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Prakash Cotton Mills Pvt. Ltd. and anr. Vs. Union of India (Uoi) and ors. - Court Judgment

LegalCrystal Citation
CourtMumbai High Court
Decided On
Case NumberWrit Petition No. 794 of 1981
Reported in1990(28)LC83(Bombay)
AppellantPrakash Cotton Mills Pvt. Ltd. and anr.
RespondentUnion of India (Uoi) and ors.
DispositionPetition dismissed
lenient view - cannot be taken repeatedly. show cause notice--when charges are clear any lacuna/ambiguity in details is of no consequence. retrospectivity--an order does not become invalid where it has application from the beginning due to prolonged proceedings. - code of criminal procedure, 1973 [c.a. no. 2/1974]. section 41: [ swatanter kumar, cj, smt ranjana desai & d.b. bhosale, jj] arrest of accused - held, a police officer or a person empowered to arrest may arrest a person without intervention of the court subject to the limitations specified under the provisions of the code. the provisions of section 41 of the code provides for arrest by a police officer without an order from a magistrate and without a warrant. a distinct and different power under section 44 of the code empowers.....s.c. pratap, j.1. this petition under article 226 of the constitution seeks to challenge order dated 17th january 1981 of the export commissioner dismissing the petitioners' appeal against order dated 15th february 1980 passed by the committee of administration of the cotton textiles export promotion council--respondent no. 3 herein.2. relevant facts and circumstances are as follows: the first petitioners are a public limited company with the second petitioner a shareholder and director thereof. the second respondent--the chief controller of imports and exports - is the licensing authority appointed under the imports (control) order 1955 issued in exercise of powers under sections 3 and 4a of the imports and exports (control) act, 1947. the third respondents are the registered authority.....

S.C. Pratap, J.

1. This petition under Article 226 of the Constitution seeks to challenge order dated 17th January 1981 of the Export Commissioner dismissing the petitioners' appeal against order dated 15th February 1980 passed by the Committee of Administration of the Cotton Textiles Export Promotion Council--respondent No. 3 herein.

2. Relevant facts and circumstances are as follows: The first petitioners are a public limited company with the second petitioner a shareholder and director thereof. The second respondent--the Chief Controller of Imports and Exports - is the licensing authority appointed under the Imports (Control) Order 1955 issued in exercise of powers under Sections 3 and 4A of the Imports and Exports (Control) Act, 1947. The third respondents are the registered authority specified under the Import Trade Control Hand Book of Rules and Procedure published by the first respondent--Union of India--and are specified as the registering authority for cotton textiles. As such registering authority the third respondents are entrusted with duties and functions of registering and deregistering exporters.

3. From time to time the first respondent promulgates an import policy which is published for the convenience of all including the trade in the form of a book popularly known as 'Red Book'. Along therewith is also published a companion publication viz., the 'Import Trade Control Hand Book of Rules and Procedure'. Under the relevant Hand Book of Rules and Procedure, importers are divided into four broad categories, viz.,

(a) Established Importers;

(b) Actual Users;

(c) Registered Exporters to whom licences are issued under the Import Policy for Registered Exporters; and

(d) Others.

Registered exporters in category (c) are those holding valid registration certificates issued to them by the concerned registering authority which in the case of cotton textiles is the third respondent.

4. The Hand Book of Rules and Procedure prescribes the procedure for registration. Application in that behalf is required to be made in prescribed form and registration certificate is issued subject to such conditions as the registering authority considers necessary. This registration remains valid for four years unless the registered exporter ceases to exist or his name is de-registered or he becomes ineligible to hold the registration certificate. Such registered exporter gets his replenishment import licences and cash incentives on the basis of his exports. According to the petitioners, the first petitioners are regular exporters of cotton textiles, hosiery goods and readymade garments; they have been exporting almost ninety per cent of their product; on the basis of their export performance they have been recognised as Registered Exporters; and as such Registered Exporters they are entitled to replenishment import licences and cash incentives under the Import Control Policy in February l975 the first petitioners applied to the third respondent for registration as Registered Exporters and obtained a certificate of registration dated 29th March 1975 valid for a period of four years. While applying for registration the first petitioners undertook to abide by the conditions subject to which registration is granted. They also solemnly declared and undertook to abide by the terms of the registration certificate granted. They also solemnly and unequivocally declared and undertook without any reservation to use, for purposes of exports, the standard contract form evolved and fixed by the Council. They were also aware that their registration was liable to be cancelled in the event of breach of any of the terms, conditions and undertakings.

5. On or about 4th March 1977 the third respondents issued to the first petitioners show cause notice (Exhibit C) which it is best to reproduce in extenso:

Whereas attention of the Cotton Textiles Export Promotion Council hereinafter referred to as 'TEXPROCIL' has been drawn to certain alteration made by you in the Standard Contract Form of Texprocil.

And Whereas on further detailed scrutiny by the Texprocil it has been noticed that alterations of material nature had been incorporated by you in the Standard Contract Form recommended by the Texprocil.

And Whereas such materially altered contract Shas been represented by you as the Standard Contract Form of the Texprocil,

And Whereas such alterations carried out by you in violation of Clause 33 of the Standard Contract Form of Texprocil.

And Whereas you had at the time of registration as a Registered Exporter under the Import Policy for Registered Exporters made a declaration and given an undertaking whereby you had declared and undertaken inter alia to use the Standard Contract Forms for exports, evolved by the Texprocil.

And Whereas in the said declaration and undertaking itself you have agreed and acknowledged that the said registration is liable to be cancelled in the event of the breach of any one of the declaration and/or undertakings including the declaration and undertaking to use the Standard Contract Form of export evolved by the Texprocil.

And Whereas by making material alterations in the Standard Contract Form of the Texprocil you have violated the aforesaid declaration and undertaking given by you at the time of your registration as a Registered Exporter under the Import Trade Control Policy for registered exporter.

Now, therefore, Texprocil hereby calls upon you to show cause, if any you have, why for the reasons stated hereinabove, action should not be taken against you under the Import Trade Control Policy for registered exporter.

You are required to submit your explanation in writing, if any, within fifteen days of the receipt of the show cause notice failing which Texprocil will proceed to take action against you as provided by the Import Trade Control Policy for registered exporters for your de-registration as a Registered Exporter on the material already before it, without any further reference to you.

Clause 33 of the standard contract form, which clause is referred to in the above notice, runs as under:

Clause 33: Prohibition to amend terms No additions, deletions, alterations, amendments, etc., shall be valid and binding unless the same are mutually agreed to between the parties and the same are countersigned by them in token of such acceptance, provided further that such additions, etc., shall always be in conformity with the essential terms and conditions of the Texprocil Standard Contract No. 1.

In reply the petitioners initially asked for particulars and inspection which was given. However, they failed to submit any explanation. The third respondents by order dated 2nd May 1977 (Exhibit G) deregistered the first petitioners with immediate effect. The petitioners appealed against this order. Even while this appeal was pending, the petitioners filed in this Court Writ Petition No. 943 of 1977. This Court passed the following order thereon:

Mr. Rana states that as suggested by Court on the last occasion, he has moved the 2nd respondent's Council for a review to deregister the petitioners.

Mr. Cooper on behalf of the 2nd Respondent's Council states that the application for review will be considered on merits. In view of this arrangement, the petition is allowed to be withdrawn.

6. The third respondents accordingly heard the petitioners. By order dated 9th January 1978 (Exhibit 1) the third respondents confirmed the previous order of 2nd May 1977 (Exhibit G). Against this order of 9th January 1978 the petitioners filed appeal before the second respondent as also Writ Petition No. 45 of 1978 in this Court. The appeal was dismissed on 26th July 1978. The petitioners subsequently amended their Writ Petition No. 45 of 1978 by including therein challenge also to the rejection of their above appeal. In the meanwhile the Appellate Authority by its order dated 2nd December 1978 cancelled its order of 26th July 1978 dismissing the above appeal and restored the said appeal for hearing. As at this stage, therefore, there were before the Appellate Authority two appeals of the petitioners, one filed on 9th May 1977 against order dated 2nd May 1977 (Exhibit G) and the other filed on 14th February 1978 against order dated 9th January 1978 (Exhibit 1) both orders being of the third respondents. After hearing respective parties the Appellate Authority by its order dated 6th March 1979 (Exhibit J) allowed these appeals, set aside both the impugned orders and sent back the proceedings to the third respondents for re-hearing the petitioners in pursuance of the show cause notice dated 4th March 1977 and for passing appropriate orders, which should be a speaking order, after giving a personal hearing to the petitioners.

7. Thereafter the petitioners filed in this Court Writ Petition No. 1288 of 1979 challenging the original show cause notice of 4th March 1977. The said petition has been placed for hearing along with this petition. The petitioners also filed Writ Petition No, 2402 of 1979, against, so I understand at the Bar, the third respondents not considering the petitioners' request for renewal of registration. This latter writ petition was rejected in limine on 20th January 1980.

8. Pursuant to the appellate order dated 6th March 1979 the proceedings once again came up before the third respondents. After hearing the petitioners and after providing them with due opportunity, the third respondents, in view of the petitioners' regret and remorse, took a rather lenient view of the matter and by its order dated 15th February 1980, held that the first petitioners should be de-registered not for the entire period but for only a few months viz., for the period 2nd May 1977 to 1st January 1978. It was further held that for the period subsequent to 1st January 1978 the first petitioners should be treated as having been registered. While making this order the third respondents also observed that for the leniency shown to the third respondents were influenced by the statements made by the petitioners' Counsel and repeated in the first petitioners' letter dated 25th January 1980 inter alia to the effect that the first petitioners have tried to make amends and that they want a fresh chance to remain as a member of the Council and prove themselves 'worthy of it'. The order concluded with the hope.

We sincerely trust that Prakash Cotton Mills will implement this assurance made by it.

However, regardless of the leniency shown to it as also of its own regret and remorse and the consequent hope based thereon supra by the third respondents, the petitioners challenged the above order by preferring against the same an appeal to the second respondent. The said appeal was dismissed on 17th January 1981. Hence this petition.

9. Hearing rival submissions of the respective learned Counsel Mr. G.J. Desai for the petitioners, Mr. G.E. Vahanwati for the third respondent and Mr. M.I. Sethna for the first and second respondents and going through the impugned orders as also all such materials to which my attention was invited by them, I am more than satisfied that this is pre-eminently a case which deserves to be dismissed. The record speaks voluminously and overwhelmingly against the petitioners and their conduct. The history of this litigation bespeaks and casts a sordid reflection on the petitioners. The law is against the petitioners. The facts and circumstances are also against the petitioners. A combination of these together with their own conduct disentitles them from any relief. Mr. Sethna, learned Counsel for the Union of India, rightly submitted that in the entire background, the petitioners whose hands were far from clean were not entitled to any relief under Article 226 of the Constitution. There are a number of tell-tale circumstances against them. I could as well have only narrated these and dismissed this petition. However, since Mr. Desai, learned Counsel for the petitioners, has with his usual vehemence in this as in many another matter before this Court, argued this petition with zeal setting forth all possible submissions and contentions, it would, in all fairness to him, not be proper to adopt that course. To proceed then to his submissions.

10. Contention at the outset is that there has been against the petitioners an order under a provision under which there was in fact no show cause notice or charge. Submission is that the order is one under Para 106(1)(b) of the Import Trade Control Hand Book of Rules and Procedure, whereas the show cause notice dated 4th March 1977 was under Para 106(1) (a) thereof. There is no merit in this contention. Para 106(1) runs thus:

106(1) The registering authority may initiate action to de-register an exporter, where such authority is satisfied that the exporter:

(a) has ceased to have the qualifications required for registration or the conditions of registration have been violated; or

(b) has indulged in any form of unfair, corrupt or fraudulent practice, or failed to fulfil any export obligation.

The show cause notice reproduced verbatim supra is not in any manner restricted either to sub-para (a) or sub-para (b) of Para 106(1) but is comprehensive enough to include both. The said notice does not mention any particular para as such but it does--and that being the crux, is enough-mention all the facts and circumstances constituting the substratum thereof and which facts and circumstances if established would render the first petitioners liable to be de-registered. It is also relevant to note that this Para 106 is the only provision dealing with de-registration of exporters.

11. It is in addition contended by Mr. Vahanwati, learned Counsel for the third respondents, that the contention supra based on a purported divergence between the notice and the orders passed was not raised by the petitioners at any stage all these years in any of the several proceedings till now. Indeed, learned Counsel continued, the said contention does not find place even in the present petition. However, rather than be technical and on this ground decline permission to raise the some, I find the said contention to be even otherwise without merit. Also relevant to note is that the petitioners have not shown any prejudice whatever by the purported lacuna or discrepancy. They entered, so to say, their defence, took part in the proceedings, fully set forth their contentions untramelled by any technicality or lacuna now sought to be set forth--and all this well aware and fully knowing the facts, circumstances and the charge against them.

12. Mt. Desai, however, invited this Court's attention to three authorities, viz.,

(a) Board of Trustees of the Maradana Mosque v. Badiuddin Mahmud and Anr. 1967 (1) Appeal Cases 13;

(b) Lau Liat Meng v. Disciplinary Committee 1968 Law Reports 391;

(c) New Samundri Transport Co. (P) Ltd. v. The Slate of Punjab and Ors. : [1976]2SCR218 .

In the case of Board of Trustees of the Maradana Mosque there was a charge against the appellants, a body corporate, specifically and only under Section 6(i) of the Assisted Schools and Training Colleges (Special Provisions) Act No. 5 of 1960. There was no charge at all under paragraph (k) of Section 6 of the above Act, 1960. Even so, the appellants were held to have committed a breach of the said paragraph (k) The Privy Council held that there being no charge at all against the appellants under paragraph (k), order relating thereto could not be sustained, as that would amount to (i) holding against the appellants on a charge not made and (ii) so holding without any opportunity to them to meet the same with (iii) the resultant position being a violation of the rules of natural justice. In the present case there is no such lacuna either in the show cause notice or in the impugned orders. The notice shows to be one squarely covering the ingredients both of sub-paras (a) and (b) of Para 106(1) and charge accordingly. Proceedings show opportunity to the petitioners to meet the same with the resultant position being in compliance with the rules of natural justice.

13. Almost similar is the position qua the second ruling viz. Lau Liat Meng v. Disciplinary Committee. There the charge against the appellant, a member of the Bar, related to (a) the acceptance of seven hundred Dollars contrary to Section 17(3) of the Motor Vehicles (Third Party Risks and Compensation) Ordinance, 1960 and (b) entering into a champertous agreement with one W. to take 25 per cent of the damages, if any were recovered, by way of remuneration for his service. There was no charge at all in respect of the additional amount of 500 Dollars purported to have been received by the appellant. It was in this context held that (i) the appellant had not been given notice of the charge in relation to this additional 500 Dollars and (ii) there was no opportunity to him to meet the same and (iii) there was thus a denial of the principles of natural justice and, therefore, (iv) the finding against the appellant relating to the receipt of 500 Dollars should be set aside. This was thus yet another clear case of a charge held established without being made and without opportunity to meet it. Such is not the present case.

14. In New Samundri Transport Co. (P) Ltd. v. The State of Punjab and Ors. thirty-three permits were the subject matter of an enquiry. However, the charge there did not mention either any specific permit or any particulars of any permit for the breach of which the appellant was prosecuted. It was in this context observed by the Supreme Court:

6. What we find in this case is a kind of bald notice making no reference to any particular permit for cancellation or suspension of which action has been taken. It is as if all the 33 permits were going to be suspended or cancelled. It is clear that after receipt of the various reports the Commissioner did not apply his mind to scrutinise the same for the purpose of taking appropriate legal action against any specific permit under Section 60 of the Act. On the other hand taking the reports as they were, which may as well have been general allegations against the permit-holder, immediate action was taken for suspension or cancellation of all the permits....

7. What is important in a departmental action of this type for violation of conditions of permit is that it must relate to the particular permits appertaining to concerned vehicles. It is of utmost importance that charges are made with reference to each permit in clear terms in order to enable the permit holder to furnish his explanation. Proviso to Section 60(1) which requires mandatory compliance is nothing short of a reasonable opportunity to the permit-holder to furnish his explanation. Unless, therefore, the breaches of conditions or other allegations are particularised with reference to each permit in the show cause notice such notice is clearly invalid and no action can be taken under such a notice. This is exactly what has happened in this case resulting in violation of the principles of natural justice ingrained in the proviso to Section 60(l)of the Act....

And on this ground the Supreme Court allowed the appeal and set aside the impugned orders. This ruling also has no relevance to the present case.

15. Carefully considering these authorities I find none of them to be here relevant. Each one of these is distinguishable from the instant case. Common ratio of these rulings is that one cannot hold a person responsible without a charge and opportunity. Here, in the present case, the show cause notice indicates the basis and the facts and circumstances on which the same is issued. The first petitioners were also 'given particulars and inspection of documents. Still further, it has not been the case of the first petitioners that they were not aware either of the nature of the proceedings or the charge against them. Besides, as indicated, I see no prejudice resulting from any purported lacuna or ambiguity in the notice. Nor is it the case of the petitioners that they were misled by this notice or were not aware about what the facts and circumstances were and/or charge or enquiry was all about. Indeed, as the record shows, the petitioners were fully aware of everything. It was precisely for this reason that the contention now urged did not even occur to the petitioners all these years. The contention thus fails and is rejected.

Thursday, 25th July 1985

16. Contention next raised by the petitioners' learned Counsel Mr. Desai is that the impugned order is bad also on the ground of being one retrospective in operation. I am afraid even this contention must fail. The impugned order, correctly analysed in the context of the scheme in question, is not one which can in reality be said to be retrospective in operation. As a consequence of the impugned order de-registering the first petitioners-company for a period 2nd May 1977 to 1st January 1978, they would not get either replenishment benefits or cash incentives for the exports effected during the aforesaid period only. The stage of giving these benefits or incentives has not yet arrived. Whether the same should or should not be granted will depend upon the ultimate result of these proceedings. If the impugned de-registration is held to be legal and valid it would then and then only, follow that the petitioners would not be entitled to the said benefits. There is thus no question of taking away retrospectively something not yet given. There is no retrospectivity here.

17. However, even assuming the order to be retrospective in operation, that, in the facts and circumstances here, is no ground per se for not making it and/or for not giving effect thereto. Order of de-registration was first made on 2nd May 1977. But since the petitioners challenged the same by appeals and writs and since proceedings in pursuance thereto were pending before different authorities and courts till ultimately the stage of the presently impugned order reached, the period of registration and/or de-registration stood covered by the time taken in these proceedings. Such indeed, can be the resultant situation in almost every matter where there is a pending challenge to the initial order. Acceptance of the petitioners' contention would defeat every such order by virtue of a mere pendency of a challenge thereto which may not for one reason or another see an early end thereto. The contention on retrospectivity thus fails and is rejected.

18. Mr. Desai, learned Counsel for the petitioners, next contended that in fact there has been in this case no material alterations from the standard contract form nor any material deviations therefrom. Now, a bare perusal of the standard contract form and comparing the same with the petitioners' totally reprinted duplicate form makes it apparent that the duplicate form suffers not from one or two but several material alterations To indicate briefly these alterations: In Clause 9 the word 'orally' has been inserted in the third line consequently giving to the seller, the first petitioners, considerable flexibility; in Clause 12, the word ''shall' in the third line has been substituted by the word 'may' thus substantially diluting the effect of the clause; the last proviso to Clause 12 has been completely deleted; the last few words 'from the day such demand was made' in Clause 13 have also been deleted; the words 'copy of overseas buyers contract' and 'copy of overseas contract' have been added in the second and fifth lines of the said Clause 13; the last sentence in Clause 19 is also deleted; the last sentence in the first para of Clause 21 as also both the middle and the last sentence in the second para of CLAUSE 21 have also been completely deleted; in Clause 26 Sub-clause (ii)(b) the words 'and all other losses and damages the seller may suffer on account of the non-receipt of the goods to the destination contracted for' have been added; the words 'reasons beyond the control of the sellers' as also the words 'if so required by the buyers' have been added in the 4th and the 9th line respectively of Clause 28; the word 'should' in the 5th line of the said clause has been substituted by the word 'may'; still further an altogether new clause running into as many as three full typed pages has been interpolated as Clause No. 34; and the original Clauses 34, 35 and 36 have been reprinted as Clauses 35, 36 and 37 respectively. Analysis of these alterations, deviations and interpolation show the same to be in most respects material and significant. The object obviously has been to dilute and neutralise the petitioners' liability and enhance that of the buyer who is blissfully ignorant of the original standard contract terms and the vital and prejudicial alterations, deviations and interpolations. De-registration even for the entire period would have, in a case such as this, been justified It was, however, only in view of the remorse and regret expressed by the petitioners and their prayer for sympathetic consideration and for a chance to be given to them that persuaded the authorities to show considerable leniency but which now in retrospect has turned out to be undeserved.

19. Before concluding one cannot help commenting on the petitioners' conduct qua the present dispute and which conduct by itself disentitled them to any relief under Article 226 of the Constitution.

20. Clause 33 of the Standard Contract Form prohibits additions, deletions, alterations and amendments of the terms of the standard contract form. The petitioners have even so and in breach thereof effected several additions, deletions and alterations. Again in their letter of 11th August 1977 (Exhibit H1) to the third respondents, the petitioners made various allegations as to what happened in the High Court at the time of hearing of Writ Petition No. 943 of 1977 and when the said allegations were denied by the third respondents by their reply (Exhibit H2) dated 13th August 1977, the petitioners by their letter of 26th August 1977 (Exhibit H3) withdrew their earlier letter of 11th August 1977. This again is a piece of conduct which cannot be lightly overlooked particularly when it involves deliberate misrepresentation of what transpired in the High Court in a pending matter.

21. Again in their application for registration the petitioners specifically declared:

I/We hereby declare that the above information is correct to the best of my/our knowledge and belief. I/We also undertake to abide by the conditions subject to which registration/membership is granted.

And further:

We hereby solemnly declare the above stated information to be true and correct and undertake without reservation to:

(i) abide by the terms of the registration certificate granted to us on all our exports.

(ii) use the import licences for the purpose for which they are issued and under the terms and conditions under which they are issued.

(iii) agree to abide by any code of conduct that may be prescribed by the Registering Authority.

(iv) furnish without fail quarterly returns of exports including Nil returns to the Registered Authorities by the 15th day of the month following the quarter.

We further understand that our registration is liable to be cancelled in the event of breach of any of the undertakings mentioned above.

Despite the aforesaid solemn declarations and undertakings the petitioners have with impunity gone ahead and mutilated several terms and conditions of the contract. The petitioners have committed a blatant breach of their declarations and undertakings. Last but not the least, in their letter dated 25th January 1980 to the third respondents, the petitioners stated that they have already suffered a lot and that they have been already punished sufficiently and having regard to the facts and circumstances no further penalty be imposed on them. They also added therein that they may be given a fresh chance and concluded with a prayer that broad and sympathetic view be taken. It is in view thereof that the third respondents took, of an otherwise serious matter, a very lenient view. With all the leniency shown, the petitioners had no compunction in resiling from their earlier beguiling stance craving sympathy, leniency and a fresh chance. Such than being the regrettable conduct of the petitioners, they are not entitled to any relief under Article 226 of the Constitution. Of course, I have also held that even otherwise the petitioners have no case and their present petition is without merit. But, even if one were to assume otherwise, this Court would then have been justified in even so not interfering under Article 226 of the Constitution.

22. To reiterate, the petitioners have not approached this Court with clean hands. The petitioners have in a manner virtually apologised before the third respondents and their letter of 25th January 1980 supra is almost in the nature of a mercy petition. It is unfortunate that after inducing the third respondents to act thereon and pass on the basis thereof an extremely lenient order, the petitioners should have turned round and retracted--an act and conduct nothing short of breach of trust and confidence. In all the circumstances, just and proper order on this petition would be the one below.

23. This petition fails and the same is dismissed. Rule stands discharged with costs.

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