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PETITIONER: MESSRS FEDCO (P) LTD. & ANOTHER

       Vs.

RESPONDENT: S.   N. BILGRAMI & OTHERS

DATE OF JUDGMENT: 09/12/1959

BENCH: GUPTA, K.C. DAS BENCH: GUPTA, K.C. DAS SINHA, BHUVNESHWAR P. GAJENDRAGADKAR, P.B. SUBBARAO, K. SHAH, J.C.

CITATION:  1960 AIR  415            1960 SCR  (2) 408  CITATOR INFO :  E          1963 SC1811  (104)  R          1982 SC 902  (23)

ACT:   Import  Licence, Cancellation of-Constitutional  validity- Reasonable  opportunity of being heard,  meaning  of-Imports Control Order, 1955, cls. 9, 10-Constitution of India, Arts. 19(1)(f) and (g), Art. 31.

HEADNOTE: The  petitioner company applied to the Chief  Controller  of Imports  and  Exports, Government of India, New  Delhi,  for five import licences and obtained them from the joint  Chief Controller  of  Imports and Exports, Bombay,  purporting  to grant  the same on the authority of the former,  and  placed orders  for goods covered by these licences, some  of  which actually  arrived  in  Bombay.  Before the  goods  could  be cleared,  the  company  received a  notice  from  the  Chief Controller  stating  that  whereas  there  were  reasons  to believe that these five licences had been obtained by fraud, the Government, in exercise of the power specified in cl.  9 of the Imports Control Order, 1955, proposed to cancel  them unless   sufficient  cause  was  shown  before   the   Chief Controller.  The petitioner company by a telegram  requested the  Chief Controller to furnish particulars of the  alleged fraud and give an opportunity to inspect the relevant papers and  documents relied upon by him.  By a letter it  gave  an explanation stating that the petitioners were the victims of foul  play by some one bent upon causing damage to them  and bringing them in the bad books of the authorities.  In  that letter  the company reserved to itself the right to add  to, amend  or  alter  the  explanation  after  it  had  obtained inspection  of  the said papers and the particulars  of  the alleged  fraud.  The representatives of the company met  the Chief  Controller as also the Director of Administration  of his office and renewed the request for the said  particulars and the inspection.  No particulars were furnished, nor  was inspection  allowed,  but  the  Chief  Controller  told  the representatives that the issue of the licences had not  been

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authorised  by  him  and  the  same  had  been  fraudulently obtained  and the Director of Administration told them  that the recommendations against which the disputed licences were granted  by the joint Controller were not genuine,  but  the said representatives, instead of denying the fraud  alleged, ascribed it to some other party as they had done before.  It was contended on behalf of the petitioners that cl. 9(a)  of the  Imports Control Order, 1955, infringed  Arts.  19(1)(f) and  (g) and 31 of the Constitution and that  no  reasonable opportunity  was given to the petitioners of being heard  as required by cl. 10 of the Imports Control Order. 409 Held  (per Sinha, C.J., Gajendragadkar, Das Gupta and  Shah, JJ.), that cl. 9 of the Imports Control Order does not  give unbridled  authority  to cancel a licence nor is  there  any scope  for  arbitrary action in this regard in view  of  the provision  of cl.  10 of the Order which amply  fulfils  the requirement of natural justice. It  is not correct to contend that before a licence  can  be cancelled  under  cl. 9, it must be shown  not  merely  that fraud  was committed but that the licensee was also a  party to  the fraud.  The entire scheme of control and  regulation of imports by licences being based on the grant of  licences on a correct statement of fact, that basis disappears if the grant  is obtained by fraud or misrepresentation, and it  is wholly immaterial whether the licensee is or is not a  party to  such  fraud  or misrepresentation.   The  provision  for cancellation   of   a  licence  under  cl.   9,   therefore, constitutes.   a  reasonable  restriction  on   the   rights conferred by Art. 19(1)(f) and (g) of the Constitution  and, being imposed by a valid law, cannot contravene Art. 31. There can be no absolute standard of reasonableness and what constitutes  reasonable  opportunity of being heard  in  the peculiar facts and circumstances of each case is a matter to be  decided by the Court.  The Court has to  satisfy  itself that the person against whom action was proposed had a  fair chance of convincing the authority that the grounds on which such action was proposed were either non-existent or did not justify  it.   So  judged, it could not  be  said  that  the omission  to give the petitioners, in the instant case,  who were more concerned to show that the company was not a party to  the fraud than that no fraud had at all been  committed, further particulars or inspection of the papers amounted  to a denial of reasonable opportunity of being heard. Per  Subba Rao, J.  Judged in the light of  well  recognised principles, there can be no doubt that the Chief  Controller of  Imports,  acting  under cls. 9 and  10  of  the  Imports Control Order, 1955, performs a quasi-judicial function  and is  bound  to follow the principles of  natural  justice  in cancelling a licence. Rex   v.   Electricity  Commissioners,   Ex   Parte   London Electricity  joint Committee Co., [1924] 1 K.B. 171, Rex  v. London  County Council, Ex Parte  Entertainments  Protection Association Ltd., [1913] 2 K. B. 215 and Province of  Bombay v. Khusaldas S. Advani, [1950] S.C.R. 621, referred to. The  language  of cl.  10 clearly indicates  that  when  the charge  is one of fraud, the affected party is  entitled  to know the particulars of the alleged fraud and to inspect the documents on which it is based and to a personal hearing. It  was impossible, in the facts and circumstances  of  this case, to hold that the petitioners, who did not admit having committed the fraud and must be assumed to be innocent, were afforded  reasonable opportunity of being heard  within  the meaning of 410

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cl.  10 of the Order to prove their innocence.   Unless  the particulars  were given to them and the documents  shown  to them  it was not possible for them to know if any fraud  was at  all  committed  and  if  so  by  whom.   The  order   of cancellation  of the licences was, therefore, arbitrary  and must be quashed.

JUDGMENT: ORIGINAL JURISDICTION: Petition No. 171 of 1958. Petition under Article 32 of the Constitution of India,  for enforcement of fundamental rights. Purshottam  Tricumdas, Porus A. Mehta, S. N. Andley,  J.  B. Dadachanji,  Rameshwar  Nath  and  P.  L.  Vohra,  for   the petitioners. C. K. Daphtary, Solicitor-General of India, N. S. Bindra, B. H. Dhebar and T. M. Sen, for the respondents. 1959.    December   9.   The  judgment   of   Sinha,   C.J., Gajendragadkar,  Das Gupta and Shah, JJ., was  delivered  by Das Gupta, J. Subba Rao, J., delivered a separate judgment.           DAS  GUPTA  J. The first petitioner is  a  Company registered  under  the  Indian  Companies  Act  having   its registered  office in Bombay and is engaged in the  business of dyes, chemicals, plastics, and various other goods.   The second  petitioner  is the Chairman and a  Director  of  the first petitioner Company.  In this petition for  enforcement of  fundamental rights under the Constitution they pray  for the issue of a writ of certiorari or other appropriate writ, direction  or  order  quashing an order made  by  the  first respondent,  the  Chief Controller of Imports  and  Exports, Government  of India, New Delhi, by which he cancelled  five import  licences  which  had  been  granted  to  the   first petitioner  by  the Joint Chief Controller  of  Imports  and Exports, Bombay.  There is also a prayer for an order on the second   respondent,  the  Collector  of  Customs,   Bombay, directing him to assess the goods of the petitioner  Company which have been landed in Bombay having been imported on the strength of these licences and allow the petitioner  company to clear them.  Of these five licences, two were dated  July 24, 1958, two dated August 16, 1958, and the fifth 411 dated  September  4, 1958.  The total value of  the  imports authorised  by these five licences was Rs.  25,75,000.   The petitioners contend that these five licences were granted to the petitioner Company on five applications sent by them  by registered  post  to  the Chief Controller  of  Imports  and Exports,  Government of India, New Delhi-three sent on  June 17,  1958,  one on June 26, 1958, and the last on  July  22, 1958.  It is further stated that in respect of each of these applications  a letter was received by the Company from  the office  of  the  Chief Controller of  Imports  and  Exports, Government  of  India,  New  Delhi,  intimating  that  their application had been forwarded to the Joint Chief Controller of  Imports and Exports, Bombay with the necessary  comments and  asking the Company to contact this officer,  the  Joint Chief  Controller of Imports and Exports, Bombay, direct  in the  matter.  The petitioner Company wrote in each  case  to the  Chief  Controller of Imports and  Exports,  New  Delhi, acknowledging receipt of these letters and at the same  time to  the  Joint  Chief Controller  of  Imports  and  Exports, Bombay,  requesting  that the licences should be  issued  to them at an early date.  After the licences were received  by the Company from the office of the Joint Chief Controller of Imports  and Exports, Bombay, the Company placed orders  for

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the  goods covered by these licences and some of  the  goods actually  arrived  at Bombay.  Before however any  of  these goods  could be cleared the Company received a notice  dated September 24, 1958, stating that whereas there was reason to believe   that  these  five  licences  had   been   obtained fraudulently,  the Government in the exercise of the  powers specified  in  para. 9 of the Imports Control  Order,  1955, proposed to cancel the said licences unless sufficient cause against  that  was  furnished to  the  Chief  Controller  of Imports  and Exports, New Delhi, within 10 days of the  date of  the  issue of the said notice’.  On  September  26,  the petitioner Company’s solicitors sent a telegram to the Chief Controller of Imports and Exports, New Delhi, requesting him to give particulars of the alleged fraud and to give them an appointment for inspection of papers 412 and  documents  relied  upon  by  him.   On  September   27, Company  wrote  a letter to the same officer in  which  they gave  a written explanation pointing out various  facts  and stating  that they were victims of foul play by some  person interested  in causing damage to them  and  involving  their reputation and in order to bring them in bad books with  the authorities.   In the concluding portion of this letter  the Company stated: " We also reserve our right to add to, amend or alter the explanations contained in this letter hereafter and  to  submit  such further  explanations  as  may  become necessary  after  taking inspection of all  the  papers  and after  getting  the particulars of the  alleged  fraud.   We shall thank you to give us also an opportunity of a personal hearing in the matter."  This written explanation was handed over   to   the   first   respondent   by   the    Company’s representatives  at an interview with him on  September  30. At  that interview also, it is said, the representatives  of the Company pointed out to Mr. Bilgrami that in the  absence of  any  particulars  of  the  alleged  fraud  and   without inspection  of  the  papers relied upon by him  it  was  not possible for the petitioners to give a complete  explanation and   that  they  reserved  their  right  to  give   further explanation  on getting the said particulars and  inspection of  the  said  papers.  The  Company’s  representatives  had another  interview with Mr. Sundaram, Director  (Administra- tion) in the Chief Controller’s Office on October 14,  1958. At  this  interview  the  petitioners  again  requested  Mr. Sundaram  to  give them particulars and that they  might  be permitted  to  inspect  the  papers.   No  particulars  were however furnished and no inspection was allowed; but on that very date when they had this interview with Mr. Sundaram the first respondent made the order of cancellation. The  ten grounds set out in Cls.  A to L of para. 15 of  the petition  as  the basis for the relief resolve  on  analysis into four only.  These are:- (1)  Clause 9(a) of the Import Control Order under which the order   of   cancellation   has   been   made   is    itself unconstitutional, being violative of the petitioners’ 413 rights  under  Art.  19(1)(f)  & (g)  and  Art.  31  of  the Constitution ; (2)  The  Order  of  cancellation  has  been  made   without compliance  with the mandatory requirement of cl. 10 of  the Imports  Control  Order to give the licensee  "a  reasonable opportunity of being heard "; (3)  The first respondent, Mr. Bilgrami, bad no authority in law  to  make any order under cl. 9 of  the  Import  Control Order; (4)  The  petitioners have been denied equal  protection  of

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laws  under  Art. 14 of the Constitution inasmuch  as  other persons   similarly  situated  have  been  given  a   proper opportunity and a personal hearing before taking any  action against  them,  while  the petitioners have  been  denied  a proper  opportunity  to show cause for the  cancellation  of licences and personal hearing in the matter. Of  these  four grounds, the third ground,  viz.,  that  Mr. Bilgrami had no authority in law to make an order under  cl. 9  of  the  Imports  Control  Order  was  made  in  apparent ignorance  of the fact that the Chief Controller of  Imports and Exports, became competent to make an order thereunder in consequence of an amendment made in the Order, in 1958.   As the  clause originally stood the relevant words were: "  The Central  Government or any other officer authorised in  this behalf   may   cancel  any  licence   granted   under   this order............By  the  amendment  made  on  February  27, 1958,the  words  ,or  the Chief Controller  of  Imports  and Exports  "  were  inserted  after  the  words  "the  Central Government  " in this clause.  The position on the  relevant dates in September and October, 1958, therefore was that the Chief  Controller  of Imports and Exports,  New  Delhi,  had authority  to cancel any licence granted under  the  Imports Control  Order  without being specially authorised  in  that behalf.   It was apparently in view of this  position  which was pointed out by Mr. Bilgrami in his affidavit in  opposi- tion  that the’ learned Counsel for the petitioners did  not press  this  ground  at all.  Nor did he  press  the  fourth ground, viz., that the petitioners’ right under 53 414 Art.  14  of  the Constitution has been  infringed.   It  is obvious  that  if  the  order  has  been  made  without  the petitioners  having been given a reasonable  opportunity  of being  heard  that itself would entitle them to  the  relief prayed for.  The question whether or not other persons  were given    a    fair   opportunity   of   being    heard    is entirely  irrelevant.  In opposition to this application, Mr. Bilgrami, the  first respondent,  contends  inter  alia that  the  provision  for cancellation of a licence under cl. 9 of the Order does  not contravene any of the fundamental rights granted under  Art. 19(1)(f) and (g) and Art 31 of the Constitution and that the petitioners  were given adequate and reasonable  opportunity of  being heard before the order of cancellation  was  made. Mr.  Bilgrami has stated in the affidavit that while  it  is true that four applications for licence-three dated June 17, arid  one dated June 26, 1958, were received in his  office, the  fact is that all these four applications were  rejected and  that  it is now found that while  these  four  rejected applications were lying in his office, four similar  applic- ations  bearing  the  same dates  and  containing  the  same particulars  and a fifth application bearing the  date  July 22, 1958, somehow made their appearance in the office of the Joint Chief Controller of Imports and Exports, Bombay, along with   five  separate  letters,  one  in  respect  of   each application,   containing  recommendations  for   issue   of licences  purporting to have been issued from the office  of the  Chief  Controller of Imports and  Exports,  New  Delhi, under  the signature of one Shri M. L. Gupta,  Deputy  Chief Controller of Imports and Exports.  The respondent  contends that  the purported signatures of Shri M. L. Gupta on  these letters  were not genuine.  Mr. Bilgrami also contends  that though  these letters purported to state that the  issue  of licences  was authorised by him he did not in fact give  any authority,  and that when the  petitioners’  representatives

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interviewed him on September 30, 1958, they were told of the "  general  nature of the fraud " and that he  further  told them that the issue of the licences had not been  authorised by  him  as  they purported to be and  that  they  had  been obtained 415 fraudulently.   The  respondents further contend  that  when again on October 14, 1958, the petitioners had an  interview with  Mr.  Sundaram, the Director of Administration  in  the office  of the Chief Controller of Imports and Exports,  Mr. Sundaram  told  them  expressly  that  the   recommendations against  which  the disputed licences were  granted  to  the petitioners were not genuine. The  first contention on behalf of the petitioners  is  that cl.  9(a) of the Imports Control Order is itself invalid  as it violates a licensee’s rights under Art. 19(1)(f) and  (g) and  Art. 31 of the Constitution.  Clause 9(a) is  in  these words :- Cancellation of Licence:-The Central Government or the Chief Controller  of  Imports  and Exports or  any  other  officer authorised  in  this behalf may cancel any  licence  granted under this order or otherwise render it ineffective :- (a)  If  the licence has been granted’ through  inadvertence or   mistake   or   has   been   obtained   by   fraud    or misrepresentation................ As in the present case there is no question of the  licences having  been granted through inadvertence or mistake  it  is not  necessary for us to consider whether the provision  for cancellation  of licences on the ground that they have  been granted  through  mistake or inadvertence is  invalid.   The question  in the present case is whether the  provision  for cancellation  of licences on the ground that they have  been obtained  by  fraud or misrepresentation is "  a  reasonable restriction in the interests of the general public " on  the exercise  of the petitioners’ right under Art. 19(1)(f)  and It has to be noticed first that here is no case of unbridled authority  to  cancel a licence nor is there any  scope  for arbitrary  action.  If a provision for giving  a  reasonable opportunity  of being heard bad not been made in  the  Order itself,  it  would have been necessary to  consider  whether this had still to be given, because rules of natural justice required  it.  No discussion about the requirements  of  the rule  of natural justice is however called for here, as  cl. 10 of the Order provides that no action shall be taken under clauses 7, 8 or 9, 416 unless  the  Licensee/Importer has been given  a  reasonable opportunity of being heard.  It is proper to state that  the learned  Counsel  for the petitioners does  not  attack  the validity of the, provisions on the ground            that it gives  unbridled authority to cancel a licence,           or that   the   requirements  of  natural  justice   have   not been  sufficiently fulfilled by clause 10.  His argument  is that though it may not be unreasonable that a licence should be cancelled if the licensee himself has practised fraud  in obtaining  it, cancellation is wholly unreasonable if it  is made  merely  on  the ground that it has  been  obtained  by fraud,  without  it being further shown  that  the  licensee himself  has  been a party to the fraud.  It appears  to  us that in most cases, if not in all cases, where a licence  is obtained   by  fraud  or  misrepresentation  it   would   be reasonable  to  think that the person in  whose  favour  the licence  has  been obtained, cannot but be a  party  to  the fraud   or  misrepresentation.   The  petitioners’   Counsel submitted  that  it is possible to imagine a case  where  an

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enemy  of the person in whose favour the licence is  granted procures  such grant by means of fraud with  the  deliberate motive of accusing this person later on of fraud and thereby subjecting  him on the one hand to criminal prosecution  and on  the other hand damaging his reputation and  ruining  his business.  It is unnecessary for us to decide in the present case whether this may ever happen.  Clearly however the fact that  fraud  by  which the grant of the  licences  has  been induced  by  an enemy is wholly immaterial  on  the  present question.   The entire scheme of control and  regulation  of imports  by  licences is on the basis that  the  licence  is granted  oil  a correct statement of relevant  facts.   That basis disappears if grant of the licence is induced by fraud or misrepresentation.  Whether the licensee himself or  some others    party   is   responsible   for   the   fraud    or misrepresentation,  the fact remains that in such cases  the basis  of the grant of licence has disappeared.  It will  be absolutely  unreasonable  that  such  a  licence  should  be allowed  to continue.  We are therefore of opinion that  the provision  that  licence may be cancelled, if it  is  found, after giving a 417 reasonable opportunity to the licensee to be heard, to  have been obtained by fraud or misrepresentation is a  reasonable restriction  in the interests of the general public  on  the exercise  of the fundamental right of a  citizen  guaranteed under  Art.  19(1)(f)  and (g)  of  the  Constitution.   The cancellation  being  under  a  valid law  there  can  be  no question  of  any right under Art. 31  of  the  Constitution having been infringed. This  brings us to the main contention pressed on behalf  of the petitioners, viz., that the licensee has not been  given a reasonable opportunity of being heard before the order  of cancellation  was  made.  There can be no doubt  that  if  a reasonable  opportunity to be heard as against the  proposed order of cancellation has not been given the order would  be an unjustified interference with the petitioners’ right.  It is necessary therefore to examine the material on the record to  see  whether the petitioners have succeeded  in  showing that no reasonable opportunity has been given. The requirement that a reasonable opportunity of being heard must  be  given  has two elements.  The  first  is  that  an opportunity  to be heard must be given; the second  is  that this opportunity must be reasonable.  Both these matters are justiciable  and  it is for the Court to decide  whether  an opportunity has been given and whether that opportunity  has been  reasonable.   In the present case, a  notice  to  show cause against the proposed order was given; it was stated in the  notice  that the ground on which the  cancellation  was proposed   was   that  the  licences   had   been   obtained fraudulently;  and later on, a personal hearing  was  given. It  must  therefore  be held that the  requirement  that  an opportunity  to be heard must be given was satisfied.   What the  petitioners’  Counsel strenuously contends  however  is that  though an opportunity was given that  opportunity  was not reasonable.  In making this argument he had laid special stress  on  the fact that particulars of the  fraud  alleged were  not  given and an opportunity to  inspect  the  papers though  repeatedly  asked  for was not  given.   It  is  now necessary  to  consider all the circumstances  in  order  to arrive  at  a  conclusion  whether  the  omission  to   give particulars of fraud and 418 inspection   of  papers  deprived  the  petitioners   of   a reasonable opportunity to be heard.

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There can be no invariable standard for " reasonableness" in such  matters  except that the Court’s  conscience  must  be satisfied,  that  the  person  against  whom  an  action  is proposed  has bad a fair chance of convincing the  authority who proposes to take action against him that the grounds  on which the action is proposed are either non-existent or even if they exist they do not justify the proposed action.   The decision  of this question will necessarily depend upon  the peculiar facts and circumstances of each case, including the nature  of  the action proposed, the grounds  on  which  the action  is proposed, the material on which  the  allegations are based, the attitude of the party against whom the action is  proposed in showing cause against such proposed  action, the nature of the plea raised by him in reply, the  requests for further opportunity that may be made, his admissions  by conduct or otherwise of some or all the allegations and  all other  matters  which  help the mind in  coming  to  a  fair conclusion  on  the question.  The action  proposed  in  the present case viz., the cancellation of the five licences was proposed  on a tentative conclusion by Mr. Bilgrami  on  the basis  of  the  material in his  possession  that  the  five licences  bad been obtained fraudulently.  The main  grounds on  which  this tentative conclusion appears to  -have  been based  were that four applications-three dated June  17  and one  dated June 26, 1958, similar in all particulars to  the four  which  are  now  found in  the  office  of  the  Joint Controller of Imports and Exports, Bombay, had been actually received  but had been rejected and were lying in the  Chief Controller’s Office; that four similar applications, bearing the same dates and same particulars which were lying in  the Bombay  Office and also a fifth application dated  July  22, were  accompanied by five forwarding letters  purporting  to have been signed by Mr. M. L. Gupta recommending the  prayer for  licence  and  containing a  statement  that  the  first respondent  had authorised such issue of licences  on  those applications but these signatures purporting to have been of Mr. M. L. Gupta were not really his 419 signatures ; that while the forwarding letters purported  to state  that the issue of these licences prayed for had  been authorised  by  Mr.  Bilgrami as  the  Chief  Controller  of Imports  and Exports, New Delhi, he himself knew  that  such issue  had not been authorised by him.  We find that in  the very  notice that was given to the petitioners’  company  to show  cause against the proposed action of cancellation,  it was  stated  that  these  licences  appeared  to  have  been obtained by fraud.  On the question of particulars of fraud, it has been stated by the first respondent in his  affidavit that  at  that stage no particulars of the  fraud  could  be given  by him as they were unknown to him, but that  be  did inform  the  petitioners’ representatives Mr.   Parikh,    a director of the Company the second petitioner Mr.  Rangwala, who  is  the  Chairman  of the  Company  and  the  Company’s solicitor,  Mr. Hussaini Doctor of the " general  nature  of the  fraud ". In para 23 of his affidavit Mr.  Bilgrami  has made the following statement:- " I say that the Director of the petitioners’ Company,  Shri B.  K.  Parekh  and  Shri  Rangwala  and  their   attorney’s partners,  Mr. Huseni Doctor saw me on the  30th  September, 1958.   I told them that the issue of the licences  had  not been authorised by me as they purported to be and that  they had  been obtained fraudulently, though at that stage I  was unable  to  say  how  exactly and  by  whom  the  fraud  was committed.   As  also the investigation by  the  Police  was already  in  progress, it was not possible  to  give  minute

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particulars of the fraud.  When the petitioners were told as above, the petitioners’ chairman started raising contentions suggesting  that  the  fraud might have  been  committed  by reason of the Gujarati Maharashtrian and anti-Muslim feeling amongst the employees of his firm." The  affidavit in reply was sworn by Mr.  Rangwala  himself. We find therein repeated denials of Mr. Bilgrami’s assertion that  the  Company’s  representatives were  told  of  the  " general  nature of the fraud ". It was worth noting  however that  as regards the categorical statement made in para.  23 as to what 420 Mr. Bilgrami told Mr. Rangwala and others and what they told him there is no clear denial.  Dealing with para. 23 of  Mr. Bilgrimi’s  affidavit in para. 20. of his own  affidavit  in reply Mr. Rangwala after saying that the first  respondents, statement  does  not say anything as to how exactly  and  by whom the fraud was committed but simply added that the first respondent  did  not say anything beyond the fact  that  the licences had been obtained by fraud.  It is significant that no specific denial was made of Mr. Bilgrami’s assertion that to  Mr. Rangwala, Mr. Parekh and Mr. Huseini Doctor  he  had himself stated that the " issue of the licences had not been authorised  by  him  as  they purported to  be  ".  No  less important  is the fact that Mr. Rangwala does riot deny  the assertion  made by Mr. Bilgrami that he (Mr.   Rangwala)  in the course of that interview on September 30, suggested that the  fraud  might have been committed by reason  of  certain feelings amongst the employees of his firm. It is reasonable therefore to believe that besides stating that the  licences had   been  obtained  fraudulently  Mr.Bilgrami   definitely informed  the  Company’s representatives  on  September  30, 1958,  that though issue of the licences had been  purported to  be  authorised  by him-with apparent  reference  to  the forwarding  letters recommending the issue of the  licences- this  had not actually been authorised and further  that  on receipt  of this information the  Company’s  representatives instead of saying that no fraud had been practised and  that Mr.  Bilgrami was making a mistake in thinking that  he  had not  authorised the issue of the licences and  that  perhaps his  memory had failed him took refuge behind the plea  that it was not the Company but some enemy of the Company who had perpetrated the fraud. The petitioners’ representatives had also an interview  with Mr. Sundaram on October 14, 1958.  While we have not got any statement  of  Mr. Sundaram himself as to what  happened  in that  interview we find apart from Mr. Bilgrami’s  affidavit in para. 24 that Mr. Sundaram also informed the petitioners’ representatives at that interview that the recommendations 421 against  which  the disputed licences were  granted  to  the petitioners were not genuine, (which assertion was  repeated in slightly different words in para. 29), the fact that  the first respondent’s letter dated December 18, 1958, a copy of which  Mr.  Rangwala  annexed  to  his  affidavit  in  reply concluded with the following words:- " It may be stated that the fact that the following  letters referred  to  above were not genuine were mentioned  to  the representatives  of your firm when they interviewed Shri  D. R.  Sundaram,  Director,  (Administration)  on  October  14, 1958." Though  annexing a copy of this letter to his  affidavit  in reply Mr. Rangwala did not state that this statement in  the concluding  portion  of  the  letter  was  not  true.   This justifies the conclusion that Mr. Bilgrami’s assertion  that

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Mr.  Sundaram  told the Company’s representatives  that  the forwarding  letters  containing the recommendations  on  the basis of which the licences had been issued were not genuine is  true.   Mr.  Bilgrami’s statement in  para.  29  of  his affidavit  is that when Mr. Sundaram informed the  Company’s representatives  of  this they had no explanation  to  give. Dealing  with para. 29 of this affidavit in para. 23 of  his own  affidavit Mr.Rangwala did not state that  Mr.  Sundaram did not tell them that the licences issued were on the basis of  documents  which were not genuine, or that on  being  so told they had no explanation to offer. On  a  consideration of the entire background in  which  the notice  for cancellation was issued, what was stated by  the petitioners in their letter dated September 27, and what  we find  to  have  taken place at the interviews  on  the  30th September and the 14th October, specially the fact that  the Company’s  reprepresentatives  appeared to  have  been  more concerned  to show that the Company was not a party  to  the fraud than to show that there was no fraud practised at all, we  are  of  opinion  that  the  omission  to  give  further particulars  or  inspection of papers did  not  deprive  the petitioners of a fair chance of convincing Mr. Bilgrami that the  grounds  on  which cancellation  of  the  licences  was proposed did not exist, or even if they existed, 54 422 they  did not justify cancellation of the licences.  We  are therefore of opinion that the opportunity that was given  to the petitioners in the present case amounted to a reasonable opportunity of being heard against the action proposed. The  petitioners are therefore not entitled to  any  relief. The petition is accordingly dismissed with costs. SUBBA  RAO  J.-I  have had the  advantage  of  perusing  the judgment  of my learned brother, Das Gupta, J. I  regret  my inability to agree with his conclusion. The  facts  are fully stated in the judgment of  my  learned brother  and  I shall, therefore, briefly restate  only  the material facts.  The first petitioner, M/s.  Fedco (Private) Limited  (hereinafter  called  the  Company)  is  a  Company registered  under  the  Indian  Companies  Act  having   its registered office in Bombay.  It is engaged in the  business of  dyes, chemicals, plastics and various other goods.   The second  petitioner  is the Chairman and a  Director  of  the first   petitioner   Company.    The   Company   sent   five applications  by registered post to the Chief Controller  of Imports  and  Exports, New Delhi,  (hereinafter  called  the Chief  Controller).   Three of the applications  were  dated June 17, 1958, one was dated June 26, 1958, and the last was dated  July 22, 1958.  In the said applications the  Company prayed  for the issue of import licences to enable  them  to place  orders and import different types of goods from  West In  regard to each of these applications, received a  letter purporting  to be from the Chief Controller intimating  them that  their  applications had be-en forwarded to  the  Joint Chief   Controller   of   Imports   and   Exports,   Bombay, (hereinafter called the Joint Controller) with the necessary comments.   The  Company acknowledged the receipt  of  these letters,  Thereafter  five licences were received  from  the Office of the Joint Controller, Bombay, and two of them were dated July 24, 1958, another two were dated August 16, 1958, and the fifth was dated September 4, 1958.  On the basis  of the said licences, orders were 423 placed  with a foreign company in West Germany and goods  of considerable value actually arrived in the Bombay port.   By

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letter dated September 23, 1958, the Joint Controller  asked the Company to return the said five licences granted to them without   entering   into  any  commitments.    After   some correspondence between the Company and the Chief Controller, the former received a notice dated September 24, 1958,  from the  latter to the effect that the Government had reason  to believe  that the said licences were  obtained  fraudulently and  therefore  they proposed to cancel  the  said  licences unless sufficient cause was shown against such action  being taken  within ten days of the issue of the said notice.   On October 16, 1958, the Company received an undated order from the  Chief  Controller purporting to cancel  the  said  five licences.  The Com. pany and their manager filed the present petition  under  Act. 32 of the Constitution praying  for  a writ  of certiorari or other appropriate writ  quashing  the order  of  the  Chief Controller cancelling  the  said  five licences and directing the Collector of Customs, Bombay,  to assess the goods of the Company which had been imported into India and allow them to clear the same. Mr.   Purshottam   Trikamdas,  learned   Counsel   for   the petitioners  in support of his contentions raised before  us two  points, viz., (1) cls. 9 and 10 of the Imports  Control Order, 1955, (hereinafter called the Order) where under  the licences were cancelled infringe the fundamental rights of a citizen  under  Art. 19(1)(f) and (g)  of  the  Constitution inasmuch as-the said provisions constitute an arbitrary  and unreasonable  restriction  on the said rights; and  (2)  the Chief Controller has not complied with the provisions of cl. 10 of the Order as he failed to give the Company  reasonable opportunity  of being heard before the licences  granted  to them  were  cancelled  and therefore the act  of  the  Chief Controller  in cancelling the licences infringes the  rights of   the  Company  under  Art.  19(1)(f)  and  (g)  of   the Constitution. The  first point need not be considered as I am  clearly  of the  view  that  no " reasonable opportunity  "  within  the meaning of cl. 10 of the Order was given to the 424 petitioners by the Chief Controller.  The material parts  of cls.  9  and  10  of the  Order  read:- clause 9. "Cancellation of Licences. The Central  Government or  any other Officer authorised in this behalf  may  cancel any licence granted under this Order or otherwise render  it ineffective (a) if the licence has been granted through inadvertence  or mistake    or    has    been   obtained    by    fraud    or misrepresentation;". Clause  10.  " Applicant or Licensee to be  heard.No  action shall  be  taken  under  Clauses  7,  8  or  9,  unless  the licensee/Importer has been given a reasonable opportunity of being heard." It is not disputed that the Central Government delegated its powers  to act under these clauses to the Chief  Controller. The  first  question is, what is the scope  of  the  enquiry under  cl. 10 of the Order ? Is it purely an  administrative act  or  is  it  a quasi-judicial  act  ?  The  criteria  to ascertain whether a particular act is a quasijudicial act or an  administrative one have been laid down with  clarity  by Lord  Justice Atkin in Rex v. Electricity Commissioners,  Ex Parte London Electricity Joint Committee Co.(1),  elaborated by  Lord Justice Scrutton Rex v. London County  Council,  Ex Parte  Entertainments  Protection Association Ltd.  (2)  and authoritatively restated by this Court in Province of Bombay v.  Khusaldas S. Advani (3).  They laid down  the  following conditions:  (a)  the  body  of  Dersons  must  have   legal

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authority;  (b) the authority should be given  to  determine questions  affecting  the rights of subjects  and  (c)  they should  have  a  duty  to act  judicially.   All  the  three conditions  are  satisfied in this case.   Under  the  ,said clauses authority is conferred on the Central Government  or any  other officer authorized in this behalf to  cancel  any licence  granted under the Order and the cancellation  of  a licence  certainly affects the rights of subjects.  A  clear duty  to  act judicially is imposed by cl. 10  on  the  said authority.   He  has  to  give  to  the  affected  party   " reasonable opportunity of of being heard ". It is  therefore clear that under (1) [1924] 1 K.B. 171.           (2) [1931] 2 K.B. 215. (3)  [1950] S.C.R. 621. 425 cls. 9 and 10 of the Order, the Chief Controller performs  a quasi-judicial  act  and is therefore bound  to  follow  the principles  of  natural  justice in  cancelling  a  licence. Clause  10 clearly and without any ambiguity  describes  the principles of natural justice by using the three  well-known words and phrase, viz., ’ reasonable opportunity " and "  of being heard They imply that when the charge is one of  fraud the  affected party is entitled to know the  particulars  of fraud  alleged,  to inspect the documents on  the  basis  of which  fraud is imputed to him and to a personal hearing  to explain  his case and to absolve himself of the charge  made against  him.  Without these elementary safeguards  provided by  the authority, the opportunity to be heard given to  the licensee becomes an empty formality.  With this background I shall scrutinize the relevant facts to ascertain whether any such reasonable opportunity was given to the petitioners  in this  case.   The question falls to be decided only  on  the affidavits  filed  by the parties.  I shall assume  for  the purpose  of  this petition that the affidavit filed  by  the Chief Controller represents what all had taken place between him  and  the representatives of the  Company.   The  notice dated   September  24,  1958,  issued  to  the   petitioners laconically  states that ’the licences granted by the  Joint Controller  to  the Company were fraudulently  obtained  and therefore  it was notified that the Government of India,  in exercise of the powers specified in paragraph 9 of the Order proposed to cancel the said licences unless sufficient cause against  the  proposed  action was furnished  to  the  Chief Controller  within ten days of the date of the issue of  the notice.   On  receipt  of the said  notice,  the  petitioner Company sent a telegram through their Solicitors  requesting the  Chief Controller not to publish the said  notification. On September 26, 1958, the Company’s Solicitors sent another telegram to the Chief Controller requesting him to give them the  particulars  of the alleged fraud and to give  them  an appointment  for inspection of papers and  documents  relied upon  by the Chief Controller.  On September 27,  1958,  the Company sent a letter to 426 the  Chief  Controller pointing out the relevant  facts  and stating  that  the  petitioner  Company  had  accepted   the licences honestly and had at no time any reason to doubt the bona  fides of the grant of the licences to them; that  they suspected  they  were victims of foulplay  by  some  persons interested   in  causing  damage  to  them  and   to   their reputation;  that  Mr.  B.  K. Parekh,  a  Director  of  the petitioner   Company,  and  the  Company’s  Solicitor,   Mr. Hooseini  Doctor, met the Chief Controller on September  30, 1958,  and  handed  over the explanation  to  him  and  also personally  told him that in the absence of any  particulars

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of  the alleged fraud and without inspection of  the  papers relied upon by the Chief Controller, it was not possible for the  petitioner Company to give a complete  explanation  and that  the petitioners reserved their right to  give  further explanation  on getting the said particulars and  inspection of   the  said  papers.   They  also  requested  the   Chief Controller  to give the Company a personal hearing  to  meet the  charges after giving the necessary particulars and  the inspection  of papers asked for.  The Chief Controller  told them that the issue of the licences had not been  authorized by  him  as  they purported to be and  that  they  had  been obtained fraudulently, though at that stage he was not  able to say how exactly and by whom the fraud was committed.   He also  did  not  give  them the  particulars  of  fraud.  The Director of the Company suggested that the fraud might  have been  committed by reason of the Gujarati Maharashtrian  and anti-Muslim  feeling amongst the employees of  the  Company. On  behalf of the petitioner Company, the  Chief  Controller was told that it was not possible for the Company to give  a complete  explanation and that they reserved their right  to give further explanation.  The petitioners were not  allowed inspection of the papers.  By their letter dated October  3, 1958,  the  Company  recorded what took place  at  the  said interview  and  sent  it  to  the  Chief  Controller.    The petitioners  again  wrote  another  letter  to  the’   Chief Controller  reminding  him that they had  not  received  any particulars   of  the  alleged  fraud.   This   letter   was personally handed over to Mr. Sundaram, 497 the  Director of Administration in the Office of  the  Chief Controller  on  October 14, 1958.  At  that  interview,  Mr. Sundaram,  told  the petitioners  that  the  recommendations against  which the disputed licences were granted  were  not genuine.    On  October  16,  1958,  the  Chief   Controller cancelled  the said five licences issued to  the  petitioner Company.  On the aforesaid facts, which we have assumed  for the purpose of this petition, can it be said that the  Chief Controller gave the petitioners a "reasonable opportunity of being heard " to enable them to establish that no fraud  had been committed in getting the said licences ? The   learned   Solicitor   General,   appearing   for   the respondents, contended that the Company admitted the  fraud, that  their only defence was that the fraud might have  been committed by reason of the Gujarati Maharashtrian and  anti- Muslim feeling amongst the employees of the Company and that therefore  the  fact  that the  Chief  Controller  told  the petitioners  that  the issue of the licences  had  not  been authorized  by him and the fact that Mr. Sundaram  told  the petitioners  on October 14, 1958, that  the  recommendations against  which  the disputed licences were  granted  to  the petitioners  were not genuine, were, in  the  circumstances, sufficient disclosure of the particulars of fraud and  that, therefore, reasonable opportunity within the meaning of  cl. 10  of the order had been given to the petitioners.  I  find it  very  difficult to accept this argument.   The  argument assumes  that  the petitioner Company accepted  the  version given  by the Chief Controller or by Mr. Sundaram.  For  the purpose  of  this  petition  it must  be  assumed  that  the petitioners were innocent.  The notice was given to them  to show  cause  why the licences given to them  should  not  be cancelled on the ground of fraud.  By letters and in  person they  requested  the  Chief  Controller  to  give  them  the particulars  of the fraud, and to allow them to inspect  the relevant  documents  so  that  they  might  give  a  further explanation  to show cause against the cancellation  of  the

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licences.  The affidavit filed by the Chief Controller  only discloses  that he, in his conversations with the  Solicitor and the Director of 428 the  Company,  mentioned to them that he did not  issue  the licences.   In the affidavit he admits that they  asked  for particulars and for the inspection of  the documents; but he says  that the petitioners were told sufficiently  what  was against  them  and their demand for the  inspection  of  the papers  was  mischievous.  But what he told them  about  the particulars of the alleged fraud is, in his own words: "  I told them that the issue of the licences had  not  been authorised  by me as they purported to be and that they  had been  obtained  fraudulently,  though at that  stage  I  was unable  to  say  how  exactly and  by  whom  the  fraud  was committed.  "  The conversation with Mr. Sundaram on October 14,  1958, does  not  carry  the  matter  further.   He  has  not  been authorized by the Central Government to make an enquiry  and the   fact   that   he  told  the   petitioners   that   the recommendations  against  which the disputed  licences  were granted  were not genuine, even if true, does not carry  the matter  any  further.   The fact,  therefore,  remains  that notwithstanding  specific  request  by  the  petitioners  no particulars  were  furnished  to  them,  no  facilities  for inspection  of the relevant documents given and no date  was fixed for the enquiry in regard to the alleged fraud. The learned Solicitor General asked, what was that that  the petitioners could have gained if the particulars were  given and if they were allowed to inspect the relevant  documents? This  is a lopsided way of looking at things.  The  question should  have been, what reasonable opportunity to  be  heard was given to the petitioners to establish their innocence  ? That  apart,  without apportioning any blame either  on  the petitioners or on the respondents, many possibilities can be visualized, viz., (i) the petitioners were guilty of  fraud; they knew that their applications were rejected by the Chief Controller,  they got similar  applications  surreptitiously introduced in the Bombay Office with forged  recommendations under  the  signature of the Deputy  Chief  Controller,  New Delhi,  Mr.  M.  L.  Gupta, and  obtained  the  licences  by practising fraud on the Joint Chief Controller, Bombay; (ii) a third party, 429 presumably  a rival businessman or members of the  staff  of the Company, evolved a complicated scheme of fraud to  cause damage  to the Company and their reputation.  the  Company’s enemies  came to know that the applications of  the  Company were  rejected,  then forged fresh  applications,  got  them surreptitiously introduced in the Bombay Office and got  the licences  issued  in favour of the petitioners:  this  is  a rather far-fetched theory; (iii) after the applications were rejected,  fresh  applications were filed in the  New  Delhi Office, got forwarded to the Joint Chief Controller, Bombay, with  the directions issued by the Deputy Chief  Controller, New Delhi; (iv) the original applications filed by the  Com- pany were ordered, and not rejected, by the Chief Controller or  his Deputy and they were sent in due course  along  with the   recommendations  duly  signed  by  the  Deputy   Chief Controller  to  the Joint Controller, Bombay, and  that  the licences were issued in the usual course: the Office of  the Chief  Controller New Delhi, after realizing  that  licences were issued contrary to rules or orders that licences should not  be issued in respect of goods to be imported from  soft currency  areas,  set  up  a  false  case  of  the  original

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applications  being  rejected  and  the  fresh  applications substituted in the Bombay Office.  The aforesaid are some of the possibilities and there may be many others.  When notice was  issued to the petitioners on the ground of fraud,  they were  certainly  entitled to the particulars  thereof.   The Chief Controller could have given the following particulars: (i)  the  petitioners’  applications  were  rejected  on   a particular   date;  (ii)  the  orders  of   rejection   were communicated to them on a particular date; (iii) that he did not  issue  any letters to the petitioners  as  regards  the forwarding  of their applications or the recommendations  to the Joint Chief Controller, Bombay; (iv) after the rejection of  their applications, the Office of the  Chief  Controller did  not receive any letters from the petitioners; (v)  that the applications on which the licences were issued were  not the  same applications sent to the Delhi Office;  (vi)  that the signature of Mr. 55 430 M.  L. Gupta was forged; and (vii) that there is nothing  in the   Bombay   Office  to  show  that  they   received   any applications  from the Delhi Office.  If  these  particulars were   given  to  the  petitioners,  they  might   have   by inspecting  the  documents proved that there was  no  fraud, that  there was no order rejecting the-  applications,  that the   despatch  book  showed  that  the  applications   were forwarded  to  the  Bombay  Office  and  that  the  original applications  were  not in  that Office, that  the  despatch book  and  the receipt book showed the  correspondence  that passed between the Chief Controller and the petitioners, and that  the signature of Mr. Gupta on the recommendations  was genuine.  It is not as if the petitioners admitted that they committed  the  fraud.  When they were confronted  with  the notice,  unless the particulars were given to them  and  the documents  shown  to them, it was not possible for  them  to know whether a fraud was committed at all and, if committed, how  was it committed.  Only for the purpose  of  explaining that  no  fraud was committed by them, they  asked  for  the particulars,  for inspection of the relevant  documents  and for  a personal hearing: all these were denied to them.   In the  circumstances, I find it not possible to hold that  the petitioners were given reasonable opportunity of being heard within  the meaning of cl. 10 of the Order.  The stakes  are high and the order of cancellation was made arbitrarily  and in utter disregard of the principles of natural justice.   I should  not be understood to have expressed any  opinion  on the  merits of the case.  It may be, or it may not be,  that the  petitioners were guilty of fraud; but they should  have been  given a reasonable opportunity of being  heard  before they were condemned as having committed the fraud and  their licences were cancelled. 1, therefore, direct the issue of a writ   of  certiorari  quashing  the  order  of  the   Chief Controller   cancelling   the  licences   granted   to   the petitioners. ORDER OF COURT In accordance with the opinion of the majority the  Petition is dismissed with costs. 431