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PETITIONER: LIBERTY OIL MILLS & OTHERS

       Vs.

RESPONDENT: UNION OF INDIA & OTHERS

DATE OF JUDGMENT01/05/1984

BENCH: REDDY, O. CHINNAPPA (J) BENCH: REDDY, O. CHINNAPPA (J) SEN, A.P. (J) VENKATARAMIAH, E.S. (J)

CITATION:  1984 AIR 1271            1984 SCR  (3) 676  1984 SCC  (3) 465        1984 SCALE  (1)750  CITATOR INFO :  R          1985 SC1416  (102)  RF         1986 SC 555  (6)  D          1987 SC1802  (28,30)  RF         1991 SC 363  (11)  RF         1991 SC 537  (13)

ACT:      Imports (Control)  order, 1955- Promulgated under ss. 3 and 4A  of the  Imports and  Exports (Control)  Act, 1947  - Clause 8B-Added later by way of amendment-Interpretation of- Contemplates action  of  interim  nature-Order  action  must satisfy rules  of natural  justice-Authorities not  bound to give  pre-decisional  hearing-Authorities  must  give  post- decisional hearing-Decision  must be  communicated to person affected-order need  not give  reasons but  must be indicate satisfaction forming  basis for action and concise statement of allegations-Action under Clause 8B of drastic nature-Must be animated  by sense of urgency-Sense of urgency infused by several factors-Public  sentiment is  one such factor-Public interest to be paramount consideration-It is for authorities to consider public interest-Courts not to concern themselves with sufficiency  of ground-Courts  to consider  question of mala fide or patent lack of jurisdiction.      Import (Control) order, 1955-Clause 8B read with Clause 11(4)- Interpretation  of-Clause 8B applies equally to goods covered by open General Licence.      Interpretation   of    statutes-Rules   of-Courts   not permitted  to  interpret  statutory  instruments  so  as  to exclude natural justice unless language of instrument leaves no option to Court.      Natural justice-Rules of-Extent of natural justice-Must vary from case to case-Interim orders imply natural justice- Seeking comments  of person before investigation against him not  necessary-Decision   affecting   a   person   must   be communicated to  the affected person-Affected person must be given post-decisional opportunity not possible.      Words and phrases-Investigation-When commences.

HEADNOTE:      On being  discovered that  beef  tallow  imported  from abroad was  either being  sold as  vanaspati or  used in its

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manufacture by  certain unscrupulous persons, general public feeling was  roused  and  there  was  public  agitation  and demands were  made that severe action be taken against those responsible. As  a result  of the  discoveries  the  Central Government thought that drastic action was called for. So, a notification was  issued under  s. 3(3)  of the  Imports and Exports (Control)  Act, 1947  totally banning  the import of beef, buffalo  and pig  tallow into  India w.e.f. August 24, 1983. And, on different dates in November 677 and  December   1983,  five   circulars,  styled  ’abeyance’ circulars and  marked ’secret’  were issued  by  the  Deputy Chief Controller  of Imports  and Exports,  in respect of as many as 192 concerns directing licensing authorities to keep in abeyance  for a  period of six months from the respective dates of the circulars, any application received from any of them for  the grant  of import  licence or customs clearance permits and  allotment of  imported goods  through  agencies like the  States Trading Corporation of India Limited or any other  similar   agency.  Though   the  circulars   did  not themselves cite  any  statutory  authority,  they  were,  as claimed and  as agreed  to by  the parties,  presumed to  be statutory orders  made in exercise of the power conferred by cl. 8B  of the Import (Control) Order, 1955. Several persons against whom  ’abeyance’ orders  had been  made  filed  writ petitions in different High Courts challenging those orders. Liberty oil  Mills was  one of  those who  filed such a writ petition in the Bombay High Court. The case was withdrawn to the Supreme Court under Art. 139A of the Constitution.      Liberty oil  Mills contended:  (1) that  the  requisite satisfaction  of   the  appropriate   authority  which   was necessary for issuing an order under cl. 8B was not only not recorded  in   the  circular   but  there  was  no  material whatsoever upon  which such  satisfaction  could  have  been arrived at;  (2) that  the circular  was not confined to the banned item of animal tallow or to items which could be said to have  some connection  with the banned item, but extended to all item for which applications for the grant of licences or for  allotment had  been made  by Liberty  oil Mills; (3) that general  nature of  the order  disclosed  a  total  non application of the mind; (4) that several firms were clubbed together and  dealt with  by a single circular and there was no indication  whatsoever that the facts relating to each of the firms  had been  considered  separately;  (5)  that  the ’abeyance circulars’  far from advancing the public interest would, on  the other  hand, prejudicially  affect the public interest by  bringing  to  a  halt  several  industries  and throwing hosts  of workers out of employment; (6) that there was no  substance in  the allegation  that Liberty oil Mills were not  actual users’  of beef tallow but they had misused the import  licences of other licensees by obtaining letters of authorisation  for import  of beef tallow as if they were actual users;  and (7)  that the circumstance that there was public agitation about the import of beef tallow was a total irrelevant circumstance  for making  an order  under cl. 8B. The  interveners  contended:  (1)  that  cl.  8B  should  be construed as  providing for  an opportunity  to be heard and since the  abeyance orders  made no  provision for  hearing, they should  be struck  down as opposed to the principles of natural justice,  and therefore  arbitrary and  violative of Article 14 and 19(1)(g) of the Constitution; (2) that secret orders affecting  rights of  parties could  not lawfully  be made since  secrecy would  militrate against natural justice and against  the right  of appeal  provided by  s. 4M of the Imports and  Exports (Control)  Act, and  (3) that  an order

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under cl.  8B could  only be  made after  the  investigation under cl  8 had commenced, that is after a show cause notice had been issued under cl.8, Dismissing the writ petitions. ^      HELD: It  is not permissible to interpret any statutory instrument so  as to  exclude natural  justice,  unless  the language of  the instrument  leaves no  option to the Court. Procedural fairness  embodying  natural  justice  is  to  be implied when  ever action  is taken  affecting the rights of parties. It  may be that the opportunity to be heard may not be pre-decisional; it may necessarily have to be post- 678 decisional where  the danger  to be averted or the act to be prevented is  imminent or  where the  action to be taken can brook ne  delay. It  may  not  oven  be  necessary  in  some situations to  give pre-decisional  opportunity of  making a representation but  it would be sufficient but obligatory to consider  any   representation  that  may  be  made  by  the aggrieved person  and that would satisfy the requirements of procedural fairness  and natural  justice. There  can be  no tape-measure of  the extent  of natural  justice. It may and indeed it  must vary  from statute  to statute, situation to situation and  case to  case. Pre-decisional natural justice is not  usually contemplated when the decisions taken are of an interim  nature pending  investigation  or  enquiry.  Ad- interim orders  may always  be made ex-parte and such orders may themselves  provide for  an opportunity to the aggrieved party to  be heard  at a  later stage.  Even if  the interim orders do  not make  provision for  such an  opportunity, an aggrieved party  has, nevertheless, always the right to make an appropriate  representation seeking a review of the order and asking the authority to rescind or modify the order. The principles of  natural justice  would be  satisfied  if  the aggrieved party  is given  an opportunity  at  his  request. There is  no violation  of a principle of natural justice if an ex-parte  ad-interim order  is made unless of course, the statute itself  provides for  a hearing  before the order is made. Natural  justice will  be violated  if  the  authority refuses to  consider the  request of the aggrieved party for an opportunity  to make  his representation  against the ex- parte ad-interim orders. (700H ; 701A-F)      There is no rule of justice of fair play which requires the authority  to seek  the comments of the person concerned before  embarking   upon  an   investigation.  Investigation commences as  soon as  the authority  concerned to  take the first step  whether by  way of seeking evidence or by way of seeking an explanation from the person concerned. (699F)      In some  cases, ex-parte  interim orders  may  be  made pending a  final adjudication.  But that  does not mean that natural justice  is not  attracted when orders of suspension or like orders of an interim nature are made. Some orders of that nature,  intended to  prevent further  mischief of  one kind. may  themselves be  productive of  greater mischief of another kind.  An interim  order of stay or suspension which has the effect of preventing a person, however, temporarily, say, from  pursuing his  profession or line of business, may have substantial,  serious and  even disastrous consequences to him  and  may  expose  him  to  grave  risk  and  hazard. Therefore, there  must be observed some modicum of residual, core natural  justice, sufficient  to  enable  the  affected person   to   make   an   adequate   representation.   These considerations may  not, however,  apply to  cases of liquor licensing which involve the grant of a privilege and are not a matter of right. That may be and in some cases it can only be after an initial ex-parte interim order is made. (705B-D)

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    Queen  v.   Randolph  et   al.  56  D.L  R.  (2d)  283, Commissioner of  Police v,  Tanos, 98,  C.L.R. 383, Levis v. Heffer, [1978]  3 All  ER 354  and Furnell v. Whangarei High Schools Ed, 1973 Appeal Cases 660 and Chingleput Bottlers v. Majestic Bottling Company, Supreme Court’s Civil Appeal Nos. 1970-71 of 1973, referred to.      Clause 8  of the imports (Control) order, 1955 empowers the Central 679 Government or the Chief Controller of Imports and Exports to debar person from importing goods or from receiving licences or allotment  of imported  goods for  a specified  period if such person  if guilty  of any  of the acts or commission or omission enumerated  in the  Clause. Clause  8A empowers the Central Government  or the  Chief Controller  of Imports and Exports to suspend the importation of goods by any person or grant of  licences or  allotment of  imported goods  pending investigation into  one or more of the allegations mentioned in cl.  8 without  prejudice to any other action that may be taken against  him in  that behalf.  Clause 8B  empowers the Central Government  or the  Chief Controller  of Imports and Exports to  keep in  abeyance applications  for licences  or allotment of  imported  goods  where  any  investigation  is pending into  any  of  the  allegations  mentioned  in  cl.8 against a  licences importer  or any other person subject to fulfilment of  the requirement  of the  satisfaction of  the appropriate authority  regarding the  public interest.  Both clauses 8A  and  8B,  which  were  inserted  in  the  Import (Control) order, 1955 later by way of amendment, contemplate action of  an  interim  nature  pending  investigation  into allegations under  cl.  8.  Ordinarily  in  the  absence  of anything  more,  it  would  not  be  necessary  to  give  an opportunity to  the person  concerned before  proceeding  to take action  under cl.  8A or cl. 8B. But while cl. 8B deals with the  right to  obtain licences and the rights to obtain allotments, cl.  8A deals  with rights  which have  flowered into licences  and allotments A person to whom licences have been granted  or  allotments  made  may  have  arranged  his affairs on  that basis  and entered  into transactions  with others, and,  to him the consequences of action under cl. 8A may be  truly disastrous  whereas the consequences of action under cl.  8B may  not  be  so  imminently  harmful.  It  is presumably because  of this lively difference between cl. 8A and 8B  that cl.10 provides for a pre-decisional opportunity in the  case of  action under cl. 8A and does not so provide in the  case of action under cl. 8B. Again, it is presumably because, of  this difference that cl. 10 while providing for an appeal  against a  decision under cl. 8A does not provide for an appeal against a decision under cl. 8B. But that does not mean that the requirements of natural justice are not to be meant  at all  in the  case of  action under  cl. 8B. The requirements of  natural justice  will be met in the case of action  under   cl.  8B   by  considering,  bona  fide,  any representation that may be made in that behalf by the person aggrieved. Clause  8B itself gives an indication that such a post-decisional opportunity  on the  request of  the  person concerned is  contemplated. The action under cl. 8B is to be taken if  the authority  is satisfied in the public interest that such  action may  be taken without ascertaining further details in  regard to  the allegations.  It clearly. implies that when  further facts are ascertained by the authority or brought to  the notice  of the authority, such action may be reviewed. Therefore,  in the  case of action under cl. 8B it is not  necessary to give a pre-decisional opportunity but a post-decisional opportunity must be given if so requested by

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the persons affected. [698G; 696D-E; G; 705F-H; 706A-E]      The  decision   to  keep   in  ‘abeyance’   should   be communicated to  the person concerned otherwise the rules of natural justice  will not  be satisfied.  It would  be  most arbitrary and  quit clearly  violative of Articles 14 and 19 (i) (g)  of the  Constitution if cl. 8B is to be interpreted as excluding 680 communication of the decision taken. There is nothing in cl. 8B to  suggest that  the decision is not to be communicated. On the  other hand,  the expression  "without assigning  any reason" implies  that the  decision has  to be communicated, but reasons  for the decision have not to be stated. Reasons of course,  must exist  for the  decision since the decision may only  be taken  if the  authority is  satisfied that the grant of  licence or allotment of imported goods will not be in the  public interest.  The expression  without  assigning reasons’ only means that there is no obligation to formulate reasons  and  nothing  more.  Formal  reasons  may  lead  to complications when  the matter is still under investigation. So the  authority may  not  give  formal  reasons,  but  the skeletal allegations  must be  mentioned in order to provide an  opportunity   to  the   person  affected   to  make  his representation.  [706H; 707A-C]      On what  should the  satisfaction be based ? The action under cl.  8B is  really in  aid of the ultimate order under cl. 8.  Therefore,  in  order  to  invite  the  satisfaction contemplated by  cl. 8B  there must  be present  some strong suspicion of  one or  other or more of the grounds mentioned in cl.  8. Since  the action which is of a drastic nature is to be  taken ex-parte,  it must necessarily be animated by a sence of  urgency. The  sense of urgency may be infused by a host  of   circumstances  such   as  the   trafficking   and unscrupulous peddling  in licences,  large scale  misuse  of imported goods, attempts to monopolise or corner the market, wholesale prevalence  of improper practices among classes of importers, public sentiment etc. etc. It is true that public administration is  not to  be run  on public  sentiment  and statutory action  may only  be taken on grounds permitted by the statute.  Public sentiment  is not  in  some  cases  the ground for the action but it is what clothes the ground with that sense  of urgency  which makes it imperative that swift action be taken. [707D-H]      Public interest  must nolens  volens be  the  paramount consideration. If  the threatened public mischief is such as to outweigh  the likely  injury to  the party, the authority may take  action under  cl. 8B.  If  the  threatened  public injury is very slight compared to the harm which may be done to the  party, the  authority may  not take action under cl. 8B. Which  element of  the public  interest should  be given greater weight  and which  grounds should  weigh at  all are matters for the authority taking action under cl. 8B. Courts do not  concern  themselves  with  the  sufficiency  of  the grounds on  which action  is taken  or with the balancing of competing considerations,  in  favour  of  and  against  the action. [708A-D].      An ‘abeyance’  order  under  cl.  8B  is  directed  not against  any   particular  type  of  goods  but  against  an importer,  licensee   or  other   person  against   whom  an investigation into  allegations  under  cl.  8  is  pending. Therefore the  question is  whether it  is not in the public interest that  a particular  person should be prevented from obtaining import  licences or imported goods any description pending investigation  into the  allegations under  cl.  8B. That would  depend on  the nature  of the  allegations,  the

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extent of  involvement of  the person  concerned  and,  most important, the  element of the public interest which are for the consideration  of the  authority. making the order under cl. 8B and not for the Court. [708E-G] 681      Action under  cl. 8B is of an interim nature and it may be ex-parte,  in which  case the.  affected party may make a suitable representation  bringing out  all  the  outweighing circumstances in  his favour. That is the real remedy of the party. Courts  do not enter the picture at that stage unless the action  is mala  fide or  patently without jurisdiction. The action  will be  patently without  jurisdiction if it is not based  on  any  relevant  material  whatsoever.  If  the authority declines to consider the representation, or if the authority after consideration or from oblique motive, or the decision is  such as  no reasonable man properly directed on the law  would arrive  at on  the material facts, it will be open to  the party  to seek the intervention of the court at that stage. [709E-G]      Barium Chemicals  v. Company Law Board [1966] Supp. SCR 311 Rohtas Industries v. S. D. Agarwal, [1959] 3 S.C.R. 108, M. A.  Rasheed v.  State of  Kerala,  [1975]  2  S.C.R.  93, Shalini Soni  v. Union  of  India,  [1981]  1  SCR  952  and Commissioner of  Income Tax v. Mahindra and Mahindra, [1983] 4 S.C.C. 392, referred to.      The Court cannot consider the question whether there is sufficient relevant  material in  support of the allegations made  against   the  petitioners.  The  Court  may  properly consider the  question  of  mala  fide  or  patent  lack  of jurisdiction. Therefore in the instant case the Court cannot consider  the   question  whether   the  material  available justifies a prima facie conclusion that the petitioners have made illegal imports of beef tallow. [711A-B]      The submission  that since the abeyance order was never formally communicated to the petitioners, it must be treated as  non  est  has  no  substance.  The  abeyance  order  was undoubtedly  communicated   to  the  concerned  authorities, Despite  the  attempt  at  secrecy  made  by  the  concerned authority  and  the  failure  to  formally  communicate  the decision to  the party,  the abeyance circular was very soon public knowledge and the petitioners did come to know of the orders. [710B; E-F]      The argument that cl.11 (4) excludes the application of cl. 8B  to goods  covered by  Open General  Licence  has  no substance. Clause  8B expressly  provides that  action under the Clause  may  be  taken  "not  withes  standing  anything contained in  this order".  In  view  of  this  non-obstante clause there  is no  doubt that  cl. 8B  applies. equally to goods covered by open General Licence. [698B-C]      The argument that the order as embodied in the abeyance circular did  not fulfil the conditions precedent prescribed by the  statute has.  some substance.  The Circular  did not contain a  recital of the allegations constituting the basis of the  satisfaction contemplated by cl. 8B for action under that provision,  and without a recital of the allegations it was impossible  to say  that the  action was  not  based  on irrelevant material.  It did  not even recite that which was the foundation  of any  action under  cl.  8B,  namely,  the satisfaction of  the authority  that the  action was  in the public interest.  Again a  large  number  of  concerns  were lumped together and purported to 682 be dealt  with by  a single abeyance circular. There was ex- facie nothing  in the  circular which  could  point  to  the authority having applied its mind and considered the case of

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his concerned  separately. It  is  true  that  the  abeyance circular suffers from everyone of these informities. But the Court’s attention  was invited to the statements made in the counter-affidavit by  the Deputy       Chief  Controller  of Imports and  Export the  author  of  the  abeyance  circular and the  relevant files  placed before the Court for perusal which shows  that    the  principal allegations  against the petitioners were  that they  had  prima  facie  indulged  in illegal importation  of beef tallow and had also misutilised the beef  tallow. Why  the authority  took this  prima facie view has  been explained  in the  counter-affidavit. From  a perusal of  the files  it is  found      that the  cases  of Liberty Oil  Mills as well as other concerns were separately and individually  considered. Thus  it  does  not  make  any difference on  the        peculiar facts of this case that a single circular  was  issued  covering  a  large  number  of concerns.[712A-B; D.G]      It  is   impressed  upon  the  authorities  that  those entrusted by  statute with  the task  of taking  prejudicial action on the basis of their subjective satisfaction should, first bestow  careful attention  to the  allegations forming the  basis   of  the   proposed  action   and  the  probable consequence which  may ensue such action and, next, take the trouble  of  reciting  in  the  order  issued  by  them  the satisfaction forming  the basis  of the action and a concise Statement of  the  allegations  forming  the  basis  of  the satisfaction. If the necessary recitals are not found, there may be serious sequels. [713B-D]      In the  instant case,  the real  remedy of the party to make a  representation   to the concerned authority which is directed to consider such representation if made. [713F]

JUDGMENT:      ORIGINAL JURISDICTION  : Transferred  Case  No.  22  of 1984.      Arising out  of Civil  Appeal  No.  274  of  1984  from Special Leave  Petition No.  17128 of 1983 from the Judgment and order  dated 13th  & 23rd  December, 1983  of the Bombay High Court in Writ Petition No. 2855 of 1983.      Ashok  H.   Desai,  S.S.   Ray,  A.N.  Banatwala,  G.E. Vehanvati, B  R. Agarwala,  P.G. Gokhale, M.M. Jayakar, V.K. Chittre, R.H.  Rancholi, M.  Jayakar &  A. Subba Rao for the Petitioner in WP & for Respondent in C.A. No. 274/84.      K Parasaran,  Attorney General.  M.K.  Banerjee,  Addl. Sol., General, A.K. Ganguli, G. Subramaniam and R.N. Poodar, for the  Respondent in  T.C. & for the Appellants in CA. No. 274 of 1984.      S.S. Ray,  Ashok  H.  Desai,  Summeet  Kachawaha,  Rani Karanjawala,  Ms.   M.  Karanjawala,  Kuldeep  Pablay,  A.N. Banathwala, G.E. Vahanvati, 683      Ms.Bina Gupta,  Rainu Walia, T.M. Ansari and D.N. Misra for the Interveners.      The Judgment of the Court was delivered by      CHINNAPPA REDDY,  J. A  few months  ago, orthodox Hindu sentiment was outraged and general public feeling was roused by the  discovery that beef tallow. imported from abroad was either being sold as vanaspati or used in its manufacture by certain unscrupulous  persons. There  was a  furore  in  the country. There was public agitation. Questions were asked in Parliament. Outside  the House,  Press and  Politician  made capital of  it. There  were demands  that severe  action  be taken against  those responsible.  Assurances were  given in

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Parliament. Bureaucracy  went into action. It was discovered that though  the import  of beef  tallow, like  other animal tallow,  had   been  canalised  through  the  State  Trading Corporation with  effect from  June 5,  1981, there had been considerable import  of beef  tallow outside  the channel of the State  Trading Corporation  even subsequent  to June  5, 1981, on  the ostensible  pretext  that  licences  had  been issued and  firm contracts  had already  been  entered  into before that  date. It  was also  discovered that beef tallow had been  allowed to  be imported even by ‘non-actual users’ under letters  of  authority  given  by  licensees  who  had obtained import  licences against  the entitlement  based on the value of their exports. As a result of these discoveries it was  thought that  drastic action  was called  for. So, a notification was  issued under  S. 3(3)  of the  Imports and Exports Control  Act totally  banning the  import  of  beef, buffalo and  pig tallow  into India  with effect from August 24, 1983.  And, on  7th, 9th  and 10th November and 17th and 21st December,  five circulars,  styled abeyance  circulars’ and  marked   ‘secret’  were  issued  by  the  Deputy  Chief Controller of  Imports and Exports, in respect of as many as 192  concerns   (business   houses),   directing   licensing authorities to keep in ‘abeyance’ for a period of six months from the  respective dates  of the circulars any application received from any of them for the grant of import licence or Customs clearance  Permits and  allotment of imported. goods through agencies like the State Trading Corporation of India Limited, the  Minerals and  Metals  Trading  Corporation  of India Ltd  or any  other similar agency. It may be useful to extract one of these. ‘abeyance’ circulars, all of which are in substantially  similar terms. The abeyance circular dated November 9,  1983 which  ‘lists’ we  will not  use the  word ‘black-lists’- as  many as 61 concerns including Liberty Oil Mills (P) Ltd. is as follows:. 684                                                       SECRET                     GOVERNMENT OF INDIA                     MINISTRY OF COMMERCE                OFFICE OF THE CHIEF CONTROLLER                     OF IMPORTS & EXPORTS                  UDYOG BHAVAN, NEW DELHI-11                                 dated, the 9th Nov. 1983 ABEYANCE CIRCULAR No. 28/83-84/HQ.      Whereas investigation into certain allegation mentioned under Cl. 8 of the Imports (Control) order, 1955 are pending against the  under mentioned  concerns,  all  the  licensing authorities are hereby requested to keep in abeyance for six months  from   the  date  of  issue  of  this  circular  any application received  from them  for  the  grant  of  import licence  of   Customs  Clearance  Permit  and  allotment  of imported goods  through  agencies  like  the  State  Trading Corpn. Of  India Ltd./Minerals  and Metals Trading Corpn. of India Ltd. or any other similar agency: SI. Name & address    Name & address of Name of the Prop./ No. of the concern.  the branches as   partner/Director etc.                      available.        as available. ------------------------------------------------------------  1         2              3                        4 ------------------------------------------------------------           *           *           *           * 14 M/s. Liberty oil    Mills (P) Ltd., 16

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  Lal Bahadur    Shastri Marg,    Kurla, Bombay-400070           *           *           *           * ------------------------------------------------------------ 685      2. These  instructions may be kept secret and if any of the  above  mentioned  firms  make  any  enquiry  about  the position of  their  application  (s),  they  may  simply  be informed the matter is under consideration.      3. This  does  not,  however,  preclude  the  licensing authorities from  rejecting their  applications if  they are otherwise inadmissible or suffer from discrepancies in terms of the  licensing instructions.  Only these applications may be kept  in abeyance where the party is entitled to licences or Customs Clearance Permits etc. except for the allegations against them.      4. Full details of all applications kept in abeyance as a result  of the  above instructions  may be reported to the Headquarters.      5.  The   receipt  of   this  circular  may  please  be acknowledge in the standard proforma.                                                sd/-                                           (J.P. SHARMA)                                      DY. CHIEF-CONTROLLER OF                                            IMPORTS & EXPORTS (Issued from file no. 3/42/HQ/83/ECA-I)"      To say the least and to put it mildly, it is a very odd circular, emanating  as it does from a high dignitary of the Government of India. Why the secrecy and why the instruction to mislead, as it were ? Are statutory orders to be made and given effect  in this  furtive  manner,  almost  as  if  the authorities   that   be   are   afraid   of   wounding   the susceptibilities of  the persons  in  respect  of  whom  the orders are  made ! We presume they are statutory orders made in exercise  of the  powers conferred  by clause 8  B of the Import Control Order, though they do not themselves cite any statutory authority.  The actual  direction, the  use of the word ‘abeyance’ and the prescription of the six-month period are indicative  that clause  8 B  is the source of power. In the counter  affidavits filed on behalf of the Government of India and  the Chief  and Deputy Chief Controller of Imports and Exports  it is claimed that the power exercised was that conferred by  clause 8B.  It was  so asserted  by the  Addl. Solicitor General.  The learned counsel who appeared for the parties proceeded  on that basis. So, we may also proceed on that basis.  Incorporating, as  they did,  directions  under clause 8B, vitally affecting the 686 business of  the concerns  concerned, one  would expect  the circulars to  be communicated  to the affected parties, even if they  were to be kept secret from other prying eyes. That was not  done for  reasons which  no one  has been  able  to explain to  us. Curiously,  enough,  despite  the  circular, supplies of  imported goods appear to have been continued to be made  for about  a month  to some  parties. But  soon the circulars ceased  to be  secret. Everyone  came-to  know  of them. True  but unauthorised versions were even published in commercial newspapers.  The circulars  also came to be acted upon. Licenses  were not  granted. Customs Clearance Permits were not  issued. Allotments  were not made. Several persons against whom  ‘abeyance’ orders  had been  made  filed  Writ

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Petitions in different High Courts challenging those orders. Liberty Oil Mills (P) Ltd. was one of those who filed such a Writ Petition  in the  Bombay High  Court. The case has been withdrawn to  this Court  under Art 139A of the Constitution and it is this case that has been heard by us. We heard Shri Ashok Desai for the Liberty Oil Mills (P) Ltd. and Shri Soli Sorabji, Shri  V.P. Raman  and Shri  Ram Jethmalani  for the interveners. We  heard Shri  Milon Banerjea, Addl. Solicitor Generalably assisted  by Sri  Gopala  Subrahmanyam  for  the Union of  India and  the Chief  Controller and  Deputy Chief Controller of Imports and Exports and Shri M.C. Bhandare and Shri A. Subba Rao for the State Trading Corporation.      Liberty  Oil  Mills  (P)  Ltd.  is  a  ‘Trading  House’ recognised as  such in terms of the expression as defined in the ‘Import  Policies’ for  several years. Their exports for the period  1982-83 are  stated  to  have  exceeded  Rs.  19 crores. They  claim to  deal in  Vegetable Oils,  export  of Frozen Marine  Products, Frozen  foods, Textiles, Chemicals, Agricultural Products  and imports  of  diverse  commodities such as oil and oil seeds, Chemicals, Drugs, etc. They claim to have  a factory  refining Vegetable  oil at  Kurla and  a factory for  manufacturing vanaspati  at Shahpur.  They have plants for  processing frozen  food  at  Madras,  Tuticorin, Calcutta  and   Vishakhapatnam;  they   also  have   solvent extraction and:  Industrial Oil plants. They claim that they require a  continuous and  steady flow  of various  imported goods for  their several  Industrial activities. They allege that if  import licences for which they have applied are not granted to  them and  if the  imported goods  for which they have applied  are not  allotted to them, their factories and their plants  will have  to be  closed down,  their business will be  seriously affected and many of their employees will be thrown out of employment. They state that they have never 687 adulterated the  vanaspati manufactured  in their factory at Shahpur and  that the samples taken from their factory on as many as thirty six occasions had never been found to contain any type  of animal tallow. They further state that they had not imported any tallow after July, 1982. Such tallow as was imported by them before July, 1982 was sold to them by other licencees to  them as  actual users. The tallow so purchased was air-treated  by them in their premises at Kurla and sold by them  to soap  manufacturers and other fatty acid plants. The import  of tallow  was on  the strength  of  letters  of authority  issued  by  licences  in  respect  of  additional licences  and,  replenishment  licences  and,  replenishment licences held by them. All. the additional licences had been issued prior  to June  5, 1981  and import  of OGL items was permitted against  the said  licences.  Beef  tallow  become canalised from  June 5,  1981 but  the canalisation  was not retrospective and  could not  affect the licences previously issued. All  the contracts for the import of beef tallow had been entered  into before  June 5,  1981 and  in respect  of seven of  the contracts  letters of  credit  had  also  been opened before that date. The beef tallow imported upto July, 1982 was  duly cleared  by Custom  authorities  without  any dispute or  question. Thereafter  the tallow as subjected to air-treatment and  sold to soap manufacturers and fatty acid plants.  There   was  never   any  allegation   against  the petitioners that  any portion of the tallow imported by them had ever  been diverted  for the  adulteration of vanaspati. Liberty  Oil  Mills  therefore,  claim  that  there  was  no justification what  for making  an  order  under  clause  8B against them.  They accordingly  seek the  issue of  Writ to quash the circular.

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    Shri  Ashok  Desai  for  Liberty  oil  Mills  (P)  Ltd. contended that  an order  under  clause  8B  of  the  Import Control order  could. Only be made if the Central Government or the Chief Controller of Imports and Exports was satisfied that the  grant of  licences and allotment of imported goods would not  be in  the public  interest. In the present case, not only  was the  requisite satisfaction of the appropriate authority not  recorded in  the circular  said to  have been issued under  Clause 8B but there was no material whatsoever upon which  such satisfaction  could have  been arrived  it. Before June 5, 1981, beef tallow was not canalised and could therefore, be freely imported as an OGL item. It was on June 5, 1981  that the import of beef tallow came to be canalised but such  canalisation could  not affect  licences which had already been  granted. Beef  tallow could  be imported under the preexisting  licences as  an OGL item even after June 5, 1981 688 and upto  the date  on which  the import  of beef tallow was totally banned.  Our attention was repeatedly invited to the two cases  of Arvind Exports (P) Ltd. and., Jayant oil Mills (P) Ltd  where dealing  with  appeals  and  decisions  under Section 128 and 131 of the Customs Act, the Central Board of Excise and  Customs and the Government of the India took the view      "The licence  issued during a Policy period is governed      by that policy as amended upto the date of issue of the      licence and  amendments made after the date of issue do      not have any application to the licencees." and      "A licence  is governed  by the  Policy which  is  made      applicable to  it. Restrictions placed on the import of      goods in the policy for the subsequent years have to be      ignored, unless  of course,  any such  restriction  has      been specifically  made applicable  to licences  issued      earlier either generally or in the particular cases. In      this case  the licences  were issued  during the policy      for the  period AH-81  and were governed by this policy      only particularly  para 174(v)  thereof. These licences      were valid  for the  goods in  question as  only Mutton      Tallow was  in the list of canalised items. In terms of      para 222(3)  of the  policy for  the period AM-82 these      licences continued  to be valid for beef tallow as this      item continued  in the list of OGL items even after the      coming into  force of  the policy  for the period AM-82      When vide  Public Notice  No.29/81 dated  June 5,  1981      beef tallow  was put  in the canalised items it is from      this date  only that it became canalised. In the public      notice there  is  no  specific  provision  invalidating      licences previously  issued as  far as  beef tallow  is      concerned, in  case such licences were valid earlier to      import this  item.  In  the  absence  of  any  specific      provision the licences produced by the importer in this      case had  to be  accepted for  the  clearance  of  beef      tallow." It was  further contended  that  the  circular  order  under Clause 8B as actually  issued was not confined to the banned item of  animal tallow  or to  items which  could be said to have some  connection with  the banned  item but extended to all items  for which  applications for the grant of licences or for  allotment had  been made  by Liberty  oil Mills  (P) Ltd., whether  or not such items had the remotest connection with animal  tallow Shri Ashok Desai connected that the very general  nature   of  the   order  disclosed  a  total  non- application of the mind since there was no nexus between the alleged misuse of licence

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689 for importing beef tallow or the misuse of the imported beef tallow and  the abeyance of applications for grant of import licences and  for allotment  of other  items.  It  was  also argued that  as many  as 61  firms were clubbed together and dealt with  by single  circular and  there was no indication whatsoever that  the facts relating to each of the firms had been considered  separately. The circular was an omnibus one and revealed  a total  non-application of  the mind.  It was suggested that  the abeyance  orders far  from advancing the public interest,  would, on  the other  hand,  prejudicially affect the  public interest  by bringing  to a  halt several industries and  throwing hosts of workers out of employment. It would  also affect  exports from India and reduce foreign exchange earnings.  It  was  submitted  that  there  was  no substance in  they allegation  that Liberty  oil Mills  Pvt. Ltd. were  not ‘actual  users’ of  beef tallow  but they had none the  less obtained  letters of authorisation for import of beef  tallow as  if they  were actual  users and they had thus misused  the import licences of other licencees. It was pointed out  that the  beef tallow  imported  by  the  under letters of  authority had either been sold by them to actual users on  the high seas or had been actually used by them to produce marketable beef tallow for use by soap manufacturers and fatty  acid plants,  by  subjecting  the  imported  beef tallow to  ‘air-treatment’. It was also argued by Shri Ashok Desai that the circumstances that there was public agitation about the  import of  beef tallow  was a  totally irrelevant circumstances for making an order under clause 8B. Shri V.P. Raman, learned  counsel for one of the interveners suggested that clause   8B  did not  apply to  goods covered  by  open General Licence  in view  of clause  11 (4)  of  the  Import Control Order which provided, "Nothing in this order, except paragraph 3-1  of sub-clause 3 of Clause 5, Clause 8, Clause 8A, Clause  8-C and Clause 10-C shall apply to the import of any goods covered by open General Licence or Special General Licence  issued   by  the  Central  Government."  Shri  Soli Sorabjee, who  appeared for  another  intervener,  submitted that clause  8-B should  be construed  as providing  for  an opportunity to  be heard  and since the abeyance orders made no provision  for hearing,  they should  be struck  down, as opposed to  the principles of natural justice, and therefore arbitrary and  violative of  Art. 14  and 19(i)  (g) of  the Constitution. It  was also urged by the learned counsel that the satisfaction  contemplated  by  clause  8B  was  not  an omnibus satisfaction  but a satisfaction which must disclose an application  of the  mind to the facts of each individual case  and   each  individual   application  for  licence  or allotment. Shri  Ram Jethmalani,  who appeared  for  another intervener 690 urged that  secret orders  affecting rights of parties could not lawfully  be made  since secrecy  would militate against natural justice  and against the right of appeal provided by sec. 4-M  of the  Imports and Exports (Control) Act. He also submitted that  in the  absence of  an  express  recital  of satisfaction which  was the  foundation for  the exercise of the jurisdiction under clause 8B, the order must be held not to conform  to clause  8B and  therefore, vitiated.  He also contrasted clause  8A and  clause 8B  and  argued  that  the public interest  contemplated by clause 8B should be such as to exclude  a pre-decisional  hearing.  There  was  no  such public interest  involved in  the case. There was not even a recital to  that effect.  For that reason also the order was vitiated. He further submitted that an order clause 8B could

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only be  made after  the investigation  under clause  8  had commenced, that is after a show cause notice had been issued under clause 8.      Shri Millon  Bannerjee,  learned  Additional  Solicitor General urged  that the  only question for the consideration of the  court was  whether there  was any  relevant material before the  authority competent  to take action under clause 8B to  reach the  satisfaction contemplated  by that clause. Since the  satisfaction contemplated  by clause  8B was  the subjective satisfaction  of  the  authority  concerned,  the court was  not to concern itself with the sufficiency of the material in  arriving  at  the  requisite  satisfaction.  He however,  invited   our  attention   to  various  facts  and circumstances which,  according to him, wholly justified the action taken  against Liberty  oil  Mills  (P)  Ltd.  Though Liberty  oil   Mills  itself   held  several   licences,  it nevertheless indulged in the collection of a large number of licences of  other imported  beef tallow as their authorised agents, sold part of the beef tallow to alleged actual users on high seas or purchased the beef tallow after importation, subjected it  to the  so-called  air-treatment  a  treatment which could  by no  means be  called a manufacturing process and which  left the  character of  beef tallow unaltered-and sold  it   to  innumerable   parties  stated   to  be   soap manufacturers and  fatty acid  plants. The  claim of Liberty oil Mills  (P) Limited that Liberty oil Mills was an ‘actual users’, who  had purchased  beef tallow for subjecting it to air treatment  was no  more than  a pretence.  It was stated that full particulars of the parties to whom the beef tallow was claimed  to have  been  sold  were  not  made  available despite requests  for  the  same.  There  was  great  public concern about  the manner  in which  beef  tallow  had  been imported and used by some importers and the authorities very naturally felt that it was their 691 duty in the public interest to investigate into malpractices connected with  the import  of beef tallow and the misuse of beef tallow  after import.  The learned Additional Solicitor General placed. before us the relevant files which according to him  indicated that  the case  of Liberty  oil Mills  (P) Limited as  well as the cases of each of the other firms who were included  in the  abeyance circular had been separately considered and  satisfaction duly and properly arrived at by the appropriate  authority on relevant material. The learned Additional Solicitor  General very  fairly did not urge that the decision  to keep in ‘abeyance’ need not be communicated or that  the principles of natural justice were not required to be  observed. But he argued that a pre-decisional hearing was not contemplated. He submitted that rule 8B did not rule out  a   post-decisional  hearing   and  stated   that   the appropriate authorities  were ready  even  now  to  consider faithfully any  representation made by the parties affected. With reference  to the  views expressed by the Central Board to Excise  and Customs  and the  Government of India, in the cases of Arvind Exports and Jayant oil Mills, Shri Bannerjee submitted that  those cases  did not  represent the  correct position  in   law.  Those   decisions  were   rendered   in proceedings under  the Customs  Act  and  did  not  preclude appropriate action  under the  Import and Export Control Act and the  Import Control  Rules. Shri  Bannerjee also invited out attention  to several  provisions of  the Import Control order.      Before considering  the questions  at issue, it will be useful to  refer to  our Import Policy and to take a cursory look at  the various statutory and non-statutory instruments

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embodying the  policy. The  import policy  of  any  country, particularly a  developing country,  has necessarily  to  be tuned to  its  general  economic  policy  founded  upon  its constitutional goals,  the requirements of its internal. and international  trade,   its  agricultural   and   industrial development plans, its monetary and financial strategies and last but  not the  least  the  international  political  and diplomatic overtones depending on ‘friendship, neutrality or hostility with other countries’ (Glass Chotans Importers and Users’ Association  v. Union  of India. There must also be a considerable number  of other  factors  which  go  into  the making  of   an  import  policy.  Expertise  in  public  and political, national  and international  economy is necessary before one  may engage  in the making or in the criticism of an import  policy.  Obviously  courts  do  not  possess  the expertise and are consequently incompetent to pass 692 judgment  on  the  appropriateness  or  the  adequacy  of  a particular import  policy. But we may venture to assert with some degree  of accuracy  that our  present import policy is export oriented.  Incentives by  way of  import licences are given to promote exports. Paragraph 173 of Chapter 18 of the ‘Import Policy’  for April  1981 to  March 1982 published by the Government  of India,  Ministry of Commerce-in the first week of  April every  year, an  annual  ‘Import  and  Export Policy’  to  be  in  force  during  the  financial  year  is published-expressly states  "the objective  of the scheme of registration of  Export Houses  and  the  grant  of  special facilities  to  them  is  to  strengthen  their  negotiating capacity in  foreign trade  and to  build up a more enduring relationship   between    them    and    their    supporting manufacturers" Paragraphs  183 and 184 enumerate the various import facilities  available  to  Export  Houses.  Paragraph 185(1) allows  Export Houses  to import  OGL  (Open  General Licence) items  against REP  (Replenishment) Licences issued in their  own names  or transferred  to them  by others. The facility is stated to be available to them for import of (a) capital goods  listed in  Appendix II  and  placed  on  Open General Licence  for Actual  Users and  (b)  Raw  Materials, components, consumables  and spares (excluding items covered by Appendix  V) which  have  been  placed  on  Open  General Licence  for   Actual  Users.   Paragraph  185  (1)  further stipulates  that   Capital  Goods   so  imported   shall  be transferred by  them  only  to  such  Actual  Users  as  are authorised to  purchase  them  by  the  concerned  Licensing Authority and that raw materials, components and consumables so imported  may be  transferred by  them to eligible Actual Users. Imported  spares may be sold to any person. Paragraph 185 (2)  provides that  import replenishment licences issued in their own names or transferred to them by others, against which Export  Houses wish  to take advantage of the facility provided  in   Paragraph  185,  shall  be  non-transferable. Therefore, the  Export Houses  wishing to  take advantage of the facility  are required  to get  the  licences  concerned endorsed by the licensing authority as under:-      "The licence will also be valid for import of OGL items      under paragraph  185 of import policy, 1981-82, subject      to  the   conditions  laid   down  and  shall  be  non-      transferable." Paragraph 185  (3) further  stipulates that  import  of  OGL items  under  these  provisions  shall  be  subject  to  the condition that  the shipment  of  goods  shall  takes  place within the  validity of  the OGL, that is, March 31, 1982 or within the validity period of the import licence 693

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itself, whichever date is earlier. Paragraph 186 (1) broadly entitles Export Houses to Additional Licences upto the value of 15%  of the f.o.b. value of select products made in 1981- 82 and  manufactured by  small scale and cottage industries, plus 7-1/2%  of the  f.o.b. value of other exports of select products made in the same year. All such Additional Licences shall be  non-transferable. Paragraph  186(7) provides  that the Additional Licences will also be valid for import of Raw Materials, Components,  Consumables  and  Spares  (including items covered  by Appendix V) which have been placed on Open General Licence  for Actual Users (Industrial). While Spares so imported  may be  sold  to  any  person,  Raw  Materials, Components and  Consumables may  only be  sold  to  eligible Actual Users.  Paragraph 192 requires every Export Houses to maintain proper  accounts of  all its  exports, imports  and disposed of  imported items  and  are  further  required  to furnish detailed information in the prescribed forms.      Some Export  Houses are  recognised as  ’Trading Houses ’depending on their performance. Trading Houses are entitled to all  the facilities available to Export Houses, but their entitlement  to   additional  licences  against  exports  of products manufactured in the small scale and cottage sectors is to be 20 per cent and not 15 per cent.      Paragraph 222(1)  prescribes that  additional  licences issued to  Export Houses  in 1980-81 shall cease to be valid for items  which do  not appear  in Appendices  5 and  7  of Import Policy, 1981-82. But it is said that restriction will not apply  to the  extent that the licence holders have made firm commitments  by opening  irrevocable letters  of credit through authorised  dealers of foreign exchange before April 1, 1981.  Paragraph 222(3)  provides that  REP licences  and additional licences  held by Export Houses shall cease to be valid for  import of  any item which could be imported under Open General Licences during 1980-81, but it is no longer so in the  Import Policy 1981-82 except for such commitments as have been  made by  opening irrevocable  letters  of  credit through authorised dealers in foreign exchange before April, 1981. We  may notice  here that  Appendices 1,  3, 4  and  6 contain lists  of banned  items. Appendix  5 and  Appendix 7 contain a  list of  restricted items.  Appendix 8 contains a list of  items import  of which  is canalised through public sector agencies, Appendix 2 contains a list of Capital Goods allowed under Open General Licences and Appendix 10 contains a list  of Items  allowed to  be imported under Open General Licences, subject to the condi- 694 tions set  out therein.  It appears  that prior to 1978, OGL was confined to certain restricted items only. But in April, 1978, the  Government of  India issued  Import Trade Control Order No.  9 of 1978: the OGL No. 3 of 1978 granting general permission to  import into  India from  any country  of  the world,  Raw   Materials  and   Components  by  Actual  Users (industrial) if the items to be imported were not covered by any of  the lists  of banned, restricted and canalised items and did  not figure  in Appendix IX of the Import Policy for 1978-79. One  of the  results was  that animal  tallow which could not  be imported  as an  OGL item prior to April 1978, could be  so imported  after 1978  as it  was not one of the banned, restricted  or canalised items. In the Import Policy for April  1980 to March 1981, mutton tallow was included in the list  of canalised items. Therefore, while mutton tallow could be imported thereafter through the agency of the State Trading  Corporation   only,  beef  tallow  could  still  be imported as  an OGL  item. The  position was the same in the Import Policy  issued for  the period April 1981-March 1982.

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However, on  June 5,  1981 by  a Public  Notice for the word ’mutton  tallow’   in  the  list  of  canalised  items,  the expression "tallow  of any  animal  organ  including  mutton tallow" was  substituted. Therefore with effect from June 5, 1981 beef  tallow also  became a  canalised item. One of the questions posed is regarding the effect of the public notice dated June 5, 1981 by which the expression ’tallow of animal origin or  including mutton  tallow’ was substituted for the word ’mutton  tallow’. The question posed is whether the ban of import  except through  the State Trading Corporation was applicable to  beef tallow imported into India after June 5, 1981 but  against licences  issued earlier and in respect of which contacts  had  already  been  into.  We  have  already mentioned that  on August  24, 1983, the Government of India made an  order under  Section 3  of the  Exports and Imports (Control) Act totally banning the import into India of beef, buffalo and pig tallow.      We may  mention here that the Import Policy for earlier as well  as  later  years,  contain  more  or  less  similar provisions as  those in  the Import  Policy for  April 1981- March 1982.      The statutory regulation of imports is contained in the Imports and  Exports (Control)  Act, 1947  and  the  Imports Control Order  1955. Section  2 of  the Imports  and Exports (Control)  Act   defines  various  expressions.  ’Letter  of authority’ is  defined a  letter meaning  as authorising the licensee to permit another person, named in the said letter, to import goods against the licence granted to the licensee. Licence is defined to mean a licence granted and including 695 a customs  clearance permit issued, under any control order. Section 3  of the  Act is  the pivotal section. Section 3(3) empowers the  Central Government,  notwithstanding  anything contained in  the Customs  Act, by  order published  in  the official Gazette, to prohibit, restrict or impose conditions on the  clearance  whether  for  human  consumption  or  for shipment abroad,  of any  goods or  class of  goods imported into India.  Section 4A  empowers the  Central Government to levy fee in respect of licences granted or renewed under any order made or deemed to be made under the Act. Sections 4 B, 4 C,  4 D,  4 E and 4 F are provisions relating to the power to enter and inspect the power to search, the power to seize imported goods  or material,  the power  to stop  and  seize conveyances. Sections  4 G and 4 H, provide for confiscation and Section  4 I  for the  levy  of  penalty.  Section  4  J preserves the  power to  inflict any  other punishment under the provisions of the Act or under any other law despite the confiscation or  penalty imposed  under the Act. Section 4 K provides for  adjudications and  Section 4  L  entitles  the owner of  the goods,  materials, conveyance  or  animals  or other persons concerned to be given a reasonable opportunity of making  a representation before any order of adjudication of confiscation  or imposition of a penalty is made. Section 4 M  provides for  an appeal  against any  decision or order made under  the Act  and Section  4  N  empowers  the  Chief Controller to  exercise power  of revision in cases where no appeal has been preferred. Section 5 makes contraventions of any order  made or  deemed to  be made  under the Act or any condition of  a licence  granted under such order punishable with imprisonment  and fine  as mentioned in that provision. Section 8  empowers the Central Government to make rules for carrying out the provisions of the Act.      The Imports  (Control) Order,  1955 is an order made by the Central  Government in  exercise of the powers conferred by Section  3 and  4-A of  the Imports and Exports (Control)

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Act. Clause 3 of the Imports (Control) Order prescribes that no  person   shall  import  any  goods  of  the  description specified in  Schedule-I except under and in accordance with the licence  or a  customs clearance  permit granted  by the Central Government  or by  a  specified  officer.  Clause  5 provides for  the imposition  of conditions subject to which licences may  be issued.  Clause 6 prescribes the situations when the  Central Government  or  the  Chief  Controller  of Imports and  Exports may refuse to grant a licence or direct any other licensing authority not to grant a licence. One of the situations  is ’if  the applicant  is for the time being subject to any action under clause 8, 8A or 8B’. 696 Clause 8(1)  empowers the  Central Government  or the  Chief Controller of  Imports and  Exports to  debar a  licencee or importer or  any other  person from  importing any  goods or receiving  licences  or  allotment  of  the  imported  goods through the State Trading Corporation of India, the Minerals and Metals  Trading  Corporation  of  India,  or  any  other similar agencies  and direct, without prejudice to any other action that may be taken against him in this behalf and that no licence  or allotment  of imported goods shall be granted to him and he shall not be permitted to import any goods for a specified  period for  any of the reasons specified in the clause. Two  of the reasons mentioned in the clause are: "If he fails  to comply  with  or  contravenes  or  attempts  to contravene or  abets the  contravention  of  any  conditions embodied in or accompanying, a licence or an application for a licence" and "If he commits a breach of any law (including any rule,  order or  regulation) relating  to custom  or the import or  export of  goods or  foreign exchange". Clause 8A empowers the  Central Government  or the Chief Controller of Imports to suspend the importation of goods by any person or grant of licences or allotment of imported goods through the State Trading  Corporation of India, the Minerals and Metals Trading Corporation  of India,  or any other similar agency, to a  licensee or  importer  or  any  other  person  pending investigation into  one or more of the allegations mentioned in Clause  8 without  prejudice to any other notice that may be taken  against him  in that  behalf. The first proviso to Clause  8A  prescribes  that  the  grant  of  a  licence  or allotment  of   imported  goods   shall  not  ordinarily  be suspended under  this  clause  for  a  period  exceeding  15 months. The second proviso stipulates that on the withdrawal of such  suspension a licence or allotment of imported goods may be granted to him for a period of suspension, subject to such conditions,  restrictions  or  limitations  as  may  be decided by  the authorities aforesaid keeping in view of the foreign exchange  position, indigenous  production and other relevant factors.  Clause 8B empowers the Central Government or the  Chief Controller  of Imports  and Exports to keep in abeyance applications  for licences or allotment of imported goods where  any investigation  is pending  into any  of the allegations mentioned  in  Clause  8  against  a  lincensee, importer or  any other  person subject  to the fulfilment of the requirement  of  the  satisfaction  of  the  appropriate authority  regarding  the  public  interest.  Since  we  are primarily concerned  in this  case with the vires, the width and the  interpretation of Clause 8B, the whole of it may be usefully extracted:-      "8B:  Power   to  keep  in  abeyance  applications  for      licences or  allotments  of  imported  goods-Where  any      investigation into 697      any of the allegations mentioned in clause 8 is pending

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    against a licensee or importer or any other person, and      the Central  Government  or  the  Chief  Controller  of      Imports  and   Exports  in   satisfied   that   without      ascertaining  further   details  in   regard  to   such      allegation,  the  grant  of  licence  or  allotment  of      imported goods will not be in the public interest, then      notwithstanding anything  contained in  this Order, the      Central Government  or the  Chief Controller of Imports      and Exports  may keep  in abeyance  any application for      grant of  licence from such person, or direct the State      Trading Corporation  of India,  the Minerals and Metals      Trading Corporation  of India,  or  any  other  similar      agency to keep in abeyance allotments of imported goods      to  such  person,  without  assigning  any  reason  and      without prejudice to any other action that may be taken      in this behalf:           Provided that  the period  for which  the grant of      such licence  or allotment  is kept  in abeyance  under      this clause shall not ordinarily exceeds six months."      Clause 8C  authorises the Central Government to publish or cause  to be  published the name of such persons or class of persons  against whom  action under  clause 8  or  8A  is taken. Clause 9 empowers the Central Government or the Chief Controller of  Imports and  Exports  or  any  other  officer authorised in  that behalf  to cancel  any  licence  granted under the  order or  otherwise to  render it ineffective for any of  the reasons  mentioned in  the clause.  One  of  the reasons is ’If the licensee has committed a breach of any of the conditions  of a  licence". Another  reason is  "If  the Central Government  is or such officer is satisfied that the licence will  not serve  the purpose  for which  it has been granted."  Yet  another  reason  in  "If  the  licensee  has committed a  breach of  any law  relating to  customs or the rules or  regulations relating  to Imports  and  Exports  of goods or any other law relating to foreign exchange." Clause 10(i) provides  that no  action shall  be taken, inter alia, under Clause  8(1) or  Clause 8A  or Clause  9(1) against  a licensee or  importer or any other person unless he has been given a  reasonable opportunity of being heard. Clause 10(2) enables any  person aggrieved  by  any  action  taken  under Clause 8(1)  or 8(3)  or 8(A) or 9(1) to prefer an appeal to the authority constituted by the Central Government for that purpose. Clause 11(4) prescribes,      "Nothing in  this order, except paragraph (iii) of sub-      clause(3) of  Clause 5,  Clause 8, Clause 8A, Clause 8C      and Clause 10C, 698      shall apply  to the import of any goods covered by Open      General Licence  or Special  General Licence  issued by      the Central Government."      We may notice here the argument of Shri V.P. Raman that Clause 11 (4) excludes the application of Clause 8B to goods covered by  Open General  Licence. We  find no  substance in this submission.  Clause 8B  expressly provides  that action under the  clause may  be  taken  "notwithstanding  anything contained in  this order".  In  view  of  this  non-obstante clause, we  have no  doubt that Clause 8B applies equally to goods covered by Open General Licence.      We may  mention at this juncture that Clauses 8A and 8B were not  to be  found in  the Imports  (Control) Order 1955 originally but  were introduced  into it  later  by  way  of amendment, to  make provision  for  the  making  of  interim orders pending investigation into allegation under Clause 8. The amendment was af consequence of the lacuna being pointed out by the Bombay High Court in some cases which came before

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it.      To be  fair to  the learned  counsel for the petitioner and the  other learned  counsel for  the interveners, all of them were unanimous about the necessity for a provision like Clause 8B,  and none  of them argued that Clause 8B would be ultra vires  if the  principles of  natural justice could be read into  it. The  learned Additional Solicitor General, as mentioned by  us earlier, agreed that natural justice should be read  into Clause  8B  so  as  to  provide  for  a  post- decisional hearing at the request of the affected party. Let us examine  Clause 8B  in the  scheme  and  setting  of  the Imports (Control) Order and consider whether natural justice is excluded  and, if  not, when  and what opportunity may be provided to the affected party.      Clause 8, we have seen, empowers the Central Government or the  Chief Controller  of Imports  and Exports to debar a person from  importing goods  or from  receiving licences or allotment of  imported goods  for a specified period if such person is  guilty of  any  of  the  acts  of  commission  or omission  enumerated   in  the  Clause.  An  order  of  this immensity cannot obviously be made without due investigation and without  giving a reasonable opportunity to the affected party. Clause  8A and  8B refer  to orders which may be made pending investigation  into the  allegations under  Clause 8 and  by   necessary  implication  expose  the  investigative content of  Clause 8.  Clause 10  expressly stipulates  that action under  Clause 8  may not be taken unless a reasonable opportunity is given to the party concerned. Neither 699 Clauses 8  nor Clause  10 prescribes  the  procedure  to  be followed before  a final order under Clause 8 is made. Has a show-cause notice  to be  issued first,  then followed by an investigation and  finally concluded  by  yet  another  show cause notice  ? Or  is it  enough if  a show-cause notice is issued after  the investigation  is concluded and the person concerned is  asked to explain the evidence gathered against him ?  When may  investigation be  said to  have commenced ? Should investigation be necessarily preceded by a show-cause notice ?  We do not think that the Central Government or the Chief Controller  is bound  to follow any rigid, hide-bound, pre-determined procedure.  The procedure may be different in each case  and may  be determined by the facts circumstances and exigencies  of each  case. The  authority may design its own procedure  to suit  the requirements  of  an  individual case. The  procedure must  be fair and not so designed as to defeat well  known  principles  of  justice  and  thus  deny justice. That  is all.  If the  procedure is fair it matters not whether  the investigation  is preceded,  interjected or succeeded by  a show-cause  notice. The word ’Investigation’ is not  defined but in the content it means no more than the process of  collection  of  evidence  or  the  gathering  of material. It  is not  necessary that it should commence with the communication  of an  accusation  to  the  person  whose affairs are  to be investigated. That may follow later. When facts come  to the  notice of  the Government  or the  Chief Controller of  Imports which  prima facie disclose an act or omission of  the nature mentioned in Clause 8, the authority may straight  away communicate the allegations to the person concerned,  seek   his  answer   and  proceed   to   further investigate or the authority may consider it more prudent to further satisfy itself by seeking other evidence or material before  communicating   the  allegations   to   the   person concerned. There  is no  rule of  justice or fair play which requires the  authority to  seek the  comments of the person concerned   before    embarking   upon   an   investigation.

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Investigation commences  as soon as the authority decides to take the first step whether by way of seeking evidence or by way of  seeking an explanation from the person concerned. On the initiation  of  a  proceeding  under  Clause  8  by  the commencement of  investigation, the authority has to address itself to  the Question  whether any  action of  an  interim nature to  prevent further  harm or  mischief  is  warranted pending investigation. Licences may have already been issued and allotment  of imported goods may have already been made. The authority  may consider  it  desirable  to  prevent  the person from  imported goods  pursuant to  the licences or to prevent him  from obtaining  the imported  goods allotted to him through the specified agencies. If so, the authority may make an order under Clause 8A 700 suspending the  importation of  goods, the grant of licences or the  allotment of  imported goods. But Clause 10 provides that no action under Clause 8A may be taken without giving a reasonable  opportunity  to  the  person  concerned.  It  is obviously thought  that the  right such  as it  may  be,  to obtain  a  licence  or  allotment  of  goods  having  become crystalised into  a licence  or an allotment, an order under Clause  8A   may  have   immediate  and   grave  prejudicial repercussions on  the person  concerned making  it desirable that he  should be  heard before  an order  of suspension is made. So  it is that Clause 8A contemplates a pre-decisional hearing. On  the other  hand, licences may not yet have been issued  and   allotments  may  yet  have  to  be  made.  The appropriate authority  may be satisfied that it would not be in the public interest to issues licences or make allotments to  the   person  concerned,  without  ascertaining  further details with  regard to the allegations against him. In such cases, the  authority may  make an order of ’abeyance’ under Clause 8B.  Though the  language of  Clause 8B is capable of being read  as if it applies to both allotments already made and allotments  yet to  be made, a reference to the marginal head, in  the background  of what  has been  provided for in Clause 8A,  makes it  clear that  Clause 8B  applies only to allotments yet  to be  made and  licences yet  to be issued. That clearly  is the  contextual construction  of Clause 8B. Read  in   any  other   manner,  there  will  be  a  totally unnecessary over-lapping  of and a needless conflict between Clauses 8A  and 8B,  with freedom to the authority to pursue action either  under Clause 8A or Clause 8B each providing a different procedure  of its  own. We do not think that it is permissible for  us to read clauses 8A and 8B in a manner as to create  needless conflict  and  confusion  when  the  two classes  are   capable  of   existing  separately,   without encroaching upon each other. Contextual construction demands such a  construction and  we have  no hesitation in adopting it. Clause  10 which  provides for  a reasonable opportunity before action  is taken  under  clause  8A,  does  not  make similar provision  in the  case of action under clause 8A as well as  action under  clause 8B  are both  in the nature of interim orders  of temporary  duration aimed  at  preventing further harm  and mischief  pending investigation  into  the allegations under  clause 8. Does it mean that the principle of  natural   justice  of   procedural  fairness  is  to  be altogether excluded  when action  is taken under clause 8B ? We do  not think  that it  is permissible  to interpret  any statutory instruments  so as  to  exclude  natural  justice, unless the  language of  the instrument  leaves no option to the court.  Procedural fairness embodying natural justice is to be implied whenever action is taken effecting the rights 701

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of parties.  It may  be that the opportunity to be heard may not be  pre-decisional; it  may necessarily  have to be pre- decisional where  the danger  to be averted or the act to be prevented is  imminent or  where the  action to be taken can brook no  delay. If  an area  is devastated  by  flood,  one cannot wait  to issue  show-cause notices for requisitioning vehicles to evacuate population. If there is an out-break of an epidemic,  we presume  one does  not have  to issue show- cause notices  to requisition  beds in  hospitals, public or private. In such situations, it may be enough to issue post- decisional notices  providing for an opportunity. It may not even be  necessary in  some situations to issue such notices but it  would be  sufficient but  obligatory to consider any representation that  may be made by the aggrieved person and that would  satisfy the  requirements of procedural fairness and natural  justice. There  can be  no tape-measure  of the extent of  natural justice.  It may  and indeed it must vary from statute  to statute, situation to situation and case to case. Again,  it is  necessary to  say  that  pre-decisional natural  justice   is  not  usually  contemplated  when  the decisions  taken   are  of   an   interim   nature   pending investigation or  enquiry. Ad-interim  orders may  always be made ex-parte  and such orders may themselves provide for an opportunity to  the aggrieved  party to  be heard at a later stage. Even  if the interim orders do not make provision for such an  opportunity, an  aggrieved party has, nevertheless, always the  right to make appropriate representation seeking a review of the order and asking the authority to rescind or modify the order. The principles of natural justice would be satisfied if  the aggrieved party is given an opportunity at the request. There is no violation of a principle of natural justice if  an ex-parte  ad-interim order  is made unless of course, the statute itself provides for a hearing before the order is  made as  in clause  8A. Natural  justice  will  be violated if the authority refuses to consider the request of the  aggrieved   party  for   an  opportunity  to  make  his representation against the ex-parte ad-interim orders.      In the  Qeen v.  Randolph et  al., the Supreme Court of Canada had to consider the question whether an interim order under s.  7 of  the Post Office Act prohibiting the delivery of mail  directed to  or deposited  by a  person in  a  Post Office may  be made  without  prior  notice  to  the  person affected, pending  the final  determination which could only be made  after hearing the party affected. The Supreme Court said, 702      "In s.  7 it has not abrogated it (i.e. the application of the  maxim audi  alteram paterm)  Rather it  has provided that before  any final  prohibitory order is made, the party affected shall  have notice  and a  right to  an expeditions hearing and  has defined  the procedure  to be  followed. It would, in my opinion, be inconsistent with the scheme of the section to  hold that  before making  an interim  order  the Post-master-General must  hold a  hearing. If  such  a  duty existed it  would be  a duty to notify the party affected of what was  alleged against  him and  to give him a reasonable opportunity  to  answer.  If  this  were  done  the  hearing prescribed sub-s.  (2) would  be an unnecessary  repetition. Generally  speaking   the  maxim  audi  alteram  partem  has reference to the making of decisions affecting the rights of parties which  are final  in their  nature, and this is true also of s. 2 (e) of the Canadian Bill of Rights, 1960 (Can), c. 44 upon which the respondents relied."      "The following  passage in  Broom’s Legal  Maxims  10th ed., p. 68 is in point:

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    Although cases  may be  found in the books of decisions under particular  statues  which  at  first  might  seem  to conflict with  the maxim,  it will be found on consideration that they  are not inconsistent with it, for the rule, which is one of elementary justice, only requires that a man shall not be subject to final judgment or to punishment without an opportunity of being heard."      "The main  object of s. 7 is to enable the Post-master- General to  take prompt  action to  prevent the  use of  the mails for  the purpose  of defrauding  the public  or  other criminal activity. That purpose might well be defeated if he could take  action only  after notice  and a  hearing.  Sub- section (1)  enables him  to act  swiftly in  performing the duty  of  protecting  the  public  while  sub-s.  (2)  gives protection to the person affected by conferring the right to a hearing before any order made against him becomes final.      "In my  opinion, the  two interim prohibitory orders in question were validly made."      In the  Commissioner of Police v. Tanos, the High Court of 703 Australia (Dixon  C. J  and Webb  J.)  was  considering  the question  whether   an  ex-parte   order  of  closure  of  a Disorderly House may be made. It was observed.      "......it is  in a  broad sense a procedural matter and      while the general principle must prevail it is apparent      that exceptional cases may be imagined in which because      of some special hazard or cause of urgency an immediate      declaration is  demanded. A power to regulate procedure      might be treated as authorising regulations allowing an      ex-parte order in such cases. Under the power conferred      by section  15 upon  the  Governor-in-Council  to  make      regulations  this   very  course  seems  to  have  been      adopted. Regulation  I provides that if the judge is of      the opinion that reasonable grounds have been shown (i)      he may make the declaration immediately and ex-parte if      this seems to him necessary or desirable, or (ii) if he      thinks that an opportunity should be given to the owner      or occupier  or  both  to  oppose  the  making  of  the      declaration he may direct them to be served with a copy      of the affidavit and to be notified of the day on which      the  matter  will  be  dealt  with,  such  service  and      notification to  be effected in such manner as may seem      to him  sufficient:  when  the  matter  comes  on,  the      Superintendent or  Inspector of  Police or  counsel  or      solicitor on  his behalf  and the owner and occupier or      counsel or  solicitor on their behalf may attend and be      heard, and  the matter  shall be  disposed of in public      chambers.  This  regulation  may  perhaps  he  read  as      leaving the choice of course at large to the judge. But      it ought  not  so  to  be  interpreted.  It  should  be      understood as  meaning  that  prima  facie  the  course      provided for  in para (iii) should be followed and only      in exceptional  or special  cases should  an  immediate      declaration be  made. The analogy is that of an interim      injunction, but  the caution  should be greater because      the declaration,  unless it is framed as provisional or      conditional, concludes the right subject to rescission.      "It may be added that probably a declaration improperly      made ex-parte  may be  rescinded or  set  aside  on  an      application made independently of s. 4(1)."      In Lewis  v. Heffer,  Lord Denning MR distinguished the observations of Megarry J. in John v. Rees and observed, 704      "Those words  apply, no doubt, to suspensions which are

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    inflicted by  way of punishment, as for instance when a      member of  the Bar  is suspended  from practice for six      months, or  when solicitor  is suspended from practice.      But they do not apply to suspensions which are made, as      a holding  operation,  pending  enquiries.  Very  often      irregularities are disclosed in a government department      or in  a business  house; and a man may be suspended on      full pay  pending enquiries. Suspicion may rest on him;      and so  he is  suspended until  he is cleared of it. No      one so  far as  I know,  has  ever  questioned  such  a      suspension on  the ground  that it  could not  be  done      unless  he  is  given  notice  of  the  charge  and  an      opportunity of  defending himself,  and so  forth.  The      suspension in such a case is merely done by way of good      administration.  A   situation  has   arisen  in  which      something must  be  done  at  once.  The  work  of  the      department or  the office  is being affected by rumours      and suspicions.  The others  will not trust the man. In      order to get back to proper work, the man is suspended.      At that  stage, the  rules of  natural justice  do  not      apply;: see Furnell v. Whangarei High Schools Board."      In Furnell  v. Whangarei  High  School  Bd.  the  Privy Council upheld  the order of suspension of a teacher pending determination of charges against him. It was observed,      "Neither  in   the  regulations   nor  in  the  Act  is      suspension classified  as a  penalty. Section  157  (3)      shows that  it is  not. It  must however  be recognised      that suspension may involve hardship. During suspension      salary is  not paid  and apart from this something of a      temporary  slur   may  be  involved  if  a  teacher  is      suspended.  But   the  regulations  (by  regulation  5)      clearly contemplate  or lay  it down  that the  written      statement of  a teacher (under regulation 5(2)) and the      oral personal statement (under regulation 5(3)) will be      made  after   suspension  if   any  has   taken  place.      Suspension is discretionary. Decisions as to whether to      suspend will often be difficult. Members of a board who      are appointed  or elected  to act as the governing body      of  a   school  must   in   the   exercise   of   their      responsibilities have  regard not only to the interests      of teachers  but to  the interests  of  pupils  and  of      parents and  of the public. There may be occasions when      having regard  to the  nature of  a charge  it will  be      wise, in the 705      interests  of  all  concerned,  that  pending  decision      whether the charge is substantiated a teacher should be      suspended from  duty. In  many cases  it can be assumed      that charges would be denied and that only after a full      hearing could  the true  position be ascertained. It is      not to  be assumed  that a board, constituted as it is,      will wantonly exercise its discretion."      We have referred to these four cases only to illustrate how ex-parte  interim orders  may be  made pending  a  final adjudication. We  however, take  care to  say that we do not mean to  suggest that  Natural Justice is not attracted when orders of suspension or like orders of an interim nature are made. Some  orders  of  that  nature,  intended  to  prevent further mischief  of one  kind, may themselves be productive of greater  mischief of  another kind.  An interim  order of stay or  suspension which  has the  effect of  preventing  a person,  however,   temporarily,  say,   from  pursuing  his profession  or  line  of  business,  may  have  substantial, serious and  even disastrous  consequences to  him  and  may expose him  to grave risk and hazard. Therefore, we say that

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there must  be  observed  some  modicum  of  residual,  core natural justice, sufficient to enable the effected person to make an  adequate representation.  (These considerations may not, however,  apply to  cases  of  liquor  licensing  which involve the  grant of  a privilege  and are  not a matter of right  :   See  Chinglepur  Bottlers  v.  Majestic  Bottling Company, Civil  Appeal Nos.  11970-71 of  1983). That may be and in  some cases, it can only be after an initial ex-parte interim order is made.      As we  have seen,  both clauses  8A and  8B contemplate action of  an  interim  nature  pending  investigation  into allegations under  clause 8.  Ordinarily, in  the absence of anything  more,  it  would  not  be  necessary  to  give  an opportunity to  the person  concerned before  proceeding  to take action  under clause  8A or clause 8B. But while clause 8B deals  with the right to obtain licences and the right to obtain allotments,  clause 8A  deals with  rights which have flowered into  licences and  allotments. A  person  to  whom licences have  been granted  or  allotments  made  may  have arranged  his   affairs  on  that  basis  and  entered  into transactions with  others, and,  to him  the consequences of action under  clause 8A  may be truly disastrous whereas the consequences of  action  under  clause  8B  may  not  be  so imminently harmful.  It is presumably because of this lively difference between clauses 8A and 8B that clause 10 provides for a pre-decisional opportunity in the case of action under clause 8A  and does  not so  provide in  the case  of action under clause 8B Again, it is 706 presumably because  of this  difference that clause 10 while providing for  an appeal  against a decision under clause 8A does not  provide for  an appeal  against a  decision  under clause 8B.  Not that  it makes  any difference because S. 4M and 4N  of the Imports and Exports (Control) Act provide for an appeal  and a revision against any decision or order made under the  Act, which naturally include any decision or made under any  subordinate legislation  made under  the Act, and this right of appeal and revision cannot be whittled down by the subordinate  legislation. As  we mentioned  earlier,  it does not  mean that  the requirements of natural justice are not to  be met at all in the case of action under clause 8B. The requirements  of natural justice will be met in the case of action  under clause  8B by  considering, bona  fide, any representation that may be made in that behalf by the person aggrieved. Clause  8B itself gives an indication that such a post-decisional opportunity  on the  request of  the  person concerned is  contemplated. We  have seen  that action under clause 8B  is to  be taken  if the authority is satisfied in the public  interest that  such action  may be taken without ascertaining further  details in  regard to the allegations. It clearly  implies that  when further facts are ascertained by the  authority or brought to the notice of the authority, such action  may be reviewed. As we have earlier pointed out while ex-parte  interim orders  may always be made without a pre-decisional  opportunity  or  without  the  order  itself providing for  a post-decisional opportunity, the principles of  natural   justice  which  are  never  excluded  will  be satisfied if  a  post-decisional  opportunity  is  given  if demanded. So we hold that in the case of action under clause 8B it  is not necessary to give a pre-decisional opportunity but a  post decisional  opportunity  must  be  given  if  so requested by the person affected.      The next  question for  consideration  is  whether  the decision to keep in ’abeyance’ should be communicated to the person concerned. There can be no two opinions on this. Ours

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is a  Constitutional Government,  an open  democracy founded upon the  rule of law and not a cloak and dagger regimen. It is inconceivable  that under  our  constitutional  scheme  a decision of  the kind  contemplated by  clause 8B  which may have the  effect of  bringing to  a stand  still the  entire business activity  of the person affected and which may even spell ruin  to him,  should be  made and implemented without being  communicated  to  that  person.  Intertwined  is  the question of  observance  of  natural  justice  and  how  can natural justice  be satisfied  if the  decision is  not even communicated ?  It would be most arbitrary and quite clearly violative of Articles 14 and 19(i)(g) of the Constitution if 707 clause 8B is to be interpreted as excluding communication of the decision taken. There is nothing in clause 8B to suggest that the  decision is  not to  be communicated. On the other hand, the  expression "without assigning any reason" implies that the  decision has  to be  communicated, but reasons for the decision  have not to be stated. Reasons of course, must exist for  the decision since the decision may only be taken if the  authority is  satisfied that the grant of licence or allotment of  imported goods  will  not  be  in  the  public interest. We  must make  it clear  that  ’without  assigning reasons’ only means that there is no obligation to formulate reasons  and  nothing  more.  Formal  reasons  may  lead  to complications when  the matter is still under investigation. So the  authority may  not  give  formal  reasons,  but  the skeletal allegations  must be  mentioned in order to provide an  opportunity   to  the   person  affected   to  make  his representation,  Chapter  and  verse  need  not  be  quoted. Details  may   not  be  mentioned  and  an  outline  of  the allegations should be sufficient.      The further question is on what should the satisfaction be based  ? Since  action under  clause 8B  is to  be  taken pending investigation  into allegations  under clause  8, we must take  it that  the action  under clause 8B is really in aid of  the ultimate  order under  clause 8.  It must follow that in  order to  invite the  satisfaction contemplated  by clause 8B  there must  be present  some  strong suspicion of one or  other or  more of the grounds mentioned in clause 8. Since the action which is of a drastic nature is to be taken ex-parte, it  must necessarily  be animated  by a  sense  of urgency. The  sense of  urgency may  be infused by a host of circumstances  such  as  the  trafficking  and  unscrupulous peddling in  licences, large scale misuse of imported goods, attempts to  monopolise  or  corner  the  market,  wholesale prevalence of improper practices among classes of importers, public sentiment  etc. etc.  One  of  the  submissions  very strenuously pressed  before us was that public sentiment was wholly  irrelevant   in   arriving   at   the   satisfaction contemplated by  Clause 8B.  We are  unable to  agree. It is true that  public administration  is not to be run on public sentiment and  statutory action may only be taken on grounds permitted by  the statute.  But strong  public sentiment may impart a  sense of  urgency to a situation such as to compel the authorities  to proceed  to take  action under a statute provided of  course grounds  for  taking  action  under  the statute. Public  sentiment is not, in such cases, the ground for the  action but  it is what clothes the ground with that sense of urgency which makes it imperative that swift action be taken.  That is how we understand the reference to public sentiment in the 708 counter affidavit  filed on behalf of the Union of India and the Chief Controller of Imports and Exports.

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    Public interest  must nolens  volence be  the paramount consideration. If  the threatened public mischief is such as to outweigh  the likely  injury to  the party, the authority may take  action under  Clause 8B.  If the threatened public injury is very slight compared to the harm which may be done to the party, the authority may not take action under Clause 8B. There  may be  cases where  the  ’abeyance’  orders  may themselves be productive of serious public injury as where a substantial amount  of foreign  exchange may  be lost  or  a large number  of workers  are likely  to be  thrown  out  of employment etc. In such situations the authorities may pause and  have   second   thoughts,   consider   the   inevitable consequences and  be guided  by that  element of  the public interest which  outweighs all  others. Which  element of the public interest  should be  given greater  weight and  which grounds should  weigh at  all are  matters for the authority taking  action   under  Rule   8B.  Courts  do  not  concern themselves with  the sufficiency  of the  grounds  on  which action  is   taken  or   with  the  balancing  of  competing considerations, in favour of and against the action.      One of the submissions very strenuously urged before us was that  a large  number of  the applications.  for  import licencees and  allotments of  imported goods which have been kept  in  ’abeyance’  relate  to  goods  which  are  totally unrelated to  beef tallow  or any  other animal  tallow  and there was  no justification  whatever for  keeping  them  in ’abeyance’. But  an ’abeyance’  order  under  clause  8B  is directed not  against  any  particular  type  of  goods  but against an  importer, licensee  or other person against whom an investigation into allegations under clause 8 is pending. The question  is not  whether any  particular type  of goods should be  allowed to  be imported or allotted to any person that is  a question of policy-, but whether it is not in the public interest that a particular person should be prevented from obtaining  import licences  or imported  goods  of  any description pending investigation into the allegations under clause  8B.   That  would   depend  on  the  nature  of  the allegations,  the   extent  of  involvement  of  the  person concerned and,  most important,  the element  of the  public interest. If  the allegations  against a  person involve him deeply in trafficking or racketeering in import licences and imported goods, the authority may consider it inexpedient in the public  interest to  keep in abeyance any application of his for the grant of a licence or allotment of goods. On the other hand  even if the allegations are grave, if the effect of an order under clause 8B is 709 likely to  result in  loses of considerable foreign exchange or to shut down an industry throwing large number of workers out of  employment, the  authority should restrain itself in larger public interest, from making an order under clause 8B or may  make  an  order  confining  the  abeyance  order  to applications and  goods of  certain description only instead to     making  a,   general  order   which  extends  to  all applications for  import licences  and allotment of imported goods.  Again,   the  allegations   may  reveal   that   the involvement of  the person  in illegal activity is so remore or minimal  that it would be entirely inexpedient to make an order  clause   8B.  A  person  who  legitimately  purchases imported goods  or imports  goods under  a licence  lawfully acquire by him and who has used the goods in the manufacture of a different kind of goods in which industry the person is engaged may  not be  visited with  an order  under clause 8B merely  because  the  original  licensee’s  actions  may  be suspicious. Again where a person’s bonafides are not suspect

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at all  but he  may be  technically at  fault or he may have acted  on   a  bonafide  interpretation  of  the  rules  and regulations, it  may not be a case for making an order under clause 8B.  But these  are all matters for the consideration of the  authority making  the order  under clause 8B and not for the Court.      We have  held that  action under  Clause 8B  is  of  an interim nature  and it  may be  ex-parte, in  which case the affected party  may make  a suitable representation bringing out all the outweighing circumstances in his favour. That is the real  remedy of  the party.  Courts  do  not  enter  the picture at  that stage  unless the  action is  mala fide  or patently without  jurisdiction. The  action will be patently without jurisdiction  if it  is not  based on  any  relevant material whatsoever.  If the  authority declines to consider the representation,  or if the authority after consideration of the  representation eschews  relevant considerations  and prefers to  act on irrelevant considerations or from oblique motive, or  the  decision  is  such  as  no  reasonable  man properly directed on the law would arrive at on the material facts, it will be open to the party to seek the intervention of the  court at  that stage. Our attention was drawn to the well known  cases of  Barium Chemicals  v Company Law Board, Rohtas Industries  v. S.D. Agarwal, M.A. Rashecd v. State of Kerala, and the recent cases 710 of Shalini  Soni v.  Union of  India,  and  Commissioner  of Income Tax  v. Mahindra  and Mahindra and we have considered all of them in arriving at our conclusion.      In the  present case, the party instead of representing his case  to the  appropriate authority  chose the  path  of litigation obviously  deterred  by  the  clumsy  attempt  at secrecy made  by the  concerned authority and the failure to communicate  the   decision  to   the  party.   One  of  the submissions made to us was that the abeyance order was never formally  communicated   to  the  petitioners  and  it  was, therefore, to  be treated as non est. Reliance was placed on the decisions  of Bachhittar  Singh v.  State of  Punjab and State of  Punjab v. Balbir Singh. We do not think that these decisions are  of any  facility to  us on  the facts  of the present case.  In Bachittar  Singh’s case,  what was decided was that  a decision  taken in  the privacy  of a Minister’s Chamber, which  was not communicative to the party and which was reversed  without ever  being  communicated  was  of  no effect at  all. In  Balbir Singh case, it was held that once an order  was sent  out, and  went out beyond the control of the authority, the order must be said to have been issued no matter  when   the  party  affected  actually  received  it. Communication, according  to learned Judges, was the process of setting  in motion the despatch of the order. It was held in that  case that  forwarding of  copies to  the Accountant General  and   to  the   Chief   Engineer   was   sufficient communication. In the present case, the ’abeyance’ order was undoubtedly communicated  to the  licensing authorities, the State Trading  Corporation, the  Minerals and Metals Trading Corporation and  other similar agencies. Despite the attempt at secrecy  made by  the concerned authority and the failure to formally  ’communicate the  decision to  the  party,  the abeyance  circular  was  very  soon  public  knowledge.  The affected party also learnt about it but probably deterred by the attempt  at  secrecy,  chose  the  path  of  litigation, instead  of   representing  his   case  to  the  appropriate authority. We  might have  considered the  question of  what relief the petitioners were entitled to had the secrecy been maintained and  knowledge of  the order continued to be held

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back from  the party.  But the  person affected  did come to know of the order-he filed a copy of the circular along with the writ petition-, and in the final analysis, the 711 object of  communication is  only to impart knowledge. Since then, a  volume of  water has  flown under the bridge and we must proceed  on the  basis that the affected party is aware of the  decision and  so, what next ? We can not, of course, proceed to consider the question whether there is sufficient relevant material in support of the allegations made against petitioners. In fact we can-not enter upon the merits of the controversy at  all. We  cannot, for  example, consider  the question whether  the material  available justifies  a prima facie conclusion  that the  petitioners  have  made  illegal imports of  beef tallow.  According to the contention of the petitioners, they  were entitled  to import beef tallow even after June  5, 1981  if they  had valid licences and if they had entered into firm contracts and opened letters of credit before June  5,1981 According  to the  authorities to is was not permissible;  the affect  of  paragraph  222(3)  of  the Import Policy  was that the amendment which was made on June 5, 1981  took effect from April 1, 1981 and permitted import of beef  tallow under OGL only where firm contracts had been entered into  and letters  of credit  had been opened before April 1,1981  but if the contracts had not been entered into and letters  of credit  had not  been opened before April 1, 1981, the imports had to be through the channel of the State Trading Corporation  only. Though  in the  cases  of  Arvind Exports and  Jayant Mills  is an  appeal and  review arising under the  provisions of  the Customs  Act, the question was decided in  favour of  the parties, the present stand of the Government is  that those  decisions are  not binding on the authorities functioning  under the  Imports (Control)  Order and that those decisions had been rendered without reference to paragraph  222(3) as  well paragraph 24 of Appendix 10 of the Import Policy of 1980-81 which expressly states:      "Nothing in  the Open  General Licence shall affect the      application to  any goods,  of any other prohibition or      regulation affecting  the import  thereof, in force, at      the time where they are actually imported."      We consider  that this is not a matter for the court to decide at  this stage in a petition under Article 226 of the Constitution or  under    Article  32  of  the  Constitution questioning an  ad-interim order  under Clause  8B. Again we cannot enter into the controversy whether there has been mis utilisation of  the imported  goods by  the petitioners  and whether the  petitioners can  be termed  as  ’actual  users’ within the  meaning of that expression in the Import Control Order by  the mere fact that they subject the beef tallow to ’air-treatment’. All  these questions  pertain to the merits of the  controversy and  it is  not for  us to embark into a discussion into these matters. 712      But we  may properly  consider, even at this stage, the question of mala fides or patent lack of jurisdiction. There is no  suggestion that  the action  was mala  fides. It was, however, argued  that the  order as embodied in the abeyance circular did  not fulfil the conditions-precedent prescribed by  the  statute  It  did  not  contain  a  recital  of  the allegations  constituting  the  basis  of  the  satisfaction contemplated by  clause 8B  for action under that provision, and without a recital of the allegation it was impossible to say that the action was not based on irrelevant material. It did not  even recite  that which  was the  foundation of any action under  clause 8B,  namely, the  satisfaction  of  the

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authority that the action was in the public interest. On the other  hand,   it  issued   a  directive  to  the  licensing authorities to  keep in  abeyance for a period of six months any application received from the concerns specified for the grant of  import licence  or customs  clearance  permit  and allotment of  imported goods through agencies like the State Trading Corporation  of India,  Minerals and  Metals Trading Corporation of  India and  similar agencies,  making a  bare recital that  investigations into  certain allegations under clause 8  were pending  against the  concerns. Again a large number of  concerns were lumped together and purported to be dealt with by a single abeyance circular. There was ex-facie nothing in  the circular  which could point to the authority having applied  its mind  and considered  the case  of  each concern separately.  It is  true that  the abeyance circular suffers from every one of these infirmities and if there was nothing more,  the parties  would be well entitled to ask us to quash  the circular.  But  the  learned  Addl,  Solicitor General invited our attention to the statements made by Shri J.P. Sharma,  Deputy Chief Controller of Imports and Exports and the  author of  the abeyance  circulars in  the  counter affidavit filed  by him.  The learned  Additional  Solicitor General has  also placed  before  us  for  our  perusal  the relevant files  of the  authority. The  counter-affidavit of Shri  J.P.  Sharma  shows  that  the  principal  allegations against   the petitioners  were that  they had  prima  facie indulged in  illegal importation of beef tallow and had also misutilised the  beef tallow.  Why the  authority  took  the prima facie view that the petitioners had illegally imported beef tallow  and had  mis-utilised the  imported beef tallow has been  explained by him in the counter-affidavit. Illegal importation  of  beef  tallow  and  mis-utilisation  of  the imported beef tallow are certainly relevant grounds on which action may  be taken  under clause 8B. We are of course, not concerned with  the question  of the sufficiency of material before the  authority  in  arriving  at  its  conclusion.  A perusal of  the files  shows that  in respect of nine of the firms covered  by the  abeyance circular  dated November  7, 1983 713 the decision  to keep  their applications  and allotments in abeyance was  taken at  the highest  level, that  is, at the level of  the Minister  for Commerce,  Government of  India. Thereafter  the  Deputy  Chief  Controller  of  Imports  and Exports, the files show, considered the cases of 61 concerns including that  of Liberty  Oil Mills Limited and issued the abeyance circular  dated November  9, 1983. We find that the cases of Liberty Oil Mills Limited as well as other concerns were separately  and individually  considered.  Their  cases having been  considered  by  the  authority  separately  and individually before the circular was issued, we do not think that it  makes any  difference on the peculiar facts of this case that  a single  circular was  issued, covering  a large number of  concerns. However,  we wish  to impress  upon the authorities that those entrusted by statute with the task of taking prejudicial  action on  the basis of their subjective satisfaction should,  first, bestow careful attention to the allegations forming the basis of the proposed action and the probable consequences which may ensue such action and, next, take the trouble of reciting in the order issued by them the satisfaction forming  the basis  of the action and a concise statement of  the  allegations  forming  the  basis  of  the satisfaction. If the necessary recitals are not found, there may be  serious sequels. In cases involving civil liberties, the orders  will necessarily  have to  be quashed.  In other

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cases also,  it is  possible  to  envisage  similar  results depending on  the rights involved, the object of the statute and other facts and circumstances. As it is the circulars in question are  hopelessly drafted  adding  to  the  confusion created by  the sadly  drafted clause  8B. In  the facts and circumstances of  this, case,  the real remedy of the party, as we  conceive it,  is to  make  a  representation  to  the concerned authority setting out his version of the facts and the law and the prejudice to himself and the public interest as a  consequence of  the action  under clause  8B. We would have first  directed the  authority to communicate, within a specified time,  to the  party the  allegations forming  the basis of  the action. But we do not consider it necessary to do so  as the party is now fully apprised of the allegations against him. In the circumstances, we think that it would be proper if  we direct the authority concerned to consider any representation that  may hereafter  be  made  by  the  party within 10 days from the date of its receipt. Subject to this directions, the  writ petition  is dismissed but without any order as to costs.      Civil Appeal  No. 274  arises out  of an  interlocutory order made by the Bombay High Court before the writ petition was transferred 714 to this  court. In  view of  our final decision disposing of the main writ petition, it is unnecessary to pass any orders in this civil appeal, which is disposed of accordingly. H.S.K.                                  Petitions dismissed. 715