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Vijayasri Metal Industries Vs. Minerals and Metal Trading Corpn. - Court Judgment

LegalCrystal Citation
SubjectCivil;Excise
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Appeal Nos. 21 to 42 of 1976
Judge
Reported in1988(37)ELT25(AP)
ActsCommon wealth Immigrants Act, 1962; Land Acquisition Act, 1894 - Sections 4 and 6; Government of India Act, 1935 - Sections 49(2) and 124(2); Imports and Exports Control Act, 1947 - Sections 3(1); Code of Criminal Procedure (CrPC) , 1898 - Sections 96, 98, 165, 451 and 523; Code of Civil Procedure (CPC) - Sections 92; Madhya Pradesh Public Security Act - Sections 1 and 3(1); Imports (Control) Order, 1955; Import Trade Control Rules; Mysore Public Works Department Code; Constitution of India - Articles 14, 19, 19(1), 31, 31(1), 31(2), 73, 73(1), 162, 226, 239, 240, 246, 258(2) and 370
AppellantVijayasri Metal Industries
RespondentMinerals and Metal Trading Corpn.
Appellant AdvocateP.A. Chowdary, Adv.
Respondent AdvocateK. Subrahmanya Reddy, Standing Counsel
DispositionAppeal dismissed
Excerpt:
- - in respect of items licensable to actual users in restricted basis, the sponsoring authority will indicate the value limit against each item within the overall value recommended. (d) if the licensing authority is satisfied that the release order will not serve the purpose for which it has been granted; 29): in modern britain, where no agreement exists on the ends of society and the means of achieving those ends, it would be disastrous if courts did not aschew the temptation to pass judgment on an issue of policy. but to enable that to be done would, in my judgment, mean making bad law the fact is that nobody contemplated this situation arising when the common wealth immigrants act, 1962 was passed, and it is only right to say that under the common wealth immigrants act, 1968, the.....s. obul reddi, c.j.1. the baste question that arises to all these writ appeals is whether the respondents, the minerals and metal trading corporation of india united, madras and the joint chief controller of exports and imports, iron and steel division, madras are hot acting under the authority of law when they act under para 292 of the import trade control rules and procedure to cancel the release orders issued under para 97 of the same rules and procedure, when once allotments of the imported steel goods are made; in other words, whether an executive order under para 292 is not a law so as to deprive the appellants of their right to property viz., the allotments of steel quotas made to them under the release orders.2. the appellants are all small scale industrialists, who manufacture.....
Judgment:

S. Obul Reddi, C.J.

1. The baste question that arises to all these writ appeals is whether the respondents, the Minerals and Metal Trading Corporation of India United, Madras and the Joint Chief Controller of Exports and Imports, Iron and Steel Division, Madras are hot acting under the authority of law when they act under para 292 of the Import Trade Control Rules and procedure to cancel the release orders issued under para 97 of the same Rules and procedure, when once allotments of the imported steel goods are made; in other words, whether an executive order under para 292 is not a law so as to deprive the appellants of their right to property viz., the allotments of steel quotas made to them under the release orders.

2. The appellants are all small scale industrialists, who manufacture several utility items using the imported stainless steel allotted to them under the release orders. As in previous years, in the year 1973-74, the year in question, allotment of steel were made to them under the release orders issued by the 2nd respondent on the basis of their consumption in the previous year certified by an auditor. But the 1st respondent, the Minerals and Metal Trading Corporation of India Limited, through which agency the supplies were made, declined to honour the release orders under instructions from the 2nd respondent. These instructions, according to the 2nd respondent were given as he had issued notices to all allottees over the country stating that there was reason to believe that the release orders were obtained by misrepresenting the actual consumption of stainless steel during the relevant period and also by showing inflated consumption. The notices also indicated to show cause why the Controller should not cancel the release orders and called upon them to produce documentary evidence in respect of the actual consumption, it is against the proposed action of cancellation of release orders that the writ petitions were filed challenging the authority of the 1st and 2nd respondents to withhold the quotas allotted to them under the various release orders.

3. Our learned brother, Krishna Rao, J., the action proposed to be taken by the respondents is administrative, the only requirement being that, before such an administrative action is taken, the petitioners should be given an opportunity of being heard. It was also observed by the learned judge that the notices have been issued to some of the petitioners and those notices don not suffer from any infirmity and to such of those to whom notices have yet to be issued, they shall be issued by the respondents.

4. Mr. Chowdary, the learned counsel appearing for the appellants contended that mere is no statutory law under which the 2nd respondent could propose to cancel, the release orders; and that, in the absence of any law which confers the power to cancel the release order when once the release order is issued, he will be acting without the authority of law, it is also his case that executive instructions issued by the 2nd respondent to the 1st respondent not to honour the release orders cannot have any retrospective application; and that the change of policy of the Central Government cannot be applied to the applications that have already been disposed of. It is further his case that, when the applications were processed according to law i.e., in accordance with para 97, the respondents cannot now turn and say that there is a change of policy to make the allotments on the basis of the value of the installed machinery of small scale units and their capacity to manufacture permissible end products and hence they are entitled to reduce the quota already allotted or cancel the release orders. He also retted upon the finding of Muktadar, J., in an interlocutory application that the appellants are not shown to be guilty of misrepresentation.

5. We may, therefore, first consider whether the 2nd respondent the authority of any taw, when he issued notices under para 292. Both Mr. Chowdary appearing for the appellants and Mr. Subrahmanya Reddy, appearing for the respondents rely on the import Trade Control, Hand Book of Rotes and Procedure. The rules and the procedure prescribed are not pursuant to any legislation empowering tee Central Government to make rules and prescribe the procedure. They form the administrative instructions issued by me Central Government for the year 1973-74. We are now concerned only with these rules and procedure prescribed for the year 1973-74 for allotment of imported steel to the applicants. The import policy of the Central Government is announced on the eve of each financial year by means of a public notice which is issued in the form of a book called 'import Trade Policy Book' commonly known as Red Book. Any important changes that may become necessary in the mid-term of the financial year are separately notified by means of a public notice. Procedure is prescribed for allotment of imported goods canalised through public sector agencies. Steel, in this case, is canalised through the 1st respondent to the actual users, Para 97, which deals with the procedure of imported goods canalised through public sector agencies reads:

'97 (1) In respect of goods the import of which is canalised through a public sector agency for meeting the requirements of actual users, the allotments of imported materials to actual users will be made in the following manner :-

(i) by release order to be issued on applications made to the licensing authorities concerned or

(ii) by release orders to be issued on applications made to the sponsoring authorities concerned or

(iii) by direct allotments to be made by the canalising agency concerned. (2) The manner of allotment in terms of sub paragraph (1) above will be indicated in respect of each item in the relevant import Trade Control Policy (Red Book).'

Sub-paragraph (3) of paragraph 97 prescribes the procedure to be followed in respect of items for which release orders will be issued by the licensing authorities to the actual users concerned and it reads :-

'(a) The actual users should submit his import application in the prescribed form and manner to the licensing authority concerned through the sponsoring authority concerned. Units which are required to make their applications for licences direct to the licensing authorities concerned under the import policy in force should not route their applications through the sponsoring authorities concerned. Applications should be supported by treasury challan showing payment of application fee and other documents as are required in terms of the import policy in force.'

In regard to the release orders for actual users, the following procedure is prescribed in clauses (c), (d), (e) and (f) of sub paragraph (3) of paragraph 97. The sub-paras reads:-

'Where an application is to be made through the sponsoring authority, the said authority will forward the same to the licensing authority concerned with its recommendation in the normal course. In respect of items licensable to actual users in restricted basis, the sponsoring authority will indicate the value limit against each item within the overall value recommended. The licensing authority will consider the application on merits in terms of the import policy in force. In respect of canalised items, instead of issuing a direct licensing to the applicant, the licensing authority will issue release order in favour of the applicant on the canalising agency concerned, in the proforma appearing in Appendix 34.

(d) Where an application is to be made direct to the licensing authority concerned, the licensing authority will consider the application on merits in terms of the import policy in force. In respect of canalised items instead of issuing a direct licence to the applicant, the licensing authority will issue release order in favour of the applicant on the canalising agency concerned in the proforma appearing in Appendix 34.

(e) The original release order will be sent to the applicant and a copy thereof will be sent to the licensing authority to the canalising agency. For purposes of verification, the licensing authority will also send confirmatory statements every week to the canalising agencies indicating particulars of the release orders issued during the week. In every case, a copy of the letter with which the release order is sent to the applicant will be forwarded by the licensing authority to the sponsoring authority concerned.

(f) The release order will be valid for a specified period during which the allottee will be required to draw supplies from the canalising agency in accordance with the procedure for allotment/distribution prescribed by such agency.'

6. What Mr. Chowdary contends is that, when once a release order is issued to an applicant and copy thereof is sent to the canalising agency, it is not open to the 2nd respondent either to cancel the release order or for the 1st respondent to say that he shall not honour the release order because of the instructions from the 2nd respondent or because of the change of policy of the Government. It is the legislature alone that is competent to take away the right to property when once it vests in a user by virtue of the release orders and that, when such a power has not been conferred upon the respondents by the legislature, they would be acting without the authority of law infringing the property right of the users under Article 19(1)(f) and the source of that power must be traceable to some law made by the legislature and there is no such law to cancel the release orders. By executive rules and procedure, the right, vested in them cannot be taken away. Paragraph 292 of the same rules and procedure is not a law so as to invest (divest) the rights vested in the appellants under the release orders. It is only an executive act not having the force of law so as to entitle the licensing authority to cancel the release orders. In short, it is his case that property rights can be created by the exercise of executive powers, but they cannot be abridged, curtailed or taken away by an executive flat, except in accordance with a law made by the legislature.

We may conveniently at this stage read para 292:

'Cancelling of Release Order: - (1) The licensing authority may cancel a release order issued for allotment of imported goods through a public sector agency, or otherwise render it ineffective :-

(a) if the release order has been granted through inadvertence or mistake or has been obtained by fraud or misrepresentation;

(b) if the release order has been granted contrary to the rules or the import policy in force;

(c) if the holder of the release order has committed a breach of any condition of the release order;

(d) if the licensing authority is satisfied that the release order will not serve the purpose for which it has been granted;

(e) if the release order holder has committed a breach of any law or rules and regulations relating to the import or export of goods.

(2) The licensing authority may also suspend the operating of a release order pending investigation into one or more of the allegations mentioned in sub-para (1).

(3) Before taking action under sub-paras (1) and (2) above, the release order holder will be given a reasonable opportunity of being heard in the matter.'

Here we are only concerned with clause (a) where a release order is obtained by fraud or misrepresentation. In the counter-affidavit fled on behalf of the respondents, it is stated by the Deputy Chief Controller of Imports and Exports that stainless steel is allowed to actual users only for the manufacture of a few end products. It is banned in any form for industries engaged in the manufacture of utensils, domestic ware, cutlery kitchen ware, table tops, furniture, etc. According to him, it was noticed that, during the period 1 -4-1973 to 31-3-1974, the 1st respondent-Corporation received release orders from small scale units for a value of about Rs. 19 crores as against the release orders for Rs. 7 crores during April 1972 to March, 1973 for stainless steel The value of about 19 crores was out of all proportion to the genuine needs of the units which obtained the release orders earlier. When this position came to be known it became necessary for the Government to take corrective measures to ensure that the units should not get away with higher value beyond their entitlement assessment and also to ensure that these units do not divert the material unauthorisedly and also manufacture end-products which are banned. The matter was examined at the very highest level and the Government came to the conclusion that one of the corrective steps that could be taken by which the issues of stainless steel could be curbed was to make all units requiring stainless steel to go in for assessment by technical authorities of their capacity to manufacture permissible end-products in which they are engaged. Pending finalisation in the matter, in order that such units may not suffer on account of the time that may be taken for assessment of the capacity of each of the units, ft was decided that stainless steel could be allocated to them on the basis of the value of the machinery installed or on actual consumption of stainless steel during 1973-74 whichever was less subject to a maximum of rupees one lakh for half a year in respect of priority industry. It is also pointed out that, as it was found that applications were made giving inflated consumption by misappropriation, notices had to be given in to all the units in the entire country so that they may have a reasonable opportunity of being heard. It is further averred that, in view of the critical foreign exchange reserves of the country and also bearing in mind the necessity for industrial development, the Government have taken a policy decision to review the release orders already issued to see that the foreign exchange spent on this scarce material is properly utilised.

7. Mr. Chowdary contends that is immaterial what policy changes there have been subsequent to the issue of the release orders and the respondents, by mere reason of the change of policy of the Government, cannot act unless they are able to trace their power to some source of law made by the Parliament to deprive the rights accrued to the appellants as a result of the issuance of the release orders. In support of his contention, he referred us to the following passage in the 'constitutional and Administrative Law' by Lawson and Bentley:

'A person who is invested with a power is not thereby exempted from the law, but is authorised by the law to exercise that power in the manner and for the objects contemplated by the law. If he acts outside that authority he acts illegally, and the Courts of law will, unless Parliament has deprived them of the necessary jurisdiction, treat this act as they would any other illegal act; to this and they can control the acts of government agents no less than these of private persons.'

The learned authors posed three questions, one of them being 'Has the person in question power to do a certain Act at all.' The answer given to that is, 'the power, as has been explained, can be conferred only by law. It is of course, therefore may be either common law or statute, but nothing else.' To show that a court is not to be swayed by the policy decision of the Government, the learned counsel next quotes Lord Parker from S.A. de Smith's judicial Review of Administrative Action on Judicial Activism and Judicial Self-Restraint (p. 29):

'In Modern Britain, where no agreement exists on the ends of Society and the means of achieving those ends, it would be disastrous if courts did not aschew the temptation to pass judgment on an issue of policy.'

The learned counsel also relied upon Chief Justice Parker's view in Regima v. Governor of Brixton Prison (1) (1969) 2nd Weekly Law Reports, 618, where the learned Chief Justice dealing with the immigration laws, observed:

'This is a thoroughly unmeritorious application. If ever men should be sent back to the country from which they earner, it is these men. But to enable that to be done would, in my judgment, mean making bad law The fact is that nobody contemplated this situation arising when the Common wealth Immigrants Act, 1962 was passed, and it is only right to say that under the Common wealth immigrants Act, 1968, the loophole here disclosed has at any rate been partly, closed. In that 24 hours allowed for examination has been extended to 28 days.'

8. The object in citing this decision is that however, unmeritorious the applications of the appellants may be when there, is no law which could support the cancellation of the release orders, the court should not take into consideration factors like conservation of foreign exchange.

9. In order to differentiate the executive acts from the laws of the legislature the learned counsel cited the decision in Eshugbayi Eleko v. Government of Nigeria (Officer Administering) (2) 1931 Appeal Cases, 662. All that was and by the Privy Council in that case was that the powers of the Governor under the ordinance were purely executive and that it was the duty of the court to investigate the questions raised by the appellant's contentions and to come to a judicial decision thereon. The Privy Council did not say that the Governor had no power to make an order under the Ordinance. It did say that the Governor can make a deportation order under Section 2, Sub-section (2) of the Ordinance without previous proceedings before a Magistrate.

10. The learned counsel next relied upon Wazir Chand's case (3) 1955 (1) S.C.R. 408. In that case, the Supreme Court said that it is doubtful, in view of the provisions of Article 370 of the Constitution, if an offence committed in Jammu and Kashmir could be investigated by an officer in charge of a police station in the Himachal Pradesh, it was further held :-

'The provisions regarding search and seizure by the Indian Police are contained in Sections 451, 96, 98 and 165 of the Code of Criminal Procedure, 1898; None of these sections had any application to the facts and circumstances of the case.

Any seizure of by the Indian Police of any property of a citizen hot sanctioned under the law stated above or under any other law infringes the fundamental rights of the citizen guaranteed under Article 19 and Article 31 of the Constitution of India. This position is not affected even if the citizen whose goods are so seized files an application under Section 523 of the Code of and his application is dismissed by the Magistrate.'

11. That case case be have no bearing, for the Criminal Procedure Code clearly lays down the procedure for search and seizure and when the procedure, as laid down in the Code, had not been followed, the seizure was not one sanctioned by the law in force.

12. The case of Amar Sign v. Costodian Evacuee Property (4), AIR 1957 SC 599, far from supporting the contention of the learned counsel for the appellants, supports the action of the respondents. That was a case where allotment of grant of the respondents was made to the refugees on a quasi-permanent basis. The Custodian of Evacuee Property cancelled the allotment and, therefore the allottees contended that there was violation of their fundamental rights to property under Article 19(1)(f), 31(1) and (2) of the Constitution. The Supreme Court, negativing the contention observed :-

'Having given our best consideration, we are unable to hold that the interest of a quasi-permanent allottees is property within the concept of that word so as to attract the protection of fundamental rights.

Property, to fall within the scope of Article 19(1)(f) must be capable of being the subject-matter of 'Acquisition and disposal'. The interest of the quasi-permanent allottees arises by statutory grant to a specified class of persons and is not capable of acquisition by the ordinary citizen in any of the normal modes. Nor is it capable of disposal by the allottee himself in the normal modes by way of sale, mortgage, gift or will.'

The learned Judges repelled the contention that, under the quasi-permanent allotment scheme, the allottee is entitled to a right to possession within the limits of the relevant notification and that such right to possession is itself 'Property'. In so repelling, they observed: 'That may be so in a sense. But it does not affect the question whether it is property so as to attract the protection of fundamental rights under the Constitution.

13. The allotment of steel quotas to the appellants entitles them to possession provided there is no breach of the conditions in para 292. The allottees are not entitled to sell, mortgage, gift or will away the allotments of the imported steel made to them and they must utilise the imported steel only for the manufacture of such goods as permitted to be manufactured. We are, therefore, of the opinion that the proposed 'deprivation' of the right accrued to them under the release orders by virtue of the provisions of para 292 cannot be a matter of challenge under Article 226 of the Constitution.

14. All that has been said by the Supreme Court in Bishan Das v. State of Punjab (5) AIR 1981 S.C. 1570 is that interference with fundamental rights to property by executive action without any authority of specific rule of law cannot be upheld. The question that arose in that case was whether the petitioners, who continued the management of Dharmashala as trustees after the death of one Ramji Das, who constructed the Dharmasala and created the trust, could be diposed by an executive order of the Sub-Divisional Magistrate and the management of the property could be placed in charge of the Municipal Committee. The Supreme Court held that the petitioners could not be held to be trespassers in respect of the Dharmasala, temple and shops nor could ft be held that they belonged to the State irrespective of the question whether the trust created was of a public or private nature. The Supreme Court made it dear that a trustee even of a public trust can be removed only by procedure known to law and he cannot be removed by an executive fiat and pointed out that Section 92 C.P.C. provided for a suit being filed against person in possession of the trust property and that the State or its executive officers cannot interfere with the rights of others unless they can point to some specific rule of law which authorises their facts. It is on those facts that it was held that the executive action taken by the State or its officers was destructive of the basis principle of the rule of law.

15. The Supreme Court in G.J. Fernandez v. State of Mysore (6) (A.I.R. 1967 S.C. 1753), held that the Mysore Public Works Department Code only consisted of mere administrative instructions and are not statutory rules and, therefore, no writ lay for disobedience of the rules at the instance of a member of the public. The learned Judges said that in order that such executive instructions have for force of statutory rules it must be shown that they have been issued either under the authority conferred on the State Government by some statute or under some provision of the Constitution providing therefor. It was therefore held that even if there has been any breach of such executive instructions that does not confer any right on any member of the public to ask for a writ against the Government by a petition under Article 226 of the Constitution. It was a matter between the State Government and its servant, and not between a Member of the public and the Government.

16. In State of M.P. v. Bharat Singh (7) A.I.R. 1967 S.C. 1170, the Supreme Court struck down Section 3(1) (b) of the Madhya Pradesh Public Security Act on the ground that it did not give any opportunity to the person concerned of being heard, before the place as to where he is to reside or remain, is selected. The place selected may be one in which the person concerned may have no residential accommodation and no means of subsistence. It may not be possible for the person concerned to honestly secure the means of subsistence in the place selected. Section 3(1) (b) did not also indicate the extent of the place or the area, its distance from the residence of the person extended and whether it may be habitated or inhabitated and the clause also nowhere provided that the person directed to be removed shall be provided with any residence, maintenance or means of livelihood in the place selected. The Supreme Court therefore struck down that clause which authorised the imposition of unreasonable restrictions insofar as it required any person to reside or remain in such place or within such area in Madhya Pradesh as may be specified in the order.

17. All that was said in the case of Chief Settlement Commissioner (Punjab) v. Om Prakash A.I.R. 1969 S.C. 33 is that statutory provisions must prevail over executive instructions. The learned Judges of the Supreme Court observed that in our constitutional system the central and most characteristic feature is the concept of the rule of law which means, in the present context the authority of the law courts to test alt administrative action by the standard of legality. The administrative or executive action that does not meet the standard will be set aside if the aggrieved person brings the appropriate action in the competent court. The rule of law rejects the conception of the Dual State in which governmental action is placed in a privileged position of immunity from control by law. Such a notion is foreign to our basic constitutional concept.

18. The learned counsel also relied upon Bennett Coleman & Co. Ltd. case (9) (A.I.R. 1973 S.C. 106). The learned Judges of the Supreme Court said that every act done by the Government or by its officer must, if it is to operate to the prejudice of any person, be supported by some legislative authority. They held that the newsprint policy of the Government violates Articles 19(1)(a) and 14 of the Constitution. In so holding they said that the effect and consequence of the impugned policy the newspapers is directly controlling the growth and circulation of newspapers. The direct effect is the restriction upon circulation of newspapers upon growth of newspapers through pages; newspapers are deprived of their area of advertisement and are exposed to financial loss and the freedom of speech and expression is infringed. That case also has no relevance to the present case. Here we are dealing with executive rules under which the users of stainless steel get allotment of steel quotas on the basis of their previous years consumption. The same executive rules provide for cancellation, if the users are guilty of micrepresentation or misuse.

19. The rules and procedure form a complete code in respect of allotment of the imported steel and withdrawal or cancellation of the release or allotment orders. The procedure is prescribed for processing the application and the basis on which the quantity to be allotted is determined. These administrative rules and procedure also prescribe the conditions under which cancellation could be made after issuing the release orders. The applications are neither processed nor allotments made under any statute or rules made thereunder. The rules and procedure prescribe certain obligations on the part of the allottees. They should not make any misrepresentations in their applications. That is one of the conditions. If a release order is obtained on the basis of misrepresentation, the allottee cannot turn round and say 'Irrespective of how I utilise the goods and what misrepresentation I made, I would be still entitled to the release of the allotted quantity, and it is no business of the Government to cause an enquiry. The right conferred, upon a manufacturer under para 97 is subject to the restrictions or conditions imposed under para 292. It is not an absolute right. It must conform to the requirement of para 292. The two paras are not to be read in isolation as they constitute an integrated scheme.

20. Article 73 of the Constitution, to the extent material, says :-

'73. Extent of executive power of the Union (1) subject to the provisions of this Constitution, the executive power of the Union shall extend :(a) to the matters with respect to which Parliament has power to make laws.'

The power of the executive is co-extensive with the power of the Parliament and in the absence of any law made by the Parliament or where a law made by the Parliament does not cover a particular subject, the executive power extends to alt such matters.

21. The following passage occurs in Halsbury Vol. 7, pp. 192-3:-

'In the performance of these functions, public authorities are bound to issue orders which are not far removed from legislation and to make decisions affecting the personal and proprietary rights of individuals which, while not strictly judicial, are quasi-judicial in character. Discretionary action of both these types must now be considered normal on the part of the executive.

In addition to these quasi-legislative and quasi-judicial functions, the executive has also been empowered by statute to exercise functions which are strictly legislative and strictly judicial in character; and in certain instances, powers are exercised which appear to part take at the same moment of legislative, executive and judicial characteristics/In view of the complexity of modem government and the congestion of parliamentary business, it is probably necessary that the executive should exercise powers of subordinate legislation. Whether it should exercise purely judicial powers is more open to question.'

In Jayantilal Amratilal v. F.N. Rana (10) A.I.R. 1964 S.C. 648. the question relating to executive power was considered by the Supreme Court. For majority, the Supreme Court held that the notification issued by the President entrusting the consent of the State Government of Bombay, to the Commissioners of Divisions in the State of Bombay the functions of the Central Government under the Land Acquisition Act, 1894 is relation to the acquisition of land for the purposes of the Union within the limits of the territorial jurisdiction of the State Commissioners, subject to the said control by the Government of Bombay as it exercised in relation to the acquisition of land for the purposes of the State, was valid. The real question in that case was whether the President's notification had the force of law. The cases of the petitioners was that the notification under Section 4 and 6 of the Land Acquisition of Act acquiring their lands was bad on the ground that, in the events that had happened after the formation of the Gujarat State, the Commissioner had no power to issue a notification. The learned Judges also observed that it is now well settled that functions which do not fall strictly within the field, legislative or judicial, fail in the residuary class and must be regarded as executive. The learned Judges extracted the following passage with approval from Halsbury's Laws of England, 3rd Edn. Vol. 7, Article 409, page 192:

'Executive functions are incapable of comprehensive definition, for they are merely due of the functions of Government after legislative and judicial functions have been taken away. They include, in addition to the execution of the laws, the maintenance of public order, the management of crown property and nationalised industries and services, the direction of foreign policy, the conduct of military operations, and the provision or supervision of such services as education. public health, transport and state assistance and insurance.'

In Ram Jaway v. State of Punjab (11) A.I.R. 1955 S.C. 549 in dealing with the question whether publishing, printing and seiling of text books for the use of students may be regarded as an executive function of the State Government; Chief Justice Mukherjee observed:

'It may not be possible to frame an exhaustive definition of what executive function means and implies. Ordinarily the executive function means and implies. Ordinarily the executive power connotes the residue of governmental functions that remain after legislative and judicial functions are taken away'

It cannot however, be assumed that the legislative functions are exclusively performed by the Legislature, executive functions by the executive and judicial functions by the judiciary alone. The Constitution has not made an absolute or rigid division of functions between the three agencies of the State. To the executive, exercise of functions legislative or judicial are often entrusted. For instance power to frame rules, regulations and notifications which are essentially legislative in character: is frequently entrusted to the executive. In the performance of the executive functions, public authorities issue orders which are hot far removed from legislation and make decisions affecting the personal and proprietary rights of individuals which are quasi-judicial in character. In addition to these quasi-judicial and quasi-legislative functions, the executive has also been empowered by statute to exercise functions which are legislative and judicial in character and in certain instances, powers are exercised which appear to partake at the same moment of legislative, executive and judicial characteristics. In the complexity of problems which modem government have to face and the same moment of legislative, executive and judicial characteristics. In the complexity of problems which modern government have to face and the plethora of parliamentary business to which it inevitably leads, it becomes necessary that the executive should often exercise powers of subordinate legislation. It is indeed possible to characterise with precision that an agency of the State is executive, legislative or judicial, but it cannot be predicted that a particular function exercised by any individual agency is necessarily of the character which the agency bears.

22. Justice Shah in State of Madhya Pradesh v. Bharat Singh (7) A.I.R. 1967 S.C. 1170, referred to the above decision (Ram Jaweya v. State of Punjab, A.I.R. 1955 S.C. 549) and distinguished the observations made by Chief Justice Mukherjee saying that those observations must be read in the facts and circumstances of that case and that the executive action which was upheld in that case was not supported by legislation, but it did not operate to the prejudice of any citizen.

23. We have already noticed as to why the Supreme Court has struck down Section (1)(b) of the Madhya Pradesh Public Security Act which imposed restrictions requiring person to reside in such and such a place as specified in the executive order. The learned does however held that under Clause (b), an order requiring a person to reside or remain a place where he is ordinarily residing may be passed. But in exercise of the power it is so open to the State to direct a person to leave the place of his ordinary residence and goto another place selected by the authorities and to reside and remain in that place. (sic)nce the clause is not severable, it must be struck down in its entirety as unreasonable. (sic) that was a case where the impugned order was made by imposing certain restrictions (sic)ich were held to be unreasonable without giving an opportunity to a person of being (sic)sard. Here, in this case, it is not shown that there is any violation of any of the rules and procedure laid down in respect of cancellation of the release orders.

24. In Sibnath Banerji's case (12) (A.I.R. 1945 P.C. 156) the Federal Court had to consider the scope of the executive power of a State under Section 49(2) of the Government of India Act, 1935 corresponding (sic)ew of the Federal Court was that Section 49(2) limited the executive power to matters (sic)ith respect to which a provincial legislature had power to make laws and the Defence of India was not within those powers. On appeal to the Privy Council, Lord Thankerton observed:-

'In the first place, their Lordships observe that the provisions of Chapter 2 of Part 3 of the Act of 1935 as to the Provincial Executive and its executive authority use the term 'executive' in the broader sense as including both a decision as to action and the carrying out of such decision. Their Lordships are unable to agree with such a narrow reading of these provisions, which would Involve the necessity of the Federal Legislature making provision in each case for the executive machinery to carry out the powers and duties imposed instead of using the existing Provincial machinery.

Their Lordships construe Sub-section (2) of Section 49 as providing an extensible limit and not a maximum limit, and the provision of Sub-section (2) of Section 124. (corresponding to Article 258(2) of the Constitution) as affording a means of such extension.'

In Bonanza Creek Gold Mining Co. Ltd. v. Rex (13) A.I.R. 1916 P.C. 193 the extent of the executive power under the Constitution of Canada came up for consideration and (sic)discount Haldene opined:-

'Executive power is in many situations which arise under the statutory constitution of Canada conferred by implication in the grant of Legislative power so that where such situations arise the two kinds of authority are corrective.'

The expression 'executive power is not defined to the Constitution. Article 73 and the corresponding Article 162 lay down the extent of the executive power. The executive (sic)ower is not confined or limited to the execution or carrying out of the laws passed by the legislature. It extends to matters with respect to which Parliament has competence to (sic)lake laws, and of course, subject to the provisions of the Constitution and the laws made by the Legislature.

25. In Deputy Assistant Iron and Steel Controller v. L. Manickchand (14) A.I.R. 972 S.C. 935, the Supreme Court held that, in view of that Section 3(1)(a) of the Imports and Exports Control Act, 1947 and Clause 6(i)(a) of the Imports (Control) Order 1955, an applicant has no vested right to an import licence in terms of the policy in force at the time of the application. In Andhra Industrial Works v. Chief Controller of Imports (15) A.I.R. (sic)374 S.C. 1539 the Supreme Court again held that where it was not contended that the Import and Export (Control) Act, 1947 or any Order or rule made there under was ultra res; nor was the validity of the Import Control Policy Statement known as Red Book (sic)ipeached although it was sheet-anchor of the petitioners claim and not a statutory document and that on the basis of an Import Trade Policy an applicant has no absolute right, much less a fundamental right, to the grant of an import licence. In so holding, the Supreme Court relied upon its earlier decisions in Deputy Assistant Iron & Steel Controller v. L. Manickchand(14) A.I.R. 1972 S.C. 935 and Ujjam Bai v. State of U.P. (16)A.I.R. 1962 S.C. 1621.

26. Mr. Chowdary however placed reliance upon a judgment of a single Judge of the Madras High Court in Mithuna Industries v. Deputy Chief Controller of Imports and Exports (17) A.I.R. 1974 (II) MLJ. 53. There, the learned Judge was dealing with the Import Trade Control Rules and Procedure as existed in 1971 and 1972 when admittedly Paragraph 292 Was not in existence. Further, both sides relied upon the Imports (Control) Order, 1955. Clause (9) of that Order did not provide for cancellation of release orders, but only provided for cancellation of licences. It is for the reason that clause (9) (did not provide for cancellation of allotment or release orders that the learned Judge, Ismail, J., held that the release orders in those cases pertaining to the years 1971 and 1972 cannot be cancelled. It is nobody's case here that the Imports (Control) Order, 1955 is applicable. Both sides rest their case on the Import Trade Control Rules and Procedure. It is the case of the appellants that Para 292 is not a law made by the Parliament so as to take away the right which had vested in a party. According to them, the legislature alone is competent to take away that right though they had acquired that right under Para 97 of the very rules. The Import Trade Control Rules and Procedure provide a package deal both for obtaining the allotment of Imported steel and also for cancellation of the release or allotment orders, if such allotment or release orders are obtained on misrepresentation or misutilisation of the quotas allotted. It is for that reason that the Central Government changed its policy. The previous policy was to make allotment on the basis of the consumption in the preceding year or years certified by a Chartered Accountant On account of the fact that there is a change of policy, the allotment of steel quota was to be made on the basis of the value of the machinery and its capacity to manufacture the permissible end-products. It is perfectly open to the Central Government to reduce the quota having regard to Foreign Exchange restrictions or due to the change of import policy or because of the discovery of malpractices committed by the users of the material.

27. In J. Fernandes & Co. v. The Deputy Chief Controller of Imports and Exports (18) A.I.R. 1975 S.C. 1208 Chief Justice Ray has clearly explained the scope of the executive power of the Union Government in these words:

'The executive power of the Union under Article 73(1)(a) shall extend to the matters with respect to which Parliament has power to make laws. The Union Government has therefore power to issue executive directions to the Administrator of a Union Territory. So long as there is no conflict between a direction issued by the Central Government and a Presidential Regulation made under Article 240, the Administrator of a Union Territory is bound to carry out the orders and directions given by the Central Government. The decision of this Court in Shan Sher Singh v. State of Punjab, AIR 1974 SC 2192 is that the powers conferred on the President by Article 239 are to be exercised by him on the said and advice of the Cabinet. Therefore, the directions issued by the Central Government are valid because of the combined effect of Article 73 and Article 246 which confer power on the Union executive to exercise powers in respect of matters with respect to which Parliament has competence to make laws.'

In that view, the Supreme Court negatived the claim of the petitioner before it, saying that no particular statute or law confers any right on the petitioner to get an import licence in the circumstances in which ft was issued to him and that a policy statement is not a statutory document and no person can, on the baste of a policy statement, claim a right to the grant of an import licence and no person can claim an absolute right or a fundamental right under the same policy statement to allotment of imported goods in breach of the conditions imposed for such allotment or releases.

28. For the reasons recorded, we hold that the action sought to be taken by the respondents under Para 292 is under the authority of law and within their competence.

29. Mr. Chowdary next contended that Muktadar, J., at the time of the disposal of the interlocutory application, had found that appellants are not guilty of misrepresentation. It should be clearly understood that was a stage only when show-cause notices were issued awaiting explanations of the appellants. The respondents cannot prejudge the issue even before they receive the explanations from the appellants. They could not have possibly stated at that stage that the appellants were guilty of misrepresentation. Therefore, that finding cannot operate as res judicata or estoppel.

30. The learned counsel next sought to contend that the executive orders cannot be made to apply retrospectively and that the change of policy of the Government cannot be applied to the applications that have already been disposed of. It is stated by Mr. K. Subrahmanya Reddy that the question of retrospective operation does not arise, as what is being done is to examine the cases of the appellants in order to see whether there has been any misrepresentation by them in obtaining the release orders.

31. The appeals, therefore, fail and are dismissed. No Costs. Advocate's fee Rs. 100/- each.


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