Bhagabati Prasad Banerjee, J.
1. In this writ application, the petitioners challenged the validity of the order suspending the import licence as well as the action of the respondents 3 and 4 in refusing to clear the goods already imported on the basis of the Import Licence issued in this behalf. The petitioner 1 is a partnership firm and the petitioner 2 is a partner of the petitioner 1. The case of the petitioners is that on or about 24th September, 1984, the petitioners purchased from one M/s. Hindusthan Trading Company of Bombay one R.E.P. Licence No. P/K/3033988 dated 21st June, 1984 of Rs. 4,07,400/-. The said licence was valid for importation of various items mentioned therein and on the basis of an endorsement on the reverse of the said licence valid for import of (a) Cerbaryl, (b) Methyl Pabathion, (c) Phorate, (d) Dephenylumine and (e) Pentaerythritol. The said R.E.P. License was issued to registered exporters under the Import Policy of the Government of India. Some percentage of import replenishment and materials was allowed for import against each product as well as other conditions relating thereto. The conditions under which the said R.E.P. Licence is issued, are provided in Appendix 17 (Import Policy for Registered Exporters). The original Import Licence was issued in favour of Hindusthan Trading Company, Bombay by the respondent 2, the Deputy Controller of Imports and Exports, Bombay. The said Import Licence was transferable as per provision of paragraph 141 of Import Policy Book for the year 1984-85. The petitioner's case is that the said R.E.P. Licence was purchased by the petitioners for valuable consideration in accordance with the provision of Paras 140-141 of the Import Policy for the year 1984-85 and that the petitioners duly paid the consideration money in respect thereof to the original licence holder in whose favour the licence was issued, namely Hindusthan Trading Company and that on or about 29th September, 1984, M/s. Hindusthan Trading Company addressed a letter to the Joint Chief Controller, Imports and Exports, Bombay intimating the transfer of the said R.E.P. Licence in favour of the petitioners. It was further stated that the said Hindusthan TradingCompany is a government recognised export house and that when the petitioners purchased the said R.E.P. Licence, the petitioners acted bona fide, without having any doubt as to the validity of the aforesaid licence. After the purchase of the said R.E.P. Licence, the petitioners, it appears, entered into an agreement with one M/s. Hoei Sangyo Company Limited, Tokyo, Japan for supply of 17.5 M.T. of Pentaerythritol. Another contract was entered into with one M/s. Nampo Trading Company of Tokyo, Japan for supply of 17.5 metric ton of the same commodity. In accordance with the said contracts, the petitioners opened two irrecoverable letters of credit with the Punjab and Sind Bank, Calcutta on 28th September, 1984 and 29th September,' 1984 respectively. It further appeared that on the basis of the said R.E.P. Licence, the afofesaid goods were purchased by the petitioners from the said company of Japan and the goods had arrived in Calcutta Port on 20th November, 1984 and 11th December, 1984 respectively by two different vessels. After the said goods arrived at the Calcutta Port, the petitioners duly paid Customs Duties assessed in respect of the goods arrived as per Vessel Lanka Srimani which arrived at the Calcutta Port on 20th November, 1984. But in so far as the duty assessed in respect of the consignment arrived by vessel S. S. Lanka Srimati on 11th December, 1984, the petitioners offered to pay the entire Customs duty but the same was not accepted.
In the meantime by the letter dated 5-12-84, the Assistant Collector of Customs for Appearing Group-1, Customs House, Calcutta informed the petitioners 1 that the Import Licence on the basis of which the said consignment of Pentaerythritol was made, had been suspended and the operation whereof had been rendered ineffective by the order No. F-4/163/84/ECA/Bom/2081 dated 5-10-84 allegedly on account of false and misleading declaration given by the original licensee for obtaining the licence in question. The said letter dated 5th December, 1984 is annexed as Annexure 'E' to the petition.
2. Mr. Bholanath Sen, learned Counsel appearing on behalf of the petitioners, contended that the petitioners had not violated any of the provisions of law. The misrepresentation and/or fraud might have been committed by the original licensee forwhich the petitioners who were the transferee of such licence, should not be made to suffer. The licensing authority on the face of the licence made it clear that the licence was 'transferable' and that when such transfer was made for valuable consideration and when actual importation of the goods have been made on the basis of such licence, it was no longer open to the respondents to refuse clearance of the goods on the allegation that the licence had been suspended by the licensing authority. Mr. Sen further submitted that if any illegal thing was done by the original licensee namely the Hindusthan Trading Company, the respondents were at liberty to take any penal action or any other action as contemplated under the Act against the original licensee. But the petitioners could not be penalised inasmuch as the petitioners were the transferee in respect of a licence who obtained the same at a valuable consideration and that the said transfer so made in favour of the petitioners was duly intimated to the licensing authority. Mr. Sen further submitted that if there was any mistake and/or any wrong done by the original licensee in the matter of obtaining a licence, the licensing authority should have acted promptly and should have cancelled the same forthwith. In the instant case, the licensing authority was fully aware that the licence was transferred in favour of the petitioners and that the licence was being utilised by the petitioners and that silence and/or inaction on the part of the licensing authority to take steps to suspend in time had created an estoppel against the licensing authority in the matter in so far as the petitioner is concerned. In the facts and circumstances of the case, the licensing authority was estopped from suspending the licence or in any way penalising the petitioners for no fault on the part of the petitioners. Mr. Sen further submitted that the petitioners were the bona fide transferee in respect of the said licence for a valuable consideration and without notice and under such circumstances, the petitioners could not be made to suffer for any lapses or negligence committed by the original licensee.
3. In support of his contentions, Mr. Sen relied on para 8 of Appendix 17 of the Import and Export Policy 1984-85 which provides that 'If at any time, it is found that an exporter obtained R.E.P. licence under this provision for an item which was not actually used as raw materials/component for the manufacture of the products exported against which the R.E.P.licence was issued, the licence in question shall be liable to cancellation. If the licence has been used by the time, the irregularities come to notice, the value of the licence shall be adjusted against the import entitlement of the exporter in any category. These actions will be without prejudice to any other action that may be taken in this behalf under the Import and Export Control Regulations.' Relying on the said provision as quoted above, Mr. Sen submitted that in the instant case even if it was found ultimately that the licence was issued illegally and was liable for cancellation, in that case also as by the time when the action is taken, the licence has been used and as such no action could be taken in respect of the goods already imported. But the only remedy as provided in the said provision was that the value of the licence should be adjusted against the import entitlement of the exporters in question. Mr. Sen submitted that such being the general condition of R.E.P. licence where the licence is suspended or cancelled is of no consequence when on the basis of the licence goods have been imported and the respondents are under a statutory obligation and duty to clear the goods which have been imported by the petitioners on the basis of the said R.E.P. licence. Mr. Sen also submitted that if it was known to the petitioners that the licence was obtained illegally, in that event, the petitioners would not have taken the licence on transfer for valuable consideration and that after the transfer of licence was made, due intimation was given to the licensing authority but the licensing authority was remaining silent over the matter and that it is established principle of law that silence or inaction under certain conditions may constitute a representation as much as positive language or conduct for the purpose of an estoppel. It was further contended by Mr. Sen that the silence or inaction on the part of the respondents to take steps against the original licensee is concerned for cancellation of the licence, the petitioner has altered its position to its prejudice and in effect the same has induced the petitioner to import the goods on the basis of the said licence after paying the value of the goods and under no circumstances, the petitioner may be made to suffer either for the lapse on the part of the licensing authority or silence or inaction on the part of the licensing authority.
4. It was contended by Mr. N.C. Roychoudhury learned Advocate appearing on behalf of the respondents 1, 4 and 6 that as because the licence in question had been suspended, the respondents 3 and 4 were not in a position to release the goods. The question of release of the goods could only arise if ultimately the licence was found to have been validly issued by the authority issuing the licence, it was also submitted by Mr. Roychoudhury, appearing on behalf of the said respondents that when the licence has been suspended by the respondent 2, the petitioner should show cause and must appear before the respondent 2 to establish that the licence was validly issued and so long it is not held that the licence was validly issued, the question of release of the goods would not arise at all. It was further submitted by Mr. Roychowdhury appearing on behalf of the respondents that when the original licensee-has obtained the licence in an illegal manner and when the licence has been suspended, in that event, the goods imported on the basis of the said licence should be treated to have been imported in contravention of the provision of the Import Control Order and if ultimately the licence is cancelled, in that event, the goods should be deemed to have been imported without licence in contravention of the Import and Export (Control) Act, 1947 and as such, the writ petition was not maintainable which would frustrate the very purpose of suspension of the said licence.
5. In the facts and circumstances of the case when there is a provision for transfer of R.E.P. licence and as a matter of fact such transferable R.E.P. licence was transferred in favour of the petitioners for valuable consideration with notice to the licensing authority and that when the licence has been used by the time the irregularity had come to the notice of the licensing authority, the transferee of the R.E.P. licence cannot be made to suffer for any lapse or negligence on the part of the exporter in question. The only remedy provided under the law is that the value of the licence should be adjusted against the import entitlement of the exporter and that the respondents have also the right to proceed against the original exporter under the law for misrepresentation or fraud that might have been committed by the original exporter. It was held by the Supreme Court ofIndia in East India Commercial Company Limited v. Collector of Customs, Calcutta, reported in : 1983(13)ELT1342(SC) that 'nor there is any legal basis for the contention that licence obtained by misrepresentation makes the licence nonest, with the result that the goods should be deemed to have been imported without licence in contravention of the order issued under Section 3 of the Act so as to bring the case within Clause (8) of Section 167 of the Sea Customs Act.'
6. In the instant case the goods had already been imported and in respect of the first consignment the customs authority had accepted the customs duty and in respect of the second consignment the duty has been assessed, but the customs authority refused to accept the same on the ground that the licence in question has been suspended. The said suspension and/or cancellation of the licence cannot make the importation of the goods invalid inasmuch as when the licence was transferred it was a valid licence and when the goods were imported, the licence was valid and only after importation, the licence had been suspended. No notice whatsoever has been given to the transferee of the licence namely the petitioner. Such transfer of the said licence was made with notice to the licensing authority. Accordingly, I up hold the contentions of Mr. Sen that in the facts and circumstances of the case, the customs authority had acted illegally in refusing to clear the goods on the basis of an order of suspension of the licence when on the basis of the licence goods have already been imported and when already there is a provision for taking action against the original exporter in whose favour the R.E.P. licence was granted, by way of adjustment against import entitlement of the exporter. When the law provides remedy in case of cancellation of rhe R.E.P. licence to take action against the original exporter in particular manner, the respondents cannot adopt any other manner which is not provided for under the law and that too again a third party who had not contravened any of the provisions of the law and who had acted bona fide in the matter. In the facts and circumstances of the case it is not open for the Respondents to take any action which would visit any penal consequences to the petitioners. The order of suspension of the said licence on the face of it is illegal as after the goods had been allowedto be imported on the basis of a valid licence the Respondents cannot suspend the same and cannot make the importation invalid after a lapse of long time causing serious prejudice and loss to the petitioners who utilised the licence with the full knowledge of the Licensing Authority and that it is well established principle of law that the long silence and/or inaction on the part of the licensing authority to take steps for cancellation of the licence had created an estoppel against the Licensing Authority and that the petitioners not only altered position to its prejudice but such an inaction had encouraged the petitioners to make such importation after spending huge sum of money. Considering the facts and circumstances of the case, I hold that the customs authorities had acted illegally in not clearing the goods which was imported on the basis of the said, licence. Accordingly, the Rule is made absolute. Let a writ in the nature of Mandamus do issue commanding the respondents to forthwith clear the said goods which was imported under the said licence subject to the payment of the customs duty and complying all usual customs formalities under the law and subject to payment of Port charges. Let a writ in the nature of Prohibition do issue prohibiting the respondents from refusing to clear the goods on the basis of suspension of the said licence. I make it clear that this order is passed without prejudice to the rights of the respondents to proceed against the original licensee in whose favour the R.E.P. Licence was granted in accordance with law.
7. There will be no order as to costs.