# • LJBERTY OIL MILLS & OTHERS v. UNION OF INDIA & OTHERS

- **Citation:** [1984] 3 S.C.R. 676
- **Court:** Supreme Court of India
- **Decided:** 1984-05-01
- **Bench:** 0. Cl!!NNAPPA REDDY, A.P. Sen, E.~. Venkataramiah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ljberty-oil-mills-others-v-union-of-india-others-8637
- **Pages:** 39

## Headnote

Imports (Colltrol) Order, '1955-Promufgated under ss. J and 4-A oft!..
Imports and Exports (Control) Act, 1947-Cfmue BB-AJded lattr by woy cj
amenilmem-Jnterprelotion of-Contemplates action of .interim !1Qture-01<ftr/
action mu_st satisfy rule• of naruwl jllstkt!-AutlwrilieJ /WI bound lo gireptt-
• ·:decisional hearing-Authorities mrw give prJ,1t·rlccisiona/ hearlng-DeciJion mJIJtbe
communicated to person affected-Order need nol .xive rea.>on$ bUIIt!Jl!l illlikalt
satisfaction furming basis for action and concise statement of aJ/tgalioru-Actic•
under Clause BB of dJ·aslic natttre-IYJust be a11jmctted by .sense of urgency-S~of
urgtncy infused by ie1•ual factors-Public .sculiment is otU! sw:fi/Q£tor--PIIbUc
lntere.s to h« parumowtt collsiderarlott-'-11 is for authorities to coruidu jlub~
. · lnt<rt!t-Cuurtt nut to concern themselves wjth sufficiency of grou'nd-<:outlstl
consider questloH of mala/ide ur patent luck of jurisdicticm.
Import (Control) 0flfer, 1955-C/ause 8B read with C/au.s~ 11 (4)-lnt<,.
pretation.. uf-Cious~ BB applies eqttally to goods coyered by Op<n Gtnm(
Licenu.
lnterprelatiotl of ltulllles-Rules of-Courts nut pernritud 10 ltlterpret srQIJIJOfT
Instruments so as /o exclude nulllrul justice unless lui11JUQ86 of inslrllm<nt /eal'<IJIJ
option to Court,
·
. . .
,_
• N«tural }ustlct!-Rulcs of-Extent of natural jtuti~Must vary Jrem ctJJl 10 '
• case-Interim orr/en Imply /Wtura( justiCe-Seeking comments· of person ll<f•rt
inYestigution ag«illst him nvllletessury-Dedsion uffcctiey a pusan must /)teo/It"
nzunicutcd to the ujfeaed pcrsun-Ajfectcd persvn .11mst be giren post-d<ciJiotl4i
opport11/ty /WI puu/Nc.
.
Words am/ pltrases-'lllvestigatioll' -IYhett comm~nus.
.
.
. -
Oa bein11 uiscovercd th~t beef tallow Imported from abroad. was et
being 110hl Ill vana~p~ti or used in its p~anufa~turo ·by certain un.sct_'lputo~
persons, general public f.:eling was rous~d ond there was public agitatton ao
demands ~re mude that 1.:vcco nctiou be tukcn ~gainst those responsible . . 1u
a result of the discoveries tho Centcul Government thou&ht that drastic acuo~
wa• called for. So, a notilio:utlon was issu~d under s 3(3) of tbo Imports
80
•
E
·
·
tt ~dptl
~ports (Control) Act, 1947 totulty bannln_g tho impact of beef, butl"a 0
bet
tallow Inti> Jndill w.e.r. Auau~t 24, 1~83. And, on <!ill"crent dateiJ. in Nov~l!l · J
r
1
.
LIDERTY OIL MILI.S·v: UNION
r
:, '
' n~ o«>cmbor ~983, five circ~l~rs. styled 'ahcyance' c'rcul~r!l-and mark~d ·sC::rct'
.
•
. sued by the Doputy Ch1ef Con•rollcr of Imports and E•porls in respect of
were
15 y as 19! concerns directing .licensing authorilits to keep in aboyanet for a
., ~n
of six months from the ~espcctive d~tes of the circulars, any application
· p< ;,ed from any of them for the grant <?f Import l1c.:nce or customs clearance
f
.
~its' and allotment of impo rtod goods through agencies· like the Slates
~~ding corporation of India Limited or nny other similar agency. Tboush the
,;.-ullfS did not tbcms,lves. e to any statutory authonty, they wcro, ascl•imed
I
•od ns agreed to by the parties, presumed to be statutory orders made in e..crcise.
{
of the power conferred by ct. 8 B of th< Import (Control) Orlicr, 1955: Sc>cr..J·
{'
pc:~ons 3gainst whom '•beyance' Orders haJ' been made tiled writ petitions in
• ~
dilferent llish Courts challenging tl:osc o+dcrs. Lib<rty Oil f>lills wa.s one . of
'l
thoSO who filed such a writ petition in the Bombay H1gh Coun. The case was .
·: v· ,,th:rawn to the Supreme Court under ':'-rt, 139A of the Constituuoa.
r 1
u:·erty Oil M1lls contenJeu: · (I) that the requisito satisfacuon , of Ute
• ~ . · ;ppropria.tc :tuthorhy which was n~""essary for issuing an ord..:r uont!f: cl. Sll was ..
"
not only not recorded In the circular but t: '"'was no material whatsoever upon
which such satisfaction could have been arrived at; C) that the· circulor was
not confined to the banned item of animal ~;~tk>w or to items which could be said
to have oumo cMncction with the ·t-anned Hem. bu

## Text

_Characters 0–39,979 of 109,028. This is a partial read: ask again with offset=39979 for what follows._

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LJBERTY OIL MILLS & OTHERS
v.
. UNION OF INDIA & OTHERS
•
May 1, 1984
. .
(0. Cl!!NNAPPA REDDY, A.P. SEN AND E.~. VENKATARAMIAH, JJ.)
Imports (Colltrol) Order, '1955-Promufgated under ss. J and 4-A oft!..
Imports and Exports (Control) Act, 1947-Cfmue BB-AJded lattr by woy cj
amenilmem-Jnterprelotion of-Contemplates action of .interim !1Qture-01<ftr/
action mu_st satisfy rule• of naruwl jllstkt!-AutlwrilieJ /WI bound lo gireptt-
• ·:decisional hearing-Authorities mrw give prJ,1t·rlccisiona/ hearlng-DeciJion mJIJtbe
communicated to person affected-Order need nol .xive rea.>on$ bUIIt!Jl!l illlikalt
satisfaction furming basis for action and concise statement of aJ/tgalioru-Actic•
under Clause BB of dJ·aslic natttre-IYJust be a11jmctted by .sense of urgency-S~of
urgtncy infused by ie1•ual factors-Public .sculiment is otU! sw:fi/Q£tor--PIIbUc
lntere.s to h« parumowtt collsiderarlott-'-11 is for authorities to coruidu jlub~
. · lnt<rt!t-Cuurtt nut to concern themselves wjth sufficiency of grou'nd-<:outlstl
consider questloH of mala/ide ur patent luck of jurisdicticm.
Import (Control) 0flfer, 1955-C/ause 8B read with C/au.s~ 11 (4)-lnt<,.
pretation.. uf-Cious~ BB applies eqttally to goods coyered by Op<n Gtnm(
Licenu.
lnterprelatiotl of ltulllles-Rules of-Courts nut pernritud 10 ltlterpret srQIJIJOfT
Instruments so as /o exclude nulllrul justice unless lui11JUQ86 of inslrllm<nt /eal'<IJIJ
option to Court,
·
. . .
,_
• N«tural }ustlct!-Rulcs of-Extent of natural jtuti~Must vary Jrem ctJJl 10 '
• case-Interim orr/en Imply /Wtura( justiCe-Seeking comments· of person ll<f•rt
inYestigution ag«illst him nvllletessury-Dedsion uffcctiey a pusan must /)teo/It"
nzunicutcd to the ujfeaed pcrsun-Ajfectcd persvn .11mst be giren post-d<ciJiotl4i
opport11/ty /WI puu/Nc.
.
Words am/ pltrases-'lllvestigatioll' -IYhett comm~nus.
.
.
. -
Oa bein11 uiscovercd th~t beef tallow Imported from abroad. was et
being 110hl Ill vana~p~ti or used in its p~anufa~turo ·by certain un.sct_'lputo~
persons, general public f.:eling was rous~d ond there was public agitatton ao
demands ~re mude that 1.:vcco nctiou be tukcn ~gainst those responsible . . 1u
a result of the discoveries tho Centcul Government thou&ht that drastic acuo~
wa• called for. So, a notilio:utlon was issu~d under s 3(3) of tbo Imports
80
•
E
·
·
tt ~dptl
~ports (Control) Act, 1947 totulty bannln_g tho impact of beef, butl"a 0
bet
tallow Inti> Jndill w.e.r. Auau~t 24, 1~83. And, on <!ill"crent dateiJ. in Nov~l!l · J
r
1
.
LIDERTY OIL MILI.S·v: UNION
r
:, '
' n~ o«>cmbor ~983, five circ~l~rs. styled 'ahcyance' c'rcul~r!l-and mark~d ·sC::rct'
.
•
. sued by the Doputy Ch1ef Con•rollcr of Imports and E•porls in respect of
were
15 y as 19! concerns directing .licensing authorilits to keep in aboyanet for a
., ~n
of six months from the ~espcctive d~tes of the circulars, any application
· p< ;,ed from any of them for the grant <?f Import l1c.:nce or customs clearance
f
.
~its' and allotment of impo rtod goods through agencies· like the Slates
~~ding corporation of India Limited or nny other similar agency. Tboush the
,;.-ullfS did not tbcms,lves. e to any statutory authonty, they wcro, ascl•imed
I
•od ns agreed to by the parties, presumed to be statutory orders made in e..crcise.
{
of the power conferred by ct. 8 B of th< Import (Control) Orlicr, 1955: Sc>cr..J·
{'
pc:~ons 3gainst whom '•beyance' Orders haJ' been made tiled writ petitions in
• ~
dilferent llish Courts challenging tl:osc o+dcrs. Lib<rty Oil f>lills wa.s one . of
'l
thoSO who filed such a writ petition in the Bombay H1gh Coun. The case was .
·: v· ,,th:rawn to the Supreme Court under ':'-rt, 139A of the Constituuoa.
r 1
u:·erty Oil M1lls contenJeu: · (I) that the requisito satisfacuon , of Ute
• ~ . · ;ppropria.tc :tuthorhy which was n~""essary for issuing an ord..:r uont!f: cl. Sll was ..
"
not only not recorded In the circular but t: '"'was no material whatsoever upon
which such satisfaction could have been arrived at; C) that the· circulor was
not confined to the banned item of animal ~;~tk>w or to items which could be said
to have oumo cMncction with the ·t-anned Hem. but cxt<ndcd to nil item, for
~hlch a~plic>tiOns for the grant of licenc-es or for allotment had been made by
l ihmy Oil Mills; (3) that general nature of the order discloscu n total noa·
application of the mind: {4) that several firms were clul>bed t~gethcr and tlc.Jlt
~ith by a sinale circula~ and thcce was no indio>tioa whauoevcr that the facts
relating to each of the firms hall ba:n considcreli scpar:aely ; (S) that the
'ubcyance circulars' far from auvnncing the public interest would, on the other
baed, prcjudicinlly offc:t the public in'terc.>t by bringing to a bait se•ero.l industtie• and throwing hosu of workers out of employment; (6) that there was no
ault!tancc i~o tne ollegation that Uberty Oil Mills were not 'actu~l users' of beef
tallow but th()' l•ad misused the import licenoc~ of other liceos<'C.S' by obtaining
letters of authorisation for Import o~ beef tlll~w as if they were ootual users;
und 17) thJl tho' circumstance that there was put>lk 3gitation about the import or
beer tallow ""a total irrelevant circumsronce for making an ordor under cr. 88.
The intervener: contended: (I) that ct. SB should be construed ·as'·providin&
for on oppprtunity to be heard und sin<-c the al"Cyonce orders roauc no provis>:>n
~or ~1earin~. they •hvu:J be struck down ·35 opposed to the prin-.pi<S or naturul
~Ill«, and therefore, arbitrary and viobth·e of Article 14 and 19(1)(g) of tho
• ~nstituti~n ; (2) tJ~at !ccret orders aiTcctin~ ~ights of part.ies _could not ~awfully
, 01.lde snu:e o<crex:y would militrate ae>nlSt aatural !UStiCC wtl!J agam•t the .
''i!ht or appeal provided by •· 4M of the lm)X'rts and £•Jwrls (Control) Act, and ·
0) that an order under cl. SD could 011ty be nude ufter the investigation under
<1. 8 haq commenceJ rh•t i~ ufter a show .-ause ooti<'t hail been issued under cl.8,
Dilml ·
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"'"lithe writ petition~.
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1112LO: It Is not perouis.•iblc to intctpn:t any statutory instrument so. as to
~luJc ll;JturJI ju~tice, unlc!l the lan~uagc of the in~tru_mc?t leav~ no ~piton to
•
Coun. l'roc.:uural fuimess cmhodyini naturul JUSttce ts to be Jmpltcd when·
n~~ a<tion Is token affecting the rishts of partie'S. It· may be that the oppurtuy to be h<aru may not .,., prc-do:cisioual ; it rnay no:ccssauly ha1·e IQ be post.
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. : SUPREI>lB COURT REPORTS
· [1984j 3 ~-c.k.
decisional where the danger to b~ averted· or the act to be preve 1 d. .
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or where the action to be taken can brook.ne delay, It may riot n e 15 •mminent ·
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ovenbe,_
sary in some sttuat ons \0 gtve pre ectstona opportunity of makin
··-...
_ tation but it would be sufficient but qbligatory to consider any repr!:~epreseo• .
may be made by the aggrieved person and that would Satisfy the re . IJoa th,t
. procedural fairocss and natural justice. There can be no tape.m:"•tnenb of
extent of naturnljusucc." It may and indeed it must vary from statutsucc or the
• · ·
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p
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e to !tatute
51tuauon to SJ uauon an ·case o case.
re- cctstonal natural ju r . •
usually contemplated when, the decisions taken are of an interim nat
5 tee"' not
invesiigatioo or enquiry • • Ad-interim orders may nlways be made •"x"' !'(ndlllt
. ·
.
·partt and
such orders may themsel~es provtdc f?r at~ opportunity to the aggrieved p:uty 1o
be hJ:f!rd at a later stage. Even if the tptenm orders do not make Pl1lYision foe
such an opportunity, an aggrieved party_ bas, ncverlhelcss, always the right to
make ~n approptiate representation seeking a review of the order and asking the
· authority to rescind or moJify the order. The principles of natural ju!lit<
would be satisfied if the aggrieved party is given an opportunity at his reqll<!l.
There is ne> violation of a princi)lc_ of natural justice if an
~.r-partt •d·interim •
order is made unle~s of course, the statute itself provides for a hearing bef~e
the order is made. Natural justice Will be violated if the authority refuses to
consider the request .of "the aggrieved party for an opportunity to make bi>
representation against the ~x.-paru ad-itt!Crim orders. (700H ; 70JA-F)
There is no rule of justice of fair play whkh requires the authorit~ to 5«k
tbe comments of the person coocc:rned before embarking upon nn investigation.
lnvt.~tigatioo commen= as •ooo as ·the authority concerned to take the 61't step
wbelher by way c>f seei:ing evidence or by way of seeking an e•planation from
the person concerned. (699F}
"tn $Orne cases, t:<·port~ in~erim. orders may
be made pending a finll .
adjudic.Jtion: But that dves not mean that natural justice is not attracted whca
orden or suspension or like orders or an Interim nat uri: arc m~<)e. Some ordm
of that nature, int~odcd to prevent further mischief of one kind, may lhem!<ll'eS .
be product ivc of ifu:er m•schief of another ldnd. An interim order of staY or
lospension ~ti;h hJ; th~ eff~ct o( preventinl! a p~NOR, however, 't<J1l[JOr><~(y,
uy, from pursuing his profenion or line of busin•ss, !D3Y h1ve subsll"1131•
ICciOUI and CYCQ disastrouS .COnSCI]UCltCCS to him and Jtlly ¢'pole him (I) grave
risk and hazard. Therefore, tbere mu:11 be observed .ome modicum of rt5Jdual,
core n•tural justice, suffident to enable tho atT.:cte.l ~C'IOn to. mnke ao aJ~u>te
representation. The"' coniiderations may not, however, apply to "ues of h~~t
ll~n•in11 whicb involve tllo grant or a prlvilell~ and aro not 1 m~uer of· "' '
Th•l may b: a•J in IJ.n> Clla, it .;tn oaty bJ a(t:r an lniti<41 t:<·[Jatl< t.JttrJJJ
order il made. (70SB-0)
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Q•-.n v. ll'VI ..... If'' tt al., S6 D.L R. (2Jl 28), Co111 11isslontr o,
,.,.,u 1,
Tonal, 9~, C.L.R.. 3~1 . Lnis Y. 11•/[tr, (19781 3 All ER 3S4 and Fu tllrs>'·
. WhW'Mo•rllli~h Schools Ed, l97J A(lpeal Cuses 660 and C/tilli/tpul Do~f 1973,
M,.f<SIIe 8JII/I·•t c,Jmp~ny, SU,>Nm: CJurt' s Civil App:a I Nos. 197().71
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LIBERTY OIL MILLS v. UNION
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ent or the Chief Controller of Imports and Exports io debar A
;, Governrn from impor tin& goodS' or from ]<Ceiving licences or allotment of
I a person
·11 d
· d ·r
h
f .
d gocds tor a ~pen e perro r sue person if guilty of any of the
rmportc commission or omi"ion enumerated in the Clause.· Clause 8A
• acts. or, 5 the Central Government ·or the Chief Controller of Imports and
etnPOW r
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15 to suspend the rmrortatwn o goo s by any person or grant of
. E•pOr
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licences or allotm~nt o
J~por c . goo s pe~ rng rnrt~tjgotion ioto one or
I!IO<C of the allegal!ons mcntron~d m . cl •• 8 wclhout preJudice to any other B
·on that miiY be . taktn ngamst hem on that bthalf. Clause 88 empowers
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~~Central Government. cir. tb_e Chi~f Controller of Imports and E•porls
10 ke<p in nbeyance apphcn hens for lcccnccs or allotment of imported good'
l
wbor< ony inl'estlgatlon 1:; pending rnto ony of 'tbe alkgations mcn•ioned in
cl. s ngainsl a lic<nccc, in>porltr or aoy other pe•'son subject to fulfilment
'
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ofthc requirement of tbc sntisfuction of the approrriate auth<'rity rcgordtng · C
the rub lie interest. Both clauses 8A and 88, which were inserted in the
Import (Control) Order, 1955 later by )V3Y or smond'ment. CC'nt•mplate
f
accion of an interim nnture pending inns'igalioil in1o aliC!!~ti<>n< imder ·
eL 8. Ordinarily in the nbsrnce of anything rr.orc, •t would not bt ncces- ·
ury' to gh·e an orportunity to the per sou concerned before proceedingl
eo take action under cl. SA or cl. SB. But whtl• cl. 8ll de;lo with tho ·
riJhllo oblftln liccncrs and th~ •ight to ol:lta:n allotments. cl. 8A deals with
D
right! which have flowered into licen<es and allotments. A person to
• •hom licences hnve been sra.nted or alk•tmen<s made lil:lY havt arranged his
l
liJ'alr~ OR that basis nnd entered into transnctionS with Others. and:to him
1he consequences of aciton under cl. SA may be truly disa<trous whcrra• the
IX!nsc:quences of action under cl. Sll may not be so imminently harrr•ful. . It
. b presumably because of this ltvely diiTor cncc betwten cl. 8A ar.d sn that
cl. 10 provides for a pn:·dccisil>nal opportunity in the case of action under
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cl. 8A and docs not so provide in the case of action under cl. SB. Again, il
is presumably b~au'c or this difference that ct. 10 while providing f<>r an
.. . lpllcal •gainH n decision under cl. SA docs not provido for an appeal against
. 1 decision undi:r cl, 8D. But that docs not me3n that the requirements of
0-'uraljustice ore nol to be ntent at all in the case or action under cl. SB.
~he requir<men:s of natural justice .will be mel in the ensc of act!on under
F
'~ C~ SB by ·cor.sidering, .~ona fide, 11ny rtprescnt:Jtion that may bt made in
:b 1 behalf by tte person asgrieved. Clause 88 itsclfaivesan indication
·,. .
at such a post-decisional opportunity on <he rrquc•t of the person c••nccr-
;
D<d lacont
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<mp a ted. The action under cl. SB is to be taken 1 t•·• aut torrty
·
11 lo.Usfied in the public intcrc~t that such a~tion may bt taken wi1hout
«nolnin• f
h
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lit:)
• Urt cr detail' In rcsord to the all(gations. It clear Y unp tes
not::h<n furll•cr facts are ns"ertaincd by the authority or brousht to tt.c G
o;a5e otof d:e authority, such action may bt r~i<wed . Th•·rcforc, in. tbc
Ollportun~ctroo under cl. 8B it is not r:ec.:s:>arx to atve ~ prc-dccls•_onnl ..
~?'the
I.Y but a post-<lcdsion111 opportunitY must bt i<ven tf so rcqutstcd
. Persona atr«:tcd, [G9SO; 696D-E; G; 705F·H; 706A·E)
·
Ptrto The dcciaion to keep' in- 'obeyance' sh~uld ~communicated to tl;e
It ·w:U~~n~erncd otherwise the rules of natural justice will not ~e sa!isfied.
H
I~ (i) l¥) : lnO&l &lbitrnry and qult clearly violative of Artceles 14 a~d
.
r lhc Constitution j£ cl. 80 is to be inter!>rctcd PS e.tctuding
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stJPR.BME ccniRl>REPORTS.
communication qf the decision . taken.
There ·.is nothing In cl. 8B to
suggest that the decision is not to be communicated. · On the other hand,
the expression ''without assi$niog. any reason" implies that the decision has .
to .be commliticated, but r.ea~Ms for the. decision have not to-be stated .
. Reasons of course, must exist for the decision. since the decision may-,.only
·be taken if the ·authority in satisfied that the grant of licence or allotment
. of·imported good~ will not be is the publi~ interest.
The expres ion
with·
o:ut assigning reasons' only means that there is no obligation to formulate
reasons and 110tbiog more.
Formal reasons may lead to complications
when the matter is still under investigatio11.
So ·the authority' may not. .
. give formal reaso!s, but the skeletal allegations must be mentioned in order
to provide. an opportunity to the person affected to make his representation. -
[706H; 707A>c]
On what should the. satisfaction . be based ? The action under cl. 8S' .
is really in aid of the ultimate -order under cl. 8.
Therefore, in order to
invite the satisfaction contemplated by ct. 8B there ·must be present some .
strong suspicion of one or other or ·more of· the grounds mentioned in ·cl.8.
Since the action which is of a drastic nature is to t:ic taken ,ex-parte, it must
· n~cessarily be .animated by a sence of urgency.
Tbe sense of urgency ·may
be infused by a host of circumstances such as the trafficking and unscru~
pulous pe4dling in licences, large scale misuse of imported goods,
att~Qlpts .
J:o m~nopolise or corner the market, .wholesale prevalence of improper
practices among classes of importers, public sentiment etc, etc .. -It is true
that public ~dministration is not to 'be run on public sentiment and statutory
action may only be taken on grounds permHted by the-statute.
Public-
·sentiment is not in some cases ·the gro~nd for the action but it is what
clothes the ground ·with that sense of urgency which makes it · imperative ·
that swm action be taken. · [7070-H]
·
Public intt:rest must nolens volens be the para'l'lount cosider·ation. !f ·
, the tl1reatened .public mischief is such as to outweigh the likely inj!lry to
~
the party, the authority may take action under· cl. 88. If tbe threatened
public injury is very slight comp!tred to the harm which may be done to
the part~. the authority may DO~ ,take action under 'cl. 88. Which elCU!CDt .
of the l,)ublic interest should be aiven greater weight and· which grounds,
should· .weigh at· all ar~ matters for· the authority taking action under cl. · ..
• 8B.
Courts do not concern .tbemselve~ 'with the sufficiency of the grounds
~o which action is taken o~·with .the balancing of competing consil,'leration!,
in favour of and against the action.
[708A•D]
.
.
\
.
J\n 'abeyance' order · under cl. 8B is directed not against any particular type- of ·,goods but against l!n importer, licensee or other persoQ
'against whom an investigation into anegations under cl, 8 fs pending.
Therefore the question is whether ·it is not tri the public interest that a
particular person shuuld be prevented, from obtaining import ·licences or
hnpo.rted goods of any description .p~ding investigation into the
allega~ions
· under cl.SB.
That would .rlepend .on the natU't'e of the a\legations, the
extent of 1nvblvement of the ·person concerned
an~, most important, the
ehintent of the 'public interest wb1ch are for the consideration of th~ . authol'itY 111akina the order under cl. ·S·B' aodnot for the Court.
[708B-G]
.
•
. ~
..
..
•
UBEltfY OIL MILts v. tJNlON
Action under cl. 8B -is or an interim nature and it may be ex-parte,
· in whiob case the affected -party may~make a suitable representation bringing
·out
an~: the outweighing circumstances id his. favour.· Tfiat is the real
. remedy of the party. courts do not enter the picture at !hat . stage . unless
the action is mala fide or patently without jurisdiction.
The action will be
pat~ntly without jurisdic\ion if it is not based on any
r~levant . mat~ial '
whatsoever. If the authority declines to consider the representation, orif
·the authority after cons.idera\ion or from o-blique motive, or tho decision is ·
such. as no reasonable nian properly cire.:ted on the law would arrive at on
ihe matcriaUacts, it will be open to the.party to seek. the ,intetv~ntion of
the court ~t that stage.
[70SE·G]
·
Barium Chemicals v. Company Law Board {1966} Supp, SCR 311
.J./
Rohtas lr.ilustries. v. S. D. 'Agarwal, [1959] 3 S.C:~. I 08~ M. A. Rasheed .
\.,;
v. State ~f Kerala, [1975] 2 S.C.R". 93, Shalin(Soni v. Unianoj India, -{1981)
1 SCR 952 and Commissioner of Income Tax v. Mahindra and Mahlndra, [1983]
.4 S.C.C. 392, referred to. ·
,
. -The Court cannot consider • the question whether ther.e . is r.ufficitrit
relevant matefial in support of tbe allegations m.tde against the petitioners.
Tlie Court may properly consider the qqestion of mala fide or patent !lick
oi' jurisdtction .. Therefore in the instant case the Co~rt cannot cmisider
the question whether the m:.~terial av~llable justifies a prima focie conclus'ioli
that tbe petitioners have ·made Hiegal imports of beef tallow.
[711A·B]
Tbe submission that
sine~ the ab0yance ··order wa~ never formally
conmiunlcat~d to the petitioners, it must be ,rea ted as non elt has nG sub·
stance. The al?eyance order was undoubtedly communicated to the .concern·
ed authorities.
Despite the attempt at secrecy made by the concerned
authority and the failure to formally communicate the decision to tho party,
the ~eyauce circular was very soon public know:edge aod the petitioners
did come to know ofthe orders.
[71013; E-F]
·
· .
The argument that cl. 11 (4) excludes the application· of cl. BB to
ioods .covered by Open, Gener\\1 LicetJce h s 'no sub~tance. Clause 8Bexpressly provides that action under the Clau a may be taken "not withe'
standing anything contained in this Order". - In view of 'this non; obstante
. clause _there is no doubt that cl. 8B applies equally to goods covered l;y
Open General Lic~nce. · [698B-C]
·
The argument-that the order ·as embodied in ths abeyapce cfrcu.lar
did not ·fulfil ·the conditions precedent prescribed by the statuto bas some
'substa.lice.
The_~ircular did _p.ot contain a recital of the allegations consti·
tuting the basis of the satisfacti}>n contemplated by Cl. 8B for action. under
th~t l)rovision, and·witho:ut arecital of the allegations-it was impossible to
say that the action was not·basCd on irrelevant material. It d.id not even
recite that which. was the- foimdatioil of any action under·ct. 813, namely, the
1J.
satisfaction of the authority 'that the · action was
~n tbe pul>liciriterest.
Again a large number· of concerns were lumped together and purp?rted to
·• .
. .
··. ..
. • :
,1 '
•'
. 682
· suPRilMil couR.t R.l!roins
tl984)3 s.c.a .
A
·· b~ deal! · with by a single ab~y11.ncc circular.
Th~re WdS e:r.-focic oo:hio ·
tho circular which could poior to the authority having npplied its ITliod gat~
considered tb~ case of his cooccroed separa loly; (t Is true that the a bey• n
circular sulfeu from everyone of these info(mi~ios.
But the Court's att~c~
·.'·• ·
tlon. was invited to",the stat~cnents mtdo 1<1
th~ couota·a!Ud•vlt by t~e
· : .. D~puty Chief Cootrol)cr of Imports and Exports th~ author of the abcy•lc•
·:
circular;, :t~d th' relcVlot
fil~s p!&ced b•fore tho COU!t for perusal whic I
B
sh?wl .that tbe pdnc•pJI nllcg.llio:n ag:fin't tho ·J)elitio.1ers wcr> "tb1t they
. • had. prima facie indulged in illegal imp.>,tatio t of b« f tallow nod h•~ atsa
misutil is~d the beef tallow. · Why the authority took this prima faci< view
has been explained in I be counter-affidavit.
From a poru1al of tho tiles it
is foun.I th't t:o~ C:t1cs of Lib;tty Oil M•lls as wdl n• other Coilccro! were
SCplCafcly a od ind•viduJIIY c"o~ ·dcred. Thus it does oo: m •ke nny uitT!roncc
on tho"peculilr facts of this C\Sc thnt ., sinalc circular .was is;ucd 'co.verlns
· <!
. a large number of concerns.
[712A-B; U:G]
. ·
D
E
It is imores.ed upon the nothoritiel that tho so' cnlru<lcd by. stutate
wnh tb! ta1k of Ulci•tg prcjudoci•l a;tion oo th~ basi• of their suh]cctivo
·satisflcthn should." first, bos•ow cardul·a ttention to tho nll~g.uion• furmio1 .
the basis ·of the proposed ncdon nod the probable con<cqucnccs which m1y .
ensue ~ucb acti?n •ntf, ~t;xt . t~ko the trouble of reciting in the O'dcr iuucd
by . them the Ut is(o~ction forming the b'l!! ·~ o( the ftCtiO" Ond a COilciSC State• :
· "·tncnt of the :tlle~ations formill& the b;;SiS of the autisfactioo. 'If the D<CtS•
aary recito~ls are o~t fou 1d, thcro may b, ZQrious sequels. . [7! 38-D]
l•l the in<t>nt ca;~, tbe roal remedy of !be parly b. to .. m,kc :1 .reP«·
sentation to the c•Jncemed auth:>rity which is directed to consid~c l~cb
ropresenutioa if made • . [71 JF]
·
0RIGISAI.. JUtU~ItJfCrtOS
Tr.insf.:rred Cas~ No. 22 of 1984.
/i
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·Arising out of Civil Appeal No; 274 of 1984 from Sp~cial l
Leave P~tition No. 17128 of 1933 from tho .Judgm~ntund Ord?r .. ·.
dated 13th & 23rd December, "1983 of the Dombay High Court tn _
in Writ Petition No."2855 of 1983.
· ·
•
,
G
H·
A1h:1k II. DeJa/, S.S . . Ray, A.N. Ocmatw.Jiu, G.l:.:. Ve/tattvatl,
'.j
B R. Ag lfWCI/a, . P.G. Guklr!lle, . 11!.11!. Jctycikar, V.K. Chiure, R.H. ·
._,
RllllchrJ/1, M. Jayakar &: A. Suhba Rao for tit.: Petitioner in WP & for
Respondent in C.A. No. 274/84.
K. Parasuran, Attorny General. M.K. JJimerjel!, Ajdl. Sol.,
General, A.K. Ga•rgull, G. Subram{miam and R.N. Poodar, for the
Re~pontlcnt in T.C. & for the Appellants in CA. No. 274 of 1984.
S.S. Rcty, A~h~k II. De;;,/, Stt/111/t;el Kachm1•al;a, Run/ Kt~runjall'ala,
.M~. M. Kuru,jawula, Ku/Jeep /'ah/ay, A.N. Bunat!twa/a,- G.E. Vulumvclll,
.,
I
\
·:-. -· .
I
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-~
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'·
LIBERTY .011: MILL': v. UNION (Chinnappa Reddy,. J.)
681.
'
Ms,-Bina Gup·ta, Rainu Walta, T. M. Ansari and D. N. Misra for the · · 4
Interveners.
\
..
The Judgment of the Court was delivered by
CHINNAPP~ REDDY, J. A few months ago; orthodox· Hindu
sentiment was outraged and genera~ public feeli-Qg was roused by the
disc0very that beet: tallow hnpo~ted from abroad was either being
sold as vanasplti or use 1 in its manufacture by certain unscrupul?us
persons. There was a furore in the country.
The~e was public
agitation: Questions were asked in Parlia~ent Outside· the · House,
Press and Politician· m~de capital of it. There were dema~ds 'that·
severe action be taken against those responsible. Assurances were
given in Parliament.
Bureaucracy went into actini. It was discovered that though the import of beef talloW, like other animal tallow,
. had been canalised through the State Trading Corporation w1th effect
from June 5, .. 1981, there had been~considerable importofbeeftallow
out-side the cha~nel of the State Trading Corporation even subsequent
to June 5, 1981_, on the ostensible pretext that licences ha,d been
issued and firm contracts had al~eaqy been. entered . into before that
date. It wa~· also discovered 'that beef tallow had been allowed
to be imported -even by 'non-actual users' under letters of authority
given by licensees. wh : had obtail;ted import licences against i'he
·entitlement based on · the value of ·their exports. . A.s a result of
these discoveries it . was thought that drastic action was 'Called for.
So, a notification was issued under S. 3 ('3) of the Imports and
Exports Control Act totally bam1.ing the import of beef, buffalo and
pig tallow into India with· effect from August 24,
1~83. And, on
7th, 9th and lOth November and · 17th and !1st Decen1ber, fiye ·
circulars, styled ''abeyance circulars' and marked . 'secree were issued
by the Deputy Chief Controller of Imports and Exports, in respect
of as .many a~ 192 concerns (business houses), directing licensing.
authorities to k~ep in 'abeyance' fo.r a period of six. months from
• the respect~ve dates of
th,~. circulars ·any application received
.from .any of them for the grant of import Jic,ence or Cus·
toms clear~nce Permits and allotment of imported goods through
' agencies like the State Trading Corporation of India Limited, the
Minerals and Metals Trading Corporation of India Ltd. or any
Other' similar. agency. It may be U)leful to CX;tract one of these
'abeyance.' circulars; all of which are in substanJially similar terms.
• The'abeyance circular dated November 9, 1983 which 'lists' we will
not use the word 'black-lists'-as many as 61 concerns inclu~ins
Liberty Oil Mills (P) Ltd. is as follow$;
.
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. ~: 684
., . A
.. . -·- --· --:~-_.
'
GOVERNMENf OF INDIA ·
. MINISTRY OF COMMERCE .
OFFICE OF THE CHIEF CONTROLLER
OF IMPORTS & EXPORTS
UDYOG BHA VAN, NEW DELHI-11
. .
.
SECRET
dated, tbe 9th N~v. 1983 . ! .
.. ABEYANCE CIRCULAR No. 28/83-84/HQ.
1 c ·
Whereas investigation into certain· allegation mentioned onder ,
. . · Cl. 8 of the .Imports (C:ontrol) order, 1955 are pending against the-"'
II . D
·t E
. . I
F
G
H
under mentioned concerns, all the licensing authorities are herebY
·
. requested· to keep in abeyance for six months from the date of issue
of this circular any application received from them for the grant·
of import Jic~nce of Customs Clearance Permit and allotment of
imported goods through agencies like the State Trading Corpn. of
India Ltd-./Minerals and Metals Trading Corpn. of · India ltd. or auy
other similar agency ;. • .
. .
.
Sl.
Name & addres . Name & address of . Name of ibc prop.{
N'o·.
of the concern.
the branches
as
partner;Director etc.
available.
as available.
2
3
4 '
• • ..
: .
14 M/,. Liberty Oil
Mills (P) Ltd., 16
llll llahadur
Shastri Marg,
Kurla, llombay--:-400070
~
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•
•
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...
. •
. LlliERl~ Oli. MILLS. V~ U~JO~ (C/timtappa Reddy, J.)
. . 2. These· instructions may be kept secret and if any of the
above mcntion~d firms ma~e any enquiry abOut t6c position of their
!
· application (s), they may s1mply be informed the matter is under
1'
(.~ .. · coosiderntivn.
.
3. This does not, however; preclude the licensing autboritie3
from rejecting their applications if they are otherwise illlldmissible or
1'i, suffer from discrepancies in terms of the licensing instructions. Only
'
these applications may be kept in abeyance where the party is entitled
~- to licences or Customs. Clearance Permits etc, except for the allega·
,..,
tioos against tberu.
·
. ~
. .
.
4. Full details of all applications kept ·in abeyance as a result
.
of the above instructions may be reported to tbe Headquarters.
. 5. The receipt of this circular may please b.: acknowled in the
.. · st3ndard proform<\.
•
r
Sd/·
(J.P. SHARMA)
l
DY. CHIEF-CONTROLLER OF
IMPORTS & EXPORTS
;
(Issued fro~ file ~o . 3/42/HQ/83/ECA- 1);,
To say the !cost and to put it mildly, it is a .·very. odd circular,
tmaoating as it does from a high dignitary of the Government of .
India. Wby the· secrecy aod why the instruction to mislead, ns it
Were? . Are. statutory orders to be made and given effect in this·
, · "':' furtive manner, almost as if the autboritks t~at be are afrnid of
WOunding the susceptibilities of the p~rsons in respect. of whom
'f
the o;d(rs are made 1 We presume thq arc statutory orders mnde in
nerc1sc of the powers conferred by clause ,8 B of the Import Control ·:
Order, though they do not themselves cite any statutory authority.
;... TJ:e actual direction, tho use of the word 'abcyanc·c• and the pres-·-
cnptioo of the six-month period are indicative tbat clause 8 B is ..
the SOurce or power. In the counter aOidavits fikd on behalf of the '
Government of India and the Chief aod D(putry Chief Controller '
of Import& aut! Exports it is cluimed that the power exercised was
G~t COnferred by clause SB It was 50 asserted by the Add I. Solicitor ·•
eo
I
'
·
d d
tr'd • The !carded counstl who appeared for the parllcs pro«e e ' .
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00
t~t basis. So, we may also proceed on that' basis. lncotJ1•.
· Por•ttng, as the~ did, directions under c;lau'st' SD, ·vitnllr affecting· thlf''
'.
.
-.. -· ·~ . ·--.~ .....
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SUPREME COURT ~PORTS
[!984] 3 s.c.R._
:r~t
business of the ~oncerns concerned, one wo-uld e .. pect the circulars
to be communicated to the affected. parties, even. if they were to be
kept secret f.rom other prying eyes. That was_ not done tor reasons
whi_ch no on.e has been ab~e to explain to . U:s.
Curisously, enough; _
despite the circular, supplies of. imported goods appear to have
been continued to be .made for about a month to some parties. But
soon the circulars ceased· to be secret. Everyone came to kn~w of
them. True but unauthqrised versions were even
publish~d in
commercial newspapers:
The Circulars also came to b~ acted upon.
Licenses were· not granted. Customs Clearance Permits . were not
. . issued.· Allotments were not made. · Several persons against whom
'abeyance' -orders had been made filed Writ Petitions in different
High Courts cnallenging those . orders. Liberty Oil Mills (P) Ltd.
was one of those who· filed such a Writ Petition in .the BombaY..
Hight Court. The case h.as been withqrawn to this Col:lrt under Art
139A of the Constitution and it. is . this• case that has been· heard
by us. We heard Shri Ashok Desai for the Liberty Oil Mills (P).
Ltd. and· Shri Soli Sorabji, . Shri V.P. Raman and. Shri Ram
Jethmalani for the interv~ners. We heard Shri Milon Banerjea,
Addl'. Solicitor . Generala.bly assisted by Sri Gopala ·subrahmanyam
. for the Union of India and the Chief Controller and Deputy Chief
·controller of Imports · and Exports and Shri M.C. Bhandare and
Shri A. Subba Rao for the State Trading Corporation . .
· Liberty Oil Mills (P) Ltd. is a 'Trading· House' recognised as
such in terms of the etrpression as defined in the 'Import Policies'
for several years. Their exports for the period 1982~8l are stated to
have exceeded RS. 19 crores. They claim to deal in ~egetable Oils~
export of Frozen Marine Products, Frozen foods, Te)\tiles, Chemicals, ·
Agricultural Products and· imports of diverse
commoditie~ such
as Oil and Oil seeds,
Chemicals~ Drugs, etc. They claim to have a
factory refining ~egetable Oil at Ku~la and ll factory for manufactur~
ing vanaspati at Shahpur. They have plants for processiag frozen food
at Madras, Tuticorin, Calcutta and
Vishakhapatn~m .; they also
have sol\>ent extraction and Industrial Oil Plants. They claim that
they require a continous and steady flow of various imported goods
for their sevetal Industrial activities. They 'allege that if import
iicences for which they have applied are not granted to them and .
· if the imported goods f~r. which they have applied are n~t allotted
to them, their faclories and their plants will have to be closed down;
their business will be seriously affected and many of· their employees
will b(l tbrown out of employme~t .. They state .-that . they have nevet
)'' ..
<
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J.
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/
687
LIBERTY OIL MILLS v. UNION (Chinnappa Reddy, J.)
, ..
adulterated .the vanaspati · ~anufactur~d in their factory_ at Sbahpur
and that the samples taken from their factory on· as many as thirty
'six occasions. had never been found to contai.n any type of animal
tatlow. They further state that they had not impor"d any tallow
after July, 1982. Such tallow as ~as ,U;nported by· them before July,'
1982 was sold to them by other Jicencees to them as actual users.
· The tallow so purchased was air~ treated by them in .theil: premises at
Kurla and s'old by' them to soap manufacturers and other fatty ~cid
pJants. The. import of tallow was on the strength of· letters of
authority issued by licences in respect of. additio:aal licences and,
replenishment licences held.by them. All the a,dditional licences bad
been 'issued prior to June 5, 19.81 and import ofOGL items was
permitted against the said licences. Beef· tallow became canafised
from Jupe s. 198! 'but the, canalisatiqn was not retrospective and
couJd not affect the licences previously issued. All the contracts for
the import ofbeef tallow had been cntcr.ed into before June.S, 1981
and in r..:spect of seven of the . co~tracts letters of ~redit.had also
been opened before that date. The beef tallow im'ported upto July,
1982 was duly cleared'by Custom Authorities without any dispu~e or
question. Thereafter the. tallow was Sl!hjected to air-treatment .and
soid to soap manuf~cturers and fatty acid plants. There was never
,
.
...
\
any allegation ag,Ftinst ·the petitioners that any portion of the tallow
imported by them had ever been diverted for the adulteration of
vanaspati. Liberty Oil Mills therefore, claim that· there was no
. justification whatsoever for making an order under clause 8B against
.them. They accordingly seek the .issue of Writ to quash the
.•
circular.
Shri Ashok Desai for Liberty dii Mills (P) Ltd. contended tliat
an order und:!r cl;wse ~B of the Import Control Order co~ld only be
made if t~e Central Government. or the Chief Controller 9f Imports .,·
and Exports was satisfied that the grant of licences and allcitmeni of
imported goods would not be in the public interest. In the present
·case, not only was. the . requisite satisfaction of the· appropriate·
)uthority not recorded in the circul~r said to have been: issued under
. _Clause 8B but there was no materhil whatsoever upon which such
iatisfaction could have been arrived it. .Before June 5, J98J, beef
t.allow was not cancalised and co,uld therefore, be freely imported. as
an OGL item. It w~son June 5. 1981 that the import ofbeeftaUow
came tq be canalised_' but such canalisation could not affect . li~ences ·
>vhich had already been .granted. Beef tallow could be imported
under the preexist~ng licences as an OGL item l':ven after June 5, 1981
~
'
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[1984]3 S.C.R.
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and upt .. the d.~~e on which the import of beef tallow was totally
banned. Our attention was 'repeatedly invited to the two cases of
A.rv:ind Exports (P) Ltd, and Jayant Oil Mills (P) Ltd., · ~here de~ing
. with appeals and decisions under .Sections 128 and 131 of the Customs
Act, the CeJ!tral_ Board of Exci~e and, Customs and 'the Gov~rnment
· ofthe India to<;~k the view
.
I
.
uThe licence issued during a Policype~iod is governed by that
policy as amended upto the date of issue of ;be licence and
fl;mendments made after the date ~f ·issue do not have any
-application to tbe licences." and
.;:.
"A licence is governed by the Policy which is made applicable
_ .to it. Restrictions placed on-the import of good~ in the policy
for the subsequent years have to be ignored, ·unless of courset
. any. such restriction has .been specifically made4 applicable to
licences issued eariier either generaUy or in the partic~J¥ cases.
In this case the licences were issued during the policy for the
period AM-81 and were gove:med by this policy only particularly para 174(v) thereof. 'These licences were valid for the
goods in questi9n as only Mutton Tallow was in the list of cana·
.Used items.' In t;rms Of para 222(3) of the. policy for the periQd
AM-82 these licences continued to be valid_ for beef tallow as
this item continued· in the list of OGL Items even after the com- .
ing into force of the policy for the period AM·82. When vide_
Public_ Notice. No. 29/81 ~ated June 5, 1981 beef tall()w'was put
·in the canalised items it is from this date only that it became
canalised: ·Jn the public ·notice there is no specific pmvision · ·
invalidating_licences previoysly issued so far as beef tallow is
concerned,· in ca~e such licences were valid · earlier to import
this·item. In tbe.absence of any specific prohibition the licences
· p~oduced by the importer in this.case had to be accepted for
the clearance of beef tallow.""'
. Jt. was furthe't contended that the circular order under 'Clause 8B
as ~.!?tuaJcy . issue,d . was not confin'ed to the banned. item ,..of-animal
tallow or to:item~ wbi~h.~uld·b~~d to have. some cann~ction with
the banned item but extendeq t~ all items for which applica.tions for '
the Sf~\lt,Qflicen~. or fot ~llqtn,1ent hacJ. been maqe .b.Y Liberty-Oil
MiHs-.'(P) Ltd., whether· or not.snch items had the re~otest connn~c:
tion with animal tallow Shri. Ashok D~sai connected, that·: the, very
geirer~J natue of the order disdos~d a total non•applkation of the
tnind sipce t~e~e was no ~e:ll:us pet ween the alle~~d misllse oflke~e~~
..
~
.;
I
LIBERTY OIL MILLS v. UNION (Chinnappa Reddy, J.)
for importing beef tallow or the misuse of the imported beef tallow
and the abeyance of applications for grant of import licences and for
allotment of other items. · It was .also argued that as many as 61
firms were Clubbed together and dealt with. by single ·circular and
. there was no indication whatsoever that the (acts relating to each of
the firms had been cons,idered separately. The circular was· an
omnibus. one and revealed a 'total non-application of the min~. It
was suggeste~ thatthe abeyance' orders far from advancing the public
'interest, would, on the otlier hand, prejudicially affect the .public
interest by bringing ·to a halt several industries and throwing hosts
of workers out of employment. It would
<;~.!so affect exports from
India and reduce for~ign e~change earnings. 'It was submitted that
there was no substance in the allegation that Liberty Oil Mills Pvt.
Ltd. were not .'actual users' of beef tallow but th.ey had nqne the
less obtained letters of ~uthorisation for import of beef tallow as if
they were actual users and they had· thus misused the lmort 'licences
of other licencees. ·It was pointed out that the beef tallow imported
by the un<ler letters of authority bad either been sold by them to
~Ct!Jal users On the, high seas or. had been.