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Bansilal Jesasingh Vs. Union of India and Others - Court Judgment

LegalCrystal Citation
SubjectCustoms
CourtMumbai High Court
Decided On
Case NumberWrit Petition No. 538 of 1981
Judge
Reported in1988LC396(Bombay); 1988(36)ELT52(Bom)
ActsImports and Exports (Control) Act
AppellantBansilal Jesasingh
RespondentUnion of India and Others
Excerpt:
i.t.c. - licence voidable but not void on date, is valid. goods released. - - it is good till avoided in the manner prescribed by law......they were imported, under a valid licence and therefore, it is not possible to say that the goods imported were those prohibited or restricted by or under chapter iv of the act within the meaning of clause (8) of section 167 of the sea customs act.'a licence, therefore, assuming that it was obtained by misrepresentation or fraud, would be valid until its cancellation. this decision of the supreme court has been followed by my brother pendse j. in mis. petition no. 1715 of 1975 r. v. metal corporation v. a.t. mukherjee, dy. collector of customs in his judgment dated 11th october, 1979.9. in view of these decisions, it is clear that in the present case also there was a valid licence on the date of import viz. in february, 1976. mr. nair, learned advocate for the petitioner, also.....
Judgment:

1. The petitioner carries on business in the firm name and style of 'Bansi Automobiles'.

2. The Joint Chief Controller of Imports and Exports had issued in favour of one M/s. General Spares Industries Private Ltd. an import licence bearing No. 2709065 dated 19th August 1974 for import, inter alia, of Fuel Injection Equipment as component of Internal Combustion Engine. This licence was issued to M/s. General Spares Industries Pvt. Ltd. as actual users under the Import Policy for registered exporters.

3. M/s. General Spares Industries Pvt. Ltd. applied to the Deputy Collector of Customs for issuing in favour of the petitioner a Letter of Authority for importing the said goods under the said Import Licence. Accordingly a Letter of Authority dated 2nd November 1974 was issued in favour of the petitioners who were accordingly authorised to act as agents of M/s. General Spares Industries Pvt. Ltd. to import the said goods and to open letter of credit and make remittances in Foreign Exchange against the said Import Licence.

4. In pursuance of the said letter of authority the petitioners between November 1974 and February 1976 imported several consignments. In or about October 1975 the petitioners placed an indent with M/s. Pezetel, Warszawa, Poland for shipment of certain components of fuel injection equipment of the aggregate CIF value of Rs. 1,13,312/-. Accordingly, M/s. Pezetel shipped 3 consignments of the said goods by s.s. 'Vishva Tirth'. The ship arrived in Bombay in or about February 1976. The petitioners paid a sum of Rs. 1,17,101.60 P. as cost of the said goods and took delivery of the Bill of Lading and the shipping documents. In February 1976 the petitioners submitted 3 bills of entry bearing Nos. 1752/37, 1752/38 and 1752/39 all dated 11th February 1976 for the purpose of clearance of the said consignments from customs for home consumption. The clearance of these consignments was, however, withheld by the Customs authorities. Ultimately, sometime in September 1976 the Joint Chief Controller of Imports and Exports purported to cancel the said licence on the ground that the licence had been obtained by M/s. General Spares Industries Pvt. Ltd. by misrepresentation. No notice was given to the petitioners before cancellation of the said licence. Thereafter the petitioner was served with a show cause notice alleging that the petitioner had contravened the provisions of the Imports and Exports (Control) Act, inasmuch, he had imported goods without holding any import licence and further stating that the said import licence had been cancelled and should not be utilised for the purpose of import of the said goods.

5. Thereafter two writ petitions were filed in this Court. Writ Petition No. 1344 of 1976 was filed by M/s. General Spares Industries Pvt. Ltd. challenging the order of cancellation of licence while Writ Petition No. 1379 of 1976 was filed by the petitioners challenging the show cause notice served on them. By an order dated 13th July 1979 Writ Petition No. 1344 of 1976 was made absolute on the ground that cancellation of licence had been effected without complying with the principles of natural justice. Thereafter M/s. General Spares Industries Pvt. Ltd. were granted a hearing and a fresh order was passed on 19th January, 1980 under which the previous order of cancellation was maintained.

6. In Writ Petition No. 1379 of 1976 the respondents made a statement in court that they would not pass any order without granting a hearing to the petitioner. As a result an order was passed on 20th February, 1980 to the effect that the petition did not survive. No hearing, however, has been given to the petitioner so far.

7. The present petition has been filed by the Petitioner praying that the petitioners should be allowed to clear the said consignments imported per s.s. 'Vishva Tirth' and that the respondents should be directed to release and deliver the said goods to the petitioner upon payment of requisite customs duty, warehousing charges and other charges. The respondents to the petition are Union of India, Collector of Customs and Deputy Collector of Customs.

8. In the present cases, the three consignments in question were imported some time in February, 1976. It is an accepted position that the consignments were imported in February, 1976. At the time when the consignments were imported there was a valid import licence under which these consignments had been imported by the petitioners. The first order of cancellation of import licence is passed sometime in September, 1976. Since the importation of goods took place a few months before the cancellation of licence, it cannot be said that the importation of these 3 consignments was in contravention of the provisions of the Imports and Exports (Control) Act of 1947. It is the contention of the respondents that since the licence in the present case was obtained by M/s. General Spares Industries Pvt. Ltd. on misrepresentation and/or fraud, the licence was not a valid licence right from the inception and hence the imports in question which took place where under an invalid import licence. This submission, however, is contrary to the decision of the Supreme Court in the case of M/s. East India Commercial Co. Ltd., Calcutta v. Collector of Customs, Calcutta : 1983(13)ELT1342(SC) . The Supreme Court in that case was required to consider a show cause notice issued to the licence-holder for confiscation of goods on the ground that the licence-holder had committed breach of the conditions of the Import Licence. The Supreme Court in that case observed as follows :

'Nor is there any legal basis for the contention that licence obtained by misrepresentation makes the licence non est, with the result that the goods should be deemed to have been imported without licence in contravention of the order issued under Section 3 of the Act so as to bring the case within Clause (8) of Section 167 of the Sea Customs Act. Assuming that the principles of law of contract apply to the issue of a licence under the Act, a licence obtained by fraud is only voidable; it is good till avoided in the manner prescribed by law. ..... In the circumstances, we must hold that when the goods were imported, they were imported, under a valid licence and therefore, it is not possible to say that the goods imported were those prohibited or restricted by or under Chapter IV of the Act within the meaning of Clause (8) of Section 167 of the Sea customs Act.'

A licence, therefore, assuming that it was obtained by misrepresentation or fraud, would be valid until its cancellation. This decision of the Supreme Court has been followed by my brother Pendse J. in Mis. Petition No. 1715 of 1975 R. V. Metal Corporation v. A.T. Mukherjee, Dy. Collector of Customs in his judgment dated 11th October, 1979.

9. In view of these decisions, it is clear that in the present case also there was a valid licence on the date of import viz. in February, 1976. Mr. Nair, learned advocate for the petitioner, also drew my attention to the provisions of Imports (Control) Order, 1955 which is issued under the Imports and Exports (Control) Act, 1947. Under Clause 9 of the Order, a provision is made for cancellation of licences granted under the Order inter alia, on the ground that the licence has been granted by fraud or misrepresentation. Under sub-clause (3) of Clause 9, the Chief Controller of Imports and Exports, by special order in writing may suspend the operation of any licence granted under the Order, where proceedings of cancellation of such licence have been initiated under sub-clause (1). This would indicate that the licence would remain valid until it is cancelled. In order, therefore, to prevent the use of such licence while proceedings for cancellation are in progress, sub-clause (3) empowers the officer concerned to suspend the operation of such licence. My attention was also drawn to a decision of the Delhi High Court in the case of Mohd. Swallehin v. Lt. Governor, Delhi : AIR1977Delhi184 under which the Delhi High Court has held that the Government has no power to rescind a notification with retrospective effect. It is not the case of the respondents that they have cancelled the licence with retrospective effect. The respondents have contended that the licence was not est at the time of import because it was obtained by mis-representation or fraud. This contention cannot be accepted for the reasons set out above.

10. In the premises, the petitioner is entitled to clear the goods imported by the petitioner by s.s. 'Vishva Tirth' under Bill of Entry Nos. 1752/37, 1752/38 and 1752/39 dated 11th February, 1976. The Respondents are directed to release the said goods to the petitioner upon payment of requisite customs duty, warehousing charges and such other charges as they may be entitled to recover in law from the petitioner.

11. The rule is made absolute accordingly with costs.


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