# [1960] 2 S.C.R. 408

- **Citation:** [1960] 2 S.C.R. 408
- **Court:** Supreme Court of India
- **Decided:** 1960
- **Bench:** B. P. Sinha, P. B. Gajendragadkar, K. SuBBA RAO, K. C. Das Gupta, J.C. Shah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1960-2-s-c-r-408-1870
- **Pages:** 23

## Headnote

Import Licence,
Cancellation of-Constitutional validityReasonable
opportunity of being heard,
meaning of-Imports
Control Order, I955. els. 9, IO-Constitution of India, Arts. I9(I)(f)
and (g), Art. JI.
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 ~ief 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 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 Contro11er 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,
infi;inged Arts. r9(r)(f) and (g) and 31 of the Constitution and that
no reasonable opportunity was. gh·en to the petitioners of being
heard as required by cl. ro of the Imports Control Order.
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-.
S.C.R.
SUPREME COURT REPORTS
409
Held (per Sinha, C.J., Gajendragadka,r, 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,
{;Onstitutes a reasonable restriction on the rights conferred by
Art. r9(r)(f) and (g) of the Constitution and, being imposed by a
valiid law, cannot contravene Art. 3I.
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 propos~d had a fair chance of
convincing the authority that the grounds on which such ac

## Text

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I959
December 9
408
SUPREME COURT REPORTS [1960(2))
MESSRS. FEDCO (P) LTD. & ANOTHER
v .
. S. N. BILGRAMI & OTHERS
(B. P. SINHA, C.J., P. B. GAJENDRAGADKAR,
K. SuBBA RAO, K. C. DAS GUPTA and J.C. SHAH, JJ.)
Import Licence,
Cancellation of-Constitutional validityReasonable
opportunity of being heard,
meaning of-Imports
Control Order, I955. els. 9, IO-Constitution of India, Arts. I9(I)(f)
and (g), Art. JI.
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 ~ief 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 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 Contro11er 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,
infi;inged Arts. r9(r)(f) and (g) and 31 of the Constitution and that
no reasonable opportunity was. gh·en to the petitioners of being
heard as required by cl. ro of the Imports Control Order.
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-.
S.C.R.
SUPREME COURT REPORTS
409
Held (per Sinha, C.J., Gajendragadka,r, 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,
{;Onstitutes a reasonable restriction on the rights conferred by
Art. r9(r)(f) and (g) of the Constitution and, being imposed by a
valiid law, cannot contravene Art. 3I.
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 propos~d 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 els. 9 and IO 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 Parle London Electricity
Joint Committee Co., [1924] I K.B. r7r, Rex v. London County
Council, Ex Parte Entertainments· Protection Association Ltd.,
[19r3] 2 K.B. 215 and Province of Bombay v. Khusaldas S. Advani,
[1950] S.C.R. 621, referred to.
The language of cl. IO 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
•
I9$9
'
F edco ( P) Ltd.
and Another
v.
S. N. Bilgrami
and Others
r959
Fedco {P) Ltd.
a11d Another
v,
S. N. Bilgrami
and Others
410
SUPREME COURT REPORTS [1960(2))
cl. IO 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.
ORIGINAL JURISDICTION: Petition No. 171 of 1958.
Petition under Article 32 of the Constitution of
India, for enforcement of fundamental rights.
Purshottain Tricuindas, Porus A. Mehta, S. N.
Andley, J.B. Dadachanji, Raineshwar Nath and P. L.
Vohra, for the petitioners.
0. K. Daphtary, Solicitor-General of India, N. S.
Bindra, R. 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].
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 Tespondent, 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 o_f
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
,
'
S.C.R.
SUPREME COURT REPORTS
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,
19!'>8, and the last. on July 22, 1958. It is further
sta.ted 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 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
r959
Fedco (P) Ltd.
and Another
v.
S. N. Bilgrami
and Others
Das Gupta ].
z959
Fed•o (P) Ltd.
and Another
v.
S. N. Bilgrami
a11d Others
Das Gupta J.
412
SUPREME COURT REPO:RTS [1960 (2)]
and documents relied upon by him. On September 27,
the 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 briug
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, :1mend or alter
the explanations contained in this letter hereafter and
to submit such further explanations 11s 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 (Administration) in the Chief Controller's Office on October 14,
1958. At this interview the petitioners again requested Mr. Snndaram 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'
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S.C.R.
SUPREME COURT REPORTS
'413
rights under Art. 19(l)(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 laws under Art. 14 of the Constitution inasmuch as other persons similarly situated have been
given a proper opportuμity and a personal hearing
before taking any action against them, while the petitioners have been denied a proper opportunity to show
ci~use 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 opposition that the learned Counsel for the petitioners did
no1; press this ground at all. Nor did he press the
fourth ground, viz., that the petitioners' right under
53
r959
Fedco (P) Ltd.
and Another
v;'
S. N. Bilgrami
and Others
Das Gupta J,
1959
Fedco (P) Ltd.
and. Another
v.
S.-.N. 'f:Ji'lgra,ni
and_· OJ hers
Dus G1:1Pla· J.
4J4
SUPREME COURT REPORTS [1960 (2))
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 tlrnt 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(l)(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, and
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 simila.r applications 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 isgue 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
S_hri M. L. Gupta, Deputy Chief Controller of Imports
and Exports. The respondent contends that the pur-.
ported 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
o~ licences was authorised by him he did not in fact
give any authority, and that when the petitioners'
representatives 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 l~cences had not been authorised by him as they
purported to be and that they had been obtained
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S.C.R. .
SUPREME COURT REPORTS
415 .
fraudulently. The respondents further contend that
z959
when again on October 14, 1958, the petitioners had Fedco (P)~ta.
a,n interview with Mr. Sundaram, the Director of
and .(lnother,
Administration in the office of the Chief Controller of
v.
Imports and Exports, Mr. Sundaram told them exs. N. Bilgrami
pressly that the recommendations against which the
anilTJthm
disputed licences were granted to the petitioners were
Das GuptaJ,
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.
I9(l)(f) and (g) and Art. 31 of the Constitution .. Clause
9(a) is in these words:-
·
"-Cancellation .of Licences :-The Central. fjoverriment 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{l)(f)
and (g}. 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 actim:i. If a provision for
giving a reasonable opportunity of being heard had
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
th.at no action shall be taken under clauses 7, 8 or 9,
'959
F1dco (P) Ltd.
and AnotheY
v.
S. N. Bilgra»ii
and Others
416
SUPREME COURT REPOH,TS [1960(2)]
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, ca-nnot but be a party to the fraud or misrepresentation. The petitioners' Counsel submitted
that it is possible to imagine a case where an 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 on a correct statement of relevant facts. That basis disappears if grant of the
licence is induced by fraud or misrepresentat.ion.
Whether the licensee himself or some other 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
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S.C.R.
SUPREME COURT REPORTS
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 inter~
ference 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 re:1sonable 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 au 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 howe'ver 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
circum!ltances in order to arrive at a conclusion
whether the omission to give particulars of fraud and
I959
Ferlco (P) Ltd.
and Another
v.
S. N. Bilgrami
and Others
Das Gupta .T.
•
I959
F.edco (P) Ltd.
.and Anothe,,
v.
S .. N. Bilgrami
and Ot!iers
Das Gupta j.
418
SUPREME COURT REPORTS [1960 (2)]
inspection of papers deprived the petitioners of a
reasonable opportunity to be heard.
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 had a fair cha.nee of convinci11g
the authority who proposes to take iLction 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
n.r·oion 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 hy Mr. Bilgrami on the basis·
of the material in his possession·that the five licences
had 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·Nxports, 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
h:we ·been of Mr. M. L. Gupta were not really his
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s.c.R.
SUPREME COURT REPORTS
419
I959
signa.tures; that while the forwarding letters purported
to sta.te that the issue of these licences prayed for had
Fedco (Pl Ltd.
been authorised by Mr. Bilgrami as the Chief Con- , and Another
troller of Imports and Exports, New Delhi, he himself
v.
knew that such issue had not been authm:ised by him. s. N. Bilgrami
We find that in the very notice that was given to the
and Others
pet_it:ioners' company to show cause against the proDas Gupta J.
posed action of cancellation, it was stated tha.t these
licences appeared to have been obtained by fraud. On '
the question -uf 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 he did
inform the petitioners' representatives-Mr. Parikh,
a Director of the Company, the second petitioner
Mr. Hangwala, who is the Chairman of the Company
and th~ Company's solicitor, Mr. Hussaini Doctor of
the "general nature of the fraud". In para 23 of his
affidE~vit 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 Dq_ctor 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 fraudul!mtly, 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 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-Musli.m 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 representc
ativeu 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
/
•
1959
Fedco (P) Ltd.
and Another,
v.
S. N. Bilgrami
and Others
Das Gupta .f.
420
SUPREME COURT REPORTS (1960(2))
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 respondent's 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 not 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 issne 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. Sunda.ram 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 tha.t interview that the recommenda.tions
'
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S.C.R.
SUPREME COURT REPORTS
421
ag~Linst which the disputed licences were granted tq the
pet,itioners 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,
1968, 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 state·
ment in the concluding portion of the letter was not
true. This justifies the conclusion that Mr. Bilgrami's
assertion that 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
affidavitMr.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 wliat we find to have taken place at
the interviews on the 30th September and the 14th
October, specially the fact that the Company's representa,tives 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
partieulars 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,
s+
,
Fedco (P) Ltd.
a!ld Another
v.
S. N. Bilgrami
and Oth~rs
Das Gupta J.
'959
Fedco (P) Ltd.
and Another
v.
S. N. Bilgrami
and Others
"Das Gupta].
Subba Rao].
422
SUPREME COURT REPORTS
[1960(2)]
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
11nd 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 Germany. In
regard to each of these applications, the Company
received a letter purporting to be from the office of the
Chief Controller intimating them that their applications had been forwarded to the Joint Chief Controller
of Imports and Exports, Born bay, (hereinaft.er called
the Joint Controller) with the necesRary comments. The
Company acknowledged the receipt of these letters.
Thereafter five licences were receked from the Office
of the Joint Controller, Bombay, and two of them
:were dated July 24, 1958, another two were dated
.August Hi, 1958, and the fifth was dated t>eptember 4,
1958, On the basis Qf the said Iicences1 orders were
•
•
S.C.R.
SUPREME COURT REPORTS
423
placed with a foreign company in West Germany and
goods of considerable value actually arrived in the
Bombay port. By 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 Gov~rnment 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 t;wo points, viz., (1) els. 9 and 10 of the Imports
Control Order, 1955, (hereinafter called the· Order)
whereunder. the licences were cancelled infringe the
fundamental rights of a citizen under Art. 19(l)(f) and
(g) of the Constitution inasmuch as the said provisions
con:stitute 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 Controllerin
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 '' wi:thiii
the n:{e·aning of ol. 1.0 of the Order Was ·given to· 'the
z959
Fede<> (P)Lt!j.
and A not her,
v.
S. N. Bilgrami
and Others
· Subb4.R~Q ]-,
I959
Fed&o (P) Ltd.
and Another
v.
S. N. Bilgrami
and Others
Subba Rao].
424
SUPREME COURT REPORTS [1960(2])
petitioners by the Chief Controller. The material
parts of els. 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 ha.s 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 wiLh clarity by Lord Justice Atkin in Rex v. Electricity Commissioners, Ex Parte London Electricity Joint
Committee Co.(1 ), elaborated by Lord Justice Scrutton in
Rex v. London County Council, Ex Parte Entertainments
Protection Association Ltd.(') and authoritatively
restated by this Court in Province of Bombay v.
Khusaldas S. Advani ('). They laid down the following
conditions: (a) ~he body of persons must have legal
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
(I) (19_24] l K.B. 171.
(2) [1931] 2 K.B. 2I5,
(3) [1950] S.C.R. 621.
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S.C.R..
SUPREME COURT REPORTS
425
els. 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.