- (1.) In this writ application, the petitioners challenged the validity of the order suspending the import licence as well as the action of the respondents 3 and 4 in refusing to clear the goods already imported on the basis of the Import Licence issued in this behalf. The petitioner 1 is a partnership firm and the petitioner 2 is a partner of the petitioner 1. The case of the petitioners is that on or about 24th September, 1984, the petitioners purchased from one M/s. Hindusthan Trading Company of Bombay one R.E.P. Licence No. P/K/3033988 dated 21st June, 1984 of Rs. 4,07,400/-. The said licence was valid for importation of various items mentioned therein and on the basis of an endorsement on the reverse of the said licence valid for import of (a) Cerbaryl, (b) Methyl Pabathion, (c) Phorate, (d) Dephenylumine and (e) Pentaerythritol. The said R.E.P. License was issued to registered exporters under the Import Policy of the Government of India. Some percentage of import replenishment and materials was allowed for import against each product as well as other conditions relating thereto. The conditions under which the said R.E.P. Licence is issued, are provided in Appendix 17 (Import Policy for Registered Exporters). The original Import Licence was issued in favour of Hindusthan Trading Company, Bombay by the respondent 2, the Deputy Controller of Imports and Exports, Bombay. The said Import Licence was transferable as per provision of paragraph 141 of Import Policy Book for the year 1984-1985. The petitioner's case is that the said R.E.P. Licence was purchased by the petitioners for valuable consideration in accordance with the provision of Paras 140-141 of the Import Policy for the year 1984-85 and that the petitioners duly paid the consideration money in respect thereof to the original licence holder in whose favour the licence was issued, namely Hindustan Trading Company and that on or about 29th, September, 1984, M/s. Hindusthan Trading Company addressed a letter to the Joint Chief Controller, Imports and Exports, Bombay intimating the transfer of the said R.E.P. licence in favour of the petitioners. It was further stated that the said Hindusthan Trading Company is a government recognised export house and that when the petitioners purchased the said R.E.P. licence, the petitioners acted bona fide, without having any doubt as to the validity of the aforesaid licence. After the purchase of the said R.E.P. licence, the petitioners, it appears, entered into an agreement with one M/s. Hoei Sangyo Company Limited, Tokyo, Japan for supply of 17.5 M.T. of Pentaerythritol. Another contract was entered into with one M/s. Nampo Trading Company of Tokyo, Japan for supply of 17.5 metric ton of the same commodity. In accordance with the said contracts, the petitioners opened two irrecoverable letters of credit with the Punjab and Sind Bank, Calcutta on 28th September, 1984 and 29th September, 1984 respectively. It further appeared that on the basis of the said R.E.P. licence, the aforesaid goods were purchased by the petitioners from the said company of Japan and the goods had arrived in Calcutta Port on 20th November, 1984 and 11th December, 1984 respectively by two different vessels. After the said goods arrived at the Calcutta Port, the petitioners duly paid Customs Duties assessed in respect of the goods arrived as per Vessel Lanka Srimani which arrived at the Calcutta Port on 20th November, 1984. But in so far as the duty assessed in respect of the consignment arrived by vessel S. S. Lanka Srimati on 11th December, 1984, the petitioners offered to pay the entire Customs duty but the same was not accepted. In the meantime by the letter dated 5-12-1984, the Assistant Collector of Customs for Appearing Group-I, Customs House, Calcutta informed the petitioners 1 that the Import Licence on the basis of which the said consignment of Pentaerythritol was made, had been suspended and the operation whereof had been rendered ineffective by the order No. F-4/163/84/ECA/Bom/2081 dated 5-10-1984 allegedly on account of false arid misleading declaration given by the original licensee for obtaining the licence in question. The said letter dated 5th December, 1984 is annexed as Annexure 'E' to the petition.
(2.) Mr. Bholanath Sen, learned Counsel appearing on behalf of the petitioners, contended that the petitioners had not violated any of the provisions of law. The misrepresentation and/or fraud might have been committed by the original licensee for which the petitioners who were the transferee of such licence, should not be made to suffer. The licensing authority on the face of the licence made it clear that the licence was "transferable" and that when such transfer was made for valuable consideration and when actual importation of the goods have been made on the basis of such licence, it was no longer open to the respondents to refuse clearance of the goods on the allegation that the licence had been suspended by the licensing authority. Mr. Sen further submitted that if any illegal thing was done by the original licensee namely the Hindusthan Trading Company, the respondents were at liberty to take any penal action or any other action as contemplated under the Act against the original licensee. But the petitioners could not be penalised inasmuch as the petitioners were the transferee in respect of a licence who obtained the same at a valuable consideration and that the said transfer so made in favour of the petitioners was duly intimated to the licensing authority. Mr. Sen further submitted that if there was any mistake and/or any wrong done by the original licensee in the matter of obtaining a licence, the licensing authority should have acted promptly and should have cancelled the same forthwith. In the instant case, the licensing authority was fully aware that the licence was transferred in favour of the petitioners and that the licence was being utilised by the petitioners and that silence and/or inaction on the part of the licensing authority to take steps to suspend in time had created an estoppel against the licensing authority in the matter in so far as the petitioner is concerned. In the facts and circumstances of the case, the licensing authority was estopped from suspending the licence or in any way penalising the petitioners for no fault on the part of the petitioners. Mr. Sen further submitted that the petitioners were the bona fide transferee in respect of the said licence for a valuable consideration and without notice and under such circumstances, the petitioners could not be made to suffer for any lapses or negligence committed by the original licensee.
(3.) In support of his contentions, Mr. Sen relied on para 8 of Appendix 17 of the Import and Export Policy 1984-1985 which provides that "If at any time, it is found that an exporter obtained R.E.P. licence under this provision for an item which was not actually used as raw materials/component for the manufacture of the products exported against which the R.E.P. licence was issued, the licence in question shall be liable to cancellation. If the licence has been used by the time, the irregularities come to notice, the value of the licence shall be adjusted against the import entitlement of the exporter in any category. These actions will be without prejudice to any other action that may be taken in this behalf under the import and Export Control Regulations." Relying on the said provision as quoted above, Mr. Sen submitted that in the instant case even if it was found ultimately that the licence was issued illegally and was liable for cancellation, in that case also as by the time when the action is taken, the licence has been used and as such no action could be taken in respect of the goods already imported. But the only remedy as provided in the said provision was that the value of the licence should be adjusted against the import entitlement of the exporters in question. Mr. Sen submitted that such being the general condition of R.E.P. licence where the licence is suspended or cancelled is of no consequence when on the basis of the licence goods have been imported and the respondents are under a statutory obligation and duty to clear the goods which have been imported by the petitioners on the basis of the said R.E.P. licence. Mr. Sen also submitted that if it was known to the petitioners that the licence was obtained illegally, in that event, the petitioners would not have taken the licence on transfer for valuable consideration and that after the transfer of licence was made, due intimation was given to the licensing authority but the licensing authority was remaining silent over the matter and that it is established principle of law that silence or inaction under certain conditions may constitute a representation as much as positive language or conduct for the purpose of an estoppel. It was further contended by Mr. Sen that the silence or inaction on the part of the respondents to take steps against the original licensee is concerned for cancellation of the licence, the petitioner has altered its position to its prejudice and in effect the same has induced the petitioner to import the goods on the basis of the said licence after paying the value of the goods and under no circumstances, the petitioner may be made to suffer either for the lapse on the part of the licensing authority or silence or inaction on the part of the licensing authority.;