1. This is an appeal against an order suspending Custom House Agent (CHA) Licence of the appellant - a partnership firmunder Regulation 21(2) of the Custom House Agents Licensing Regulations (CHALR), 1984 because an enquiry under Regulation 21(1) read with Regulation 23 ibid is contemplated against the said firm and its employees. Since the impugned order is short and many arguments have been advanced against the tenseness of the impugned order, it is reproduced in full:- WHEREAS a Show Cause Notice C. No. VIH(A)10/45/Cargo/P&I/90 dated 7-5-1991 has been served among others upon the Custom House Agent M/s. P.S. Bedi & Co. E-43/1, Okhla Indl. Area, Phase-II, New Delhi-20, Sh. P.S. Bedi, Mg. Partner of the said firm and Sh. R.S. Bedi, an employee of the Custom House Agent, for their active connivance with M/s. Mitsubishi Heavy Industries Ltd. and M/s. ACKM Pithawala in undervaluation and the fradulent clearance of goods vide Bill of Entry No. 252592 dated 17-9-1990 at the Air Cargo Complex, I.G.I. Airport, New Delhi.
And whereas in view of the gravity of the above allegations made against the said CHA firm and its employee, an enquiry under Regulation 21(1) read with Regulation 23 of the Custom House Agents Licensing Regulations, 1984 is contemplated against the said firm and its employee.
Now, therefore, I, Mahesh Kumar, Collector of Customs, Delhi in exercise of powers vested in me under Regulation 21(2) of CHALR, 1984 hereby order suspension of CHA licence No. 11/87 of M/s. P.S. Bedi & Co. with immediate effect and until further orders.
This order is issued without prejudice to any other action being taken or proposed to be taken against the said CHA/or its employees/representatives under the Customs Act, 1962 or any other law for the time being in force.
1.1 In order to appreciate the arguments advanced from both sides, it is appropriate to set out a few facts which are considered relevant to the disposal of this case and which are mentioned in the aforesaid show cause notice:- 1.2 Bill of Entry No. 252592 dated 7-9-1990 was filed by M/s.
Mitsubishi Heavy Industries Ltd. (hereinafter referred to as MHI) in the name of M/s. National Thermal Power Corporation Ltd. (hereinafter referred to as NTPC) as an importer of the goods in the office of the Additional Collector of Customs Air Cargo Unit, IGI Airport, New Delhi.
The services of the appellant firm were taken to clear the goods against the said bill of entry. M/s. MHI have also engaged M/s. ACKM Pithawala (hereinafter referred to as ACKM) to deal with the work relating to Customs formalities in general and the aforesaid bill of entry in particular. The services of M/s. P.S. Bedi & Co. have been engaged through ACKM. We may, however, note at this stage that it is the appellant's contention that MHI had engaged the services of the appellant vide a letter dated 14th September, 1990 addressed to the appellant by MHI as well as to the Assistant Collector of Customs (photo copies thereof available at pages 131 & 132 of the documents relied upon by the department in respect of the show cause notice dated 7-5-1991) and filed by the department as a part of their paper book in this case). The department having suspected heavy under-valuation of the goods and violation against the prohibition imposed by Import Trade (Control) Act, carried out searches on September 24, 1990 in the following premises under the authorisation issued by the proper officer:- i. M/s. Mitsubishi Heavy Industries Ltd., 410, Som Dutt Chambers-11, Bhikaji Cama Place, New Delhi.
iii. M/s. P.S. Bedi & Co., Nangal Devat, Opp. IGI Cargo Complex, New Delhi.
iv. M/s. P.S. Bedi & Co., E-43/1, Okhla Industrial Area, Phase-II, New Delhi.
v. Mr. Amrit Patel of M/s. ACKM Pithawala, at Room No. 7, Guest House of National Federation of Coop. Sugar Factories Ltd., L-8 Siytg Extension Part-II, New Delhi.
Following the searches and seizure of incriminating material consequent thereto, further investigations were made and certain statements were also recorded. The investigations ultimately led to issue of the show cause notice dated 7-5-1991 which has been referred to in the impugned order.
1.3 The allegations made in the show cause notice which are relevant to the present case are:- (1) One Mr. Itagaki, representative of M/s. MHI at New Delhi in his statements dated 25-9-1990 and 20-11-1990, inter alia, stated that after the invoice with the value of J. Yen 11,20,000 was received from Japan, discussions were held in a hotel with M/s. P.S. Bedi & Co. and on communication of result of the discussion to Japan, MHI Japan sent the invoices with the lower values of J. Yen 6,00,000 and the same was filed with Bill of Entry No. 252592. [Para 5.8 of the show cause notice] (2) The Bill of Entry No. 252592 dated 17-9-1990 including its anncxures such as OGL declaration, declaration under Rule 10 of Customs Valuation Rules, authority letter have been purportedly signed in the name of M/s. NTPC. The Bill of Entry itself has been filed in the name of NTPC and in the invoice the name of the consignee is NTPC. These documents as filed with the Customs give an impression that the goods have been imported by NTPC and are being cleared under their authority. The authorisation letter was in the name of P.S. Bedi & Co. Investigations, runs the allegation, however, revealed that these documents have not been signed by an officer of NTPC. The documents have actually been signed by one Mr.
K.L. Katyal, an employee of M/s. ACKM. This was made clear by M/s.
NTPC vide their letter dated 5-10-1990 that these documents did not appear to have been signed by any authorised representative of NTPC. It is further alleged that the said Shri Katyal in his statement dated 8-10-1990 has, inter alia, admitted, having signed Bill of Entry No. 252592 declaration, OGL declaration, declaration form under Rule 10 of Customs Valuation Rules and the authorisation letter to the appellant herein. The show cause notice further states that the said Katyal admitted that he has signed the documents on behalf of NTPC as importer of the goods and he knew that he was not authorised to sign on behalf of NTPC. Mr. Amrit Patel, General Manager of M/s. ACKM in his statement dated 8-10-1990, inter alia, admitted that he instructed Mr. K.L. Katyal to sign the documents at the instance of Mr. S. Kitayama of MHI and on the suggestion of Mr.
R.S. Bedi, an employee of M/s. P.S. Bedi & Co. [Paras 6 to 6.3b of the show cause notice] (3) A further statement dated 5-5-1991 of Mr. Itagaki indicated that Shri R.S. Bedi of the appellant Co. and Shri Amrit Patel of ACKM were participating in the discussions with Shri Kitayama of MHI regarding the value and the invoice to be filed with the Customs.
Mr. Itagaki, however, did not indicate the date of the exact venue of the said meeting. He also stated that he did not have any correspondence which would throw light on these meetings. [Para 6.12 of the show cause notice] (4) Mr. Ashok Pithawala, Karta of HUF concern M/s. ACKM in his statement dated 1-10-1990, inter alia stated that in a meeting attended by Mr. T. Goto, Mr. K. Matsukuma, Mr. Itagaki (all of MHI) Mr. R.S. Bedi of the appellant firm Mr. Amrit Patel and himself, it was suggested by Mr. Goto and Mr. Matsukuma that they could supply invoices with heavily reduced FOB values to save substantial amount of Customs duty for which he also agreed. Mr. Amrit Patel in his statement dated 8-10-1990 had corroborated the aforesaid version of Ashok Pithawala. [Para 9.1 of the show cause notice] (5) Shri Amrit Patel in his statement dated 8-10-1990, inter alia, admitted that the various documents were signed by Mr. Katyal on behalf of M/s. NTPC as instructed by him at the instance of Mr. S. Kitayama and at the suggestion of R.S. Bedi of the appellant firm.
[Para 9.1a of the show cause notice] (6) The appellant, who has filed the said bill of entry in the name of NTPC has not been authorised by NTPC or on their behalf. The authorisation letter purported to have been issued in favour of the appellant is also without any authority. The appellant has filed all the papers purported to have been signed by NTPC although he had not received any of the papers from any officer of NTPC or anybody authorised on their behalf. Shri R.S. Bedi, an employee of the appellant firm has further stated that these papers were handed over to him by M/s. ACKM. It has, therefore, been alleged that the appellant firm have filed the papers with the Customs without any authority from NTPC; they had in the past known the procedure for clearance of the consignments proper on behalf of NTPC. Further allegation is that the appellant had been dealing with the officers of ACKM on day-to-day basis and would have in all probability known Mr. K.L. Katyal who had signed illegally these papers. [Para 10.2 of the show cause notice] 2. On the basis of the above allegations the appellant firm among others has been asked to show cause as to why a penalty be not imposed upon them under Section 112 of the Customs Act. The show cause notice dated 7-5-1991 is pending adjudication with the Additional Collector of Customs, IGI Airport, New Delhi.
2.1 We are not concerned in the present proceedings with the said show cause notice.
3.1 The learned Advocate for the appellant has urged that after the receipt of the show cause notice dated 7-5-1991 proposing to impose penalty under Section 112 of the Customs Act, the appellant had been requesting for inspection of the documents since May 1991 but the same was yet to be allowed by the petitioners. Thereafter the impugned order has been received all of a sudden without any provocation or without any change in the circumstances. The learned Advocate in assailing the impugned order has put forth several propositions which we shall deal seriatim.
3.2 His first proposition is that the impugned order is bad in law inasmuch as it entails civil consequences adverse to the appellant and therefore, it should have been preceded by a show cause notice and an opportunity for hearing in accordance with the principles of natural justice based on the rule of audi alteram partem which is to be read in a statutory provision unless it is clearly excluded on the strength of the expressed statutory language. In support of his plea, he submits that Regulation 21 of the CHALR, 1984 is subject to the provisions of Regulation 23 which prescribes the procedure of suspending or revoking licence under Regulation 21. Regulation 23 clearly spells out that the Collector shall issue notice in writing to the CHA stating the grounds on which it is proposed to suspend or revoke the licence and requiring the said agent to submit within such time as may be specified in the notice but being less than 45 days. The impugned order, according to the learned Advocate, is a mala fide exercise of power against the appellant to avoid recourse to Regulation 23. It is mala fide and motivated only to harass and jettison the business of the appellant.
The learned Advocate has submitted that he is aware that there is a decision of Division Bench of Calcutta High Court in the case of Collector of Customs v. Jeena & Co. [1990 (45) E.L.T. 72] which has held that for the purpose of exercising power under Regulation 21(2) prior show cause notice or hearing is not necessary for suspension of the licence under the circumstances mentioned therein but the learned Advocate submits that the decision of the Calcutta High Court is not a good law inasmuch as the said judgment has not noticed certain decisions of the Supreme Court or because of subsequent pronouncements of Supreme Court which clearly stipulate that even interim orders are subject to the constraint of a pre-decisional hearing. For this proposition, the learned Advocate relies on Supreme Court's judgment in the case of Liberty Oil Mills & Others v. Union of India [AIR 1984 SC 1272] - Head Note (C). He has also relied on Supreme Court's judgment in the case of Management of M/s. Nally Bharat Engg. Co. Ltd. v. The State of Bihar and Others reported in Judgments Today [JT 1990 (2) SC 96]. He laid emphasis on the Head Note to the said judgment which reads as follows:- "What is thus important in the modern administration is the fairness of procedure with elimination of element of arbitrariness. The State functionaries must act fairly and reasonably. That is, however not the same thing to state that they must act judicially or quasi-judicially ... it may be noted that the terms 'fairness of procedure', 'fair play in action', 'duty to act fairly' are perhaps used as alternatives to 'natural justice' without drawing any distinction. But Prof. Paul Jackson points out that such phrases may sometimes be used to refer not to the obligation to observe the principles of natural justice but, on the contrary to refer to a standard of behaviour which, increasingly, the Courts require to be followed even in the circumstances where the duty to observe natural justice is inapplicable. We share the view expressed by Professor Jackson. Fairness, in our opinion, is a fundamental principle of good administration, it is a rule to ensure the vast power in the modern state is not abused but properly exercised. The State power is used for proper and not for improper purposes. The authority is not misguided by extraneous or irrelevant consideration. Fairness is also a principle to ensure that statutory authority arrives at a just decision either in promoting the interest or affecting the rights of persons. To use the time hallowed phrase 'that justice should not only be done but be seen to be done' is the essence of fairness equally applicable to administrative authorities. Fairness is thus a prime test for proper and good administration. It has no set form or procedure. It depends upon the facts of each case." He has also relied upon another judgment of the Supreme Court in the case of Charan Lal Sahu v. UOI reported in JT (4) SC 582. He pointed out to the following observations in para 124 of the said judgment as recorded in the Head Note (iii):- "It is true that not giving notice, was not proper because the principles of natural justice are fundamental in the constitutional set up of this country. No man or no man's right should be affected without any opportunity to ventilate his views." "Principles of natural justice are integrally embedded in our constitutional framework and their pristine glory and primacy cannot and should not be allowed to be submerged by the exigencies of particular situations or cases. This Court must always assert primacy of adherence to the principles of natural justice in all adjudications. But at the same time these must be applied in a particular manner in particular cases having regard to the particular circumstances." [Emphasis supplied by Id. Advocate].
3.3 Opposing the contention of the learned Advocate Smt. Vijay Zutshi, learned CDR pointed out that principles of natural justice have to be applied having regard to the peculiar Scheme of the Act or the provisions of law and not only the peculiar facts and circumstances of the case. There is no hard and fast rule that in every situation there must be a show cause notice and there must be prior hearing to the affected person. There are no embedded principles in any rigid set of the rules by the name of principles of natural justice. She points out that so far as particular provision, namely Regulation 21.(2) is concerned there is a direct authority of Calcutta High Court and there is no other contrary decision of any other High Court which holds that prior notice or hearing is required to be given by the Collector while he exercises his power under the said Regulation 21(2). She has, therefore, submitted that no illegality has been committed by the Collector. She relies for her proposition on (i) AIR 1970 SC 150 [A.K.Kraipak& Others] and (ii) AIR SC 8% [Daud Ahmed v. District Magistrate, Allahabad 3.3A We have carefully considered the aforesaid submission of the learned Advocate for the appellants and the submissions of the learned CDR for the Collector. We agree with the learned CDR that in view of a direct authority on the scope of Regulation 21(2) of the CHALR, 1984, we need not look for any other authority or judgments based on general proposition. Further we are also of the view that the learned Advocate is not right that the principle of a prior show cause notice or of a prior opportunity for hearing is a must in every case in every situation. Reliance placed by him on the Case of Liberty Oil Mills, mentioned supra, is incorrect. The Court was examining the provisions of Clause 8, 8A and 8B of the Import Trade Control Order, 1955. It is in the peculiar circumstances and consequences that flow from Clause 8 that it was held that a predecisional hearing was necessary whereas it was not so in the case of Clause 8B. It is for this reason the Court points out in Para 121 of the said Report that Clause 10 specifically provides for a pre-decisional opportunity in the case of action under Clause 8A and does not so provide in the case of action under Clause 8B. It is thus observed that the decision of the Supreme Court in the case of Liberty Oil Mills is in the context of the peculiar provisions of the ITC Order under consideration. That decision cannot be applied straightaway to the present situation. Similarly, as already extracted in the case of Charan Lal Sahu & Others, in Para 128 the Supreme Court has itself ruled that the principles of natural justice have to be applied in a manner in particular cases having regard to the particular circumstances. If it is not considered always feasible to give prior opportunity of hearing, the Supreme Court itself has held that it may be given after taking a decision as has been held by the Court in the case of Liberty Oils Mills relied by the learned Advocate himself in respect of decisions under Clause 8B. So far as the present Regulation 21(2) is concerned this has to be noted that it is an exception to the general provision to sub-regulation (1) of Regulation 21 and it has to be applied only in appropriate cases and where immediate action is necessary. Sub-regulation (1) is subject to the procedure of a prior notice and hearing, as set out in Regulation 23. Therefore, following respectfully the ratio of Calcutta High Court in the case of Jeena & Co. and having regard to the peculiar Scheme of Regulation 21 read with Regulation 23, we are of the view that an order passed by the Collector of Customs in exercise of his power under Regulation 21(2) need not precede by a show cause notice or any hearing to the CHA concerned.
Accordingly, we do not find any substance in this proposition of the learned Advocate.
3.4 Next proposition of the learned Advocate is that the impugned order does not give any reasons and is, therefore, a nullity. He relies for this proposition on (i) 1976 SC 1785 Para 6 [Siemens Engg. & Mfg. Co.
v. UOI].
3.5 Opposing the submission, the learned CDR has submitted that the reasons are stated in para 2 of the impugned order (which has already been set out above). According to her, the reason given is that there are grave allegations against the appellant firm in the show cause notice dated 7-5-1991 and an enquiry is contemplated against the said firm under Regulation 21(1) read with Regulation 23 of the CHALR, 1984.
She has, therefore, urged that no illegality in the order can be found on this ground.
3.6 We have considered the submissions of both the sides on this issue whether there are reasons given in the impugned order for taking the action of suspending the licence of the appellant firm. We are inclined to agree with the learned CDR that reasons have been given, in howsoever succinct manner these are.
3.7 Next proposition of the learned Advocate for the appellant is that even if the impugned order is found to be validly passed on the above grounds under Regulation 21(2), it is not tenable on the ground that it does not satisfy the circumstances spelt out in Regulation 21(2) under which alone the order could be passed by the Collector. According to the learned Advocate the power under sub-regulation (2) of Regulation 21 could be exercised by the Collector only in (i) 'appropriate cases', (ii) 'where immediate action is necessary' and (iii) 'where an enquiry against such agent is pending or contemplated'. The reasons given in the impugned order are (i) gravity of the allegations in the show cause notice dated 7-5-1991 and that an enquiry is contemplated against the said firm. He has submitted that the allegations made in the show cause notice are still at the stage of allegation and are not yet proved. The show cause notice is yet to be adjudicated upon by the concerned adjudicating authority. He has also submitted that after issuing of the impugned order dated 11-9-1991 no notice for initiating the enquiry under Regulation 21(1) read with Regulation 23 of the CHALR has been issued even though more than 2 1/2 months have passed. This latter circumstance by itself, according to the learned Advocate indicates a mala fide intention of the respondent-Collector. On the allegations made in the show cause notice he submits that the other essential-ingredient of Regulation 21(2) namely, "where immediate action is necessary" has not at all been fulfilled while passing the impugned order. The said order does not disclose any material subsequent to issue of the said show cause notice dated 7-5-1991 which has led the Collector to believe that any immediate action of suspension of licence is necessary against the appellant. The show cause notice itself is older by more than 4 months than the impugned order. This fact in itself would indicate that no immediate action against the appellant was called for. For the aforesaid scope of Regulation 21(2), the learned Advocate relies upon Calcutta Division Bench Judgment in the case of Jeena & Company, mentioned supra. In para 5 of the said Report that Court has observed as follows:- "To our mind, such power under sub-regulation (2) of Regulation 21 has given the Collector a very wide discretionary power to suspend the licence of a Custom House Agent. While taking such action the Collector of Customs is not confined to the grounds as specified in sub-regulation (1) but in order to take such action the Collector must be fully satisfied the immediate action is necessary. Although such satisfaction should not be merely on subjective satisfaction of the Collector but the reasons for being so satisfied should be specifically recorded in the order itself. As indicated earlier, the said order was not on merely subjective satisfaction of the Collector but ample reasons had been given in the order itself indicating that he had bona fide exercised his power as provided under sub-regulation (2) of Regulation 21." He has submitted that the Jeena's case was one of export of narcotics and the evidence on record and the reasons given in the impugned order itself shows that an immediate action was necessary against the CHA. No such immediacy emerges out of the reasons, namely, gravity of allegations made in the show cause notice dated 7-5-1991 in the present case. Further, immediacy of action in the impugned order has not all been spelt out unlike the case of Jeena. He has further submitted that even though the notice had been issued on 7-5-1991 all the allegations that have been made in the show cause notice against the appellant were available in the hands of the department by the month of October 1990 and yet no action was taken against the appellant. This circumstance by itself amply proves that no immediate action was called against the CHA in terms of CHALR, 1984. He also relies on 1984 SCC 125 (at page 136) for the impugned order getting vitiated by the inordinate delay made by the Collector in issuing the impugned order on the basis of facts known to him by October 1990. Distinguishing the facts of the present case he points out in Jeena's case events occurred in quick succession. On 18-8-1986 the shipping bill was filed by the Jeena & Co. The Customs officials passed the shipping bill on the same day. On 20th August, 1986 the packages were delivered in the docks for the purpose of scrutiny/checking by the Customs officials there. As a result of checking, hashish, a kind of narcotic, was found in the packages.
Searches were carried out thereafter and the owner of the consignments of hashish was arrested in Andeman Nicobar on or about 26th day of August, 1986, the day on which an order under Regulation 21(2) was passed by the Collector of Customs, Calcutta stating clearly in the impugned order that on a preliminary enquiry it appeared that Jeena and Company was prima facie involved in the attempted export of the said narcotics. It was also stated in the order that Jeena and Company had failed to discharge their responsibility as a CHA and that they had also aided and abetted J. Sale in the attempted export of the consignment of narcotics and that an enquiry against Jeena and Company was contemplated. Their CHA licence was, therefore, suspended. The learned Advocate thus submitted that the facts of this case are in the sharp contrast to the facts of Jeena & Co. Elaborating on the word 'immediate', the learned Advocate has submitted that in Blacks' Law Dictionary it is defined as" (i) Present (ii) at once (iii) without delay (iv) not deferred by an interval of time. The word without any precise signification denotes that action is or must be taken cither instantly or without any considerable loss of time. A reasonable time in view of particular facts and circumstances of case under, consideration. The word 'immediate' in the American Legal Dictionary "Words and Phrases - Legally Defined" states that there appears to be no material difference between the terms 'immediately' and forthwith'.
A provision to the effect that a thing must be done 'forthwith' or 'immediately' means that it must be done as soon as possible in the circumstances, the nature of the act to be done being taken into account. The Law Lexicon by Justice T.P. Mukherjee quotes - Bladwin's Century Edition Bouvier's Law Dictionary 1928 Edition at page 519 explaining the meaning of the word 'immediately' as follows:- "The words 'forthwith' and 'immediately' have the same meaning. They are stronger than the expression 'within a reasonable time', and imply prompt, vigorous action without any delay, and whether there has been any such action is a question of fact having regard to the circumstances of the particular case. A similar meaning has been given in 'Wharton's Law Lexicon'." For the aforesaid reasons, the learned Advocate has submitted that the impugned order is an untenable order in terms of Regulation 21(2) itself.
3.8 Opposing the contention of the learned Advocate, learned CDR submits that the allegations in the show cause notice regarding the role of the appellant firm was still of a very tentative nature and therefore, no action under CHALR was contemplated against the appellant at that time. However, the present action was actually necessitated because of receipt of reply dated 27-8-1991 to the show cause notice dt. 7-5-1991 from M/s. NTPC on 6-9-1991 in the Custom House which indicated clearly the complicity of the appellant after getting the bill of entry signed fraudulently on behalf of M/s. NTPC without any authorisation. The impugned order dated 11-9-1991 is a result of that letter from NTPC. It has, therefore, been submitted that there has been no undue delay at all in this case and immediate action has been taken against the appellant firm for suspension of his licence under Regulation 21(2); it is not necessary, according to the learned CDR, for spelling out the reason for immediacy on the face of the order under Regulation 21(2).
3.9 In his rejoinder to the learned CDR, Dr. Singhvi for the appellant urges that the respondent cannot be permitted to supply the reasons in addition to what has already been stated in the impugned order. There is a clear pronunciation of law by the Supreme Court in the case of Mahinder Singh Gill & Others v. The Chief Election Commissioner [AIR 1978 SC 851] - Head Note A states as follows:- "When a statutory functionary makes an order passed on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out. [Para 8]" The Supreme Court in making the aforesaid pronouncement has followed its earlier judgment in the case of Commissioner of Police, Bombay v.Goverdhan Dass Bhanji [AIR 1952 SC 16]. The Supreme Court has ruled there as follows:- "We are clear that public orders, publicly made in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or what was in his mind., or what he intended to do. Public Orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself.
The learned Advocate has, therefore, submitted that the respondent cannot be allowed to plead about a letter dated 27-8-1991 not mentioned in the impugned order itself. He further submits that this letter in any case is just an inference of M/s. NTPC in respect of a matter which is still under adjudication with the Additional Collector of Customs and how far that inference of M/s. NTPC is valid and can be used against the appellant is a matter of conjecture and surmises at this stage and cannot form the basis for action under RG 21(2) of CHALR, 1984.
3.10 We have carefully considered the pleas advanced on both sides. We are in agreement with the learned Advocate about the requirements that an order passed under Regulation 21(2) must fulfil before it can be held to be tenable. One of the requirements as rightly pointed out by the learned Advocate on the authority of Calcutta High Court's judgment in the case of Jeena & Co., mentioned supra, is that where immediate action is necessary against the CHA. On the basis of the facts already set out in the beginning of this order, it is apparent that the allegations made in the show cause notice against the appellant were formed on the material available in the hands of the department by November 1990 in the shape of statements of various persons including that of Katyal who has admittedly signed the bill of entry and the various declarations made thereunder on behalf of NTPC without there being any authority from the latter in favour of Katyal. The letter dated 27-8-1991 from M/s. NTPC received in the Custom House on 6-9-1991, even if it is assumed that it has led the Collector to take the action under Regulation 21(2) against the appellant, does not bring any material different from what was available with him on the record by the end of November, 1990. The plea of the respondent, therefore, is not only untenable but also an after thought. We are also in agreement with the learned Advocate for the appellant that the impugned order must be judged on the basis of the reasons given therein. The position of law has been clearly laid by the Supreme Court in the citations relied upon by the learned Advocate, extracts from which have already been set out above. The letter dated 27-8-1991 from NTPC said to have been received by the department on 6-9-1991 cannot be treated as a valid reason for passing of the impugned order inasmuch as that has not been advanced as a reason leading to the impugned order. We, therefore, hold that the facts and circumstances given in the impugned order are such as would not call for an immediate action against the appellant warranting action under Regulation 21(2) inasmuch as the impugned order itself is based on stale material which came into the hands of the department more than nine months before the impugned order. Hence the impugned order is not sustainable in terms of Regulation 21(2) and is, therefore, quashed.
4. I have had advantage of reading the erudite Order proposed by my learned brother Shri P.C. Jain, Technical Member. While respectfully agreeing with him 1 would like to add as follows - As regards prior hearing before passing any Order under sub-regulation (2) of Regulations 21 of the CHALR, 1984 5. Apart from the fact that the judgment of the Division Bench of the Calcutta High Court rendered in the case of M/s. Jeena & Co., supra, holding that prior hearing is not necessary before suspending the licence under sub-regulation (2) of Regulation 21, the Apex Court had an occasion to consider the scope and extent of the principle of audi alterant partem in the case of Union of India v. Tulsiram Patel, 1985 SC 1416 and observed in paragraph 101 as follows: "101. Not only, therefore, can the principles of natural justice be modified but in exceptional cases they can even be excluded. There are well defined exceptions to the memo judex in causa sua rule as also to the audi alterant partem rule. The memo judex in causa sua rule is subject to the doctrine of necessity and yields to it as pointed out by this Court in J. Mohapatra & Co. v. State of Orissa, (1985) 1 SCR 322, 334-5: (AIR 1984 SC 1572,1576-7). So far as the audi alterant partem rule is concerned, both in England and in India it is well established that where a right to a prior notice and an opportunity to be heard before an order is passed would obstruct the taking of prompt action, such a right can be excluded. This right can also be excluded where the nature of the action to be taken, its object and purpose and the scheme of the relevant statutory provisions warrant its exclusion; nor can the audi alterant partem rule be invoked if importing it would have the effect of paralysing the administrative process or where the need for promptitude or the urgency of taking action so demands, as pointed out in Maneka Gandhi's case at page 681 of [(1978) 2 SCR 621: AIR 1978 SC 597 at p. 629]. If legislation and the necessities of a situation can exclude the principles of natural justice including the audi alterant partem rule, a fortior so can a provision of the Constitution, for a Constitutional provision has a far greater and all-pervading sanctity than a statutory provision".
6. From the aforesaid observations it is clear that hearing may be excluded where prompt action is required to be taken keeping in view the object and purpose and the scheme of the relevant Statutory provisions warranting its exclusion since prior hearing may delay action, defeating the very purpose for which it is taken. The audi alterant partem rule is a very flexible, malleable and adaptable concept of natural justice. To adjust and harmonise the need for speed and obligation to act fairly, it can be modified. The rules of natural justice are not embodied rules nor they can be elevated to the position of fundamental right. Their aim is to secure justice or to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. They do not supplant the law but supplement it. If the Statutory provision can be held constitutional with the principles of natural justice, the Court should do so. But if statutory provision either specifically or by necessary implication excludes the application of any rule of natural justice then the Court cannot ignore the mandate of the legislature or the Statutory Authority and read into the concerned provision the principles of natural justice. From the language employed in sub-regulation (2) of Regulation 21, it is clear that, the Regulations making authority has specifically and by necessary implication excluded the application of prior hearing where the Collector considered that the case is an appropriate one where immediate action is necessary. In this connection, it must be remembered that when a licence is suspended under sub-regulation (2) of Regulation 21 where an enquiry against such agent is pending or contemplated, he is not wholly without any opportunity. For, in such a case, a Show Cause Notice has to be given to such Agent and he would have full opportunity to contest the same by producing any evidence or cross-examining any person under Regulation 23. Besides he will also have an opportunity to make representation before the Collector, if enquiry report prepared by the Assistant Collector of Customs goes against him. Even if the Order of the Collector goes against him, such Agent has the remedy of appeal. This in my considered opinion would be a sufficient compliance with the requirement of natural justice. Thus, I agreeing with my learned brother also overrule the contention that prior hearing was necessary before passing the impugned Order of suspension under sub-regulation (2) of Regulation 21.
As regards the contention that the impugned Order is not in consonance with sub-regulation (2) of Regulation 21 7. It was the contention of the learned Counsel for the appellants that under sub-regulation (2) of Regulation 21 the Collector has a discretion to suspend the licence of an Agent only in appropriate cases where immediate action is necessary and where an enquiry against the Agent is pending or contemplated. It was, therefore, necessary for the Collector to give reasons in the impugned Order as to why he was satisfied that the present case was an appropriate case where immediate action to suspend the licence was necessary as to give reasons is also a part of the principle of audi alterant pattern, more particularly when the prior hearing is said to have been excluded before suspending the licence and cited the case of Siemens Engg. & Mfg. Co. v. Union of India, AIRLiberty Oil Mills v. Union of India, AIR 1984 SC 1271. In reply, it was contended by the learned CDR that from the Order itself it can be seen that it was an appropriate case where immediate action was necessary and it is not necessary that the authority passing the suspension Order should state in the Order itself that it was an appropriate case where immediate action was necessary for its validity can be judged from the evidence on record. In his rejoinder it was contended by the learned Counsel for the appellants that it is settled law that the impugned Order should either stand or fall on its own and it cannot be supplemented by any fresh reasons and cited the case of Commissioner of Police v. Gordhan Das Bhanji, AIR 1952 SC 16 and the case of Mohinder Singh Gill v. Chief Election Commissioner, AIR 1978 SC 851.
7.1 I have considered the submissions. From the observations made by the Apex Court in the case of Mohinder Singh Gill v. Chief Election Commissioner, supra, it is clear that when a Statutory functionary makes an Order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by any fresh reasons in the shape of affidavit or otherwise. Otherwise an Order bad in the beginning may, by the time it comes to Court on account of a challenge get validated by additional grounds later brought out. In the case of Siemens Engg. & Mfg. Co. v. UOI - AIR 1976 SC 1785 it was also held that the rule requiring reasons to be given in support of an Order is, like the principle of audi alteram partem. It was further observed by the Apex Court in the case of Liberty Oil Mills v. UOI, supra in paragraph 28 that those entrusted by Statute with the task of taking pre-judicial action on the basis of their subjective satisfaction should, first bestow careful attention to the allegations forming the basis of the proposed action and the probable consequences which may ensue such action and, next, take the trouble of reciting in the Order issued by them the satisfaction forming the basis of the 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 Order will necessarily have to be quashed. In other cases also, it is possible to envisage similar results depending on the rights involved the object of the Statute and other facts and circumstances. From a reading of the impugned Order of suspension it is clear that the respondent had not taken trouble of reciting in the Order about his satisfaction forming the basis of the action. Nowhere he has said in the impugned Order that the present case is an appropriate case where immediate action is necessary. What he has said in the impugned order is only that a Show Cause Notice dated 7-5-1991 was issued to the appellants for their active connivance with M/s. Mitsubishi Heavy Industries Ltd. and M/s.
ACKM Pithawala in under-valuation and fradulent clearance of goods vide Bill of Entry No. 252592 dated 17-9-1990 and in view of the gravity of the above allegation an enquiry under Regulation 21(1) read with Regulation 23 is contemplated. It is common knowledge that the cases of under-valuation and fradulent clearance of goods do occur and strong action should be taken but the question remain as to whether in all such cases licence of the agent is to be suspended mechanically under Rule 21(2). Answer would certainly be in the negative as the Collector has first to satisfy himself as to whether the particular case is an appropriate case where immediate action to suspend the licence is necessary and if he is so satisfied he should take trouble to say so in the Order itself which is passed under sub-regulation (2) of Regulation 21, particularly when the prior hearing before suspension is excluded.
But curiously enough he had not said so in the impugned Order. It is also significant to note that during the hearing the respondents has not filed any cross-objections or affidavit in opposition.
Alternatively assuming with the learned CDR that from the Show Cause Notice mentioned in the impugned Order it could be seen that it was an appropriate case where immediate action was necessary, I while aggreeing with my learned brother that the impugned Order itself is based on stale material which came into the hands of the Department more than 9 months before the impugned Order passed, would like to add that from paragraphs 11.2 and 11.3 of the Show Cause Notice dated 7-5-1991 it is clear that before the issuance of the said Show Cause Notice dated 7-5-1991 the case was taken up for adjudication by the Assistant Collector and he vide his Order No. C/VIII/12/ACU/1352/90 dated 23-11-1990 adjudicated the case asking the importer M/s. MHI to pay the differential duty reserving the right to take any penal action but even no action to suspend the licence of the appellants under sub-regulation (2) of Regulation 21 was taken by the respondents at that stage. Needless to say that during the hearing the respondent did not attempt to supplement the impugned Order by fresh reasons, though the learned CDR in her ingenuity submitted that after the issuance of the Show Cause Notice a copy of letter dated 27-8-1991 addressed by NTPC to M/s. MHI was received by the Additional Collector and in the said letter it was stated by M/s. MHI that it transpires from Annexure A to the Show Cause Notice dated 7-5-1991 that the appellants under their direction have fraudulently signed the Bill of Entry and filed it in the name of NTPC though they were never authorised to do so by the NTPC or nobody on their behalf may be the fresh reason for passing the impugned Order. This contention is to be rejected only for mention.
For, this alleged fraudulent act of the appellants was the very basis of the Show Cause Notice itself and this is amply clear from the opening paragraph of the impugned Order of suspension wherein the respondent has stated that Show Cause Notice dated 7-5-1991 was issued to the appellants for their connivance with M/s. MHI and M/s. ACKM and Pithawala in under-valuation and fradulent clearance of goods vide Bill of Entry No. 252592 dated 7-9-1990. Thus the receipt of the said letter dated 27-8-1991 is of no consequence.
8. Before I part it may also be stated that for the reasons mentioned by my learned brother and by me as aforesaid, this unexplained inordinate delay in passing the order of suspension vitiates the impugned Order as it has become tainted with colourable exercise of power. See: Radheysham v. State of Haryana - AIR 1982 Punjab & Haryana 519 (FB) and also the case of Mansaram v. S.P. Pathak - (1984) 1 SCC 125 wherein it was held that when the power is conferred to effectuate the purpose it has to be exercised in a reasonable manner. Exercise of power in a reasonable manner inheres the concept of its exercise within a reasonable time though no limitation may be prescribed in this behalf.