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

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· c severe action be taken against those responsible. Assurances were given in Parliament. Bureaucracy went into actini. It was discover- ed 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 I) 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 I 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$; .

kl ,I~ I~: . ~: 684 :il! ,,: ., . A I

1..'· GOVERNMENf OF INDIA · ' SECRET

·' . MINISTRY OF COMMERCE . I ' OFFICE OF THE CHIEF CONTROLLER I' OF IMPORTS & EXPORTS I· UDYOG BHAVAN, NEW DELHI-11 i. I . . . f'. dated, tbe 9th N~v. 1983 . !. t: I I:; .. ABEYANCE CIRCULAR No. 28/83-84/HQ. :1 :1 1''1 l 1 c· Whereas investigation into certain· allegation mentioned onder , . .· Cl. 8 of the .Imports (C:ontrol) order, 1955 are pending against the-"' Iii under mentioned concerns, all the licensing authorities are herebY · '.'.1 : Jl . requested· to keep in abeyance for six months from the date of issue of this circular any application received from them for the grant· ~L of import Jic~nce of Customs Clearance Permit and allotment of :,• II II . D imported goods through agencies like the State Trading Corpn. of 1~ !1 . India Ltd-./Minerals and Metals Trading Corpn. of · India ltd. or auy other similar agency ;. • . ' I 1:1 . . . ::i Sl. Name & addres . Name & address of . Name of ibc prop.{ ;: .! ·t E N'o·. of the concern. the branches available. as partner;Director etc. as available. •I ·! '\ 2 3 4'

. . I F • • : ... 14 M/,. Liberty Oil Mills (P) Ltd., 16 G llll llahadur Shastri Marg, ) .. Kurla, llombay--:-400070

. • . LlliERl~ Oli. MILLS. V~ U~JO~ (C/timtappa Reddy, J .) 685 .: • . . 2. These· instructions may be kept secret and if any of the A ' 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 B . '1 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. ·

~r . . . 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<\. •

Sd/· ,, 't J (J.P. SHARMA)

l ; DY. CHIEF-CONTROLLER OF

(Issued fro~ file ~o. 3/42/HQ/83/ECA- 1);, IMPORTS & EXPORTS E ,t '

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· F ·I , · "':' 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-·- G·l 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 ' r: 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 ·• eotr'dI• The !carded counstl ' who appeared for the parllcs · pro«eded ' . . 00 t~t basis. So, we may also proceed on that' basis. lncotJ 1•. l · Por•ttng, as the~ did, directions under c;lau's t' SD, ·vitnllr affecting· thlf'' \ I,

·'I 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 )'' ..

·c '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 . . E,

· 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 a they require 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

LIBERTY OIL MILLS v. UNION (Chinnappa Reddy, J.) 687 ,.. adulterated .the vanaspati · ~anufactur~d in their factory_ at Sbahpur A ... J. 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. in · The tallow so purchased was air~ treated by them .theil: premises at Kurla and s'old by' them to soap manufacturers and other fatty ~cid t 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 c 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, D 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 .E . 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 ,G '' . _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 c·1I. under the preexist~ng licences as an OGL item l':ven after June 5, 1981 ~ ' ' . • •.

·68_!. [1984]3 S.C.R. ·• . - ' 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 B. . 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 .;:. c "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 ·•·i in licences issued eariier either generaUy or the partic~J¥ cases. I) In this case the licences were issued during the policy for the period AM-81 and were gove:med by this policy only particu- larly 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 I. 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: . ·ll 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~~

LIBERTY OIL MILLS v. UNION (Chinnappa Reddy, J.) 689

for importing beef tallow or the misuse of the imported beef tallow and the abeyance of applications for grant of import licences and for allotment of other items. · It was .also argued that as many as 61 firms were Clubbed together and dealt with. by single ·circular and . there was no indication whatsoever that the (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 I of other licencees. ·I t was pointed out that the beef tallow imported by the un<ler letters of authority bad either been sold by them to .D ~Ct!Jal users On the, high seas or. had been. actually used by them tq produce marketable beef t~llow for use by soap manufacturers and fatty a<;id. plants, by subjecting the imported beef tallow to ~air­ treatment•. It was also argued·, by Shri Ashok De:sai that the ·circumstances that there was public agitation about the import of beef tallow was a totally irrelevant· circumstances for making an ord_er under claus.e 8B. Shri ,V.P. Raman, learned counsel for one ·of the interveners suggested that clause 8B did not apply · to goods covered byOpen General Licence in view of clause 11(4) of the Import Control Order which provided, "Nothing in this order, except paragraph 3-I · of sub-clause 3 of Clause 5, Clause 8, Clause SA, Clause 8-C and Clause 10-C shall apply to the import of any goods covered by Open General Licence or Special General Licence issued • by"the Central Government." Shri Soli Sorabjee, who appeared for ~mother. interyener, submhted that clause 8·B should be construed as providing for an opportunity to b~ heard and since the abeyance _?rders made no provision for hearing, they· should be struck down, as opposed to t'lte principles of natural justice, and therefore arbitrary and· violative of Art. 14 and 19(i) (g) of the Constitution. !twas also urged ~y. the learned counsel that the satisfaction contemplated by clause 8B was not an· omnibus satisfaction but a satisfaction _which must, disc!ose an ~~:pplicati~n or' the mind to the fa~ts of each individual case and each indhddual application. for licence or· allot- me 't\ t. Shri Ram Jetb!llalapi 1 wlw appe_ared fpr another intervener

690 SUPRF,ME COllRT REFORTS {t984~ 3 S.C.R • . -rj urged that secret orders affecting rights of parties could not lawfully be made since secrecy would militate against natural justice and against the right of app~al provided by sec. 4-M of theJmports and Exports (Control) Act. He also submitted that in the .absence . of an express recital 'of satisfaction which was the foundation for the exercise of the jurisdiction under clause 8B, the order must be held not to confotm ·to clause 8B and therefore, · vitiated. He ·also contrasted clause 8A and clause 8B and argued that the :public ~-·· interest contemplated by clause 8B should be such as to exclude a ·~ pre-decisional. bearing. There was no such public interest involved . in the case. There was ~ot even ~. recital to that effect. For that -" c reason .also the order was vitiated.· He further submitted that an order· clause 8B could only be made after the inVestigation under clause 8 had. commenced, that is after a show cause notice, had been issued under clause 8.'

D . Shri Millon· Bannerjee; learned Additional Solicitor General ·urged that the only questi0n for the consideration· of the court was whether there was any relevant materjal before the authority com- . petent to take ·action under clause 8B to reach the satisfaction contemplated by 1hat clause. Since the satisfaction contemplated by · Clause 8B was the subjective satisfaction of the authority concerned, E the court was not to concern itself with the sufficiency· of the ·mat~rial in a.iriving at the requisite satisfaction. He howeverJ invited· opr attention to various facts and circumstances which, according to him,. wholly justifi~q the action taken against liberty Oil Mills (P) Ltd. Though Liberty Oil Mills itself held several licences. it never- -·· F theless indulged in the. collection of a large number of licences of other imported beef ta11ow ·as their. authorised ag~ts, sold part of the beef tallow to alleged actual .users on high seas or puacbased the beef tallow after importation, subjected it to the so-called air-treatment a treatment which could 'by no means be cal1ed a· manufacturing .... · process and which lef( the cbarac.ter of beef tallow unaltered-and sold it tQ 'innumerable. parties stated to be soap manufacturers and fatty acid plants.' The claim of Liberty Oil Mills (P+ Limited that Liberty "!; Oil 'Mills was an 'actual users•, who had purchased beef tallow for subjecting it to air treatment was no more than a pretence. · It was .. stated that full particula~ 'or the parties to whom the beef tallow was claimed to have been sold ~ere not made avaiable despite requests for "the same. There , was great public concern about. the manner in which beef tallow had been imported and used by some importers and the. authorities very naturally felt that,it ~ thei.l •

UBERTY oiL MiLLS v. UNiON (Chinnappa Reddy, !.) 691

duty in the public interest to investigate into .malpractices -conne~ted with the import of beef tallow and the misuse of beef tallo~ aftel import. The learned Additional Solicitor General ·placed before us · . the relevant files which according- to )lim indicated that the case of Liberty 0 il Mills (P) Limited as well as the cases of each of the other firms who were· included in the abeyance circular h~d been separately considered and satisfaction duly and properly· arrived at by ·tbe appropriate authority on relevant material . The lear ed Additional Solicitor General very fairly did not urge that the decision to keep in 'abeyance' need not be communicated or that the principles of natural· justice were not reqQ;ired to be observed. But he argued that a pre-decisional hearing was not contemplated. c He submitted that rule 8B did not.iute out a post-deCisional hearing and stated .that the appropriate authorities were ready even now to consider faithfully any representation made by the parties affected. With reference to the views expressed by the .Central Board to Excise and Customs and the Government of India, in the cases of Arvind Exports and. Jayant Oil Mills, Sbri Banne..rjee submitted that D those cases did not represent the correct position in law. Those decisions were rendered in proceedirigll under the Customs Act and · did not pre.clude .appropriate action under the Import . and Export Control Act· and the Import Control Rules. Shri Bannerjee also invited out attention to several provisions of the Import Control E · Order.

Before considering the questions at issue, it wi11 be·useful to t#'-

refer to our Import Policy and to take a cursory look at the various statutory an!l non-statutory instruments embodying the policy. The import policy of any country, particularly ·a developing country, has .F necessarily to be tuned to. its general econ..omic policy f(mnded upon its constitutional goals, the requirements of its internal and inter- nation~\ trade, its agricultural and industrial development plans; its m~netary and financial strategie's and last but not the least the inter- nati~nal political and diplomatic overtones depending on 'friendship, neutrality or hostility with other countries' (G/ass.Chotans Importer3 · and Users' Association v. Union of India1 ). There must also be a considerable number of· other factors which go in:to the making of an import policy: Expertise in . public and political, nationa~ and \nternational economy, is necessary before one may engage m the making or in the criticism ofan import policy. Obviously courts do not possess "the expertise and are consequently. incompetent to pass :~

(1) [1962] I SCR 862.

692 SUf'REME COURT REPORTS Il984] 3 s.c.R. ,..__,..

A judgment oc the appropriateness or the adequacy of a particular import policy. But we may venture to assert with some degree of accuracy that our present import policy is export oriented. Incentives· · by way of import licences are given· to promote exports. Paragraph 173 of Chapter 18 of the 'Import Policy' ·for April 1981 to March:I982 published b~ the Government of India, Ministry of Coqtmerce-in the B first week of April every year, an annual '1mport and Export Policy' to. be in force during the financial year is published-expressly states ......... "the objectiye of the scheme of registration of Export Houses and , J · the grant of special ·facilities to them. is to strengthen their negotia- ting capacity in' foreign trade and to build up a more enduring relationship between them and their supporting manufacturers". Paragraphs 183 and· 184 enumerate the various import facilities · available to Export I:Iouses. Paragraph 185(1) allows Export H~uses to import OGL {Open General Licence) items-against REP (Reple· nisbment) Licences is$ued in· their own names or transferred to them by others. The facility is stated to be .availab1e to them for '~ D .import of (a) capital goods Ii~ted _in Appendix !I and placed on. Open General Licence for Actual_ Users and (b) Raw Material9, components, consumables and spares (excluding items covered by Appendix V) which have been placed on Open General Licence for Actual. Users. Paragraph 185 (I) further stipulates that Capital .E Goods so imported shall be transf~red by them only to such Actual Users as are authorised to p~rchase the~ by the concerned-Licensing •A1;1thority and that raw materials, components and consumables so imported may be transferred by . them to eligible Actual Users. Imported spares may be sold to any person. Paragraph 185 (2) provides. that import replenishment licences issued in their own· • F names or transferred to them by others, against which. Export . HQuses wish to take advantage of the facility provided in Paragraph 185, shaH . be non-transferable. Therefore, the Export HouS'es wisbiug to take· advantage of. the facility are required to get the licences concerned endorsed by the licensing authority ·as under r- . G • 'The licence will also be vaJid for import of OGL items under para·graph · 185 of import policy, ·1981-82, subject to the conditions,laid down arid; shall be non-transferable."

H Paragraph 185 (3) further stipulates that import of OGL items under these provisions sbal1 be subject to the condition' that the shipment ... :

of goods shall takes place within the va1idity of the OGL, that is, March 31, !982 or wll~in the' validity· peri9d of.tlle import Ikenc~

LIBERTY orL MILLS v. UNION (Chinnappa Ready, J. ). · 693

itself, whichever date is earli~r. Paragraph 186 (1) broadly entitles A E~port Houses to Additional . Licences upto the value of 15% of the f~.b. value ofseiect products made in i981·82 and manufactured by small scale and cottage indus.tries, plus 7-1/2% of the f.o.b. value of other exports of select products made in tbe same· year. All such Additional ·Licences shall be non~ transferable .. Paragraph 186(7) provides that the Additional Licences will also be valid for import of D Raw Materials, Compone[)ts, Consumablcs. and Spares (including items covered ~y Appendix V) whicl1 have been placed on Open General I.icence for· Actual Users (Industrial). While Spares so . imported may be sold to any person, Raw Materials, Components and Consumables may only be sold to eligible Actual Users. c Paragraph 192. requires every Export. Houses to maintain proper accounts of all its exports, 'imports and disposed of imported items- and are further required to furnish detailed information in the · pr~scribed forms.

Some Export Houses are re~ognised as 'Trading Houses D 'depening on their performance. Trading Houses· are entitled to all the facilities available to Export Houses, but their entitlement to· additional Jicences against. exports of products manufactured in the small scale and cottag~< sectors is to be 20 per cent and not 15 per cent. E ' , Paragraph 222(1) prescribes· that additi~nal licences issued to Export Houses in 1980-81 ~hall cease to be valid for items which do .nNappear\n Appendices 5 and 7 of-Import Policy, 198l·g2, But it is said that restriction will not apply to the extent that the licence holders have made firm comm:itments ·by opening irrevocable letters of credit through authorised dealers of foreign exchange before April 1, J<;gl, Paragraph . 222(3) provides that REP licences and . additional hc~nces held by .Export Houses shall.cease to be valid for import of any item which could be· imported under Open General Licences during 1980-81, but it is no longer so in the Import Policy 1981-82 except for such commitments as have been made by opening irrevocable lett~rs of credit through authorised dealers in foreign exchange before April, 1981. We may notice here that Appendices 1, . ~ .. 3, 4 and 6 contain lists of banned items. Appendix 5 and Appendix 7 contain a list of restricted items. Appendix 8 contains a list of items ·import of which is canalised through public sector agencies, ..... Appendix 2 contains· a list of C-apital Goods allowed under Open H General Licences and Appendix· 10 contains a list of Items allowed . · to be imported. under Open. General Licences, sub$ct t6 the condi~

SUPREMB COURT REPORTS (19&4] 3s.C.R.

A tions. set out therein. It appear~ that prior to 197S, QGL was · copfined to certain restricted items only. But in April, 1978, the · Government of India issued Import Trade Control Or.der No. 9 of 1978: the OGL No. 3 of 1978 granting general permissio~ to import . into India from any country of the world, Raw Materials and . · Com(lonents by Actual Us~rs (industrial) if the items to be importe9 B · · were not covered by· aey 9f .the lists of banned, restricted and . canalised items and did not figure in Appendix IX of the Import Policy for 1978:79. One of the results was that an~mal tallow which could not be imported as a!) OGL item .prior to Aprill978, could be so imported after 1.978 as it was not one of the banned, restricted or c canalised items. In the Import Policy for Ayrill9SO to March 1981, mutton tallow was included in the list of canalised items. Therefore, white mutton . tallow could be . impqrted· · thereafter through ·the agency of the 'State Trading Corporation only, beef tallow could·still be imported as an OGL item. The position was the same in the Ip1port Policy is~ucd for the period. April 1981-March 1982. How- D ever, on June 5, 19.81 by a Public Notice for the· word 'mutton . tallow' in the list of canalised items, the expression "tallow of any · · animal orgin including mutton tallqw" was substituted.. Therefore with effect from June 5, 1981 beef .tallow also became ·a canalised item. One· of the questions posed is regartling the effect of th~ public·. notice dated June 5, 1981 by which the expression 'tallow of animal E origin or including mutton tallow' was Sl,lbstitutep for the wprd .'mutton tallow'. The question posed is whether the ban of import except through the State Trading C~rporation was applicable to beef .·~ tallow imported .into India after June 5, 1981 but against licences issued earlier and in respect of whici1 contacts hlfd already been , into. We have already mentioned that on Agust 24, 1983, the Government of India made an order under Section 3 of the ·Exports and Imports (Control) Act totally banning the import Into India of / beef,, buffalo and pig tallow. . We may mention here that the Import Policy for earlier as well as later years, contain more or less similar provisions as .those in the G Import Policy for April 1981-March 1982. · The statutory regulation of imports is COJ)tained in the Imports and Exports (Control) Act, 1947 and the Imports· Control ).

Order .1955. Section 2 of the. Imports and Exports (Control) Act defin~narious exprcs$ions .. 'Lett~r of. authority'· is defined a letter H-.. meaning as authorising the licensee to· permit another person, named ..... . ) in the.said letter, to import goods against the licence grantl)d to the- pcensee. Licence is.defined to mean a licence granted and including

UBERTY OIL MILLS v. UNIO~ (Chinnapp,l Reddy, J.) 69S

a custo~s clearance permit issued, under any control .order. _Section A 3 of the Act is the pivotal s~ct ion. Section 3(3) empowers the Central Government, n6tw;t1Htaading anything contained in the Customs Act, by order published -in the official Gazette, to prohibit: restrict or impose condtrons o:1 the clearance wheter for human consumption or for shipment' abroad, of any goods or. class of goods imported ioto India. Sectiol'l. 4A empowers the Central n Gover*'nent to levy fee in respect of licences granted , or ·. renewed under any order. made or deemed to · be made ·under the Act. Sections 4 B, 4 C, 4 D, 4 E and 4 F .are provisions _relating to the power to enter. and inspect the· power to search, the 'pow~r to seize imported' goods or material, the power to stop and se'ize conveyances. Sections 4 G and 4 H provide for confiscatioiJ and c Section 4 I for the levy_-of penalty. Section 4 J preservs the power to inflict any other punishment under the· provisions of the Act or under any other la;v despite the confiscation or penalty imposed under the Act. Section 4 K. p~ovielcs for adju~ication and Section 4 L entitles the owner of the goods, mat~rials, conveyance or animals D or other persons concerned to be given a reasonable oppor(unity of making a representation before any order of adjudication of confis- cation or imposition of a penalty is made. Section 4 M provides an for appeal against any decision or or~er made -under the Act and Section 4 N einpowers the Chief Controller to exercise power of revision in cases. where DQ appe,al . has been preferred. SeCtion 5 E makes contraventions of any orde.c, made or deemed · to be made under the Act or any condition of a licence granted under such order punis)lable with imprisonment and fine as mentioned in that provi- sion. Section 8 empowers the Central Government , to make rules · for ~arrying out the provPilions of·the Aot. · F The Imports (C~ntrol) Order, 1955 is an order made by the . Central Government in exercise of the powers conferred by Section 3 and 4·A of the Imports and Exports (Control) Act. Clause 3 of the Imports (Control) Order prescrib_es that no person shall import any good:; of the description specified in Schedule-! ~except unde.J; G and inaccordance with the licence or a customs clearance permit granted by the Central Government or by a specified offic~r. Clause 5 provides- for the imposition of conditions• subject to which licences . ·ni!lY be issued. Cla·use 6 prescribes· the situations when the Central· Government or the Chief Controller . of Imports and Exports may ref~se to grant a licence or direct any other licensing authority not H .4 to grant a licente. One of the situations is 'if the applicant· is for the time being subject to any action under clause 8, 8A or 8B'! .

SUPREMB COURT RBPOil.TS [1984] 3 s~c.R. · Clause 8( 1) empowers the CeQtral Government or the Chief Control- . Jer of Imports · and Exports to . debar a licencee or importer or any ·other pe.rson froni imp!>rting any goods. or receiving licences · or a~otment of the imported goods through the State Trading Corpora- tion ·ofiudia, the Minerals and Mctals. Tr~ding Corporation of India, · or _any other similar · agencies and direct, without prejudice to any B other act.ion that may be taken ag'airist him in this ~half and that no licence or allotment of imported goods shall be granted to him lnd be · sbaH not be permitted to- im.port' any goods for a specified period for ...---r . . ~

any of the reasons specified in the clause. Two of the reasons men- · tioped in th~ clause.are : " If he fails to comply with -or contravenes c or attempts to ·contravene or abets the contravention of any condi- ·" tions embodied in or accoJI1panying, a .licence or an application for a licence" and ·'If he commits a breach of any law (including any rule, order or regulatio.n) relating to custom · or the import or export of g.oods or foreign exchange". Clause· 8A empowers the Central Govetn~ent or the Chief Controller of Imports to suspend the im- D portation. of goods by any person or grant of licer.ces or allotment of importec1 ·goods through the State Trading Corporation of India', the Minerals and Metals Trading Corporation of India, or any other · . similar agency, to u licensee or im'iJOrt¢r or any other person penaing investigation into on-e or more of the allegations mentioned in. Clause · 8 without prejudice to · any other notice that may be taken against him init.hat behalf. The first proviso to Clause SA ·prescribes tbat'the- grant of a licence or allotment of imported goods shall not ordinarily . be suspended under this clause for a period exceeding 15 months. The second proviso stipulates that on the withdraw I of such_ sus.pen- sion a licenee 91; allotment of imported goods "may be granted to h~m

F a for p~riod of suspension, subject to such cbnditions, restrictions or limitations as may be deciaed by the authorities ·aforesaid keeping in view cif the- .foreign exchange position, ·indigenous production and other relevant factors. Clause 8B empowers the Central Government or the Chief Controller of Imports and Exports to keep in abeyance applications for licences or allotment of imported goods where any ':- ' G ·investigation is pending ·into any of the allegation& ·mentioned in ) Cla]Jse 8 against a lincensee, importer or any oth~ person subject to the fulfilment of the req~iremcnt of the satisfaction of the appropriate authority regarding the public-interest. Since we are primarily con- cerned in this. case with the vires, · the width and the intt:rprdation of , Clause. 8B, the whole of it may 9e 'usefully extracted :- H· 1'88 : Power t9 keep in abeyance applications for licences- or allot meuts of imported goods- Where any investigation into. '

LIBERTY OIL MILLS V. UNION (Chinnappa Reddy, J.) 691

any of the anegations mentioned in clause 8 is pending against A a licensee or importer or any other person,- and the Central Government or the Chief Controller of Impo.J;ts and Eltports in satisfied that without ascertaining fuFther details in r~gard to such allegation, the grarit of licence or allotment of imported goods will not be in the public interest~ then notwithstanding anything c-ontained. in this Order, the Central Government" or B' th~ Chief .ControHer of Imports and Exports ·may keep in abeyance any application for grant of licence from such.persop, or direct the State Trading Corporation of India, the ·Minerals· and Metals Trading Corporation of India, or any other similar agency to keep in· abeyance allotments of impo~ted goods tb c sU<;h p~rson, without assigning any . reason and without preju. dice to auy,other action that may be taken in this behalf:

Provided that· the period ·ror which the grant of such lice.nct.: or allotment is kept in abeyance under this clause spall not ordinarily exceeds ~ix months." D 'i' •

Clause 8C authorises the Cen~ral Govermnent to publish or . cause to be published the name . of such persons or class of persons ~gainst whom action under clause '8 or 8A is taken.. Clause 9 empowers the Central Government or the Chief Controller of Imports E and Exports or any other 0fficer authorised in that behalf to cancel any licence granted under the order or· otherwise to tender it ineffec· tive for any of the reasons mentioned in the clause. One of . the reasons is ' lf the licensee has committed a breach of any ·of the ·conditions of a licence". Another reason is "If the Cent,ral Govern- ,, ment is or such officer is satisfied that· the licence will not serve the purpose for which· it has ~en grauted." Yet another reason in "If the licensee has'committed a breach of aziy law relating to customs or the rules or regulations relating to' Imports and.Exports.of g?ods or any other law ·relating to foreign exchange." Clause lO(i) provides that no actioq shall be taken, inter alia, under 'clause 8(1) or Clause 8A or Clause 9(1) against a licensee ,or importer or ariy other. person uniess he has been given a reasonable opportunity of being heard. ·cJausel0(2) enables any person aggrieved by any acriontaken under· Clause 8(1) or lS(3) or 8(A) or 9(1) to prd(:r ·ao appeal to the autho- . rity constituted by the Central Goyernnient for that _purpose. Clause 11 (4) prescribes, ii "Nothing in this order, except ·paragrapil (iii} of sub.clause(3) of Clause 5, Clause 8, Clause. 8A, Clause 8C and Clause IOC, • . .

SUP~EME COURT REPORTS [1984] 3 $.C.R. A shall appiy "lo the import of any goods covered by Open Genera) Licence or Special General Licence issued by the Central Government.:•

We may notice here the argument of Shri V.P. Raman that. Clause-11 (4) excludes the application of Clause 8B to good~ covered by Open General Licence .. We find no substance in this submjssion. Clause 8B expressly provides that action under the clause may be taken· "notwithstandinganything contained in this order". In view' of this non-obstante clause, we have no doubt th~t Clause SB applies equally to goods povered by Open General Licence. c We may mention at this juncture that Clauses 8A and 8B were not to be found in the Imports (Control) Order 1955 originally but ' were introduced into it later by way of amendment, to make provi- sion for the making of ~.Jterim orders pending investigation into. allegation under Clause 8. . The amendment was · af cons~quence of the lacuna being pointed out by the Bombay High Court in some D cases which came before it.

To be fair · to the learned counsel for the petitioner and the · other learned counsel for the interveners, all ofthem were unanimous about the necessity for a provision like Clause 8!3, and none of them arg!Jed that Clause 8B would be ultra vires if the principles of natural justice could be read into· it. The' learned Additional Solicitor General, . a~ mevtioned by us earlier, agreed -that natural jwtice. . should be read into Clause 8B so as to provide for a post-decisional hearing· at the request of the. affected party. Let us examine Clause 8B in the scheme and setting of the Imports (Control) Order a"Qd -F consider whe_ther natural justice is excluded and, if ·no.t, when and what opportl.J~.ity may be provided to the affected party~ · ' . ' Clause 8,. we have seen, empowers the Central Government or the Chief Controller. of Imports and· Exports to debar a person from importing goods· or from receiving licences or allotment of imported goods for a specified period if such person is gullity of any of the acts of commission or· omission enumerated ·in the Clause. An order of this immensity cannot obviously be made without due investigation and wit'hout giving a· reasonable opportunity to the affected party. Clause 8A and SB refer to. orders which may be made pending inves- tigatio~ into the alkgations un~er Clause 8 and by·necessary impljca~ H, tion expose the investigative content of Clause 8. Clause 10 expressly stipulates that action ·under Clause ~ may not be taken unless a reasonable opportunity is given .to the party concerned. Neither .. •

LIBERTY OIL MILLS' v. U '!IO~ (Chinnappa Reddy, J.) 69.9.

Clauses g nor Clause 10 pre~cribes the procedure to be followed be- A fore a final order uude.r Clause 8 is made. · Has a show-cause notice to be issued first, then followed by an investigation. and finally con- . eluded by yet another shbw cause notice ? Or is it enough if a show- cause notice is issued after the investigation is concluded and the · person concerned is asked to explain the evidence gathereci.• against. B him ? When may investigation be sa~d to have commenc.ed ? Should investigatiqn be necessarily preceded by a show-c;mse notice.? We do not think that the Central Government or the Chief Controller is bou~d to follow any rigid, hide-bound, pre-determined procedure. The procedure may be different in each case and may be determined .. by the facts circumstances and exigencies· of each c~e. The authority may design its own procedure to · suit the requirements of a_n ind~vi­ c: dual ca·se. The procedure must be fair and not so designed as. to *defeat well known principl~s of justice an.d thus deny justice. That. is alf. If the procedure is fair it matters not whether the investigation is prec~ded, interjected or succeeded by a show-cause notice. The. ·word 'Investigatirn' is not defined but in the context it means no ll • more than the process of collection.of evidence or the gathering of ' material. It is not necessary that it should commence ~iih the com- munication of an accusation to the person whose affairs are to be investigated. , That may follow later. When facts come to the notice of ~he Government or the Chief Controlle)' of Imports which prima facie disclose an act or omission of the nature mentioned ~n Clause 8, the authority may straight away communicate the allegations to the person concerned, s_eek his answer and proceed to further investigate or the authority may cons!der it more prudent to further satisfy itself · by seeking other .evidence or material before communicating the al.Jega'tions to the person concerned. There is 'no rule of justice· oi fair play which requires the authority to seek the comruents of the person. concerned before embarking upon an investigation. Investiga- tion commences as soon as the authority decides to .take the first

, step whether by way of seeking evidence or by way of seeking an --), explanation from the person concerned. On the initiation of a proceeding under Clause 8 by the commencement o'T investigation; the authority has to address itself ~o the Question whether a'ny'action of an interim nature to prevent further harm or mischief is warranted pending investigation: Licences may ~ave already been issued and allotment of imported goods may have already been made. The authority may consider it . desirable to prevent the person from im· 'ported goqds pursuant .to the licences or to prevent him from ~- • obtaining the imported.g0ods allotted to him througq the specified aBencies. If ~o, the authority may make an order under , Clause 81\;

100 . ~tJPREME COURT REPORts [1~84] 3 s.c.R..

...A ' S.1.5pending the importation of ·goods, the grant of ·licences or the· allotment of imported goods. But Clause 10 provides that no action under Clause 8A. n:iay be taken without "giving a reasonable opp~rtu4 nity to the person concerned. . It is obv~ously thought th~f the right such as it may be, to obtain · a licence or allotment of goods having become.crys~alised into a licence or an allotmeut, an order under B Clause 8A may have immediate and g·rave prejudicial reJ:?el'cussions. on the person·concerned making it ·desirable that he· should be heard bef~re an ordet of suspension is made. · So it is that Clause 8A contempla·es a pre-decisional hearing: On the.other· hand, licences may not yet have been issued and· allotments may yet have to be made. The approprite authoi'iiy may be satisfied that it would~ not c . be in the public interest to issues Jicence·s or make allotments to the · person concerned, without ascert~ining further. details with regard to · · the allegations against him. In such cases, the authority may make • .an order of ·'abey~nce' under Claus~ 8B. Though the language of .. · · Clause 8B is capable of being read as if it applies to both allotments D already made and allotments yet to be made, a reference to the marginal head, in the background of what has been provided for in • Clause 8A, makes it clear that Clause SB applies only to allotments . jet to be made and licences yet t9 be issued. That clearly is the . contextual construction of Clause 88. Read· in any other manner, there will be a totally unnecessary . "over-lapping of and a needless conflict between Cfausds SA and 8B, with freedom to, the authority to . to pui:stie action either under Clause 8A or Clause 8B each providing . .a .different procedure.of of its own. We do not ·think' that it is per- missible for us to read clauses SA ·and 8B in a manner as to create needJess conflict an.d .confusion ·when the two Classes. a.rc capable of existing separately, without encroach.ing upon each other. Contextual construction demands such a construction a: d we have no hesitation in adopting it. Clause 10 which ptovides for a reasonable opportu- ·nity before action is taken under clause 8A, does not make similar provi.sion··in the- .case· of action under. clause 8A as weU as action under clause S.B are both in the .nature of interim orders of tempo- . G. rary duration aimed at preventing furt.her harm and mischief pending in\'estigation into the al)eg11tions under.clause 8. D~:es it ·me~n that ., \-·

· . the principl.e ::>f natural justice of procedural fairness is to be alto- , .

. gether exclude~ when action ·is taken under clause 8B? We do-not · think that it is permissible ·to interpret· any statutory instruments so ' a as to· exclude natural justice, ·Qnless the language of the instrument . leaves no option. tq the court. Pro.cedural fairness embodying natural jUstice hr to be implied whenever action is taken effecting the..rights

UBERTY OIL MTLLS v. UNION (Chinnappa Reddy, J.) '701 . A of parties. It may be that the opportunity to be heard may not be · pre-decisio~al ;· it may necessarily have to be pre-decisional where _the danger to be averted or the act to be prevented is imminent or where the action to. be taken can· brook· no delay. - If an area is devastated by flood, one cannot wait to issue show-cause notices for requisitioning vehicles to evacuate population. If there is an out- break of an epidemic, we presume one does not -have t<? iss,ue , show~ B . cause notices to requisition beds in hospitals, public or private. - In such situations, it may be enough to issue post-decisional notices .. providing for an opportunity. It may not e'en be necessary in some . situations to issue,such · notices, but it would be sufficient but obliga- . . ~, tory to consider · any representation that may be made by the ·c aggrieved·person and that would satisfy the requirements of proce- · dural fairness and natural justice.. There Can be no _tape-measure of the extent of natural justice. It may and indeed it must vary from statute to statute, situatio~ to situation and case to case. Again, it . is necessary to say that pre-decisional natural justic~ is not usually contemplated when the. decisions. taken' are. of- an ii!_t~ri_m nature. D pending investigation or enquiry. Ad-interim orders may always be made ex-parte and suc;:h orders tnay themselves provide for an oppor- tunity to the aggrieved party to be beard at a later ~fage. Even if the interim ord~rs d~ not -m-ake provision for such an' opportunity, an ~ aggrieved party has, nevertheless, always the right to make appro- E. priat~ representation seeking a review of the order and asking the authority to re'Scind or modify the order. The principles- of, natural justice would be satisfied' if the aggrieved party is~giyen an opportu- nity at the request. There is no violation of ~ principle ofnatural justice if an ~x-parte ad-interim order is made unless of course, · the statute its.elf provides for a hea.ring before the order is made- as in - clause 8A. Na:tural justfce will be violated if the authority refuses to F consider the request of the aggrieve~ party for an opportunity to make his representation against the ex-parte ad-interim orders. .

- In tbe Qeen v. Randolph et az.t, the Supreme Court of Canada J had to consider the ·question whether an interim order uncter s. 7 of .. G of the Post Office Act prohibiting the delivery of mail directed to or deposited by a pcmon · in a Post Office may be made without prior potice to the person affected, pending the final determination which CQuld only be made after hearing the. party affe<;:ted. The .Supreme . Court said, ,; - (1) S6 D.L.R. (2d) 283 H

102 SUPREME COURT REPORTS (1984} 3 S.C.R. · A "tn s. 7 it has not abrogated It (i.e. the a.pptication of the maxim audi alteram paterm) Rather it has provided that befofl:l any final prohibitory order is made, the party affected shalt have notice and a right to an expeditions hearing and has defined the procedure to be follqwed. It would, in my opinion, . r B be inconsistent with the scheme of the section to hold that before making an interim order the Post-master-General must hold a hearhig. If sl]ch ~ duty existed it would be a duty to notify the party affected of what was-allged against him and to· give him a reasonable opportunity to answer. If this were done the hearing prescribed sub-s. (2) would · be· an unnecessary ·C repetition. Gener~lly speaking the maxim audi alteram partem ,J

has reference to the making of decisions affecting the rights' of parties which are final in •their nature, . and this is true also · of s. 2 (e) of the Canadian Bill of Rights, 1960 (Can.), c. 44 upon which the respondents relied." .

,D "The following passage in Broom's Legal Maxims lOth ed~, p. 68 is in point :

Although cases may be found in the- books of decisions un· der particular statutes ~bidl at first might seem to conflict with • the maxim, it will be found on con~ideration that they are not E inconsistent with it, for the rule, which is orie of elementary a _justice, only requires that man shall no~ be subject to final . judgment or to punishment without an opportunity of being · "4- heard."

"The main object of s. 7 is to. enable the Post~master-Gene­ F ral to take prompt action to prevent the use of the' mails for the purpo~e of )iefrauding the public or other criminal activity. That purpose might well be defeated if he could take action only after notice and a hearing. _,.,.Sub-section (1) enables h)m to act swiftly in performjng the duty of protectipg the public \-• '· while sub-s. (2) gives protection to the person affected by_ ... G,. conferring t_he right to a hearing before any ord~r made against~ him becomes final. · · · .. ''In n:iy op~nion, the two interim prohibitory · orders in ; questionwere validly made." . '

In the Comroission(fr of Po!i~e v. Tanos/ the;: High Court c,>f H

• LIBERTY OIL MILLS v. UNION (Chinnappa Reddy, J.) ,03 ·.~- Australia (Dixoll C. J and Webb J.) was considering the question .A . whether an ex-parte order of closure of a Disorderly House may be . , · made. It was observed) ·

" ......it is in a broad sense a procedural matter and while the general principle must prevail it is apparent that exceptional cases may be imagined in which because of lome special hazard B or cause of urgency an immediate declaration is demanded. A power.to regulate pro~edure might be treated as authorising regulations allowjng an· exparte ord.er in such cases. Under the power conferr.ed by section J5 upon the Governor-in-Council to make regulations this very course seems to have been adopted. Regulation I provides that if the judge is of the opinion that c reasonable grounds have been shown (i) he may make the decl!;l~ ration immediately aild ex~parte if this seems to him necessary or desirable,· or (ii) if he thinks thaf an opportunity should be given to the owner or occupier . or both to oppos'e the making of the declaration he may direct them to be served with a copy' of the affidavit and to be notified of the day on which the matter wilt be dealt with, such service and n~tification to be effected in such manner as may ~eem to him sufficient : 9hen the matter tomes on, the Superintendent' or Inspector of Police or counsel· or solicitor on his behalf' and the owner and occupier or counsel or solicitor on their behalf may attend and be heard, and the matter shall be disposed of iii public .cham· bers.' This regulation may perhaps be read as leaving the choice of course at large to the judge. But it ought not so to. be interpreted. It· should be .understood as meaning that prima facie the l(ourse provided for in para (iii) should be followed and . : onJy in exceptional or special cases should ap immediate declaration be made. The analogy is that of an interim ·injunction, but· the caution should be greater because the declaration; unless it is framed as provisional or conditional, concludes 'the right subject to rescission.· G "It may be added that probably a declaration improperly made ex-parte may be rescinded or set aside on an application m·ade •• independently of s. 4(1}.,

· In Lewis ;,r; Heffer1, Lord Denning MR distinguished the observations of Megarry J. in John v. Rees and observed, ...•. ~

' (1) [1978] 3 All ER, 35~

704 SU~''RF~m couRT RETORTS [1984] 3 s.c.R.

"Those words... apply, no doubt, to suspensions which· are inflicted by way of.punishment, as for instance when a member· 'ofthe Bar is suSJ?ended from practice for six months, or when · solicitor is suspended from· practice . . But they do not apply to s·uspensions which are made, as a holding operation, pending enquiries. Very often irregularities are disclosed in a govern~ · ment department or in a business ho~•se ; and a man Play be ·suspended on full pay pending enquiries: ~uspicion may rest on him; and so he is suspended until he is cleared of it. No ' one, so far as I know, has ever questioped .such· a suspension on the ground that it could not be done ·unless he is given .G i10tice.of the charge and an opportunity of defending himself, and so forth. The suspension .in such a case is merely done by way of 'good administratiQn. .A situation has arisen in which something·must be done at once. The work of thei department or the office is. being · affected by rumours and suspicions. The·

n· others will not trust the man. In order to get back to proper .. work, the man is suspended. At that stage, the rules pf natural justice do not apply ; : see Purnell v. Whangarei High Schools Board. •• ·

In F~rnel/ v. · Whangarei High" ,~chool Bd. the Privy Council • 'II! ' ~

upheld the order of suspension of a teacher pending determination of charges against him. It was observed, · · . '

"Neither in the regulations nor in· the Act is suspensioA classi· tied as a penalty. Sectiori .1 57 (3) shows that it is not. It must . however .be· recognised that suspension· may involve hardship. F . During suspension salary is not pai<l and apart from this something of a te~pporary slur may be .invplwd if a teacher is suspended.. But the regulation~ (by regulation 5) cleady con- template or lay it down that .tht: written statement of a teacher (under regulation 5(2)) and. the oral personal statement (tinder regulation 5(3)) will be made after suspension if an~ has taken place. Suspension is discretionary. Decisions as to whether to suspend will often be diffictdt. Members of a board who are appointed or elected to act as the governing body of a school ·must in the exercise of their responsibilities bave- regard not only to the interests of teachers· but to the interests of pupils and of parents and of the public. There may be occasions when ha.vin~ regard to the nature of a. char~e jt \'/ill be wise, in tbe ·. ~

(l) (1973} Appeal Cases 660 . '-..........__ ---._

LiBERTY OiL MiLLS v. UNION (Chinnappa Reddy, J.) 705

interests of all .concerned; that pending decision whether the charge is substantiated a teacher should be suspend(:d from duty; In many cases it can be assumed that c11arges' would be . denied and that only after a full hearing could the true position '' be ascertained. lt is not to be assumed that a board; constituted 'asit ~is, will. wantonly exercise its discretion." B We have referred to these four c~ses only to illustrate how ex- parte interim orders may be made pending a final adjudication. We however, take. care to say that we do not mean to suggest that Natural Just(~ i-; not attrac~ed when orders of suspension or like ., orders of an interim nature·· are made. Some orders of that nature, intended t~ prevent further mischief ·of one kind, inay themselves be productive or greater mischief of ~nether kind. An interim order of stay or suspension which has the ~ffect of pr~venting a person, · how- ever, tempor!ll'ily, say, from pursuing his .PrOfession or line of busi- ness, niay have substantial, serious hod even disastrous consequences to him and· may expo~e him to grave risk and hazard. Therefore, D we say that there must be observed some modicum of residual, core ' natural jt;1stlce, -sufficient to enable the effected person to make an adequate representation. (These considerations may not, however; apply to case• of liquor licensing wbicti involve the grant of a privi- lege and are riot a matter of . right : See Chfngleput Bottlers v. Maj~stic Bottling,CompallJ, Civil Appeal Nos: 11970-71 of 1983). That may be and in some cases, it can only· be after. an initial ex- parte interim' order is made;

As we have seen, both clauses 8A and 8B contemplate action of an interim nature pending investigation. into allegations under clause I'

8. Ordinarily, in the absence of anything more, it would not be . necessary to ·give an opp9rtunity to the person concerned before proceeding to take action' under clause 8A or clause 8B. But while clause· 8B ·deals· with the right · to obtain licences and the right to · obtain allotments, clause 8A deals with rights which hav~ flowered into licences and allotments. A person to whom licences have been G · granted or allotments made may have arranged his affairs on that basis and entered into transactions ·with others, and; to him the consequences of ac.tion under clause 8A may .be truly disastrous whereas tl:le consequences of action under cla"Use 8B may not be so imminently harmfut )tis presumably because of this lively difference between clauses SA and 8B that clause 10 provi~es for a pre-deci- H sional opportunity in the case of action . SA and does . under clause '

not w provid~ ip the· case of actiotl UTlder cli!U£e 8B. A~aini jt. js. ·'

706. ·..• .._ - ;; SUPlt£Mil COURT REPORTS '[1984] 3 S.C.R. A --r· presumably because ofthis d·Hrerence that clause JO white providing • : - · f.or an appeal against a. decision tinder cfause 8A does not provide for an appeal against a decision urider c1atise 8B.- -Not that it makes any difference because S. _ 4tvt arid 4N of the Imports and Exports (Control) Act provide for an apptaLarid a revision against any deCision or order made under the Act. which naturally include any B d~cision or .made under any subordinate legislation. made under -the Act, and this right_ of appeai ·~nd revision ·cannot· be whittled down . by the subordinate ie8isJadon. As we mentioned earlier, it does not' . mean thafthe requirementS of ~atiual )ustice are not to_be met all at .mthe ca.Se of action· under tianse SB. The ··requirements bf natural ·justice c ~g•• bona will b~ l'llet in the case of actbn..: under . cJ:iuse 8B by copsider., fide~ any repreSentation that may be made in that behalf . by the person aggtie~ed. · Clause SB . itself-gives an indication tbat- such a post-decisionalopporttinity .on the. request of the persoii eon- .. '<erned is contemplated. __We ·have seen that action under·clau-se 8B . . is to be taken if the_' au tbority is' satisfied 'hi the' pubJic interest that D such -action may be. taken without ascertaining . further detail, in regard to tbe aUegaUons. ·n cleatly implies that when further facts- . are ascertained by the aUthOrity ot . brought to tbe notice' -of the -, autb6Hty. ~ch -action l:miy be reviewed•. As we have earlier pointed : out while e~~patte interim 6tders tnay be ah'vays. made without a pre- -· dedsiona·l opporhmity or- \ttthou~ the_o_rdet _itself providing · for a _ E- · post~decisional opportunity. the principleS of natural justice which"" - are never exdudcil will 'b e satisfied- if a post-decisional opportvnity . . is given if demanded. So we hoJd tllllt in the · ~ase of action - under .... _ - -~clause 8B it is not necessary to give a pre.dedsi;nal ~pportunity but - . .. ' opportunity must be given if so zequested a post decisional . . by _the •· person affected. · • "' . F --· -_ _The ne~t question for consideration is.\Vh~thetthe decision to - .keep in 'abeyance' should 'be communicated to the. person concerned. There can be no two opinions · on· this. _ Ours is a Consthutional Government', an ·opel:'l 'dernocracyfourided upon the rule· of law and . 1

'G not i(cJoak and .1.hgger re~imen~ ·. It is io:conceivable that t,mder our eonstitutiona! s::heme a 'decision of the kind contemplated by dause 8B which may 'have the effect of b'rioging ~to a !startd {still the ~ntire - " business 'activity of the person affected and which !flay :even 'spell rui:Q. to him. ' should be made abd ·implemented 'without .being communi- cated to·'that person. Intertwined fs ' the question of: observance of H 'natural justice and bow 'can ·.oa'tural justice: be satisfied if the decision is not even communicated ? It would be most arbitrary and -quite .. clearly . of violative . Atticle$ . -14_. and 19(i)(~) . of the '· t;onstituti<?q . -~r ·

•.. -- LIBER."IY oiL 1.i1i.Ls v. tH.NoN. (Chinnappa R~ddy; j,) . 7ot ' ', + - • - • ' -· ~ • •

,.clause 8B is .to ,be interpret~d a~ ~xclud!ng communicatio~ of the A·' , deCision taken.' Cfhere. is ~ot~i_n_g ,·Jn Clause ' 8B t~ ~~g~est that the· . decision is riot to be communicated. · On the other hand, the ex pres· . ·. ·~\on· ·~.without a~sigt:ting~apyre~~on'~jn;tplies ~hat .,tpe .de~ision bas to · be.commuuicated,.l;Jut r.eas.ons for the d~cision. have riot to be stated. ; Reasons, of Ct;)Urse, ·,mu~~ ~xist.forthe·.~eCisiQn ~.ioce. the decision may is only .be Jaken iC the autho.rjty ,satisfi~d ihat.the '.iran·t of licence or B ·. ~a,ll~tm~nt ot,impor_:~ed_goo~s >YH~ pot i,e: ~~n', ~he ~mb.Iic interest. We ;,must make :it clear .that \vith9ut a~signing ,teas9.ns' only means · that ·there·· is Jlo ;,opligation io fp!mul~t~ rea:Sons · .a.nd,' nothing .. more. , ~For mal reasons .m~Y lead ,~o.~oinplic3:tio~s ~lle_n: ,the ..~~tt.er is still ·:: under ;investigatiqn. · ;So ~be ~_uthoriJy m<,ty not -~~h;e formal reasons, - c ..· :b11t the S~e!et~J allegationS ~\,1St ,be mentioned ,in ,OT~ler to. proyide an _ · · f ~PP9.~tunity: to . ,the _person _aff~cted · ,to ; ·m~k·e ,~s ~epi'e:s~~tl\tion, : Cbap~er ppd :v~rse.pe.ed,riot,be .. quot::d . .- Details.,may .not be. men-- r tioncd and ~-n PU.tl~~e of ;t~e flll~gat~'?DS .S~O!lid_ ~)e. suffid:ent..· .. - "-w •••

•' D . :The further- question .is. on . what , should . the :~:1tisfaction be 1 based ? ~Since a~tion under. clause S.B .is. to,be..tak,en pending investi· gation in.to allegations under clause 8, . we must take it..t.4at :the action· under clause 8B is really in aid of the ultimate order under clause 8. ·It must follow that in order to invite the satisfaction contemplated by...., E clause 8B there must be pr~s;~t -some 'strong s~spicion of one or the /

. other ~r more of grounds' ,mentioned Clause 8. Since t~e action in · whi<;h is of a drastic-nature. is to be taken expartc,•if must necessarily ~ -.-be animated by . - a· sense. I . of. . •. urgency .:. .. Th() . ·sense . - of urgency may be ~ I • · · infused by a host of circumstances such as the. traffickmg and unscru·. pulo~~ peddfiog·in licences, ·t~rge. scale misuse. ofimpo_rted goods,' ·F .. 'attempts ~0 ni'o!lopolise or corner ,the market, wholesale p-revalence . . of i~prop:r practices among-classes -~f impor£ers,. public Sentime'nt _etc.. e.tc: : O~e of the submissions· very:strenuously . pressed before us was that public se~tiroent, was wholly . irr~I~,varii ·in arriving· at· the .._satisfact~on. corite~plated by Ciause. 8B. · ·We,are unable .to agree. It. is _is true that public administration. not to. be run on· public Si:ntiment G . and statutory action may only be taken on;-gr(!t;nds permitted by the l. statute. But strong-public sentiment niay jropart a sense · of urgency · to a situati~n such as ' tocompel-tbe ·:authorities to proceed to take pr .. action. u~uet a statute 0 yided. of. course· grounds for taking .action ,under the statute... Public sentiment knot, in. such.cis'es,the ground fo~ th~ action but it is what ·clothes the ground with,1ll~t· sense of H urge:1cy which makes it imperative that swift action be taken. That .. is how we understand the referrenc~ ·to public . sentiment in the

1o8 [1984] 3 s.c.it: --f'

A · counter affidavit fil~d on behalf of the Union cj India and the _Chief Controller of Imports and Exports. r

Public interest must nolens yolence be the paramount· consi- deration; If the threatened public mischief is such as to outweigh the likely injury. to the party. the authority may take action under Cla'!lse_ B 8B~ If the t}lreatened public injury, is very slight C<?mpared 'to the · 'harm which may be done to the party, the authority may not take action under Clause 8B. There inay be cases where the 'abeyance' orders may themselves be produQtive of serious public injury as where ' a substantial amount of for~ign eXchange may be lost or a large number of. workers are likely to' be thrown out of employment c etc. In such situations the authorities may pause and have second thoughts, consider the inevitable consequences and be guided by that element of the public interest whiCh ()Utweighs all others. Which element of the public interest should be given greater' weiglrt and' . which' grounds should weigh at all are. matters for the authority ( taking action under Rule 8B. Courts do not concern themselves. D with the sufficiency of the grounds on which action is takea or with the balancing of competing considerations, in favour of and against the action. · ' " ' One of the submissions very strenuously urged before us was that a large number of the applications for import lincen¢es and E allotments of imported goods which have been kept in 'abeyance' relat~ to goods which are totally. unrelated to beef tallow or any other" animal tallow and there ,wa~ no justification whatever for keep- ing them in· 'abeyance'. But an 'abeyance' order under clause 8B is directed, not against any particular· type of goods but against an ' importer. licen~ee or other person against whom an investigation into allegations under clause 8 is pending. The question is not . whether any particular type of goods sbou'd be allowed to be impor-- 'ted or allotted to any person-that is a question of policy-, butwhetl;ler • it is not in the. public interest that a particular person should be ·· prevented from obtaining import licences or imported goods of any ·description pending investigation into the . allegations under clause 8B. That would depend on_ the nature of tbe allegations, the extent ·

element . of the public interest. 'f of involvement of the per~on concerned ahd, most important. the the allegations against· a person· in~ovle hi~l deeply in trafficking or racketeering in import \icences and irr1'ported goods, .the authority may consider it inexp~dientin the public interest to _keep in abeyance any applica~ion of hi~ for the .. grant of a licence or allotment of goods. on the other hand even if the -alle~~tions are grave~ if the effect of an order under clause 8B is . '.

LiBBRTV OIL MILLS v. VNION (Cittnappa Reddy, i.)

· likely to result in loses or" considerable foreign exchange or. to shut down an if.idustry throwing large number .of workers' out of employment, the authority should restrain itself in larger public interest, from · making an order under clause 8B or ·may ma~e a.n . order confining the abeyance order to . applications atid goods of certain descriptio~ oa\y instead of making a, general order which . extend') to alt . applications for import licences and allotment of · B . . imported goods. . Again, the allegations. may reve<!l that the · involvement o.f the person in· illegal a..ctivity' is so remore or minimal · that . it would t5e entir~ly inexp~dient to inake an order clause.~B. · A. person ~ho ~egitimately purch~se's . ,.importe<;l ·goods or imports gOOQS unde( a licence .lawfully acquired by him and who has used c the goods in· the manufacture of a different kind of goods ·in which industry the person . is en,gaged may not be visited with an o.rder under clat111e · 8B merely because the original licensee's actions may be · suspph;:ious. ,Again where· a person's bonafides are not susP._~ct ar all· but he may be ·technically at fault or he inay have acted on tr · bonafide interpretattion of the rules and regulations, it may -not be a case for making an order under clause SB. B~t -these are all matters ·for the consideration of tl:e auttority making the order uiider clause . 8B and not for the Court.

We have held that ·action under Clause · 8B is ~f. an interim E . ..,_...~- · , nature and it may be ex-parte, in · which case the affecteq party may J make ·a suitable representation bringing out all Jhe outwbeighing . · Circumstances in his favour . . That is the real remedy of the party . .·Courts do · not enter the picture at that r.tage unless . the action is lJ.lalafide or patently without'juiisdiction. The action will be patently without jurisdiction if it is not based on any relevant material what- soever. ~f the authority de~lines ' to consider the- representation, or if the authority after consideration of the representation eschews relevant consWerations and prefers to act on irrelevant considerations or from oblique motive, or the decision is such as no . reasonable man _, · propefly· "directed on the . law would arriv~ at on the material facts, it will be open to the party· to seek the intervention of.the Court at · G that stage. Our attention was drawn to tbe · well known . cases of v. Barium Chemicals Company Law Board1, Rohtas Industries S.D. v. Agarwala, M.4. Rasheed v. State of ·Keralas, and · the recent cas-es

(1) [1%6) Supp. SCR 311 .H (2) [1969]3 S.C.R. 108. . z (3) [19751 s·c.R. 93

710 [1984] 3 S.C.R.' . _._,..-

A ·of SlmfiniSoni v~ :fJtrfon .Offndia1, 'And @oNJmissivner of /nc(Jme Tax· 1'. Maltindra and Mt.t#fttdraz Mid •dm~ conaide.roo all oft.hesi in -~llrrivnrg at our cooolusi6n;

• ' ' In the ·present· case~ the party instead of representing his . case to the appropriate authority · ch-ose · the path. ·of rJitigaiion B· obviously· deterred by the clumsy.· at'tempt at secrecy made by the concerned authority arid the failure to communicate the decisien to ihe party.' One of the sul:mli~~ioos made to·us·was that the:abeyance ·order was never ·rorroiiny ·commurricatod- to-the-petitioners and it·.was, . ..... therefore, to be_ 'treated ·a~ ·non est. :•Reliance :was placed onthe c decisions of Bathhittar Singh v. ·Stttte ·of Punjab8 ·and -State qf :Runjab · v. Balbir si·~g'i 4 • We do n6t think· that fbese decisions are of any facility to us on th'e fa¢ts of'the present ·case. 1'ln 13achittcir Sirrgh~s · case, what was decided \'.las 'that a decilion taken •in -tthe privacy of a Minister's Chamber, which was DOt communicative to 1he·panty and . k. which was tevers.ed without ever ,;~lt1g communicated was of no effect at all. In B-olbir Sin'gli's Cltse, it '\~''l<;'held:that once ·an: order was sent out, aQd went out 'beyond· thc·"ConiTol ·ohb.e ·ailthor.ity, the order niust ·be said to have 'been issued no"'l'lat~r ·when ·the party affected actually received. it. Communication,_ according toilearned • Judges, was the process of setting in motion the despatc~ of the -order. It was .held in that case that forwarping of copies to tne E Accountant General and to the Ch~ef Engineer was sufficient com- munication. ~n the ,present case, the 'abeyance' order was undoub. tedly communicated to the licensing. authorities, the State Trading Corporation, the Minerals.,.and Metals Trading Corporation and. ot~er similar.~genci:es. Despite the attempt at secrecy made ·by the concerned authority and tht failure to formally comm~nicate F the decision to the party, the abeyance circular was very soon public knew ledge. The affected· ·party also learnt~ about it. but ·· probtlbiy ·deterred by the attempt at secrecy, chose. the p~th .of litigation, instead.of teprcsentil)g hi& case to the appropriate authority. We might have considered the question of what relief the petitione~s G were entitled to had the .secreqy.been maintained and knowl~dge . of the order · continued to be h.eld back from the ·party. But the person affecte.d did come to 'know of theorJer-he filed a copy of the circular a tong with: the·writ petition-, and in ther final ~natysis, the