Holding

Clause 8B permits an ex‑parte interim abeyance order, but natural justice demands that the affected party be communicated the allegations and be given a post‑decisional opportunity to be heard; the circulars satisfied these requirements, so the order stands.

Summary

The Supreme Court examined the validity of a series of "abeyance circulars" issued under clause 8B of the Imports (Control) Order, 1955, which placed the licence applications of Liberty Oil Mills and 60 other concerns in abeyance pending investigation into alleged illegal import of beef tallow. The petitioners contended that the circulars were ultra vires because they were issued without a hearing, without stating the material on which the authority’s satisfaction of public interest was based, and that clause 8B could not apply to goods covered by an Open General Licence. The Court held that clause 8B authorises an ex‑parte interim measure but that natural justice requires the affected party to be informed of the allegations and to be given a post‑decisional opportunity to make a representation. The Court found that the circulars had been communicated, the parties were aware of the allegations, and the statutory requirements of clause 8B were satisfied. Consequently, the writ petition was dismissed, and the civil appeal was disposed of without further order.

Issues considered

The validity of an abeyance order issued under clause 8B of the Imports (Control) Order, 1955 without a pre‑decisional hearing.
Whether clause 8B applies to goods covered by an Open General Licence under clause 11(4).
Whether the authority must disclose the material facts and reasons for its satisfaction of public interest when invoking clause 8B.
Whether the lack of a detailed recital of allegations renders the order void for violation of natural justice.
Whether the order is ultra vires for lack of jurisdiction or mala‑fide exercise of power.

Legislation cited

Customs Acts. 128, s. 131
Imports and Exports (Control) Act, 1947s. 3, s. 4A, s. 4B, s. 4C, s. 4D, s. 4E, s. 4F, s. 4G, s. 4H, s. 4I, s. 4J, s. 4K, s. 4L, s. 4M, s. 4N
Imports (Control) Order, 1955s. clause 10, s. clause 11(4), s. clause 8, s. clause 8A, s. clause 8B, s. clause 8C

Subjects

natural justiceprocedural fairnessinterim orderimport controlclause 8Bpublic interestabeyance orderadministrative lawright to be heard

Judgment

I . ..•.
I
'

•
A

LJBERTY OIL MILLS & OTHERS

v.
B
. UNION OF INDIA & OTHERS
•
. . May 1, 1984

(0. Cl!!NNAPPA REDDY, A.P. SEN AND E.~. VENKATARAMIAH, JJ.)
.,c Imports (Colltrol) Order, '1955-Promufgated under ss. J and 4-A oft!..
Imports and Exports (Control) Act, 1947-Cfmue BB-AJded lattr by woy cj
amenilmem-Jnterprelotion of-Contemplates action of .interim !1Qture-01<ftr/
action mu_st satisfy rule• of naruwl jllstkt!-AutlwrilieJ /WI bound lo gireptt-
• ·:decisional hearing-Authorities mrw give prJ,1t·rlccisiona/ hearlng-DeciJion mJIJtbe
communicated to person affected-Order need nol .xive rea.>on$ bUIIt!Jl!l illlikalt
satisfaction furming basis for action and concise statement of aJ/tgalioru-Actic•
i under Clause BB ofdJ·aslic natttre-IYJust be a11jmctted by .sense of urgency-S~of
:· urgtncy infused by ie1•ual factors-Public .sculiment is otU! sw:fi/Q£tor--PIIbUc
lntere.s to h« parumowtt collsiderarlott-'-11 is for authorities to coruidu jlub~
. · lnt<rt!t-Cuurtt nut to concern themselves wjth sufficiency of grou'nd-<:outlstl
consider questloH of mala/ide ur patent luck of jurisdicticm.

Import (Control) 0flfer, 1955-C/ause 8B read with C/au.s~ 11 (4)-lnt<,.
pretation.. uf-Cious~ BB applies eqttally to goods coyered by Op<n Gtnm(
E Licenu.

lnterprelatiotl of ltulllles-Rules of-Courts nut pernritud 10 ltlterpret srQIJIJOfT
Instruments so as /o exclude nulllrul justice unless lui11JUQ86 of inslrllm<nt /eal'<IJIJ
option to Court, ·
. .. ,_
F • N«tural }ustlct!-Rulcs of-Extent of natural jtuti~Must vary Jrem ctJJl 10 '
• case-Interim orr/en Imply /Wtura( justiCe-Seeking comments· of person ll<f•rt
inYestigution ag«illst him nvllletessury-Dedsion uffcctiey a pusan must /)teo/It"
nzunicutcd to the ujfeaed pcrsun-Ajfectcd persvn .11mst be giren post-d<ciJiotl4i

I
-
opport11/ty /WI puu/Nc. .

Words am/ pltrases-'lllvestigatioll' -IYhett comm~nus.
I G
. .
Oa bein11 uiscovercd th~t beef tallow Imported
. from abroad. was et
being 110hl Ill vana~p~ti or used in its p~anufa~turo ·by certain un.sct_'lputo~
persons, general public f.:eling was rous~d ond there was public agitatton ao
demands ~re mude that 1.:vcco nctiou be tukcn ~gainst those responsible. .1u
a result of the discoveries tho Centcul Government thou&ht that drastic acuo~
II wa• called for. So, a notilio:utlon was issu~d under s 3(3) of tbo Imports •
80
tt ~dptl

J
E · ·
~ports (Control) Act, 1947 totulty bannln_g tho impact of beef, butl"a 0 bet
tallow Inti> Jndill w.e.r. Auau~t 24, 1~83. And, on <!ill"crent dateiJ. in Nov~l!l ·
.....

r:, '
1

. LIDERTY OIL MILI.S·v: UNION

' n~ o«>cmbor ~983, five circ~l~rs. styled 'ahcyance' c'rcul~r!l-and mark~d ·sC::rct' A
. • 15. sued by the Doputy Ch1ef Con•rollcr of Imports and E•porls in respect of

r.
were y as 19! concerns directing .licensing authorilits to keep in aboyanet for a
.,~nof six months from the ~espcctive d~tes of the circulars, any application
· p< ;,ed from any of them for the grant <?f Import l1c.:nce or customs clearance
~its' and allotment of impo rtod goods through agencies· like the Slates
~~ding corporation of India Limited or nny other similar agency. Tboush the
fI
,;.-ullfS did not tbcms,lves. e to any statutory authonty, they wcro, ascl•imed
•od ns agreed to by the parties, presumed to be statutory orders made in e..crcise.
B'
{ of the power conferred by ct. 8 B of th< Import (Control) Orlicr, 1955: Sc>cr..J ·
{' pc:~ons 3 gainst whom '•beyance' Orders haJ' been made tiled writ petitions in
•~ dilferent llish Courts challenging tl:osc o+dcrs. Lib<rty Oil f>lills wa.s one . of
'l
·:v· thoSO who filed such a writ petition in the Bombay H1gh Coun. The case was .
,,th:rawn to the Supreme Court under ':'-rt,
139A of the Constituuoa. C'

r1 u:·erty Oil M1lls contenJeu: · (I) that the requisito satisfacuon , of Ute
• ~ . · ;ppropria.tc :tuthorhy which was n~""essary for issuing an ord..:r uont!f: cl. Sll was ..
" not only not recorded In the circular but t: '"'was no material whatsoever upon
which such satisfaction could have been arrived at; C) that the· circulor was
..
,.

not confined to the banned item of animal ~;~tk>w or to items which could be said
to have oumo cMncction with the ·t-anned Hem. but cxt<ndcd to nil item, for
~hlch a~plic>tiOns for the grant of licenc-es or for allotment had been made by
n :. ..
!..
I '
l ihmy Oil Mills; (3) that general nature of the order discloscu n total noa·
application of the mind: {4) that several firms were clul>bed t~gethcr and tlc.Jlt
I:.
~ith by a sinale circula~ and thcce was no indio>tioa whauoevcr that the facts
!'•..
i'
relating to each of the firms hall ba:n considcreli scpar:aely ; (S) that the
'ubcyance circulars' far from auvnncing the public interest would, on the other
..
..
baed, prcjudicinlly offc:t the public in'terc.>t by bringing to a bait se•ero.l indus-
! ..,
~·
ttie• and throwing hosu of workers out of employment; (6) that there was no
ault!tancc i~o tne ollegation that Uberty Oil Mills were not 'actu~l users' of beef
i•
tallow but th()' l•ad misused the import licenoc~ of other liceos<'C.S' by obtaining 1. _·
letters of authorisation for Import o~ beef tlll~w as if they were ootual users; I.,
und 17) thJl tho' circumstance that there was put>lk 3gitation about the import or
beer tallow ""a total irrelevant circumsronce for making an ordor under cr. 88. F
The intervener: contended: (I) tha t ct. SB should be construed ·as ' ·providin&
for on oppprtunity to be heard und sin<-c the al"Cyonce orders roauc no provis>:>n
~or ~1earin~. they •hvu:J be struck down ·35 opposed to the prin-.pi<S or naturul
~Ill«, and therefore, arbitrary and viobth·e of Article 14 and 19(1)(g) of tho
• ~nstituti~n ; (2) tJ~at !ccret orders aiTcctin~ ~ights of part.ies _could not ~awfully
, 01.lde snu:e o<crex:y would militrate ae>nlSt aatural !UStiCC wtl!J agam•t the .
''i!ht or appeal provided by •· 4M of the lm)X'rts and £•Jwrls (Control) Act, and ·
G
0) that an order under cl. SD could 011 ty be nude ufter the investigation under
<1. 8 haq commenceJ rh•t i~ ufter a show .-ause ooti<'t hail been issued under cl.8,
Dilml · • · .
"'"lithe writ petition~. , . . ·. .

1112LO: It Is not perouis.•iblc to intctpn:t any statutory instrument so. as to
~luJc ll;JturJI ju~tice, unlc!l the lan~uagc of the in~tru_mc?t leav~ no ~piton to
• Coun. l'roc.:uural fuimess cmhodyini naturul JUSttce ts to be Jmpltcd when·
H
n~~ a<tion Is token affecting the rishts of partie'S. It· may be that the oppurtu-
y to be h<aru may not .,., prc-do:cisioual ; it rnay no:ccssauly ha1·e IQ be post.
.
·. · ,
.'618 . : SUPREI>lB COURT REPORTS
· [1984j 3 ~-c.k.
decisional where the danger to b~ averted· or the act to be preve d. . .
..
A
. d"· I .
sary in some sttuat ons \0 gtve pre ectstona opportunity of makin
1
or where the action to be taken can brook.ne delay, It may riot n e 15 •mminent ·
• f ovenbe,_
··-...
_tation but it would be sufficient but qbligatory to consider any repr!:~epreseo• .
may be made by the aggrieved person and that would Satisfy the re . IJoa th,t
. procedural fairocss and natural justice. There can be no tape.m:"•tnenb of
•. B .
extent of naturnljusucc." It may and indeed it must vary from statutsucc or the
51
•tuauon
· · to SJ·tuauon
· an d ·case ·t o case. p re-dcctstonal
. . natural jue to
r !tatute
5
. •
usually contemplated when, the decisions taken are of an interim nat tee"' not
invesiigatioo or enquiry• • Ad-interim orders may nlways be made •"x"' !'(ndlllt
. · . ·partt and
such orders may themsel~es provtdc f?r at~ opportunity to the aggrieved p:uty 1o
be hJ:f!rd at a later stage. Even if the tptenm orders do not make Pl1lYision foe
such an opportunity, an aggrieved party_ bas, ncverlhelcss, always the right to
make ~n approptiate representation seeking a review of the order and asking the
c · authority to rescind or moJify the order. The principles of na tural ju!lit<
would be satisfied if the aggrieved party is given an opportunity at his reqll<!l.
There is ne> violation of a princi)lc_ of natural justice if an ~.r-partt •d·interim •
order is made unle~s of course, the statute itself provides for a hearing bef~e
the order is made. Natural justice Will be violated if the authority refuses to
consider the request .of "the aggrieved party for an opportunity to make bi>
representation against the ~x.-paru ad-itt!Crim orders. (700H ; 70JA-F)
D
There is no rule of justice of fair play whkh requires the authorit~ to 5«k
tbe comments of the person coocc:rned before embarking upon nn investigation.
lnvt.~tigatioo commen= as •ooo as ·the authority concerned to take the 61't step
wbelher by way c>f seei:ing evidence or by way of seeking an e•planation from
the person concerned. (699F}
E
"t n $Orne cases, t:<·port~ in~erim. orders may be made pending a finll .
adjudic.Jtion: But that dves not mean that natural justice is not attracted whca
orden or suspension or like orders or an Interim nat uri: arc m~<)e. Some ordm
of that nature, int~odcd to prevent further mischief of one kind, may lhem!<ll'eS .
be product ivc of ifu:er m•schief of another ldnd. An interim order of staY or
F lospension ~ti;h hJ; th~ eff~ct o( preventinl! a p~NOR, however, 't<J1l[JOr><~(y,
1131
uy, from pursuing his profenion or line of busin•ss, !D3Y h1ve subsll" •
ICciOUI and CYCQ disastrouS .COnSCI]UCltCCS to him and Jtlly ¢'pole him (I) grave
risk and hazard. Therefore, tbere mu:11 be observed .ome modicum of rt5Jdual,
core n•tura l justice, suffident to enable tho atT.:cte.l ~C'IOn to. mnke ao aJ~u>te
representation. The"' coniiderations may not, however, apply to "ues of h~~t
ll~n•in11 whicb involve tllo grant or a prlvilell~ and aro not 1 m~uer of· "' '
·G Th•l may b: a•J in IJ.n> Clla, it .;tn oaty bJ a(t:r an lniti<41 t:<·[Jatl< t.JttrJJJ
order il made. (70SB-0)

.J. , · . • I p~/jef ~I .
Q•-.n v. ll'VI.....If'' tt al., S6 D.L R. (2Jl 28), Co111 11isslontr o, 1,,.,.,u
Tonal, 9~, C.L.R.. 3~1. Lnis Y. 11•/[tr, (19781 3 All ER 3S4 and Fu tllrs>'·
. WhW'Mo•rllli~h Schools Ed, l97J A(lpeal Cuses 660 and C/tilli/tpul Do~f 1973,
It M,.f<SIIe 8JII/I·•t c,Jmp~ny, SU,>Nm: CJurt' s Civil App:a I Nos. 197().71
~~"~~ .

-~---
·, -···. .- ..----· -· -- ·
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:. ·
. .
LIBERTY OIL MILLS v. UNION
.· ·.
ent or the Chief Controller of Imports and Exports io debar A
;, Governrn from impor tin& goodS' or from ]<Ceiving licences or allotment of
. .
I
I
f)
~ . ' I.
•

.I a person ·r
d gocds tor a ~pen·11e d perro· d r sueh person if guilty of any of the
I

f rmportc commission or omi"ion enumerated in the Clause.· Clause 8A
• acts. or, 5 the Central Government ·o r the Chief Controller of Imports and
etnPOW r . ' . f d
'· . j
': ,
·; 15 to suspend the rmrortatwn o goo s by any person or grant of .. ;
. E•pOr I d d d. ·
licences or allotm~nt o ( J~por .
c . goo s pe~ rng rnrt~tjgotion ioto one or
I!IO<C of the allegal!ons mcntron~d m . cl •• 8 wclhout preJudice to any other B
·on that miiY be . taktn ngamst hem on that bthalf. Clause 88 empowers
·: ~~Central Government. cir. tb_e Chi~f Controller of Imports and E•porls
( ke<p in nbeyance apphcn hens for lcccnccs or allotment of imported good'
10
wbor< ony inl'estlgatlon 1:; pending rnto ony of ' tbe alkgations mcn•ioned in
l cl. s ngainsl a lic<nccc, in>porltr or aoy other pe•'son subject to fulfilment
ofthc requirement of tbc sntisfuction of the approrriate auth<'rity rcgordtng · C
. • the rub lie interest. Both clauses 8A and 88, which were inserted in the
Import (Control) Order, 1955 later by )V3Y or smond'ment. CC'nt•mplate
accion of an interim nnture pending inns'igalioil in1o aliC!!~ti<>n< imder ·
" I .

f eL 8. Ordinarily in the nbsrnce of anything rr.orc, •t would not bt ncces- ·
ury' to gh·e an orportunity to the per sou concerned before proceeding- 'i,

l
' eo take action under cl. SA or cl. SB. But whtl• cl. 8ll de;lo with tho ·
riJhllo oblftln liccncrs and th~ •ight to ol:lta:n allotments. cl. 8A deals with D
right! which have flowered into licen<es and allotments. A person to
• •hom licences hnve been sra.nted or alk•tmen<s made lil:lY havt arranged his

l
liJ'alr~ OR that basis nnd entered into transnctionS with Others. and:to him
1he consequences of aciton under cl. SA may be truly disa<trous whcrra• the .,
IX!nsc:quences of action under cl. Sll may not be so imminently harrr•ful. . It
. b presumably because of this ltvely diiTor cncc betwten cl. 8A ar.d sn that
cl. 10 provides for a pn:·dccisil>nal opportunity in the case of action under E 'I
cl. 8A and docs not so provide in the c ase of action under cl. SB. Again, il ·!
is presumably b~au'c or this difference that ct. 10 while providing f<>r an .!
.. . lpllcal •gainH n decision under cl. SA docs not provido for an appeal against
1
. decision undi:r cl, 8D. But that docs not me3n that the requirements of
0
( -'uraljustice ore nol to be ntent at all in the case or action under cl. SB.
~he requir<men:s of natural justice .will be mel in the ensc of act!on under F
'~ C~ .~ona
SB by ·cor.sidering, fide, 11ny rtprescnt:Jtion that may bt made in
:b 1 behalf by tte person asgrieved. Clause 88 itsclfaivesan indication
·,. . at such a post-decisional oppo rtunity on <he rrquc•t of the person c••nccr- .. .
· ;. · Is D<d lacont
. <mp1a ted. The action · under cl. SB is to be taken ·f • I ·
1 t•·• aut torrty
· 11 lo.Usfied in the public intcrc~t that such a~tion may bt taken wi1hout
lit:)«nolnin• • f Urt hcr detail' In rcsord to the all(gations.
· It clear1Y· ·unprtes
not::h<n furll•cr facts are ns"ertaincd by the authority or brousht to tt.c G
o;a5e otof d:e authority, such action may bt r~i<wed . Th•·rcforc, in . tbc
Ollportun~ctroo under cl. 8B it is not r:ec.:s:>arx to atve ~ prc-dccls•_onnl ..
~?'the I.Y but a post-<lcdsion111 opportunitY must bt i<ven tf so rcqut stcd
. Persona atr«:tcd, [G9SO; 696D-E; G; 705F·H; 706A·E) ·
Ptrto The dcciaion to keep' in- 'obeyance' sh~uld ~communicated to tl;e
It ·w:U~~n~erncd otherwise the rules of natural justice will not ~e sa!isfied. H
I~ (i) l¥) : lnO&l &lbitrnry and qult clearly violative of Artceles 14 a~d
. r lhc Constitution j£ cl. 80 is to be inter!>rctcd PS e.tctuding
'l .: .! l •.- .
stJPR.BME ccniRl>REPORTS.
'·

A communication qf the decision . taken. There ·.is nothing In cl. 8B to
suggest that the decision is not to be communicated. · On the other hand,
the expression ''without assi$niog. any reason" implies that the decision has .
to .be commliticated, but r.ea~Ms for the. decision have not to -be stated .
. Reasons of course, must exist for the decision. since the decision may-,.only
·be taken if the ·authority in satisfied that the grant of licence or allotment
. of·imported good~ will not be is the publi~ interest. The expres ion with·
o:ut assigning reasons' only means that there is no obligation to formulate
reasons and 110tbiog more. Formal reasons may lead to complications
when the matter is still under investigatio11. So ·the authority' may not. .
. give formal reaso!s, but the skeletal allegations must be mentioned in order
to provide. an opportunity to the person affected to make his representation. -
[706H; 707A>c]
-c On what should the. satisfaction . be based ? The action under cl. 8S' .
is really in aid of the ultimate -order under cl. 8. Therefore, in order to
invite the satisfaction contemplated by ct. 8B there ·must be present some .
strong suspicion of one or other or ·more of· the grounds mentioned in ·c l.8.
Since the action which is of a drastic nature is to t:ic taken ,ex-parte, it must
·n~cessarily be .animated by a sence of urgency. Tbe sense of urgency ·may
be infused by a host of circumstances such as the trafficking and unscru~
D pulous pe4dling in licences, large scale misuse of imported goods, att~Qlpts .
J:o m~nopolise or corner the market, .wholesale prevalence of improper
practices among classes of importers, public sentiment etc, etc.. -It is true
that public ~dministration is not to 'be run on public sentiment and statutory
action may only be taken on grounds permHted by the-statute. Public-
·sentiment is not in some cases ·the gro~nd for the action but it is what
clothes the ground ·with that sense of urgency which makes it · imperative ·
that swm action be taken. · [7070-H] ·

Public intt:rest must nolens volens be the para'l'lount cosider·ation. !f ·
, the tl1reatened .public mischief is such as to outweigh the likely inj!lry to ~
the party, the authority may take action under· cl. 88. If tbe threatened
public injury is very slight comp!tred to the harm which may be done to
the part~. the authority may DO~ ,take action under 'cl. 88. Which elCU!CDt .

.. ..
of the l,)ublic interest should be aiven greater weight and· which grounds,
should· .weigh at· all ar~ matters for· the authority taking action under cl. ·
• 8B. Courts do not concern .tbemselve~ 'with the sufficiency of the grounds
~o which action is taken o~·with .the balancing of competing consil,'leration!,
in favour of and against the action. [708A•D]
. . \ .
is
J\n 'abeyance' order · under cl. 8B directed not against any parti-
cular type- of ·,goods but against l!n importer, licensee or other persoQ
'against whom an investigation into anegations under cl, 8 fs pending.
Therefore the question is whether ·it is not tri the public interest that a
particular person shuuld be prevented, from obtaining import ·licences or
hnpo.rted goods of any description .p~ding investigation into the allega~ions
· under cl.SB. That would .rlepend .on the natU't'e of the a\legations, the
extent of 1nvblvement of the ·person concerned an~, most important, the
ehintent of the 'public interest wb1ch are for the consideration of th~ . autho-
l'itY 111akina the order under cl. ·S·B' aodnot for the Court. [708B-G] .
..
•
.~
UBEltfY OIL MILts v. tJNlON

Action under cl. 8B -is or an interim nature and it may be ex-parte,
· in whiob case the affected -party may~make a suitable representation bringing
·out an~: the outweighing circumstances id his. favour.· Tfiat is the real
. remedy of the party. courts do not enter the picture at !hat . stage .unless
the action is mala fide or patently without jurisdiction. The action will be
pat~ntly without jurisdic\ion if it is not based on any r~levant. mat~ial '
whatsoever. If the authority declines to consider the representation, orif
·the authority after cons.idera\ion or from o-blique motive, or tho decision is ·
such. as no reasonable nian properly cire.:ted on the law would arrive at on
ihe matcriaUacts, it will be open to the.party to seek. the ,intetv~ntion of
the court ~t that stage. [70SE·G] ·

Barium Chemicals v. Company Law Board {1966} Supp, SCR 311 .J./
Rohtas lr.ilustries. v. S. D. 'Agarwal, [1959] 3 S.C:~. I 08~ M. A. Rasheed . \.,;
v. State ~f Kerala, [1975] 2 S.C.R". 93, Shalin(Soni v. Unianoj India, -{1981)
1 SCR 952 and Commissioner of Income Tax v. Mahindra and Mahlndra, [1983]
.4 S.C.C. 392, referred to. · ,
•
. -The Court cannot consider • the question whether ther.e . is r.ufficitrit
relevant matefial in support of tbe allegations m.tde against the petitioners.
Tlie Court may properly consider the qqestion of mala fide or patent !lick
oi' jurisdtction .. Therefore in the instant case the Co~rt cannot cmisider
the question whether the m:.~terial av~llable justifies a prima focie conclus'ioli
that tbe petitioners have ·made Hiegal imports of beef tallow. [711A·B]

Tbe submission that sine~ the ab0yance ··order wa~ never formally
conmiunlcat~d to the petitioners, it must be ,reated as non elt has nG sub·
stance. The al?eyance order was undoubtedly communicated to the .concern·
ed authorities. Despite the attempt at secrecy made by the concerned
authority and the failure to formally communicate the decision to tho party,
the ~eyauce circular was very soon public know:edge aod the petitioners
did come to know ofthe orders. [71013; E-F] · · .

The argument that cl. 11 (4) excludes the application· of cl. BB to
ioods .covered by Open, Gener\\1 LicetJce h s 'no sub~tance. Clause 8B-
expressly provides that action under the Clau a may be taken "not withe'
standing anything contained in this Order". - In view of 'this non; obstante
. clause _there is no doubt that cl. 8B applies equally to goods covered l;y
Open General Lic~nce. · [698B-C] ·

The argument -that the order ·as embodied in ths abeyapce cfrcu.lar
did not ·fulfil ·the conditions precedent prescribed by the statuto bas some
'substa.lice. The_~ircular did _p.ot contain a recital of the allegations consti·
tuting the basis of the satisfacti}>n contemplated by Cl. 8B for action. under
th~t l)rovision, and·witho:ut arecital of the allegations-it was impossible to
say that the action was not·basCd on irrelevant material. It d.id not even
any
recite that which. was the- foimdatioil of action under·ct. 813, namely, the 1J.
satisfaction of the authority 'that the ·action was ~n tbe pul>liciriterest.
Again a large number· of concerns were lumped together and purp?rted to

·• .
. .
.•: ,1 '

•'

. 682 · suPRilMil couR.t R.l!roins tl984)3 s.c.a.
A ·· b~ deal! · with by a single ab~y11.ncc circular. Th~re WdS e:r.-focic oo:hio ·
tho circular which could poior to the authority having npplied its ITliod gat~
considered tb~ case of his cooccroed separa loly; (t Is true that the a bey• n
circular sulfeu from everyone of these info(mi~ios. But the Court's att~c~
tlon. was invited to", the stat~cnents mtdo 1<1 th~ couota·a!Ud•vlt by t~e
..
··. ·. '·• ·
· : .. D~puty Chief Cootrol)cr of Imports and Exports th~ author of the abcy•lc•
·: circular;, :t~d th' relcVlot fil~s p!&ced b•fore tho COU!t for perusal whic I
B sh?wl .that tbe p dnc•pJI nllcg.llio:n ag:fin't tho · J)elitio.1ers wcr> "tb 1 t they
. • had. prima facie indulged in illegal imp.>,tatio t of b« f tallow nod h•~ atsa
misutil is~d the beef tallow. · Why the authority took this prima faci< view
has been explained in I be counter-affidavit. From a poru1al of tho tiles it
is foun.I th't t:o~ C:t1cs of Lib;tty Oil M•lls as wdl n• other Coilccro! were
SCplCafcly a od ind•viduJIIY c"o~ ·dcred. Thus it does oo: m •ke nny uitT!roncc
on tho "peculilr facts of this C\Sc thnt ., sinalc circular .was is;ucd ' co.verlns
· <! . a large number of concerns. [712A-B; U:G]

It is imores.ed upon the nothoritiel that tho so ' cnlru<lcd by . stutate
wnh tb! ta1k of Ulci•tg prcjudoci•l a;tion oo th~ basi• of their suh]cctivo
.· ·satisflcthn should." first, bos•ow cardul· a ttention to tho nll~g.uion• furmio1 .
the basis ·of the proposed ncdon nod the probable con<cqucnccs which m1y .
D ensue ~ucb acti?n •ntf, ~t;xt . t~ko the trouble of reciting in the O'dcr iuucd
by . them the Ut is(o~ction forming the b'l!! ·~ o( the ftCtiO" Ond a COilciSC State• :
· "·tncnt of the :tlle~ations formill& the b;;SiS of the autisfactioo. 'If the D<CtS•
aary recito~ls are o~t fou 1d, thcro may b, ZQrious sequels. . [7! 38-D]

l•l the in<t>nt ca;~, tbe roal remedy of !be parly b. to ..m,kc :1 .reP«· /i
sentation to the c•Jncemed auth:>rity which is directed to consid~c l~cb \1
E ropresenutioa if made• . [71 JF] ·

0RIGISAI.. JUtU~ItJ fC rtOS Tr.insf.:rred Cas~ No. 22 of 1984.

F
·Arising out of Civil Appeal No; 274 of 1984 from Sp~cial
Leave P~tition No. 17128 of 1933 from tho .Judgm~ntund Ord?r . . ·.
dated 13th & 23rd December, "1983 of the Dombay High Court tn _
l
fJ
in Writ Petition No."2855 of 1983. · · • ,

A1h:1k II. DeJa/, S.S. .Ray, A.N. Ocmatw.Jiu, G.l:.:. Ve/tattvatl, '.j
B R. Ag lfWCI/a, . P.G. Guklr!lle, . 11!.11!. Jctycikar, V.K. Chiure, R.H. · ._,
RllllchrJ/1, M. Jayakar &: A. Suhba Rao for tit.: Petitioner in WP & for
G
Respondent in C.A. No.
274/84.
I

K. Parasuran, Attorny General. M.K. JJimerjel!, Ajdl. Sol., J
-~
General, A.K. Ga•rgull, G. Subram{miam and R.N. Poodar, for the
Re~pontlcnt in T.C. & for the Appellants in CA. No. 274 of 1984.
H· S.S. Rcty, A~h~k II. De;;,/, Stt/111/t;el Kachm1•al;a, Run/ Kt~runjall'ala,
.M~. M. Kuru,jawula, Ku/Jeep /'ah/ay, A.N. Bunat!twa/a,- G.E. Vulumvclll,

\
.,
I
·:- . -· .
'·

LIBERTY .011: MILL': v. UNION (Chinnappa Reddy,. J.) 681.
'
Ms,-Bina Gup·ta, Rainu Walta, T. M. Ansari and D. N. Misra for the · · 4
Interveners.
\ ..
The Judgment of the Court was delivered by

CHINNAPP~ REDDY, J. A few months ago; orthodox· Hindu
sentiment was outraged and genera~ public feeli-Qg was roused by the
-;. disc0very that beet: tallow hnpo~ted from abroad was either being
sold as vanasplti or use 1 in its manufacture by certain unscrupul?us
+ persons. There was a furore in the country. The~e was public
agitation: Questions were asked in Parlia~ent Outside· the · House,
Press and Politician· m~de capital of it. There were dema~ds 'that· c
severe action be taken against those responsible. Assurances were
given in Parliament. Bureaucracy went into actini. It was discover-
ed that though the import of beef talloW, like other animal tallow,
. had been canalised through the State Trading Corporation w1th effect
-~' from June 5, ..1981, there had been~considerable importofbeeftallow
out-side the cha~nel of the State Trading Corporation even subsequent I)
to June 5, 1981_, on the ostensible pretext that licences ha,d been
issued and firm contracts had al~eaqy been. entered . into before that
date. It wa~· also discovered 'that beef tallow had been allowed
to be imported -even by 'non-actual users' under letters of authority
given by licensees. wh : had obtail;ted import licences against i'he
·entitlement based on · the value of ·their exports. . A.s a result of E
these discoveries it . was thought that drastic action was 'Called for. ..
So, a notification was issued under S. 3 ('3) of the Imports and
Exports Control Act totally bam1.ing the import of beef, buffalo and
pig tallow into India with· effect from August 24, 1~83. And, on
7th, 9th and lOth November and · 17th and !1st Decen1ber, fiye ·
circulars, styled ''abeyance circulars' and marked . 'secree were issued
by the Deputy Chief Controller of Imports and Exports, in respect
of as .many a~ 192 concerns (business houses), directing licensing.
authorities to k~ep in 'abeyance' fo.r a period of six. months from
• the respect~ve dates of th,~. circulars ·any application received
.from .any of them for the grant of import Jic,ence or Cus·
toms clear~nce Permits and allotment of imported goods through
' agencies like the State Trading Corporation of India Limited, the
~
Minerals and Metals Trading Corporation of India Ltd. or any
I Other' similar. agency. It may be U)leful to CX;tract one of these
'abeyance.' circulars; all of which are in substanJially similar terms.
• The'abeyance circular dated November 9, 1983 which 'lists' we will H
not use the word 'black-lists'-as many as 61 concerns inclu~ins
Liberty Oil Mills (P) Ltd. is as follow$; .
.. . -·-
--· --:~-_.

kl
,I~
I~:
. ~: 684
:il!
,,: ., . A
I

1..'· GOVERNMENf OF INDIA ·
' SECRET

·' . MINISTRY OF COMMERCE .
I ' OFFICE OF THE CHIEF CONTROLLER
I'
OF IMPORTS & EXPORTS
I·
UDYOG BHAVAN, NEW DELHI-11
i. I . . .
dated, tbe 9th N~v. 1983 . ! .
f'.
t: I
I:; .. ABEYANCE CIRCULAR No. 28/83-84/HQ.
:1 :1
1''1
l 1
c· Whereas investigation into certain· allegation mentioned onder ,
. .· Cl. 8 of the .Imports (C:ontrol) order, 1955 are pending against the-"'
Iii under mentioned concerns, all the licensing authorities are herebY ·
'.'.1
: Jl . requested· to keep in abeyance for six months from the date of issue
of this circular any application received from them for the grant·
~L of import Jic~nce of Customs Clearance Permit and allotment of
:,•
II II . D imported goods through agencies like the State Trading Corpn. of
1~ !1
.
India Ltd-./Minerals and Metals Trading Corpn. of · India ltd. or auy
other similar agency ;. • .
' I
1:1 . . .
::i Sl. Name & addres . Name & address of . Name of ibc prop.{
;:
.! ·t E
N'o·. of the concern. the branches
available.
as partner;Director etc.
as available.
•I
·!
'\ 2 3 4'

. . I F •
•
: ...
14 M/,. Liberty Oil
Mills (P) Ltd., 16
G
llll llahadur
Shastri Marg, )
..
Kurla, llombay--:-400070

..
~

•
H •
•

' ...
. • . LlliERl~ Oli. MILLS. V~ U~JO~ (C/timtappa Reddy, J .) 685 .: •
. . 2. These· instructions may be kept secret and if any of the
A '
above mcntion~d firms ma~e any enquiry abOut t6c position of their
! · application (s), they may s1mply be informed the matter is under

..·
1'
(.~ coosiderntivn. .

3. This does not, however; preclude the licensing autboritie3
from rejecting their applications if they are otherwise illlldmissible or B . '1
1'i, suffer from discrepancies in terms of the licensing instructions. Only
' these applications may be kept in abeyance where the party is entitled
~- to licences or Customs. Clearance Permits etc, except for the allega·
,.., tioos against tberu. ·

c
"·...
'

~r
. . . 4. Full details of all applications kept ·in abeyance as a result
. of the above instructions may be reported to tbe Headquarters.

. . 5. The receipt of this circular may please b.: acknowled in the
.. · st3ndard proform<\. •

Sd/·
,,
't
J
(J.P. SHARMA)

l ;
DY. CHIEF-CONTROLLER OF

(Issued fro~ file ~o. 3/42/HQ/83/ECA- 1);,
IMPORTS & EXPORTS
E ,t '

To say the !cost and to put it mildly, it is a .·very. odd circular,
tmaoating as it does from a high dignitary of the Government of .
India. Wby the· secrecy aod why the instruction to mislead, ns it
Were? . Are. statutory orders to be made and given effect in this· F ·I
, · "':' furtive manner, almost as if the autboritks t~at be are afrnid of
WOunding the susceptibilities of the p~rsons in respect . of whom
'f the o;d(rs are made 1 We presume thq arc statutory orders mnde in
nerc1sc of the powers conferred by clause ,8 B of the Import Control ·:
Order, though they do not themselves cite any statutory authority.
;... TJ:e actual direction, tho use of the word 'abcyanc·c• and the pres-·- G·l
cnptioo of the six-month period are indicative tbat clause 8 B is ..
the SOurce or power. In the counter aOidavits fikd on behalf of the ' r:
Government of India and the Chief aod D(putry Chief Controller '
of Import& aut! Exports it is cluimed that the power exercised was
G
~t COnferred by clause SB It was 50 asserted by the Add I. Solicitor ·•
eotr'dI• The !carded counstl
' who appeared for the parllcs · pro«eded ' .
. 00
t~t basis. So, we may also proceed on that' basis. lncotJ 1•.
l · Por•ttng, as the~ did, directions under c;lau's t' SD, ·vitnllr affecting· thlf'' \
I,

-.. -·' . .
·~
. .....
·--.~
·'I
SUPREME COURT~PORTS [!984] 3 s.c.R._ :r~t

business of the ~oncerns concerned, one wo-uld e.. pect the circulars
to be communicated to the affected. parties,even. if they were to be
kept secret f.rom other prying eyes. That was_ not done tor reasons
whi_ch no on.e has been ab~e to explain to . U:s. Curisously, enough; _
despite the circular, supplies of. imported goods appear to have
been continued to be .made for about a month to some parties. But
soon the circulars ceased· to be secret. Everyone came to kn~w of
them. True but unauthqrised versions were even publish~d in
commercial newspapers: The Circulars also came to b~ acted upon.
Licenses were· not granted. Customs Clearance Permits . were not
. . issued.· Allotments were not made. · Several persons against whom )'' ..

·c 'abeyance' -orders had been made filed Writ Petitions in different
High Courts cnallenging those . orders. Liberty Oil Mills (P) Ltd.
was one of those who· filed such a Writ Petition in .the BombaY..
Hight Court. The case h.as been withqrawn to this Col:lrt under Art
139A of the Constitution and it . is . this• case that has been· heard
by us. We heard Shri Ashok Desai for the Liberty Oil Mills (P).
Ltd. and· Shri Soli Sorabji, . Shri V.P. Raman and. Shri Ram
Jethmalani for the interv~ners. We heard Shri Milon Banerjea,
Addl'. Solicitor . Generala.bly assisted by Sri Gopala ·subrahmanyam
. for the Union of India and the Chief Controller and Deputy Chief
·controller of Imports · and Exports and Shri M.C. Bhandare and
Shri A. Subba Rao for the State Trading Corporation . .
E,

· Liberty Oil Mills (P) Ltd. is a 'Trading· House' recognised as
such in terms of the etrpression as defined in the 'Import Policies'
for several years. Their exports for the period 1982~8l are stated to
have exceeded RS. 19 crores. They claim to deal in ~egetable Oils~
export of Frozen Marine Products, Frozen foods, Te)\tiles, Chemicals, ·
Agricultural Products and· imports of diverse commoditie~ such
as Oil and Oil seeds, Chemicals~ Drugs, etc. They claim to have a
factory refining ~egetable Oil at Ku~la and ll factory for manufactur~
ing vanaspati at Shahpur. They have plants for processiag frozen food
at Madras, Tuticorin, Calcutta and Vishakhapatn~m .; they also
have sol\>ent extraction and Industrial Oil Plants. They claim that
a
they require continous and steady flow of various imported goods
for their sevetal Industrial activities. They 'allege that if import < '

iicences for which they have applied are not granted to them and .
· if the imported goods f~r. which they have applied are n~t allotted
to them, their faclories and their plants will have to be closed down;
their business will be seriously affected and many of· their employees
will b(l tbrown out of employme~t.. They state .-that . they have nevet
/

LIBERTY OIL MILLS v. UNION (Chinnappa Reddy, J.) 687
,..
adulterated .the vanaspati · ~anufactur~d in their factory_ at Sbahpur A ...
J.
and that the samples taken from their factory on· as many as thirty
'six occasions. had never been found to contai.n any type of animal
tatlow. They further state that they had not impor"d any tallow
after July, 1982. Such tallow as ~as ,U;nported by· them before July,'
1982 was sold to
them by other Jicencees to them as actual users.
in
· The tallow so purchased was air~ treated by them .theil: premises at
Kurla and s'old by' them to soap manufacturers and other fatty ~cid
t pJants. The. import of tallow was on the strength of· letters of
authority issued by licences in respect of. additio:aal licences and,
replenishment licences held.by them. All the a,dditional licences bad
been 'issued prior to June 5, 19.81 and import ofOGL items was
permitted against the said licences. Beef· tallow became canafised
c
from Jupe s. 198! 'but the, canalisatiqn was not retrospective and
couJd not affect the licences previously issued. All the contracts for
the import ofbeef tallow had been cntcr.ed into before June .S, 1981
and in r..:spect of seven of the . co~tracts letters of
~redit.had also
been opened before that date. The beef tallow im'ported upto July, D
1982 was duly cleared'by Custom Authorities without any dispu~e or
question. Thereafter the. tallow was Sl!hjected to air-treatment .and
soid to soap manuf~cturers and .fatty acid plants. ... There was never
, \
any allegation ag,Ftinst ·the petitioners that any portion of the tallow
imported by them had ever been diverted for the adulteration of
vanaspati. Liberty Oil Mills therefore, claim that· there was no .E
. justification whatsoever for making an order under clause 8B against
....
.them. They accordingly seek the .issue of Writ to quash the
.• circular.

Shri Ashok Desai for Liberty dii Mills (P) Ltd. contended tliat
an order und:!r cl;wse ~B of the Import Control Order co~ld only be
made if t~e Central Government. or the Chief Controller 9f Imports .,·
and Exports was satisfied that the grant of licences and allcitmeni of
imported goods would not be in the public interest. In the present
·case, not only was. the .requisite satisfaction of the· appropriate·
)uthority not recorded in the circul~r said to have been: issued under ,G
''
. _Clause 8B but there was no materhil whatsoever upon which such
iatisfaction could have been arrived it. .Before June 5, J98J, beef
t.allow was not cancalised and co,uld therefore, be freely imported. as
an OGL item. It w~son June 5. 1981 that the import ofbeeftaUow
came tq be canalised_' but such canalisation could not affect . li~ences ·
>vhich had already been .granted. Beef tallow could be imported .
c·1I
under the preexist~ng licences as an OGL item l':ven after June 5, 1981
~ ' ' .
•
•.
... :

·68_!. [1984]3 S.C.R.
·•
. - '
and upt..the d.~~e on which the import of beef tallow was totally
banned. Our attention was 'repeatedly invited to the two cases of
A.rv:ind Exports (P) Ltd, and Jayant Oil Mills (P) Ltd., · ~here de~ing
. with appeals and decisions under .Sections 128 and 131 of the Customs
·. Act, the CeJ!tral_ Board of Exci~e and, Customs and 'the Gov~rnment
· ofthe India to<;~k the view
B. . I .
uThe licence issued during a Policype~iod is governed by that
policy as amended upto the date of issue of ;be licence and
fl;mendments made after the date ~f ·issue do not have any
-application to tbe licences." and .;:.
c "A licence is governed by the Policy which is made applicable
_.to it. Restrictions placed on-the import of good~ in the policy
for the subsequent years have to be ignored, ·unless of courset
.any. such restriction has .been specifically made4 applicable to
·•·i
in
licences issued eariier either generaUy or the partic~J¥ cases.
I) In this case the licences were issued during the policy for the
period AM-81 and were gove:med by this policy only particu-
larly para 174(v) thereof. 'These licences were valid for the
goods in questi9n as only Mutton Tallow was in the list of cana·
.Used items.' In t;rms Of para 222(3) of the. policy for the periQd
AM-82 these licences continued to be valid_ for beef tallow as
I. this item continued· in the list of OGL Items even after the com- .
ing into force of the policy for the period AM·82. When vide_
Public_ Notice. No. 29/81 ~ated June 5, 1981 beef tall()w'was put
·in the canalised items it is from this date only that it became
canalised: ·Jn the public ·notice there is no specific pmvision · ·

•· invalidating_licences previoysly issued so far as beef tallow is
concerned,· in ca~e such licences were valid · earlier to import
this·item. In tbe.absence of any specific prohibition the licences ..
~

· p~oduced by the importer in this.case had to be accepted for
the clearance of beef tallow.""'

• .Jt. was furthe't contended that the circular order under 'Clause 8B
as ~.!?tuaJcy .issue,d .was not confin'ed to the banned. item ,..of-animal
tallow or to:item~ wbi~h.~uld·b~~d to have. some cann~ction with
the banned item but extendeq t~ all items for which applica.tions for '
the Sf~\lt,Qflicen~. or fot ~llqtn,1ent hacJ. been maqe .b.Y Liberty-Oil
MiHs-.'(P) Ltd., whether· or not.snch items had the re~otest connn~c:
. ·ll tion with animal tallow Shri. Ashok D~sai connected, that·: the, very
geirer~J natue of the order disdos~d a total non•applkation of the
tnind sipce t~e~e was no ~e:ll:us pet ween the alle~~d misllse oflke~e~~
LIBERTY OIL MILLS v. UNION (Chinnappa Reddy, J.) 689

for importing beef tallow or the misuse of the imported beef tallow A
and the abeyance of applications for grant of import licences and for
allotment of other items. · It was .also argued that as many as 61
firms were Clubbed together and dealt with. by single ·circular and
. there was no indication whatsoever that the (acts relating to each of
the firms had been cons,idered separately. The circular was· an
B
omnibus. one and revealed a 'total non-application of the min~. It
was suggeste~ thatthe abeyance' orders far from advancing the public
'interest, would, on the otlier hand, prejudicially affect the .public
interest by bringing ·to a halt several industries and throwing hosts
of workers out of employment. It would <;~.!so affect exports from
India and reduce for~ign e~change earnings. 'It was submitted that
there was no substance in the allegation that Liberty Oil Mills Pvt.
Ltd. were not .'actual users' of beef tallow but th.ey had nqne the
less obtained letters of ~uthorisation for import of beef tallow as if
.;
they were actual users and they had· thus misused the lmort 'licences
I
of other licencees. ·I t was pointed out that the beef tallow imported
by the un<ler letters of authority bad either been sold by them to .D
~Ct!Jal users On the, high seas or. had been. actually used by them tq
produce marketable beef t~llow for use by soap manufacturers and
fatty a<;id. plants, by subjecting the imported beef tallow to ~air
treatment•. It was also argued·, by Shri Ashok De:sai that the
·circumstances that there was public agitation about the import of beef
tallow was a totally irrelevant· circumstances for making an ord_er
under claus.e 8B. Shri ,V.P. Raman, learned counsel for one ·of the
interveners suggested that clause 8B did not apply · to goods covered
byOpen General Licence in view of clause 11(4) of the Import
Control Order which provided, "Nothing in this order, except
paragraph 3-I · of sub-clause 3 of Clause 5, Clause 8, Clause SA,
Clause 8-C and Clause 10-C shall apply to the import of any goods
covered by Open General Licence or Special General Licence issued •
by"the Central Government." Shri Soli Sorabjee, who appeared for
~mother. interyener, submhted that clause 8·B should be construed as
providing for an opportunity to b~ heard and since the abeyance
_?rders made no provision for hearing, they· should be struck down, G
as opposed to t'lte principles of natural justice, and therefore arbitrary
and· violative of Art. 14 and 19(i) (g) of the Constitution. !twas
also urged ~y. the learned counsel that the satisfaction contemplated
by clause 8B was not an· omnibus satisfaction but a satisfaction
_which must, disc!ose an ~~:pplicati~n or' the mind to the fa~ts of each H
individual case and each indhddual application. for licence or· allot-
me 't\ t. Shri Ram Jetb!llalapi 1 wlw appe_ared fpr another intervener

•
690 SUPRF,ME COllRT REFORTS {t984~ 3 S.C.R • . -rj
A urged that secret orders affecting rights of parties could not lawfully
be made since secrecy would militate against natural justice and
against the right of app~al provided by sec. 4-M of theJmports and
Exports (Control) Act. He also submitted that in the .absence .
of an express recital 'of satisfaction which was the foundation for the
B exercise of the jurisdiction under clause 8B, the order must be held
not to confotm ·to clause 8B and therefore, · vitiated. He ·also
contrasted clause 8A and clause 8B and argued that the :public ~-··
interest contemplated by clause 8B should be such as to exclude a ·~
pre-decisional. bearing. There was no such public interest involved
. in the case. There was ~ot even ~. recital to that effect. For that -"
c reason .also the order was vitiated.· He further submitted that an
order· clause 8B could only be made after the inVestigation under
clause 8 had. commenced, that is after a show cause notice, had been
issued under clause 8.'

D . Shri Millon· Bannerjee; learned Additional Solicitor General
·urged that the only questi0n for the consideration· of the court was
whether there was any relevant materjal before the authority com-
. petent to take ·action under clause 8B to reach the satisfaction
contemplated by 1hat clause. Since the satisfaction contemplated by ·
Clause 8B was the subjective satisfaction of the authority concerned,
E
the court was not to concern itself with the sufficiency· of the
·mat~rial in a.iriving at the requisite satisfaction. He howeverJ invited·
opr attention to various facts and circumstances which, according
to him,. wholly justifi~q the action taken against liberty Oil Mills
(P) Ltd. Though Liberty Oil Mills itself held several licences. it never-
-·· F theless indulged in the. collection of a large number of licences of other
imported beef ta11ow ·as their. authorised ag~ts, sold part of the
beef tallow to alleged actual .users on high seas or puacbased the beef
tallow after importation, subjected it to the so-called air-treatment
a treatment which could 'by no means be cal1ed a· manufacturing
....
· process and which lef( the cbarac.ter of beef tallow unaltered-and
G sold it tQ 'innumerable. parties stated to be soap manufacturers and
fatty acid plants.' The claim of Liberty Oil Mills (P+ Limited that Liberty "!;
Oil 'Mills was an 'actual users•, who had purchased beef tallow for
subjecting it to air treatment was no more than a pretence. · It was ..
stated that full particula~ 'or the parties to whom the beef tallow
was claimed to have been sold ~ere not made avaiable despite
H requests for "the same. There , was great public concern about. the
manner in which beef tallow had been imported and used by some
importers and the. authorities very naturally felt that,it ~ thei.l
•
UBERTY oiL MiLLS v. UNiON (Chinnappa Reddy, !.) 691

duty in the public interest to investigate into .malpractices -conne~ted A
with the import of beef tallow and the misuse of beef tallo~ aftel
import. The learned Additional Solicitor General ·placed before us ·
. the relevant files which according- to )lim indicated that the case of
Liberty 0 il Mills (P) Limited as well as the cases of each of the
other firms who were· included in the abeyance circular h~d been
B
separately considered and satisfaction duly and properly· arrived at
by ·tbe appropriate authority on relevant material . The lear ed
Additional Solicitor General very fairly did not urge that the
decision to keep in 'abeyance' need not be communicated or that
the principles of natural· justice were not reqQ;ired to be observed.
But he argued that a pre-decisional hearing was not contemplated. c
He submitted that rule 8B did not.iute out a post-deCisional hearing
and stated .that the appropriate authorities were ready even now to
consider faithfully any representation made by the parties affected.
With reference to the views expressed by the .Central Board to
Excise and Customs and the Government of India, in the cases of
Arvind Exports and. Jayant Oil Mills, Sbri Banne..rjee submitted that D
those cases did not represent the correct position in law. Those
decisions were rendered in proceedirigll under the Customs Act and ·
did not pre.clude .appropriate action under the Import . and Export
Control Act· and the Import Control Rules. Shri Bannerjee also
invited out attention to several provisions of the Import Control
E
· Order.

Before considering the questions at issue, it wi11 be·useful to t#'-

refer to our Import Policy and to take a cursory look at the various
statutory an!l non-statutory instruments embodying the policy. The
import policy of any country, particularly ·a developing country, has
.F
necessarily to be tuned to. its general econ..omic policy f(mnded upon
its constitutional goals, the requirements of its internal and inter-
nation~\ trade, its agricultural and industrial development plans; its
m~netary and financial strategie's and last but not the least the inter-
nati~nal political and diplomatic overtones depending on 'friendship,
neutrality or hostility with other countries' (G/ass.Chotans Importer3 ·
and Users' Association v. Union of India1 ). There must also be a
considerable number of· other factors which go in:to the making of
an import policy: Expertise in . public and political, nationa~ and
\nternational economy, is necessary before one may engage m the
making or in the criticism ofan import policy. Obviously courts do
not possess "the expertise and are consequently. incompetent to pass
:~

(1) [1962] I SCR 862.
692 SUf'REME COURT REPORTS Il984] 3 s.c.R. ,..__,..

A judgment oc the appropriateness or the adequacy of a particular
import policy. But we may venture to assert with some degree of
accuracy that our present import policy is export oriented. Incentives· ·
by way of import licences are given· to promote exports. Paragraph 173
of Chapter 18 of the 'Import Policy' ·for April 1981 to March:I982
published b~ the Government of India, Ministry of Coqtmerce-in the
B
first week of April every year, an annual '1mport and Export Policy'
to. be in force during the financial year is published-expressly states .........
"the objectiye of the scheme of registration of Export Houses and , J
· the grant of special ·facilities to them. is to strengthen their negotia-
ting capacity in' foreign trade and to build up a more enduring
relationship between them and their supporting manufacturers".
Paragraphs 183 and· 184 enumerate the various import facilities ·
available to Export I:Iouses. Paragraph 185(1) allows Export H~uses
to import OGL {Open General Licence) items-against REP (Reple·
nisbment) Licences is$ued in· their own names or transferred to
them by others. The facility is stated to be .availab1e to them for '~
D .import of (a) capital goods Ii~ted _in Appendix !I and placed on.
Open General Licence for Actual_ Users and (b) Raw Material9,
components, consumables and spares (excluding items covered by
Appendix V) which have been placed on Open General Licence for
Actual. Users. Paragraph 185 (I) further stipulates that Capital
.E Goods so imported shall be transf~red by them only to such Actual
Users as are authorised to p~rchase the~ by the concerned-Licensing
•A1;1thority and that raw materials, components and consumables so
imported may be transferred by . them to eligible Actual Users.
Imported spares may be sold to any person. Paragraph 185 (2)
provides. that import replenishment licences issued in their own·
• F names or transferred to them by others, against which. Export
. HQuses wish to take advantage of the facility provided in Paragraph
185, shaH . be non-transferable. Therefore, the Export HouS'es
wisbiug to take· advantage of. the facility are required to get the
licences concerned endorsed by the licensing authority ·as
under r- .
G
• 'The licence will also be vaJid for import of OGL items under
para·graph · 185 of import policy, ·1981-82, subject to the
conditions,laid down arid; shall be non-transferable."

H
Paragraph 185 (3) further stipulates that import of OGL items under
these provisions sbal1 be subject to the condition' that the shipment ...
:

of goods shall takes place within the va1idity of the OGL, that is,
March 31, !982 or wll~in the' validity· peri9d of.tlle import Ikenc~
LIBERTY orL MILLS v. UNION (Chinnappa Ready, J. ). · 693

itself, whichever date is earli~r. Paragraph 186 (1) broadly entitles A
E~port Houses to Additional . Licences upto the value of 15% of the
f~.b. value ofseiect products made in i981·82 and manufactured by
small scale and cottage indus.tries, plus 7-1/2% of the f.o.b. value of
other exports of select products made in tbe same· year. All such
Additional ·Licences shall be non~ transferable .. Paragraph 186(7)
provides that the Additional Licences will also be valid for import of
D
Raw Materials, Compone[)ts, Consumablcs. and Spares (including
items covered ~y Appendix V) whicl1 have been placed on Open
General I.icence for· Actual Users (Industrial). While Spares so .
imported may be sold to any person, Raw Materials, Components
and Consumables may only be sold to eligible Actual Users. c
Paragraph 192. requires every Export. Houses to maintain proper
accounts of all its exports, 'imports and disposed of imported items-
and are further required to furnish detailed information in the ·
pr~scribed forms.

Some Export Houses are re~ognised as 'Trading Houses D
'depening on their performance. Trading Houses· are entitled to all
the facilities available to Export Houses, but their entitlement to·
additional Jicences against. exports of products manufactured in the
small scale and cottag~< sectors is to be 20 per cent and not 15 per
cent.
E
' , Paragraph 222(1) prescribes· that additi~nal licences issued to
Export Houses in 1980-81 ~hall cease to be valid for items which do
.nNappear\n Appendices 5 and 7 of-Import Policy, 198l·g2, But it
is said that restriction will not apply to the extent that the licence
holders have made firm comm:itments ·by opening irrevocable letters
F
of credit through authorised dealers of foreign exchange before
April 1, J<;gl, Paragraph . 222(3) provides that REP licences and
. additional hc~nces held by .Export Houses shall.cease to be valid for
import of any item which could be· imported under Open General
Licences during 1980-81, but it is no longer so in the Import Policy
1981-82 except for such commitments as have been made by opening
G
irrevocable lett~rs of credit through authorised dealers in foreign
exchange before April, 1981. We may notice here that Appendices 1,
. ~ .. 3, 4 and 6 contain lists of banned items. Appendix 5 and Appendix 7
contain a list of restricted items. Appendix 8 contains a list of items
·import of which is canalised through public sector agencies,
..... Appendix 2 contains· a list of C-apital Goods allowed under Open H
General Licences and Appendix· 10 contains a list of Items allowed
.
· to be imported. under Open. General Licences, sub$ct t6 the condi~
/

SUPREMB COURT REPORTS (19&4] 3s.C.R.

A tions. set out therein. It appear~ that prior to 197S, QGL was ·
copfined to certain restricted items only. But in April, 1978, the ·
Government of India issued Import Trade Control Or.der No. 9 of
1978: the OGL No. 3 of 1978 granting general permissio~ to import .
into India from any country of the world, Raw Materials and
. · Com(lonents by Actual Us~rs (industrial) if the items to be importe9
B · · were not covered by· aey 9f .the lists of banned, restricted and
. canalised items and did not figure in Appendix IX of the Import
Policy for 1978:79. One of the results was that an~mal tallow which
could not be imported as a!) OGL item .prior to Aprill978, could be
so imported after 1.978 as it was not one of the banned, restricted or
c canalised items. In the Import Policy for Ayrill9SO to March 1981,
mutton tallow was included in the list of canalised items. Therefore,
white mutton . tallow could be . impqrted· · thereafter through ·the
agency of the 'State Trading Corporation only, beef tallow could·still
be imported as an OGL item. The position was the same in the
Ip1port Policy is~ucd for the period. April 1981-March 1982. How-
D ever, on June 5, 19.81 by a Public Notice for the· word 'mutton
. tallow' in the list of canalised items, the expression "tallow of any
· · animal orgin including mutton tallqw" was substituted.. Therefore
with effect from June 5, 1981 beef .tallow also became ·a canalised
item. One· of the questions posed is regartling the effect of th~ public·.
notice dated June 5, 1981 by which the expression 'tallow of animal
E origin or including mutton tallow' was Sl,lbstitutep for the wprd
.'mutton tallow'. The question posed is whether the ban of import
except through the State Trading C~rporation was applicable to beef .·~
tallow imported .into India after June 5, 1981 but against licences
issued earlier and in respect of whici1 contacts hlfd already been
, into. We have already mentioned that on Agust 24, 1983, the
Government of India made an order under Section 3 of the ·Exports
and Imports (Control) Act totally banning the import Into India of
/ beef,, buffalo and pig tallow. .
We may mention here that the Import Policy for earlier as well
as later years, contain more or less similar provisions as .those in the
G Import Policy for April 1981-March 1982. ·
The statutory regulation of imports is COJ)tained in the Imports
and Exports (Control) Act, 1947 and the Imports· Control ).

Order .1955. Section 2 of the. Imports and Exports (Control) Act
defin~narious exprcs$ions .. 'Lett~r of. authority'· is defined a letter
H-.. meaning as authorising the licensee to· permit another person, named .....
. )
in the.said letter, to import goods against the licence grantl)d to the-
pcensee. Licence is.defined to mean a licence granted and including
UBERTY OIL MILLS v. UNIO~ (Chinnapp,l Reddy, J.) 69S

a custo~s clearance permit issued, under any control .order. _Section A
3 of the Act is the pivotal s~ct ion. Section 3(3) empowers the
Central Government, n6tw;t1Htaading anything contained in the
Customs Act, by order published -in the official Gazette, to prohibit:
restrict or impose condtrons o:1 the clearance wheter for human
consumption or for shipment' abroad, of any goods or. class of
goods imported ioto India. Sectiol'l. 4A empowers the Central n
Gover*'nent to levy fee in respect of licences granted , or
·. renewed under any order. made or deemed to · be made ·under
the Act. Sections 4 B, 4 C, 4 D, 4 E and 4 F .are provisions
_relating to the power to enter. and inspect the· power to search, the
'pow~r to seize imported' goods or material, the power to stop and
se'ize conveyances. Sections 4 G and 4 H provide for confiscatioiJ and
c
Section 4 I for the levy_-of penalty. Section 4 J preservs the power
to inflict any other punishment under the· provisions of the Act or
under any other la;v despite the confiscation or penalty imposed
under the Act. Section 4 K. p~ovielcs for adju~ication and Section
4 L entitles the owner of the goods, mat~rials, conveyance or animals D
or other persons concerned to be given a reasonable oppor(unity of
making a representation before any order of adjudication of confis-
cation or imposition of a penalty is made. Section 4 M provides
an
for appeal against any decision or or~er made -under the Act and
Section 4 N einpowers the Chief Controller to exercise power of
revision in cases. where DQ appe,al . has been preferred. SeCtion 5 E
makes contraventions of any orde.c, made or deemed · to be made
under the Act or any condition of a licence granted under such order
punis)lable with imprisonment and fine as mentioned in that provi-
sion. Section 8 empowers the Central Government , to make rules
· for ~arrying out the provPilions of·the Aot. ·
F
The Imports (C~ntrol) Order, 1955 is an order made by the
. Central Government in exercise of the powers conferred by Section
3 and 4·A of the Imports and Exports (Control) Act. Clause 3 of
the Imports (Control) Order prescrib_es that no person shall import
any good:; of the description specified in Schedule-! ~except unde.J; G
and inaccordance with the licence or a customs clearance permit
granted by the Central Government or by a specified offic~r. Clause 5
provides- for the imposition of conditions• subject to which licences
. ·ni!lY be issued. Cla·use 6 prescribes· the situations when the Central·
Government or the Chief Controller . of Imports and Exports may
ref~se to grant a licence or direct any other licensing authority not H
.4 to grant a licente. One of the situations is 'if the applicant· is for
the time being subject to any action under clause 8, 8A or 8B'! .

' '
SUPREMB COURT RBPOil.TS [1984] 3 s~c.R.
· Clause 8( 1) empowers the CeQtral Government or the Chief Control-
. Jer of Imports · and Exports to . debar a licencee or importer or any
·other pe.rson froni imp!>rting any goods. or receiving licences · or
a~otment of the imported goods through the State Trading Corpora-
tion ·ofiudia, the Minerals and Mctals. Tr~ding Corporation of India, ·
or _any other similar · agencies and direct, without prejudice to any
B other act.ion that may be taken ag'airist him in this ~half and that no
licence or allotment of imported goods shall be granted to him lnd be ·
sbaH not be permitted to- im.port' any goods for a specified period for ...---r .
. ~

any of the reasons specified in the clause. Two of the reasons men- ·
tioped in th~ clause.are : " If he fails to comply with -or contravenes
c or attempts to ·contravene or abets the contravention of any condi- ·"
tions embodied in or accoJI1panying, a .licence or an application for
a licence" and ·'If he commits a breach of any law (including any
rule, order or regulatio.n) relating to custom · or the import or export
of g.oods or foreign exchange". Clause· 8A empowers the Central
Govetn~ent or the Chief Controller of Imports to suspend the im-
D portation. of goods by any person or grant of licer.ces or allotment of
importec1 ·goods through the State Trading Corporation of India', the
Minerals and Metals Trading Corporation of India, or any other
· . similar agency, to u licensee or im'iJOrt¢r or any other person penaing
investigation into on-e or more of the allegations mentioned in. Clause ·
8 without prejudice to · any other notice that may be taken against
E him init.hat behalf. The first proviso to Clause SA ·prescribes tbat'the-
grant of a licence or allotment of imported goods shall not ordinarily
. be suspended under this clause for a period exceeding 15 months.
The second proviso stipulates that on the withdraw I of such_ sus.pen-
sion a licenee 91; allotment of imported goods "may be granted to h~m

F
a
for p~riod of suspension, subject to such cbnditions, restrictions or
limitations as may be deciaed by the authorities ·aforesaid keeping in
view cif the- .foreign exchange position, ·indigenous production and
other relevant factors. Clause 8B empowers the Central Government
or the Chief Controller of Imports and Exports to keep in abeyance
applications for licences or allotment of imported goods where any
':- '
G ·investigation is pending ·into any of the allegation& ·mentioned in )
Cla]Jse 8 against a lincensee, importer or any oth~ person subject to
the fulfilment of the req~iremcnt of the satisfaction of the appropriate
authority regarding the public-interest. Since we are primarily con-
cerned in this. case with the vires, · the width and the intt:rprdation of ,
Clause. 8B, the whole of it may 9e 'usefully extracted :-
H·
1'88 : Power t9 keep in abeyance applications for licences- or
allot meuts of imported goods- Where any investigation into. '
LIBERTY OIL MILLS V. UNION (Chinnappa Reddy, J.) 691

any of the anegations mentioned in clause 8 is pending against A
a licensee or importer or any other person,- and the Central
Government or the Chief Controller of Impo.J;ts and Eltports in
satisfied that without ascertaining fuFther details in r~gard to
such allegation, the grarit of licence or allotment of imported
goods will not be in the public interest~ then notwithstanding
anything c-ontained. in this Order, the Central Government" or B'
th~ Chief .ControHer of Imports and Exports ·may keep in
abeyance any application for grant of licence from such.persop,
or direct the State Trading Corporation of India, the ·Minerals·
and Metals Trading Corporation of India, or any other similar
agency to keep in· abeyance allotments of impo~ted goods tb c
sU<;h p~rson, without assigning any . reason and without preju.
dice to auy,other action that may be taken in this behalf:

Provided that· the period ·ror which the grant of such
lice.nct.: or allotment is kept in abeyance under this clause spall
not ordinarily exceeds ~ix months." D
'i' •

Clause 8C authorises the Cen~ral Govermnent to publish or
. cause to be published the name . of such persons or class of persons
~gainst whom action under clause '8 or 8A is taken.. Clause 9
empowers the Central Government or the Chief Controller of Imports E
and Exports or any other 0fficer authorised in that behalf to cancel
any licence granted under the order or· otherwise to tender it ineffec·
tive for any of the reasons mentioned in the clause. One of . the
reasons is ' lf the licensee has committed a breach of any ·of the
·conditions of a licence". Another reason is "If the Cent,ral Govern-
,,
ment is or such officer is satisfied that· the licence will not serve the F
purpose for which· it has ~en grauted." Yet another reason in "If
the licensee has'committed a breach of aziy law relating to customs
or the rules or regulations relating to' Imports and.Exports.of g?ods
or any other law ·relating to foreign exchange." Clause lO(i) provides
that no actioq shall be taken, inter alia, under 'clause 8(1) or Clause
8A or Clause 9(1) against a licensee ,or importer or ariy other. person G
uniess he has been given a reasonable opportunity of being heard.
·cJausel0(2) enables any person aggrieved by any acriontaken under·
Clause 8(1) or lS(3) or 8(A) or 9(1) to prd(:r ·ao appeal to the autho-
. rity constituted by the Central Goyernnient for that _purpose. Clause
11 (4) prescribes,
ii
"Nothing in this order, except ·paragrapil (iii} of sub.clause(3)
of Clause 5, Clause 8, Clause. 8A, Clause 8C and Clause IOC,
•
. .
SUP~EME COURT REPORTS [1984] 3 $.C.R.
A shall appiy "lo the import of any goods covered by Open
Genera) Licence or Special General Licence issued by the Central
Government.:•

We may notice here the argument of Shri V.P. Raman that.
Clause-11 (4) excludes the application of Clause 8B to good~ covered
by Open General Licence .. We find no substance in this submjssion.
Clause 8B expressly provides that action under the clause may be
taken· "notwithstandinganything contained in this order". In view'
of this non-obstante clause, we have no doubt th~t Clause SB applies
equally to goods povered by Open General Licence.
c We may mention at this juncture that Clauses 8A and 8B were
not to be found in the Imports (Control) Order 1955 originally but
' were introduced into it later by way of amendment, to make provi-
sion for the making of ~.Jterim orders pending investigation into.
allegation under Clause 8. . The amendment was · af cons~quence of
the lacuna being pointed out by the Bombay High Court in some
D
cases which came before it.

To be fair · to the learned counsel for the petitioner and the ·
other learned counsel for the interveners, all ofthem were unanimous
about the necessity for a provision like Clause 8!3, and none of them
arg!Jed that Clause 8B would be ultra vires if the principles of natural
justice could be read into· it. The' learned Additional Solicitor
General, . a~ mevtioned by us earlier, agreed -that natural jwtice.
. should be read into Clause 8B so as to provide for a post-decisional
hearing· at the request of the. affected party. Let us examine Clause
8B in the scheme and setting of the Imports (Control) Order a"Qd
-F consider whe_ther natural justice is excluded and, if ·no.t, when and
what opportl.J~.ity may be provided to the affected party~ ·
' . '
Clause 8,. we have seen, empowers the Central Government or
the Chief Controller. of Imports and· Exports to debar a person from
importing goods· or from receiving licences or allotment of imported
goods for a specified period if such person is gullity of any of the
acts of commission or· omission enumerated ·in the Clause. An order
of this immensity cannot obviously be made without due investigation
and wit'hout giving a· reasonable opportunity to the affected party.
Clause 8A and SB refer to. orders which may be made pending inves-
tigatio~ into the alkgations un~er Clause 8 and by·necessary impljca~
H, tion expose the investigative content of Clause 8. Clause 10 expressly
stipulates that action ·under Clause ~ may not be taken unless a
reasonable opportunity is given .to the party concerned. Neither
.. •
LIBERTY OIL MILLS' v. U '!IO~ (Chinnappa Reddy, J.) 69.9.

Clauses g nor Clause 10 pre~cribes the procedure to be followed be- A
fore a final order uude.r Clause 8 is made. · Has a show-cause notice
to be issued first, then followed by an investigation. and finally con-
. eluded by yet another shbw cause notice ? Or is it enough if a show-
cause notice is issued after the investigation is concluded and the ·
person concerned is asked to explain the evidence gathereci.• against.
B
him ? When may investigation be sa~d to have commenc.ed ? Should
investigatiqn be necessarily preceded by a show-c;mse notice.? We do
not think that the Central Government or the Chief Controller is
bou~d to follow any rigid, hide-bound, pre-determined procedure.
The procedure may be different in each case and may be determined
.. by the facts circumstances and exigencies· of each c~e. The authority
may design its own procedure to · suit the requirements of a_n ind~vi
c:
dual ca·se. The procedure must be fair and not so designed as. to
*defeat well known principl~s of justice an.d thus deny justice. That.
is alf. If the procedure is fair it matters not whether the investigation
is prec~ded, interjected or succeeded by a show-cause notice. The.
·word 'Investigatirn' is not defined but in the context it means no ll
• more than the process of collection.of evidence or the gathering of
' material. It is not necessary that it should commence ~iih the com-
munication of an accusation to the person whose affairs are to be
investigated. , That may follow later. When facts come to the notice
of ~he Government or the Chief Controlle)' of Imports which prima
facie disclose an act or omission of the nature mentioned ~n Clause 8,
the authority may straight away communicate the allegations to the
person concerned, s_eek his answer and proceed to further investigate
or the authority may cons!der it more prudent to further satisfy itself ·
by seeking other .evidence or material before communicating the
al.Jega'tions to the person concerned. There is 'no rule of justice· oi
fair play which requires the authority to seek the comruents of the
person. concerned before embarking upon an investigation. Investiga-
tion commences as soon as the authority decides to .take the first

,
step whether by way of seeking evidence or by way of seeking an
--), explanation from the person concerned. On the initiation of a
proceeding under Clause 8 by the commencement o'T investigation;
the authority has to address itself ~o the Question whether a'ny'action
of an interim nature to prevent further harm or mischief is warranted
pending investigation: Licences may ~ave already been issued and
allotment of imported goods may have already been made. The
authority may consider it . desirable to prevent the person from im·
'ported goqds pursuant .to the licences or to prevent him from ~-
•
obtaining the imported.g0ods allotted to him througq the specified
aBencies. If ~o, the authority may make an order under , Clause 81\;
100 . ~tJPREME COURT REPORts [1~84] 3 s.c.R..

...A ' S.1.5pending the importation of ·goods, the grant of ·licences or the·
allotment of imported goods. But Clause 10 provides that no action
under Clause 8A. n:iay be taken without "giving a reasonable opp~rtu4
nity to the person concerned. . It is obv~ously thought th~f the right
such as it may be, to obtain · a licence or allotment of goods having
become.crys~alised into a licence or an allotmeut, an order under
B Clause 8A may have immediate and g·rave prejudicial reJ:?el'cussions.
on the person·concerned making it ·desirable that he· should be heard
bef~re an ordet of suspension is made. · So it is that Clause 8A
contempla·es a pre-decisional hearing: On the.other· hand, licences
may not yet have been issued and· allotments may yet have to be
made. The approprite authoi'iiy may be satisfied that it would~ not
c . be in the public interest to issues Jicence·s or make allotments to the ·
person concerned, without ascert~ining further. details with regard to ·
· the allegations against him. In such cases, the authority may make •
.an order of ·'abey~nce' under Claus~ 8B. Though the language of
.. · · Clause 8B is capable of being read as if it applies to both allotments
D already made and allotments yet to be made, a reference to the
marginal head, in the background of what has been provided for in •
Clause 8A, makes it clear that Clause SB applies only to allotments .
jet to be made and licences yet t9 be issued. That clearly is the
. contextual construction of Clause 88. Read· in any other manner,
there will be a totally unnecessary . "over-lapping of and a needless
conflict between Cfausds SA and 8B, with freedom to, the authority to
. to pui:stie action either under Clause 8A or Clause 8B each providing
.
.a .different procedure.of of its own. We do not ·think' that it is per-
missible for us to read clauses SA ·and 8B in a manner as to create
needJess conflict an.d .confusion ·when the two Classes. a.rc capable of
existing separately, without encroach.ing upon each other. Contextual
construction demands such a construction a: d we have no hesitation
in adopting it. Clause 10 which ptovides for a reasonable opportu-
·nity before action is taken under clause 8A, does not make similar
provi.sion··in the- .case· of action under. clause 8A as weU as action
under clause S.B are both in the .nature of interim orders of tempo- .
G. rary duration aimed at preventing furt.her harm and mischief pending
in\'estigation into the al)eg11tions under.clause 8. D~:es it ·me~n that
.,
\-·

· . the principl.e ::>f natural justice of procedural fairness is to be alto- , .

. gether exclude~ when action ·is taken under clause 8B? We do-not
· think that it is permissible ·to interpret· any statutory instruments so
'
a as to· exclude natural justice, ·Qnless the language of the instrument
. leaves no option. tq the court. Pro.cedural fairness embodying natural
jUstice hr to be implied whenever action is taken effecting the..rights
UBERTY OIL MTLLS v. UNION (Chinnappa Reddy, J.) '701
. A
of parties. It may be that the opportunity to be heard may not be
· pre-decisio~al ;· it may necessarily have to be pre-decisional where
_the danger to be averted or the act to be prevented is imminent or
where the action to. be taken can· brook· no delay. - If an area is
devastated by flood, one cannot wait to issue show-cause notices for
requisitioning vehicles to evacuate population. If there is an out-
break of an epidemic, we presume one does not -have t<? iss,ue , show~
B
. cause notices to requisition beds in hospitals, public or private. - In
such situations, it may be enough to issue post-decisional notices ..
providing for an opportunity. It may not e'en be necessary in some .
situations to issue,such · notices, but it would be sufficient but obliga-
. .
~,
tory to consider · any representation that may be made by the ·c
aggrieved·person and that would satisfy the requirements of proce- ·
dural fairness and natural justice.. There Can be no _tape-measure of
the extent of natural justice. It may and indeed it must vary from
statute to statute, situatio~ to situation and case to case. Again, it .
is necessary to say that pre-decisional natural justic~ is not usually
contemplated when the. decisions. taken' are. of- an ii!_t~ri_m nature. D
pending investigation or enquiry. Ad-interim orders may always be
made ex-parte and suc;:h orders tnay themselves provide for an oppor-
tunity to the aggrieved party to be beard at a later ~fage. Even if
the interim ord~rs d~ not -m-ake provision for such an' opportunity, an ~
aggrieved party has, nevertheless, always the right to make appro-
E.
priat~ representation seeking a review of the order and asking the
authority to re'Scind or modify the order. The principles- of, natural
justice would be satisfied' if the aggrieved party is~giyen an opportu-
nity at the request. There is no violation of ~ principle ofnatural
justice if an ~x-parte ad-interim order is made unless of course, · the
statute its.elf provides for a hea.ring before the order is made- as in -
clause 8A. Na:tural justfce will be violated if the authority refuses to F
consider the request of the aggrieve~ party for an opportunity to
make his representation against the ex-parte ad-interim orders. .

-
In tbe Qeen v. Randolph et az.t, the Supreme Court of Canada
J
had to consider the ·question whether an interim order uncter s. 7 of .. G
of the Post Office Act prohibiting the delivery of mail directed to or
deposited by a pcmon · in a Post Office may be made without prior
potice to the person affected, pending the final determination which
CQuld only be made after hearing the. party affe<;:ted. The .Supreme
.
Court said,
,;
- (1) S6 D.L.R. (2d) 283
H
102 SUPREME COURT REPORTS (1984} 3 S.C.R. ·
A "tn s. 7 it has not abrogated It (i.e. the a.pptication of the
maxim audi alteram paterm) Rather it has provided that befofl:l
any final prohibitory order is made, the party affected shalt
have notice and a right to an expeditions hearing and has
defined the procedure to be follqwed. It would, in my opinion, .
r B be inconsistent with the scheme of the section to hold that
before making an interim order the Post-master-General must
hold a hearhig. If sl]ch ~ duty existed it would be a duty to
notify the party affected of what was-allged against him and to·
give him a reasonable opportunity to answer. If this were done
the hearing prescribed sub-s. (2) would · be· an unnecessary
·C repetition. Gener~lly speaking the maxim audi alteram partem ,J

has reference to the making of decisions affecting the rights' of
parties which are final in •their nature, . and this is true also
· of s. 2 (e) of the Canadian Bill of Rights, 1960 (Can.), c. 44
upon which the respondents relied." .

,D "The following passage in Broom's Legal Maxims lOth ed~,
p. 68 is in point :

Although cases may be found in the- books of decisions un·
der particular statutes ~bidl at first might seem to conflict with
• the maxim, it will be found on con~ideration that they are not
E inconsistent with it, for the rule, which is orie of elementary
a
_justice, only requires that man shall no~ be subject to final .
judgment or to punishment without an opportunity of being · "4-
heard."

"The main object of s. 7 is to. enable the Post~master-Gene
F ral to take prompt action to prevent the use of the' mails for the
purpo~e of )iefrauding the public or other criminal activity.
That purpose might well be defeated if he could take action
only after notice and a hearing. _,.,.Sub-section (1) enables h)m
to act swiftly in performjng the duty of protectipg the public \-•
'·
while sub-s. (2) gives protection to the person affected by_ ...
G,. conferring t_he right to a hearing before any ord~r made against~
him becomes final. · · ·
..
''In n:iy op~nion, the two interim prohibitory · orders in ;
questionwere validly made." . '

In the Comroission(fr of Po!i~e v. Tanos/ the;: High Court c,>f
H
•
LIBERTY OIL MILLS v. UNION (Chinnappa Reddy, J.) ,03
·.~-
Australia (Dixoll C. J and Webb J.) was considering the question .A
. whether an ex-parte order of closure of a Disorderly House may be . ,
· made. It was observed) ·

" ......it is in a broad sense a procedural matter and while the
general principle must prevail it is apparent that exceptional
cases may be imagined in which because of lome special hazard B
or cause of urgency an immediate declaration is demanded.
A power.to regulate pro~edure might be treated as authorising
regulations allowjng an· exparte ord.er in such cases. Under the
power conferr.ed by section J5 upon the Governor-in-Council to
make regulations this very course seems to have been adopted.
Regulation I provides that if the judge is of the opinion that
c
reasonable grounds have been shown (i) he may make the decl!;l~
ration immediately aild ex~parte if this seems to him necessary
or desirable,· or (ii) if he thinks thaf an opportunity should be
given to the owner or occupier . or both to oppos'e the making
of the declaration he may direct them to be served with a copy'
of the affidavit and to be notified of the day on which the
matter wilt be dealt with, such service and n~tification to be
effected in such manner as may ~eem to him sufficient : 9hen
the matter tomes on, the Superintendent' or Inspector of Police
or counsel· or solicitor on his behalf' and the owner and
occupier or counsel or solicitor on their behalf may attend and
be heard, and the matter shall be disposed of iii public .cham·
bers.' This regulation may perhaps be read as leaving the choice
of course at large to the judge. But it ought not so to. be
interpreted. It· should be .understood as meaning that prima
facie the l(ourse provided for in para (iii) should be followed and .
: onJy in exceptional or special cases should ap immediate F
declaration be made. The analogy is that of an interim
·injunction, but· the caution should be greater because the
declaration; unless it is framed as provisional or conditional,
concludes 'the right subject to rescission.·
G
"It may be added that probably a declaration improperly made
ex-parte may be rescinded or set aside on an application m·ade
•• independently of s. 4(1}.,

· In Lewis ;,r; Heffer1, Lord Denning MR distinguished the
observations of Megarry J. in John v. Rees and observed,
...•.
~

'
(1) [1978] 3 All ER, 35~
·'

704 SU~''RF~m couRT RETORTS [1984] 3 s.c.R.

"Those words... apply, no doubt, to suspensions which· are
inflicted by way of.punishment, as for instance when a member·
'ofthe Bar is suSJ?ended from practice for six months, or when
· solicitor is suspended from· practice . . But they do not apply to
s·uspensions which are made, as a holding operation, pending
enquiries. Very often irregularities are disclosed in a govern~
· ment department or in a business ho~•se ; and a man Play be
·suspended on full pay pending enquiries: ~uspicion may rest
on him; and so he is suspended until he is cleared of it. No
' one, so
far as I know, has ever questioped .such· a suspension
on the ground that it could not be done ·unless he is given
.G i10tice.of the charge and an opportunity of defending himself,
and so forth. The suspension .in such a case is merely done by
way of 'good administratiQn. .A situation has arisen in which
something·must be done at once. The work of thei department
or the office is. being · affected by rumours and suspicions. The·

n·
others will not trust the man. In
order to get back to proper ..
work, the man is suspended. At that stage, the rules pf
natural justice do not apply ; : see Purnell v. Whangarei High
Schools Board. •• ·

In F~rnel/ v. · Whangarei High" ,~chool Bd. the Privy Council
• 'II! ' ~

upheld the order of suspension of a teacher pending determination of
charges against him. It was observed, · ·
. '

"Neither in the regulations nor in· the Act is suspensioA classi·
tied as a penalty. Sectiori .1 57 (3) shows that it is not. It must
. however .be· recognised that suspension· may involve hardship.
F . During suspension salary is not pai<l and apart from this
something of a te~pporary slur may be .invplwd if a teacher is
suspended.. But the regulation~ (by regulation 5) cleady con-
template or lay it down that .tht: written statement of a teacher
(under regulation 5(2)) and. the oral personal statement (tinder
regulation 5(3)) will be made after suspension if an~ has taken
G place. Suspension is discretionary. Decisions as to whether to
suspend will often be diffictdt. Members of a board who are
appointed or elected to act as the governing body of a school
·must in the exercise of their responsibilities bave- regard not
only to the interests of teachers· but to the interests of pupils
and of parents and of the public. There may be occasions when
H ha.vin~ regard to the nature of a. char~e jt \'/ill be wise, in tbe
·. ~

(l) (1973} Appeal Cases 660 .
'-..........__
---._
LiBERTY OiL MiLLS v. UNION (Chinnappa Reddy, J.) 705

interests of all .concerned; that pending decision whether the A
charge is substantiated a teacher should be suspend(:d from
duty; In many cases it can be assumed that c11arges' would be .
denied and that only after a full hearing could the true position
'' be ascertained. lt is not to be assumed that a board; constituted
'asit ~is, will. wantonly exercise its discretion."
B
We have referred to these four c~ses only to illustrate how ex-
parte interim orders may be made pending a final adjudication. We
however, take. care to say that we do not mean to suggest that
Natural Just(~ i-; not attrac~ed when orders of suspension or like
., orders of an interim nature·· are made. Some orders of that nature,
intended t~ prevent further mischief ·of one kind, inay themselves be
productive or greater mischief of ~nether kind. An interim order of
stay or suspension which has the ~ffect of pr~venting a person, · how-
ever, tempor!ll'ily, say, from pursuing his .PrOfession or line of busi-
ness, niay have substantial, serious hod even disastrous consequences
to him and· may expo~e him to grave risk and hazard. Therefore, D
we say that there must be observed some modicum of residual, core '
natural jt;1stlce, -sufficient to enable the effected person to make an
adequate representation. (These considerations may not, however;
apply to case• of liquor licensing wbicti involve the grant of a privi-
lege and are riot a matter of . right : See Chfngleput Bottlers v.
Maj~stic Bottling,CompallJ, Civil Appeal Nos: 11970-71 of 1983).
That may be and in some cases, it can only· be after. an initial ex-
parte interim' order is made;

As we have seen, both clauses 8A and 8B contemplate action of
an interim nature pending investigation. into allegations under clause I'
8. Ordinarily, in the absence of anything more, it would not be
. necessary to ·give an opp9rtunity to the person concerned before
proceeding to take action' under clause 8A or clause 8B. But while
clause· 8B ·deals· with the right · to obtain licences and the right to ·
obtain allotments, clause 8A deals with rights which hav~ flowered
into licences and allotments. A person to whom licences have been G
· granted or allotments made may have arranged his affairs on that
basis and entered into transactions ·with others, and; to him the
consequences of ac.tion under clause 8A may .be truly disastrous
whereas tl:le consequences of action under cla"Use 8B may not be so
imminently harmfut )tis presumably because of this lively difference
between clauses SA and 8B that clause 10 provi~es for a pre-deci- H
sional opportunity in the case of action . SA and does
. under clause '

not w provid~ ip the· case of actiotl UTlder cli!U£e 8B. A~aini jt. js.
·'
706. ·..• .._ - ;; SUPlt£Mil COURT REPORTS '[1984] 3 S.C.R.
A
--r·
presumably because ofthis d·Hrerence that clause JO white providing • : - ·
f.or an appeal against a. decision tinder cfause 8A does not provide for
an appeal against a decision urider c1atise 8B.- -Not that it makes any
difference because S. _ 4tvt arid 4N of the Imports and Exports
(Control) Act provide for an apptaLarid a revision against any
deCision or order made under the Act. which naturally include any
B d~cision or .made under any subordinate legislation. made under -the
Act, and this right_ of appeai ·~nd revision ·cannot· be whittled down
. by the subordinate ie8isJadon. As we mentioned earlier, it does not'
. mean thafthe requirementS of ~atiual )ustice are not to_be met all at
.mthe ca.Se of action· under tianse SB. The ··requirements bf natural
·justice
c ~g•• bona will b~ l'llet in the case of actbn..: under . cJ:iuse 8B by copsider.,
fide~ any repreSentation that may be made in that behalf .
by the person aggtie~ed. · Clause SB . itself-gives an indication tbat-
such a post-decisionalopporttinity .on the. request of the persoii eon- ..
'<erned is contemplated. __We ·have seen that action under·clau-se 8B .
. is to be taken if the_' au tbority is' satisfied 'hi the' pubJic interest that
D such -action may be. taken without ascertaining . further detail, in
regard to tbe aUegaUons. ·n cleatly implies that when further facts-
. are ascertained by the aUthOrity ot . brought to tbe notice' -of the
-, autb6Hty. ~ch -action l:miy be reviewed•. As we have earlier pointed
: out while e~~patte interim 6tders tnay be
ah'vays. made without a pre-
-· dedsiona·l opporhmity or- \ttthou~ the_o_rdet _itself providing · for a _
E- · post~decisional opportunity. the principleS of natural justice which""
- are never exdudcil will 'b e satisfied- if a post-decisional opportvnity .
. is given if demanded. So we hoJd tllllt in the · ~ase of action - under .... _
- -~clause 8B it is not necessary to give a pre.dedsi;nal ~pportunity but
- . .. ' opportunity must be given if so zequested
a post decisional . . by _the •·
person affected. · • "' .
F
--· -_ _The ne~t question for consideration is.\Vh~thetthe decision to
- .keep in 'abeyance' should 'be communicated to the. person concerned.
There can be no two opinions · on· this. _ Ours is a Consthutional
Government', an ·opel:'l 'dernocracyfourided upon the rule· of law and . 1

'G not i(cJoak and .1.hgger re~imen~ ·. It is io:conceivable that t,mder our
eonstitutiona! s::heme a 'decision of the kind contemplated by dause
8B which may 'have the effect of b'rioging ~to a !startd {still the ~ntire -
" business 'activity of the person affected and which !flay :even 'spell rui:Q.
to him. ' should be made abd ·implemented 'without .being communi-
cated to·'that person. Intertwined fs ' the question of: observance of
H 'natural justice and bow 'can ·.oa'tural justice: be satisfied if the decision
is not even communicated ? It would be most arbitrary and -quite
.. clearly
.
of
violative . Atticle$
.
-14_. and 19(i)(~)
.
of the
'·
t;onstituti<?q
.
-~r ·
•.. --
LIBER."IY oiL 1.i1i.Ls v. tH.NoN. (Chinnappa R~ddy; j,) . 7ot
' ', + - • - • ' -· ~ • •

,.clause 8B is .to ,be interpret~d a~ ~xclud!ng communicatio~ of the A·'
, deCision taken.' Cfhere. is ~ot~i_n_g ,·Jn Clause ' 8B t~ ~~g~est that the·
. decision is riot to be communicated. · On the other hand, the ex pres· . ·.
·~\on· ·~.without a~sigt:ting~apyre~~on'~jn;tplies ~hat .,tpe .de~ision bas to ·
be.commuuicated,.l;Jut r.eas.ons for the d~cision. have riot to be stated.
; Reasons, of Ct;)Urse, ·,mu~~ ~xist.forthe·.~eCisiQn ~.ioce. the decision may
is
only .be Jaken iC the autho.rjty ,satisfi~d ihat.the '.iran·t of licence or B
·. ~a,ll~tm~nt ot,impor_:~ed_goo~s >YH~ pot i,e:
~~n', ~he ~mb.Iic interest. We
;,must make :it clear .that \vith9ut a~signing ,teas9.ns' only means · that
·there·· is Jlo ;,opligation io fp!mul~t~ rea:Sons · .a.nd,' nothing .. more. ,
~For mal reasons .m~Y lead ,~o.~oinplic3:tio~s ~lle_n: ,the ..~~tt.er is still
·:: under ;investigatiqn. · ;So ~be ~_uthoriJy m<,ty not -~~h;e formal reasons, - c
..· :b11t the S~e!et~J allegationS ~\,1St ,be mentioned ,in ,OT~ler to. proyide an _
· · f ~PP9.~tunity: to . ,the _person _aff~cted · ,to ; ·m~k·e ,~s ~epi'e:s~~tl\tion,
: Cbap~er ppd :v~rse.pe.ed,riot,be .. quot::d . .- Details.,may .not be. men--
r tioncd and ~-n PU.tl~~e of ;t~e flll~gat~'?DS .S~O!lid_ ~)e. suffid:ent..·
.. - "-w •••

•'
D
. :The further- question .is. on .
what , should . the :~:1tisfaction be
1 based ? ~Since a~tion under. clause S.B .is. to,be..tak,en pending investi·
gation in.to allegations under clause 8, . we must take it..t.4at :the action·
under clause 8B is really in aid of the ultimate order under clause 8.
·It must follow that in order to invite the satisfaction contemplated by....,
E
clause 8B there must be pr~s;~t -some 'strong s~spicion of one or
the
/

. other ~r more of grounds' ,mentioned Clause 8. Since t~e action in
· whi<;h is of a drastic-nature. is to be taken expartc,•if must necessarily
~
-.-be animated by . -
a· sense.
I .
of.
. •.
urgency
.:.
.. Th()
.
·sense
. -
of urgency may be ~ I •
· · infused by a host of circumstances such as the. traffickmg and unscru·.
pulo~~ peddfiog·in licences, ·t~rge. scale misuse. ofimpo_rted goods,' ·F
.. 'attempts ~0 ni'o!lopolise or corner ,the market, wholesale p-revalence .
. of i~prop:r practices among-classes -~f impor£ers,. public Sentime'nt
_etc.. e.tc: : O~e of the submissions· very:strenuously . pressed before us
was that public se~tiroent, was wholly . irr~I~,varii ·in arriving· at· the
.._satisfact~on. corite~plated by Ciause. 8B. · ·We,are unable .to agree. It.
is
_is true that public administration. not to. be run on· public Si:ntiment G
. and statutory action may only be taken on;-gr(!t;nds permitted by the
l. statute. But strong-public sentiment niay jropart a sense · of urgency ·
to a situati~n such as ' tocompel-tbe ·:authorities to proceed to take
pr
.. action. u~uet a statute 0 yided. of. course· grounds for taking .action
,under the statute... Public sentiment knot, in. such.cis'es,the ground
fo~ th~ action but it is what ·clothes the ground with,1ll~t· sense of H
urge:1cy which makes it imperative that swift action be taken. That
.. is how we understand the referrenc~ ·to public . sentiment in the
~ .

1o8 [1984] 3 s.c.it: --f'

A · counter affidavit fil~d on behalf of the Union cj India and the _Chief
Controller of Imports and Exports. r

Public interest must nolens yolence be the paramount· consi-
deration; If the threatened public mischief is such as to outweigh the
likely injury. to the party. the authority may take action under Cla'!lse_
B 8B~ If the t}lreatened public injury, is very slight C<?mpared 'to the
· 'harm which may be done to the party, the authority may not take
action under Clause 8B. There inay be cases where the 'abeyance'
orders may themselves be produQtive of serious public injury as where '
a substantial amount of for~ign eXchange may be lost or a large
number of. workers are likely to' be thrown out of employment
c etc. In such situations the authorities may pause and have second
thoughts, consider the inevitable consequences and be guided by that
element of the public interest whiCh ()Utweighs all others. Which
element of the public interest should be given greater' weiglrt and'
. which' grounds should weigh at all are. matters for the authority
(
taking action under Rule 8B. Courts do not concern themselves.
D with the sufficiency of the grounds on which action is takea or with
the balancing of competing considerations, in favour of and against
the action. ·
' "
'
One of the submissions very strenuously urged before us was
that a large number of the applications for import lincen¢es and
E allotments of imported goods which have been kept in 'abeyance'
relat~ to goods which are totally. unrelated to beef tallow or any
other" animal tallow and there ,wa~ no justification whatever for keep-
ing them in· 'abeyance'. But an 'abeyance' order under clause 8B is
directed, not against any particular· type of goods but against an
' importer. licen~ee or other person against whom an investigation
into allegations under clause 8 is pending. The question is not
. whether any particular type of goods sbou'd be allowed to be impor--
'ted or allotted to any person-that is a question of policy-, butwhetl;ler
• it is not in the. public interest that a particular person should be
·· prevented from obtaining import licences or imported goods of any
·description pending investigation into the . allegations under clause
8B. That would depend on_ the nature of tbe allegations, the extent ·

element . of the public interest. 'f
of involvement of the per~on concerned ahd, most important. the
the allegations against· a person·
in~ovle hi~l deeply in trafficking or racketeering in import \icences
and irr1'ported goods, .the authority may consider it inexp~dientin the
H public interest to _keep in abeyance any applica~ion of hi~ for the
.. grant of a licence or allotment of goods. on the other hand even if
the -alle~~tions are grave~ if the effect of an order under clause 8B is .
'.
LiBBRTV OIL MILLS v. VNION (Cittnappa Reddy, i.)

· likely to result in loses or" considerable foreign exchange or. to shut A
down an if.idustry throwing large number .of workers' out of
employment, the authority should restrain itself in larger public
interest, from · making an order under clause 8B or ·may ma~e a.n .
order confining the abeyance order to . applications atid goods of
certain descriptio~ oa\y instead of making a, general order which .
extend') to alt . applications for import licences and allotment of · B .
. imported goods. . Again, the allegations. may reve<!l that the ·
involvement o.f the person in· illegal a..ctivity' is so remore or minimal ·
that . it would t5e entir~ly inexp~dient to inake an order clause.~B.
· A. person ~ho ~egitimately purch~se's . ,.importe<;l ·goods or imports
gOOQS unde( a licence .lawfully acquired by him and who has used c
the goods in· the manufacture of a different kind of goods ·in which
industry the person . is en,gaged may not be visited with an o.rder
under clat111e · 8B merely because the original licensee's actions may be
· suspph;:ious. ,Again where· a person's bonafides are not susP._~ct ar
all· but he may be ·technically at fault or he inay have acted on tr ·
bonafide interpretattion of the rules and regulations, it may -not be
a case for making an order under clause SB. B~t -these are all matters
·for the consideration of tl:e auttority making the order uiider clause .
8B and not for the Court.

We have held that ·action under Clause · 8B is ~f. an interim E
. ..,_...~- ·
, nature and it may be ex-parte, in · which case the affecteq party may
J
make ·a suitable representation bringing out all Jhe outwbeighing
.
· Circumstances in his favour . . That is the real remedy of the party .
.·Courts do · not enter the picture at that r.tage unless . the action is
lJ.lalafide or patently without'juiisdiction. The action will be patently
without jurisdiction if it is not based on any relevant material what-
soever. ~f the authority de~lines ' to consider the- representation, or
if the authority after consideration of the representation eschews
relevant consWerations and prefers to act on irrelevant considerations
or from oblique motive, or the decision is such as no . reasonable man
_, · propefly· "directed on the . law would arriv~ at on the material facts,
it will be open to the party· to seek the intervention of.the Court at · G
that stage. Our attention was drawn to tbe · well known . cases of
v.
Barium Chemicals Company Law Board1, Rohtas Industries S.D. v.
Agarwala, M.4. Rasheed v. State of ·Keralas, and · the recent cas-es

(1) [1%6) Supp. SCR 311 .H
(2) [1969]3 S.C.R. 108. .
z
(3) [19751 s·c.R. 93
...
·

710 [1984] 3 S.C.R.' . _._,..-

A ·of SlmfiniSoni v~ :fJtrfon .Offndia1, 'And @oNJmissivner of /nc(Jme Tax·
1'. Maltindra and Mt.t#fttdraz Mid •dm~ conaide.roo all oft.hesi in
-~llrrivnrg at our cooolusi6n;

•
' ' In the ·present· case~ the party instead of representing his
. case to the appropriate authority · ch-ose · the path. ·of rJitigaiion
B·
obviously· deterred by the clumsy.· at'tempt at secrecy made by the
concerned authority arid the failure to communicate the decisien to
ihe party.' One of the sul:mli~~ioos made to·us·was that the:abeyance
·order was never ·rorroiiny ·commurricatod- to-the-petitioners and it·.was, .
.....
therefore, to be_ 'treated ·a~ ·non est. :•Reliance :was placed onthe
c decisions of Bathhittar Singh v. ·Stttte ·of Punjab8 ·and -State qf :Runjab
· v. Balbir si·~g'i 4 • We do n6t think· that fbese decisions are of any
facility to us
on th'e fa¢ts of'the present ·case. 1'ln 13achittcir Sirrgh~s
· case, what was decided \'.las 'that a decilion taken •in -tthe privacy of a
Minister's Chamber, which was DOt communicative to 1he·panty and . k.
which was tevers.ed without ever ,;~lt1g communicated was of no
effect at all. In B-olbir Sin'gli's Cltse, it '\~''l<;'held:that once ·an: order
was sent out, aQd went out 'beyond· thc·"ConiTol ·ohb.e ·ailthor.ity, the
order niust ·be said to have 'been issued no"'l'lat~r ·when ·the party
affected actually received. it. Communication,_ according toilearned
• Judges, was the process of setting in motion the despatc~ of the
-order. It was .held in that case that forwarping of copies to tne
E Accountant General and to the Ch~ef Engineer was sufficient com-
munication. ~n the ,present case, the 'abeyance' order was undoub.
tedly communicated to the licensing. authorities, the State Trading
Corporation, the Minerals.,.and Metals Trading Corporation and.
ot~er similar.~genci:es. Despite the attempt at secrecy made ·by the
concerned authority and tht failure to formally comm~nicate
F
the decision to the party, the abeyance circular was very soon
public knew ledge. The affected· ·party also learnt~ about it. but
·· probtlbiy ·deterred by the attempt at secrecy, chose. the p~th .of
litigation, instead.of teprcsentil)g hi& case to the appropriate authority.
We might have considered the question of what relief the petitione~s
G were entitled to had the .secreqy.been maintained and knowl~dge
. of the order · continued to be h.eld back from the ·party. But the
person affecte.d did come to 'know of theorJer-he filed a copy of the
circular a tong with: the·writ petition-, and in ther final ~natysis, the

-·-~---- · -- -·-·----...-~.---__...___

H , O> _198ll s.c.R. 962.
(2) [l983 4] s.c.c. 392
(3) 11962] Suppl. S.C.R. 37 ·
(4) [1976) 2 S.C.R. 115
·------,.--~- __~
-.....,.

tmEnTY OIL MILLS V. UNION (CJ.innappa Reddy, ,J.). 711

object of communication is oniy to impart knowlcdg~. · Since tllcn, a·
· volume of water has flown under the bridge and we must proceed on
the basis that the affected party is aware of the decision and so, what ·
next 7 We C30 not, of course, pro:ced to consider the qu~stion
whether there is s~fficient relevant material in support of the allega-
tions made against petitioners. In facl we can-not ent~r upor. the
I ;;:.
B
merits of the controversy at all. We cannot, for example, consider . :i,.
the question whether the material a'l':litabte justifies a prima facie
·conclusion that the petitioners have made illegal imports of beef-
tallow. Accordiog to the contention of the petitioners, they were
entitled to import beef taliO\V even after June 5, !981 if they had.
valid licences and if .they had en tered into firm contracts and opened . c
letters of credit before June 5, 1981. According to the authorities
to is was not permissible ; the affect of paragrnph · 222(.3) of the ·
Import Policy was th1t the amendment which was made on June 5, ·
·1981 took effect from April I, 1981 and permitted import of beef
tallow. under OGL only where 'firm contracts had b.:en entered into
and letters of credit had been opened prior to April I, 1981 but if D
the contracts had not been. entered into and letteo of credit had not
been opened hefore April I, I 981, the imports had to be through the
channel of the Stute Trading Corp oration only. Though in the cases
of A rvind Exports nod Jayant Mills is an appeal and review arising
under the provisions of the Customs Act, ·the questio n was decided
in favotir of the parties, the present stand of the" Government is that E
those decisions are not binding on the authorities functioning under
the Tmports (Controi) Order and that those decisions had been
rendered without reference to paragraph 222(3) as welt paragraph 24
ofAppendix 10 of the Jmpolt Policy of 1980-81 which e~pressly
states: ·:r
"Nothing in t he Open General Licence shatl affect the applica·
tion to any goods, of any other prohibition or regulation
n!Tccting the import thereof, in force, at the time where they
nrc tlctunlty imported.'' . .
'we consider that this i~ not a matte·r for the court to decide nt this
~G
stage in a peiition under Article 226 of. the Constilution or under
Article 32 of the Constitutio n questioning an ad-interim order under
Clause SD. Again we cannot enter into. the controversy . wheth~r
there has been mis-ur ilisation of the import~d goods by the pcll-
tioncrs and whether the petitioners cun be termed as 'actual users' -
within the meaning or that expression in the Import , <:ontrol Ordc.r H
by the mere fact thut they subject the beer tallow to atr-treatmc~t:
All thcsequestions pertain to tbo mcr..its of the controvcr1y and 1t ts
9t for us to co; bark info a discussion into these ~alters.

~ -- ·- .~-··
712. I ·SUPREME COURT REPORTS ·: [1984] 3 s.c.R.

A . But we may properly consider, even at this stage, the question
of mala fides 'or patent lack of jurisdjction: There is no suggestion
that the action wa'S mala fides. It was, however, argued that ·the
order as embodied in the abeyance Circular- did not fulfll the con~
. - ditions-precedent prescribed by the statute It did not contain a
re~ital of the allegations constituting the basis of ~he satisfaction
B . ·contemplated by clause 8B for action under that prov}sion, and with-
out a recital of the allegations it was impossible to say that ~he 'action
was not based on irrelevant materiaL' It did 'riot even recite that '
which was the foundation of any action under clause 8B, namely, the
· satisfaction of the ·authority that the action was in the public interest.
c On the other hand, it i~sued a directive to the. licensing authorities to
keep in abeyance for a period of six mo.nth~ any application received
from the concerns specified for the grant of import licence or cus-
toms clearance permit and al!otroent of imported goods through'
agencies like the State Trading Corpt.ration of india, Minerals and
Metals Trading Corporation of India arid similar- agencies, making a
D bare recital that investigations into certain a}ltgation!' under. clause 8
were pending agahist the concerns. Again a large number of con-
cerns were lumped together and purported lo be dealt with by a
single abeyance circular. There was e:~:.f~cie nothing in the circ~lar
w~ich could point to tP.e a'uthority having ~PQlied its mind and
considered. the case of ,each concern separately. It is true that the
I abeyance circuiar suffers from every one -of these jnfirmities and if
·there was nothing more, the parties' would be well entitled to ask us ·
to quash ·the circular. But the learned Addl, Solicitor Gener.al
invited our attention to the statements· rpade by Shri J.P. Sharma,
Deputy Chief Coiltro11er of Jmp<?rts and Exports ·and the author of.
the abeyance circulars in the counter affidavit filea by him. The
... r - ' learned A.dditional Solicitor General lias also placed before us for
our perusal the relevant filesof the .au!hority.~ The counter-affidavit . •
of Sbri J.P, Sharma shows that th.e princip!il allegations against the
P,eti't,ioners were that they bad prima facie indulged in illega1' import-
ation of beef tallow and had also misutilised the b~f tallow. Why ·
G . the authority tOok. the prima facie view that the petitioners had .
illegally· imported beef.tallow and had mis:utilised the imported beef,·
tallow has been explained by him in the count~r-affidavit. Illegal
importation of beef tallow and mis-utilisation of •the imported l~eef
I" . .
tallow ars ce'rtainly relevant grounds 0n which actio!) may be taken
under clause 8B. We are, of course, not ~onj:erned with the question
ii · • · of the .sufficiency of material before the authority in arri•ling at its
conclusion. A persual of the fi1es shows that ·in respect of nine of
t the firws:covered by the !lbeyap.ce circ\llar ~ated :No,ereb~r 71 1983 1

..
tiBERTY OIL MILtS v, UNION (Chinnappa Reddy, J.)

the decicision to kee) their applications and allotments in abeyance A
·".~as taken at the highest level, that is, at the level of the Minister
• for Commerce, Government of fndia. Thereafter the Deputy· Chief
Controller of Imports and Exports, the files show, considered the
cases of 61 concerns including that of Liberty Oil Mills Limited .
. and issued the a!>eyance circular dated No·.-ember 9, 1983. We find
·that the <;ases of Liberty Oil Mills Limited as well as other concerps B
were separately and individually considered. Their cases having been
considered by the authority separately and individually before the
circular was issued, we do not think that it makes any difference· on
the peculiar facts of this case that a single circular was. issued,
covering a large number of concerns. Ho}vever, we wish to impress
upon the authorities that those entrusted bY, statute 'With the task
c
of taking prejudicial action on the basis of their s.ubjective satisfac-
. tion should, first, bestow careful attention to the allegations forming
the basis of the proposed action and !he probable consequences
which may ensue such action and, next, take the trouble of reciting
iQ the order issu.ed by them the satisfaction forming the basis of the D
action and a concise statement of the allegations forming the basis of
the satisfaction .. If the necessary recitals are not found, there may be
serious sequels. In cases involving civil liberties, the orders will
necessarily have to be quashed. In other cases also, it is possible to
envisage similar results depending on the _rights'involved, th~ object
of the statute and other facts ansi circumstances. As it is the circulars
in question are hopelessly drafted adding to the confusi'On created by .
the sadly drafted Clause 8B. In the facts and circumstances of this,
case, the real remedy of the party, as we conceive it, is to make a •
representation to the concerned authority setting out his version of
the facts and the. law and the prejudice to himself-and the public
inteyest as a consequence ·of the action under clause 8B. We would F
· have first directed the authority to communicate, within a specified
. time, to the party ihe allegations forming the bMis of the action.
But we do not consider !t necessary to do so as the party is now fully
apprised of the all~gations against him. In the circumstances, we
think that it would be proper if we direct the authority concerned
G
to consider any representation that PlaY hereafter be made by the
party within 10 days from the date of its receipt. Subject to this
directions, the writ petition is dismiss.ed but without any· order as to
eosts.

Civil Appeal No. 274 arises out of an· interlocutory order made H
by the Bombay High Court b~fore th! wCit p~tition was transferred
7i4 SUPREMB COURT REPORTS [1984] 3 s.c.i.

A. to this court. In view of our final decision di~posing ofihe main
writ petition, it is unnecessary to pass any orders iu this civil appeal,
which is disposed of accordingly.

H.S.K. Petitions dismls1 e
B

..

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