was urged by counsel for the petitioners that opportunity of being heard in the matter before refusing to grant the permission as contemplated by S.14-B of the Act was not given to the petitioners nor does the order of refusal give reasons for such refusal and the said order being a quasi-judicial one is accordingly vitiated. For the respondent, on the other hand, it was urged that opportunity of being heard in the matter as contemplated by S.14-B of the Act was to be given only before refusing to grant certificate of registration under S.14-A. In the instant case, since a Certificate of registration had already been granted earlier and the application which was dismissed by the impugned order not being an application for grant of a certificate but for permission to conduct forward trading in another commodity namely, Linseed Oilcake in pursuance of Condition No. 2(ii) of the certificate of registration the proviso to S.14-B of the Act was not applicable. In order to deal with the respective submissions made by counsel for the parties, it would be necessary to keep in mind the nature of the jurisdiction exercised by the Commission under S.14-A of the Act which deals with certificate of registration to be obtained by all associations. The said Section, inter alia, contemplates that no association concerned with the regulation and control of business relating to Forward Contracts, shall after the commencement of the Forward Contracts (Regulation) Amendment Act, 1960 carry on such business except under and in accordance with the conditions of a certificate of registration granted under this Act by the Commission. The following observations in regard to the rights of an Association in the matter of carrying on business made by the Supreme Court in A.I.B.E. Association v. National Industrial Tribunal (AIR 1962
SC 171) will be relevant (at p. 180) :-
"The resulting position may be illustrated thus : If an association were formed for the purpose of carrying on business, the right to form it would be guaranteed by sub-cl. (c) of Cl.(1) of Art.19 subject to any law restricting that right conforming to Cl.(4) of Art.19. As regards its business activities, however, and the achievement of the objects for which it was brought into existence its rights would be those guaranteed by sub-cl. (g) of Cl.(1) of Art.19 subject to any relevant law on the matter conforming to Cl.(6) of Art.19; while the property which the association acquires or possesses would be protected by sub-cl. (f) of Cl.(1) of Art.19 subje
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