Skip to content


Khunnoo Lall and Sons Vs. the Union of India (Uoi) and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil;Constitution
CourtAllahabad High Court
Decided On
Case NumberWrit Petn. No. 4195 of 1972
Judge
Reported inAIR1974All170
ActsConstitution of India - Article 226(1A); Evidence Act, 1872 - Sections 115
AppellantKhunnoo Lall and Sons
RespondentThe Union of India (Uoi) and ors.
Appellant AdvocateV.N. Khare, Adv.
Respondent AdvocateT.N. Sapru and ;V.K. Burman, Advs.
DispositionPetition allowed
Cases ReferredCentury Spg. and Mfg. Co. Ltd. v. The Uthasnagar Municipal Council
Excerpt:
.....applied to the central government for review of its order, but this application met with no better fate and was dismissed by an order dated november 1, 1971. the petitioner then met the finance minister and also submitted to him a written representation. 6. it is well settled that the causeof action means 'a bundle of essentialfacts which it is necessary for a claimantto prove before he can succeed in gettingthe relief. this letter shows very clearly that the deputy chief controller, imports and exports, karupur, regarded the condensing unit mentioned in the application of the petitioner as spare parts of refrigeration and air conditioning machinery covered by the public notice no. 13. the other ground relied upon by the customs department of bombay that the value of the goods imported..........notice the petitioner firm applied on 30th of july, 1966, to the fourth respondent, the deputy chief controller of imports and exports, kanpur, for the grant of a licence to import 'open type condensing units run by 1 h.p., 2 h.p., 3 h.f., 4 h.p, and 5 h. p. without motor.' this application was granted on 12th december, 1966, and a licence dated 8th december, 1966 for rs. 25,000/- was sent to the petitioner. the petitioner then placed an order for the import of the aforesaid items with m/s. sillcox refrigeration corporation, u. s. a. which consigned the goods by a sea ship. when the shipment arrived at bombay port, the clearing agent of the petitioner was refused clearance of the consignment on the ground that the goods imported were not covered by the import licence issued to the.....
Judgment:
ORDER

R.L. Gulati, J.

1. This is a petition under Article 226 of the Constitution. The petitioner is a firm carrying on business at Kanpur. It appears that in the year 11966-67 the Government of India launched a scheme for the import of spare parts of essential machinery and equipment from U. S. A. under U. S. Aid Non-Project Loan. Consequently the Ministry of Commerce, Government of India issued a public notice No. 115 dated 11th August, 1966 setting out the conditions and procedure for obtaining licences for spare parts of machinery. Subsequently another public notice No. 117-ITC (PN)/66 dated 16th August, 1966 was issued by the Ministry of Commerce, Government of India mentioning the articles which could be imported under the aforesaid scheme after taking out the necessary import licences. One of the items of which the import was permitted was 'spare parts of refrigeration and air conditioning machinery other than domestic refrigerators'. In response to this notice the petitioner firm applied on 30th of July, 1966, to the fourth respondent, the Deputy Chief Controller of Imports and Exports, Kanpur, for the grant of a licence to import 'open type condensing units run by 1 H.P., 2 H.P., 3 H.F., 4 H.P, and 5 H. P. without motor.' This application was granted on 12th December, 1966, and a licence dated 8th December, 1966 for Rs. 25,000/- was sent to the petitioner. The petitioner then placed an order for the import of the aforesaid items with M/s. Sillcox Refrigeration Corporation, U. S. A. which consigned the goods by a sea ship. When the shipment arrived at Bombay Port, the Clearing Agent of the petitioner was refused clearance of the consignment on the ground that the goods imported were not covered by the import licence issued to the petitioner and also that the value of the goods imported exceeded Rs. 25,000/-. The Department of Customs, Bombay, issued to the petitioner a notice under Section 112 of the Sea Customs Act requiring it to show cause why the goods should not be confiscated for the following reasons:

(1) That the import licence issued was for spare parts of refrigerators and air-conditioning machinery other than domestic refrigerators, whereas the goods imported are found on an examination to be complete condensing units, which are not covered by the licence produced.

(ii) That the value of the goods imported exceeds the value of the licence produced by Rs. 426/-.

2. The petitioner submitted a written explanation contending that the imported items were spare parts of refrigerator and air conditioning machinery and were not complete units inasmuch as in order to be complete units they would require addition of motors, thermostock switch, expansion wall capillary, cabinet and various other parts.

3. With regard to the second objection, it was explained that while the shipment was on its way, war broke out between Egypt and Israil as a result of which Suez Canal was closed and the ship carrying cargo had to come via Cape of Goodhope covering a longer distance and it is on that account that an extra freight of Rs. 426/- was demanded by the shippers. As such this extra demand could not be said to be the increased value of the imported goods. The petitioner also pointed out that in its application for the licence it had clearly specified the items which were to be imported and after having issued a licence on the basis of that application, it was not open to the authorities concerned to hold that they were not covered by the import licence. This explanation of the petitioner was not accepted and the Collector of Customs, Bombay on 12th January, 1968, passed the following order:--

'I, therefore, order that the goods in question shall be confiscated under Section 111(d) of the Customs Act, 1962, read with Section 3 of the Imports and Exports (Control) Act, 1947. I, however, allow under Section 125 of the Customs Act, 1962, an option to pay in lieu of such confiscation a fine of Rs. 50,000/-(Rupees fifty thousand only) and clear the goods for home consumption. This order..... or within such extendedperiod as may be allowed on good and sufficient cause being shown to the satisfaction of the Adjudicating Authority.

Sd/- G.S. Sawhney,

Collector of Customs, Bombay.'

The petitioner appealed to the second respondent, the Central Board of Excise, Customs, New Delhi, but failed, except that the fine of Rs. 50,000/- was reduced to Rs. 25,000/-. The petitioner thereupon preferred a revision to the first respondent, the Union of India, under Section 131 of the Sea Customs Act. This petition also failed except that the Government of India by its order dated July 2, 1971 further reduced the fine to Rupees 10,500/-. The petitioner then applied to the Central Government for review of its order, but this application met with no better fate and was dismissed by an order dated November 1, 1971. The petitioner then met the Finance Minister and also submitted to him a written representation. According to the petitioner, this representation is still pending, but according to the averment contained in the counter-affidavit, the Minister had declined to interfere.

4. The petitioner then received a letter from his counsel at Bombay that the Deputy Dock Manager, Bombay, had informed him that if the consignment was not cleared within a fortnight, the same shall be sold by public auction under Sections 64 and 64-A of the Bombay Port Trust Act. It is at this stage that the petitioner filed the present writ petition and this Court while admitting the writ petition passed the following interim order on 19th July, 1972;

'Issue notice.

Until further orders the confiscated goods shall not be sold.'

5. Before going into the merits, it is necessary to dispose of a preliminary objection raised on behalf of the respondents. It is contended that the authorities whose orders are impugned in this petition are all situate outside the State of Uttar Pradesh and as such this Court has no jurisdiction to entertain the writ petition. The learned counsel for the petitioner relies upon Clause (1-A) of Article 226 of the Constitution which confers jurisdiction upon a High Court to entertain a petition under Article 226 of the Constitution, if the cause of action or a part thereof arises in its territorial jurisdiction. He has also filed a supplementary affiadvit setting out certain facts to show that the cause of action arose wholly or in part at Kanpur which place is within the territorial jurisdiction of this Court. In the supplementary affidavit the following facts have been narrated :

1. That the application for import was made to the Deputy Chief Controller, Imports and Exports, Kanpur, which authority alone was competent to grant or refuse the licence and the licence was granted by that authority,

2. That after the grant of the licence, the petitioner opened a letter of credit at Kanpur for 3000 dollars in favour of M/s. Sillcox Refrigeration Corporation, U.S.A. The Bill of Lading prepared by the suppliers and the insurance cover indicate that the goods were to be delivered at Kanpur via Bombay.

3. That the Bill of Lading was presented to the petitioner through National and Grindley Banks at Kanpur and the payment was made to that Bank at Kanpur.

From these facts the learned counsel for the petitioner argued that the entire transaction originated and culminated at Kanpur and as such the cause of action or, at any rate, a part thereof arose at Kanpur.

6. It is well settled that the causeof action means 'a bundle of essentialfacts which it is necessary for a claimantto prove before he can succeed in gettingthe relief.' As would be shown presently, the principal ground for relief asclaimed in this writ petition is based upon the plea of estoppel against the respondents and in order to prove estoppel,the petitioner has to establish that theDeputy Chief Controller, Imports andExports, Kanpur, was the competent authority to grant the licence and thelicence was granted not under any mistake or misrepresentation made by thepetitioner. In order to succeed the petitioner has to prove under what circumstances the import licence was grantedto him. Without proving this fact, thepetitioner cannot succeed on this plea.It is clear, that a part of the cause ofaction arose at Kanpur.

7. The Madras High Court in L.V. Veeri Chettiar v. Sales Tax Officer, Bombay, AIR 1971 Mad 155 while dealing with the scope of Article 226(1-A) of the Constitution has observed :

' 'Cause of action' has always been understood as referable to the bundle of facts in a legal proceeding and if a limb of that bundle of facts is available, seen or discernible in one particular place which is a seat of the High Court, then such High Court has the power to exercise all the powers conferred on it under Article 226(1-A) notwithstanding the fact that the authority against whom the ultimate rule has to be issued and whose act has created a cause of action as a whole or in part is situate outside its territorial limits.'

I am in respectful agreement with this view. In the instant case the important limb of the proceedings culminating in the confiscation of goods and imposition of fine is the issuance of the import licence at Kanpur and as such a part of cause of action did arise at Kanpur, even though the ultimate order against which the petitioner is aggrieved was passed by the authority situate outside Uttar Pradesh. I accordingly overrule the preliminary, objection.

8. Turning now to the merits, the case of the petitioner is that the items imported by it are 'spare parts of refrigeration and air conditioning machinery other than domestic refrigerators' as set out in Part y of the public notice of the Chief Controller of Imports and Exports and in support of this contention he relies on Annexures A-6 and A-7 to the writ petition which were submitted before the appellate authority. It apears that the petitioner made an application to the Government of India, Small Industries Service Institute, Kanpur, for their opinion as to whether the articles imported by it were covered by the licence granted to it or not. On the said application the Assistant Director of that Institute informed the petitioner that 'Truck type air cooled condensing unit of 3 HP compressor (R1 = 2) with low pressure control for 50 cycles operation without motor and housing and extra capillary and expansion valve etc. is a part of deep freeze and not a complete refrigeration unit itself. Annexure A-6 is a copy of the aforesaid letter. The petitioner also gave an application to the Deputy Chief Controller of Imports and Exports, Kanpur, to verify as to whether the articles imported by it were covered by the licence. The Deputy Chief Controller, Kanpur, also gave an opinion that the articles in question were covered by the licence issued to the petitioner. Both these documents were before the Central Board of Excise and Customs, New Delhi, at the time it decided the petitioner's appeal. The contention of the petitioner is that while the case of the petitioner is supported by technical and expert opinion of the Government of India's own departments, the contrary view taken by the respondents is without any material and is wholly arbitrary. The alternative contention is based upon the principle of estoppel. It is contended that the public notice issued by the Chief Controller of Imports and Exports contained a representation that the import of spare parts of refrigeration and air conditioners was permissible. The petitioner applied for import of certain items which it considered to be spare parts covered by the aforesaid notice. The Deputy Chief Controller, Kanpur, who is the authority competent to grant or refuse the licence itself considered these items to be spare parts covered by the public notice and in these circumstances the petitioner imported the articles in question at a huge cost of Rs. 25,000/- and the Government of India is now estopped from taking up a contrary position.

9. It is not necessary to express any considered opinion on the first ground, even though the same does not appear to be devoid of force, as the petitioner, in my opinion, is entitled to succeed completely on the second ground.

10. Now, admittedly the petitioner applied for an import licence on the strength of the public notice dated 16th August, 1966 which permitted the import of 'spare parts of refrigeration and air conditioning machinery other than domestic refrigerators'. The application was made in the prescribed form, Clause V whereof requires the particulars to be furnished of the goods intended to be imported. The description of the goods given by the petitioner in the application in the column against Clause V is 'Open type condensing units run by 1 H.P., 2 H.P., 3 H.P., 4 H.P, and 5 H.P. without motor'. The petitioner considered these units as spare parts. That the Deputy Chief Controller of Imports and Exports, Kanpur, also regarded them as spare parts of refrigeration is clear from its covering letter sent along with the licence, a copy whereof is Annexure A-2 to the writ petition and reads:

'Subject: Import of spare parts of refrigeration under U.S. Aid Loan No. 386-H-160 under P.N, 117/66 dated 16-8-66.

With reference to your application dated 30-7-66 on the above subject, I write to enclose herewith licence No. P/AD/2014953 dated 8-12-66 of Rs. 25,000.

Please acknowledge receipt.

Yours faithfully,

Sd. A, N. Kapuria,

Asst, Controller of Imports &

Exports for Dy. Chief Controller of

Imports and Exports.

This letter shows very clearly that the Deputy Chief Controller, Imports and Exports, Karupur, regarded the condensing unit mentioned in the application of the petitioner as spare parts of refrigeration and air conditioning machinery covered by the public notice No. 117-ITC(PN)/66 dated 16th August, 1966 and issued the import licence on that basis. It is also clear that that authority did not issue the import licence under a mistake inasmuch as subsequently also he sought to justify his action in his report submitted to the Chief Controller, New Delhi, a copy whereof is Annexure A-7 to the writ petition. On these facts it is abundantly clear that the petitioner had made no misrepresentation whatsoever and the import licence was granted to it with open eyes and after due consideration by the authority concerned. The petitioner acting upon the import licence had imported the items at a huge cost of Rs. 25,000/-. The Union of India had undertaken an obligation to permit the petitioner to import the condensing units as described in its application and it is bound to carry out that obligation. It cannot avoid the obligation merely because another officer or authority takes a different view and considers that such an obligation should not have been undertaken.

11. The Supreme Court while dealing with a similar question under the Imports and Exports Control Act, 1947 in the case of the Union of India v. Anglo Afghan Agencies, AIR 1968 SC 718 held that even assuming that the provisions relating to the issue of trade notices offering inducement to the prospective exporters are in character executive, the Union Government and its officers are, on the authorities of this Court, not entitled at their mere whim to ignore the promises made by the Government. It further held that where a person has acted upon the representations made in an Export Promotion Scheme, that import licence upto the value of the goods exported would be issued and had imported goods, his claim for import licence for the maximum value permissible by the Scheme could not be arbitrarily rejected. This view has recently been affirmed by the Supreme Court in Century Spg. and Mfg. Co. Ltd. v. The Uthasnagar Municipal Council, AIR 1971 SC 1021, where it was held in paragraph 11:

'Public bodies are as much bound as private individuals to carry out representations of facts and promises made by them relying on which other persons have altered their positions to their prejudice.'

And again in paragraph No. 12 it was observed:

'If our nascent democracy is to thrive different standards of conduct for the people and the public bodies cannot ordinarily be permitted. A public body is in our judgment, not exempt from liability to carry out its obligations arising out of representations made by it relying upon which a citizen has altered his position to his prejudice.'

The Central Board of Excise and Customs, New Delhi, in its order passed on the petitioner's appeal has relied, upon certain correspondence between the petitioner and the Deputy Chief Controller, Imports and Exports, Kanpur and certain notings on the file to hold that the import licence was gratned to the petitioner on the basis of a subsequent representation made by its representative to the Deputy Chief Controller, Imports and Exports, Kanpur. The petitioner has denied that its representative ever called on the Deputy Chief Controller and made any representation contrary to what was stated in its application. Copies of such correspondence have not been annexed to the affidavit filed on behalf of the respondents, nor has the Deputy Chief Controller, Imports and Exports, Kanpur, filed a counter-affidavit of his own in spite of specific opportunity having been allowed to the learned counsel for the respondents for this purpose. What representation, if any, was made by the petitioner's representative before that! authority could appropriately be disclosed by him. But he has chosen not to file any counter-affidavit. As such no reliance can be placed upon such a vague] allegation.

12. That apart, it is not disputed that the petitioner did submit an application for importing 'open type of condensing units run by 1 H.P., 2 H.P. 3 H.P., 4 H.P. and 5 H.P. without motor.' This description remained unchanged and it is not the case of the opposite parties that any amended application was filed giving a different description of the goods sought to be imported. Moreover, the Deputy Chief Controller in fact considered the items in question as described in the application as spare parts and supported this view even subsequently after the authorities of the Bombay Port Trust had taken a different view. In these circumstances it cannot be accepted that the Deputy Chief Controller granted the licence on. some other representation.

13. The other ground relied upon by the Customs Department of Bombay that the value of the goods imported exceeded the value of the licence by Rupees 426/- was effectively met by the petitioner by pointing out that the sum of Rs. 426/- did not represent the enhanced value of the imported items, but was the enhanced freight demanded by the Shipping Company, which, however, the petitioner never paid. This explanation appears to have been accepted by the authorities concerned and no reliance upon this ground was placed before me.

14. For the reasons stated above, I am satisfied that the action of the opposite parties in confiscating the goods and imposing the fine is wholly contrary to the law, equity and good conscience.

15. The petition is accordingly allowed and the following orders of the opposite parties are quashed:

(i) The order passed by the Collector of Customs, Bombay, dated 12thJanuary, 1968 (Annexure A-5).

(ii) The order of the Central Board of Excise and Customs, New Delhi, dated 17th August, 1970 (Annexure A-8).

(iii) and the order of the Central Government dated 2nd July, 1971 (Annexure A-9).

The respondents are further directed by a writ of mandamus to release the consignment in question forthwith without demanding from the petitioner any fine or penalty.

16. The petitioner is entitled to the costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //