Supreme Court: In a petition filed under Article of the against the order dated 29-5-1953 passed by the Chief Controller of Imports and Exports and the order dated 11-1-1954/12-1-1954 passed by the Deputy Chief Controller of Imports and Exports, New Delhi, the five-Judges Bench of B.K. Mukherjea, S.R Das, N.H. Bhagwati*, B. Jagannadhadas and T.L. Venkatarama Ayyar, JJ., stated that under Section of the (‘the Act’), it was open to the Central Government to make provision for prohibiting, restricting or otherwise controlling in all cases or in specified classes of cases the import of goods of any specified description. Whatever was comprised within this power could be the subject matter of a notified order. However, the scope of that power was strictly limited to the prohibiting, restricting or otherwise controlling of the imports of goods.
However, the Supreme Court absolved itself from the necessity of considering the question of validity of the impugned provisions of the notified order, because the order dated 29-5-1953 was tantamount to a refusal to grant the petitioner licences for the two items for the two licensing periods July-December 1952 and January-June 1953. Further, the order dated 11-1-1954/12-1-1954 was tantamount to a refusal to grant the petitioner licences for the other items mentioned for the three licensing periods July-December 1952, January-December 1953 and July-December 1953. Therefore, the Supreme Court stated that consideration of the question regarding validity of the impugned clauses was merely academical and refused to go into the same.
Background
Before the partition of British India, the petitioner resided and carried on business in the West Pakistan. He carried on business at Karachi and at Lahore under the firm, Kishanchand and Company and his main business was of import of goods of various descriptions from foreign countries. In 1946, the petitioner’s General Manager, allegedly went to the United Kingdom and Europe on a priority certificate granted by the then Punjab Government and placed large orders for the exports of goods of various descriptions to the petitioner at or through the port of Karachi.
The petitioner stated that in the communal riots that took place at Lahore in August 1947 extensive damage was caused to his office and his records including books, bills of lading, bills of entries, invoices, drafts, etc. were destroyed. As a result of the partition, the petitioner migrated to India and set up his home in Bombay. He carried on his business in Bombay and Delhi in the firm name, Kishanchand and Company (India). The petitioner claimed to be an established importer who was displaced from West Pakistan and applied to the Chief Controller of Imports for the issue of import licences in respect of several commodities based on what had been imported by him at or through the port of Karachi supported by suppliers’ certificates. He obtained several quota certificates from the Chief Controller of Imports and renewed his applications for import licences from time to time.
The Chief Controller of Imports suspected that the suppliers’ certificates which was furnished by the petitioner were not obtained bona fide. Thus, on 16-9-1952, Chief Controller of Imports passed an order suspending the issue of all licences to the petitioner. The Chief Controller of Imports was not satisfied with the explanation given by the petitioner regarding the art silk yarn and the dry fruits, and he made an order debarring the petitioner from receiving licences for the said goods for the three licensing periods, July to December 1952, January to June 1953 and July to December 1953.
The Government of India issued a notification on 1-7-1943 which prohibited the bringing of any goods of the descriptions specified in the schedule, except the goods which comprised specified descriptions covered by special licences to be issued by various authorities, into British India by sea, land or air from any place outside India. After the war was terminated, the powers to prohibit or control imports was necessary for a limited period. Thus, the Act was passed, and Section 3(1) of the Act empowered the Central Government to make provision for prohibiting, restricting or otherwise controlling the imports of goods of any specified description.
On 6-3-1948 the Central Government in exercise of the powers under Section 3(1) of the Act issued a notified order which debarred permanently or for a specified period licensees or importers from obtaining licences for import of goods. The provisions of the notified order, which was impugned by the petitioner as illegal, void and not within the terms of the Act, were as follows:
(b) Where a licensee contravened the order or the terms and conditions in or accompanying a licence, the appropriate licensing authority or the Chief Controller of Imports might notify him that he should either permanently or for a specified period be refused any further licence for import of goods.
(c) Where an importer was found guilty of contravention of the proviso to the said notification or of any orders or terms of conditions embodied in or accompanying a licence or an application for a licence or any other import trade control rules or regulations duly promulgated, the appropriate licensing authority or the Chief Controller of Imports might notify him that he shall either permanently or for a specified period be refused any licence for import of goods.
Analysis, Law, and Decision
The Supreme Court stated that under Section 3(1) of the Act, it was open to the Central Government to make provision for prohibiting, restricting or otherwise controlling in all cases or in specified classes of cases the import of goods of any specified description. Whatever was comprised within this power could be the subject matter of a notified order. However, the scope of that power was strictly limited to the prohibiting, restricting or otherwise controlling of the imports of goods.
The Supreme Court stated that the notified order could provide for the issue of licences, might prescribe the terms and conditions of the licences and might also provide for the suspension and cancellation of the licences under certain circumstances with a view to effectively provide for prohibiting, restricting or otherwise controlling the import of goods. However, if the notified order travelled beyond the purview of this power, then it would not be within the Act.
The Supreme Court noted that it was urged that the power contained in the impugned clauses (b) and (c) was implicit within the power to make provision for prohibiting, restricting or otherwise controlling the import of goods, because if it were not so, there would be no effective check or control on the licensees/importers and the policy of the Act would not be effectively carried out. A licensee or importer might obtain a quota certificate or a licence on the basis of fraudulent misrepresentations or forged documents which might be subsequently discovered to be such and then the Import Control Authorities would be without a remedy, if they were not invested with the power to impose any such punishment as was provided in the impugned clauses.
Further, mere suspension or cancellation of the licence would not be enough and in the exercise of their discretion, the Import Control Authorities might deprive the licensee or importer, of an opportunity of being considered for further licences along with other bona fide applicants by making him disgorge the unlawful gains he had made earlier and equalising the distribution of the quotas for goods which would be permitted to be imported.
However, the Supreme Court absolved itself from the necessity of considering this question of the validity of these impugned provisions, because the order dated 29-5-1953 was tantamount to a refusal to grant the petitioner licences for the two items for the two licensing periods July-December 1952 and January-June 1953. Further, the order dated 11-1-1954/12-1-1954 was tantamount to a refusal to grant the petitioner licences for the other items mentioned for the three licensing periods July-December 1952, January-December 1953 and July-December 1953.
Regarding the licensing period July-December 1953, which was anticipated in the order dated 29-5-1953, the Supreme Court stated that the Solicitor General appearing for the respondent had undertaken to consider the petitioner’s applications for licences to import the two commodities mentioned for this period as if they were still undisposed of and unaffected by the order dated 29-5-1953.
Therefore, the Supreme Court stated that consideration of the question regarding validity of the impugned clauses (b) and (c) was merely academical and refused to go into the same. The alternative contention of the petitioner that the orders complained against, were mala fide had no substance in it and was summarily rejected.
[Kishanchand Ramdas Gajwani v. Controller, Imports and Exports, , decided on 22-03-1954]
*Judgment authored by: Justice N.H. Bhagwati
Advocates who appeared in this case :
For the Petitioner: B.H. Lulla, Bakshi Mahtab Singh and Rajinder Narain, Advocates;
For the Respondents: C.K. Daphtary, Solicitor General of India (Poras A. Mehta and P.G. Gokhale, Advocates, with him)
*Note: Power of Central Govt to make provision related to import of goods
Since the inception of (‘the FT Act’), the was repealed. The FTA Act was enacted to provide for the development and regulation of foreign trade by facilitating imports into, and augmenting exports from, India and for matters connected therewith or incidental thereto. Section 3 of the FTA Act provided the powers to make provisions related to imports and exports.
Section 3(1) of the FT Act states that the Central Government may, by Order published in the Official Gazette, make provision for the development and regulation of foreign trade by facilitating imports and increasing exports. Further Section 3(2) of the FT Act provides that the Central Government may also, make provision for prohibiting, restricting or otherwise regulating, in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the Order, the import or export of goods or services or technology. Provided that the provisions of this sub-section shall be applicable, in case of import or export of services or technology, only when the service or technology provider is availing benefits under the foreign trade policy or is dealing with specified services or specified technologies.
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