Judgment:
Gokal Chand Mital, Chief Justice
1. These writ petitions have been referred to the larger Bench because of the conflicting orders passed by the two Division Benches of this court, on the question, whether an oral hearing should be given before deciding an application mentioned in second proviso to Section 4-M of the Imports and Exports (Control) Act, 1947.
2. The Division Bench consisting of S. Ranganathan, and Sunanda Bhandare, JJ. in C.W.P. 2820/87, Shri Amrutlal Ganpatram Panchal v. Union of India and Another, on 25th September, 1987, passed the following order :
'Present : Mr. S. K. Paul with Mr. R. A. Mishra for the Petitioner C.W. 2820/87
The petitioner's contention is that a personal hearing should have been given before the condition was imposed calling upon the petitioner to furnish a bank guarantee of 10% of the penalty amount. We do not see any statutory requirement to this effect. The petitioner has made written applications which have been considered and, thereforee, there is no failure of natural justice. Dismissed.
S/d.- S. Ranganathan
S/d.- Sunanda Bhandare
25th September, 1987'
3. On 9th November, 1989, a Division Bench consisting of B. N. Kirpal and C. L. Chaudhary, JJ., while noticing the earlier order passed by the Division bench in Amrutlal Ganpatram Panchal's case (supra), took a different view. The said Division Bench observed that the appellate authority should give an oral hearing before deciding an application mentioned in the second proviso to Section 4-M of the Imports and Exports (Control) Act, 1947. The Division Bench further observed that decision of the application has serious consequences on the final outcome of the main appeal. Principles of natural justice would, thereforee, require an oral hearing to be granted. The court also observed that 'the view which we are taking in conflict with the view expressed by another Division Bench in Amrutlal Ganpatrai's case (supra), we are of the opinion that, subject to orders of Hon'ble the Chief Justice, that case should be referred to a Full Bench.' On the request of the Division Bench, this Larger Bench has been constituted to decide the issue.
4. Since the controversy involved in these writ petitions is rather narrow, thereforee, only very brief facts are recapitulated. The petitioner obtained advanced license for import of brass scrap under the Duty Exemption Scheme and this license was issued subject to the petitioner's exporting 78 MT Brass Art ware for approximately FOB value of Rs. 14,00,420. The petitioner fulfillled export obligation for the value of about 186%.
5. On 10-6-1991, a show cause notice was issued to the petitioner u/s 4-M of the imports and Exports (Control) Act, based upon a report of investigation, a copy of which was not supplied to the petitioner and the respondent imposed penalty of Rs. 6 lakhs without affording any opportunity to the petitioner.
6. The petitioner filed an appeal on 8th February, 1993 along with the application for dispensation of pre-deposit. The petitioner was advised to deposit 25% of the penalty amount. Before taking the said decision on this application, no personal hearing was granted to the petitioner though it was specifically sought. The short question for our determination is, whether the concerned authority was under an obligation to grant oral hearing to the petitioner before deciding the said application
7. Section 4-M of the Imports and Exports (Control) Act, 1947 is reproduced below :
'4M. Appeal. - (1) Any person aggrieved by any decision or order made under this Act may prefer an appeal, -
(a) where the decision or order has been made by the Chief Controller or Additional chief Controller, to the Central Government;
(b) where the decision or order has been made by any officer below the rank of the Additional Chief Controller to the Chief Controller or where he so directs, to the Additional Chief Controller, within a period of forty-five days from the date on which the order is served on such person.
Provided that the Appellate authority may, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal within the aforesaid period of forty-five days, allow such appeal to be preferred with a further period of forty-five days;
Provided also that, where the Appellate authority is of opinion that the deposit to be made will cause undue hardship to the appellant, it may, at its discretion, dispense with such deposit either unconditionally or subject to such conditions as it may impose.
(2) The Appellate authority may, after giving to the appellant a reasonable opportunity of being heard, if he so desires, and after making such further inquiries, if any, as it may consider necessary, pass such orders as it thinks fit, confirming, modifying or reversing the decision or order appealed against, or may send back the case, with such directions as it may think fit, for a fresh adjudication or decision, as the case may be, after taking additional evidence, if necessary :
Provided that an order enhancing or imposing a penalty or confiscating goods or materials of a greater value shall not be made under this section unless the appellant has had an opportunity of making a representation, and if he so desires, of being heard in his defense.'
8. The principle of audi alteram partem has been commented upon, discussed and dealt with in various judgments of the Supreme Court and other High Courts. Our endeavor in this reference would be to extract ratio of these Judgments to arrive at the conclusion whether oral hearing by the tribunal is imperative in the case of this nature.
9. Learned counsel referred to and relied upon another decision of the Supreme Court, Shri Mandir Sita Ramji v. Lt. Governor of Delhi and Others - : [1975]1SCR597 . In the said case of Land Acquisition Act, the Court held that under Section 5A of the Act, it is the duty of the Land Acquisition Collector to afford an opportunity of being heard before deciding the objections.
10. Learned counsel further referred to and relied upon the case reported as S.L. Kapoor v. Jagmohan and Others - : [1981]1SCR746 . In para 10 of the said judgment, the Court observed as under :-
'10. One of the submissions of the learned Attorney-General was that when the question was one of disqualification of an individual member, Section 16 of the Punjab Municipal Act expressly provided for an opportunity being given to the member concerned whereas Section 238(1) did not provide for such an opportunity and, so, by necessary implication, it must be considered that the principle audi alteram partem was excluded. We are unable to agree with the submission of the learned Attorney-General. It is not always a necessary inference that if opportunity is expressly provided in one provision and not so provided in another, opportunity is to be considered as excluded from that other provision. It may be a weighty consideration to be taken into account but the weightier considerations is whether the administrative action entails civil consequences.'
11. Learned counsel for the petitioners Mr. Rawal and Mr. Nanda relied upon the Supreme Court judgment in Mohinder Singh Gill and Another v. The Chief Election Commissioner, New Delhi and Others - : [1978]2SCR272 . The Constitution Bench of the Supreme Court in para 43 of the judgment, observed as under :-
'Indeed, natural justice is a pervasive facet of secular law where a spiritual touch enlivens legislation, administrative and adjudication, to make fairness a creed of life. It has many colours and shades, many forms and shapes and, save where valid law excludes it, applies when people are affected by acts of Authority. It is the hone of healthy government, recognised from earliest times and not a mystic testament of Judge-made law. Indeed, from the legendary days of Adam - and of Kautilya's Arthasastra - the rule of law has had this stamp of natural justice which makes it social justice. We need not go into these deeps for the present except to indicate that the roots of natural justice and its foliage are noble and not newfangled. Today its application must be sustained by current legislation, case-law or other extant principle, not the hoary chords of legend and history. Our jurisprudence has sanctioned its prevalence even like the Anglo-American system.'
12. The Court has further mentioned that the aim of the rules of natural justice is to secure justice or to put it negatively, to prevent miscarriage of justice.
13. In the said case, the court has referred to the leading English case Ridge v. Baldwin - 1963 (2) All ER 66. In this case, it is held that good administration demands fairplay in action and this simple desideratum is the fount of natural justice.
14. The Court further observed in para 56 of the judgment, as under :
'Normally, natural justice involves the irritating inconvenience for men in authority, of having to hear both sides since notice and opportunity are its very marrow. And this principle is so integral to good government, the onus is on him who urges exclusion to make out why. Lord Denning expressed the paramount policy consideration behind this rule of public law (while dealing with the nemo judex aspect) with expressiveness : 'Justice must be rooted in confidence; and confidence is destroyed when right-minded people go away thinking 'the judge was biased'.' We may adapt it to the audi alteram situation by the altered statement : 'Justice must be felt to be just by the community if democratic legality is to animate the rule of law. And if the invisible audience sees a man's case disposed of unheard, a chorus of 'no-confidence' will be heard to say, 'that man had no chance to defend his stance.' 'That is why Tucker LJ in Russel v. Duke of Norfolk emphasised that 'whatever standard of natural justice is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case'. What is reasonable in given circumstances is in the domain of practicability; not formalised rigidity. Lord Upjohn in Fernando observed that 'while great urgency may rightly limit such opportunity timeously, perhaps severely, there can never be a denial of that opportunity if the principles of natural justice are applicable'. It is untenable heresy, in our view, to lock-jaw the victim or act behind his back by tempting invocation of urgency, unless the clearest case of public injury flowing from the least delay is self-evident. Even in such cases a remedial hearing as soon as urgent action has been taken is the next best. Our objection is not to circumscription dictated by circumstances, but to annihilation as an easy escape from a benignant, albeit inconvenient obligation. The procedural precondition of fair hearing, however, minimal, even post-decisional, has relevance to administrative and judicial gentlemanliness.'
15. In this judgment, the Court has placed reliance on 1976 (1) All ER 12, in the case of Selvarajan v. Race Relations Board, and quoted as under :
'The fundamental rule is that, if a person may be subjected to pains or penalties, or be exposed to prosecution or proceedings, or deprived of remedies or redress, or in some such way adversely affected by the investigation and report, then he should be told the case made against him and be afforded a fair opportunity of answering it. The investigation body is, however, the master of its own procedure. It need not hold a hearing. It can do everything in writing. It need not allow lawyers. It need not put every detail of the case against a man. Suffice it if the broad grounds are given. It need not name its informants. It can give the substance only. Moreover it need not do everything itself. It can employ secretaries and assistants to do all the preliminary work and leave much to them. But, in the end, the investigating body itself must come to its own decision and make its own report.'
16. Learned counsel further referred to and relied upon Shivraj Fine Art Litho Works v. Assistant Collector, Central Excise : 1990(49)ELT51(Bom) . The Division Bench of Bombay High Court at Nagpur Bench, held that the application for waiving the pre-deposit of duty without hearing an application dismissed, and thereafter appeal dismissed for non-compliance with the condition of pre-deposit, without hearing the petitioner was clearly bad in law being vocative of the principles of natural justice.
17. Learned counsel for the petitioner Mr. Rawal further referred to and relied upon Smart P. Ltd. v. Income-Tax Appellate Tribunal, 1990 182 I.T.R. 384. In this case, the Full Bench of this Court has held that it is now well settled that, even where hearing is not specifically provided, the principles of natural justice have to be complied with before any order adverse to any party is passed especially by a judicial or a quasi-judicial authority. This principle would be negated if Section 254(2) is to be given a narrow construction and a hearing is limited only to the cases contemplated by the proviso thereto.
18. The learned counsel for the petitioner cited Civil Rule 7722(W) of 1972, All India General Transport Corporation v. The Collector of Central Customs and Others. In this case, the learned Single Judge of the Calcutta High Court while dealing with the provisions of Section 129(1) of the Customs Act has held, when the Board proceeded to dispose of the petitioner's application by an ex parte order and on the basis of a report from the Collector which was never disclosed to the petitioner and when the petitioner was given no opportunity to satisfy the Board of evidence produced before it that the report is not correct and that the appellant is so financially involved that it would cause great hardship to the appellant if they are to be made to deposit the amount of penalty prior to the consideration of the appeal. The court held that the Board had not acted in accordance with law in rejecting the petitioner's application for an order dispensing with deposit of the amount of penalty by an ex parte order dated 30-5-1970 and the said order must be set aside.
19. Learned counsel further referred to an relied upon M/s. Bhagat Singh v. The State of Punjab and Others - (Full Bench). In the said case, the petitioner obtained liquor licenses and due to certain irregularities alleged to have been committed by them, their licenses were cancelled and security deposited by them was forfeited either in whole or in part. They filed petitions to challenge the orders of cancellation of their licenses and the forfeiture of the amount of securities. Admitted, they were issued show cause notices to show cause why their licenses should not be cancelled. The order of cancellation was passed after taking into consideration their Explanationns but without affording them any opportunity of oral hearing. The petitioners claimed that they were entitled to a hearing before their licenses were cancelled. The Court held as under :
'Before taking the drastic action of cancellation of an excise license under Section 36, Punjab Excise Act which results in far-reaching consequences involving financial loss, a fair and proper enquiry into the culpable allegations leveled against a licensee should be made after affording him an adequate opportunity of hearing. In order to comply with the principle of natural justice - audi alteram partem - the licensee must be given a full and true disclosure of the facts sought to be used against him and the hearing afforded must be adequate and substantial in order to enable him to safeguard his rights. In other words, the hearing must be fair, proper and in substance and not mere formal. If such a hearing is denied, the action will be struck down as void.'
20. Learned counsel for the petitioner has also cited a Constitution Bench judgment of the Supreme Court - Union of India v. Jyoti Prakash Mitter, : (1971)ILLJ256SC . In this case, the Constitution Bench has held that normally, an opportunity for an oral hearing should be given to the Judge whose age is in question, and the question should be decided by the President on consideration of such materials as may be placed by the Judge concerned and the evidence against him after the same is disclosed to him.
21. Learned counsel has drawn our attention to The King v. Tribunal of Appeal under the Housing Act, 1919, 1920 King's Bench Division, 334. In this case, the Court has held,
'The first question is, What is the meaning of that rule. I think it means that they may dispense with an oral hearing, that the decision in Arlidge's case 1915 A.C. 120, is applicable to the present, and that a hearing by the consideration of the parties, cases as stated in writing would be sufficient. But there must be a hearing, although not necessarily an oral one. In the present case, I have come to the conclusion that there has not been a hearing at all. I cannot conceive that where the Legislature has given a right of appeal against an order affecting the property of one of the King's subjects a mere consideration of the written statement of his grounds of appeal together with the reply in writing of the respondent can without more be regarding as sufficient to constitute a hearing.'
22. Learned counsel for the petitioner has drawn our attention to Constitution Bench judgment of the Supreme Court, I.J. Rao, Asstt. Collector of Customs and Others v. Bibhuti Bhushan Bagh and Another - : 1989(42)ELT338(SC) , in which the Court held as under :
'It would be open to the Collector, if he finds that sufficient cause has been made out before him in that behalf to extend the time beyond the original period of six months, and thereafter, after notice has been served on the person concerned, to afford a post-decisional hearing to him in order to determine whether the order of extension should be cancelled or not. Having regard to the seriousness and the magnitude of injury to the public interest in the case of the illicit importation of goods, and having regard to considerations of the damage to economic policy underlying the formulation of import and export planning, it seems necessary to reconcile the need to afford an opportunity to the person affected with the larger considerations of public interest.'
23. Learned counsel for the petitioner has cited Collector of Customs and Excise, Cochin and Others v. M/s. A.S. Bava - : 1973ECR18(SC) , and particularly drawn our attention to para 8 of the judgment in which the court observed that Section 129 requires an appellant to deposit the duty or penalty levied pending an appeal. Section 129 whittles down substantive right of appeal under Section 35.
24. Mr. Rawal, learned counsel appearing for the petitioner submitted that when the petitioner's substantive statutory right of appeal is taken away because of non-deposit of the duty, in that event, the petitioner ought to be granted oral hearing by the concerned authority.
25. Learned counsel for the petitioner has also drawn our attention to Bombay High Court, Mahindra and Mahindra Ltd. v. Union of India - : 1990(50)ELT338(Bom) . In this case, while dealing with Sections 35B and 35F of the Central Excises & Salt Act, 1944, the Court observed as under :
'It is not proper for the authority to merely read the stay application and pass order adverse against the petitioners. The authority should realise that an application for stay is a proceeding independent of the appeal filed against the order of the Assistant Collector. The Collector of Central Excise (Appeals) shall hear the parties when an application for stay is filed, and only after hearing the oral submissions should dispose of the stay application. The two orders passed by the Collector of Central Excise (Appeals) refusing to waive the pre-deposit required under Section 35F of the Excise Act thereforee cannot be sustained. The consequential order dismissing one of the appeal also cannot be sustained. The proceedings are thereforee, required to be remitted back to the Collector of Central Excise (Appeals) with a direction that the authority shall give hearing to the petitioner in respect of two applications for stay in respect of two appeals preferred and thereafter pass appropriate orders.'
26. Learned counsel has referred to and relied upon Institute of Chartered Accountants of India v. L.K. Ratna and Others - : [1987]164ITR1(SC) . In this case, the Supreme Court while dealing with the principle of audi alteram partem has held that Tribunal or body, responsible to take first determinative decision which has grave adverse effects on the person against whom it is taken, should afford opportunity of hearing to the concerned person before taking decision. The court further observed that such an opportunity had already been afforded to him by a subordinate body, conclusion of which is not a 'finding' but is subject to the decision of the parent body and that the statute provided for appeal against that decision, not sufficient to deny opportunity of hearing before the parent body or Tribunal before taking the decision.
27. Learned counsel also cited The Assistant Collector of Customs and Superintendent, Preventive Service Customs, Calcutta and Others v. Charan Das Malhotra - : 1973ECR1(SC) . In this case, the Court observed that the extension of period for giving notice of confiscation under Section 124(a) without giving opportunity of hearing to person whose articles are seized as contraband, was held bad.
28. Learned counsel further cited Aluminium Corporation of India v. Union of India and Others - 1978 (2) E.L.T. ( 320). The court held as under :
'The Government has undertaken quasi-judicial or curial functions and a fair hearing means a hearing however, given, which is adequate for the purpose of bringing before the officer who makes the decision, all the relevant submissions pertaining to the case.'
29. Mr. Madan Lokur, learned counsel appearing on behalf of the Union of India has submitted that, hearing does not mean oral hearing alone and in support of his contention has drawn our attention to a case decided by the Supreme Court, F.N. Roy v. Collector of Customs, Calcutta and Others - : 1983ECR1667D(SC) . In this judgment, the Supreme Court has held that there is no rule of natural justice and that at every stage a person is entitled to a personal hearing. Moreover, when the appeal against the order of the Customs authority is filed beyond limitation, and the appellate authority has dismissed the appeal as barred by limitation without hearing the appellant, there is no violation of the rules of natural justice.
30. Mr. Lokur has also placed reliance on Madhya Pradesh Industries Ltd. v. Union of India and Others - 0044/1965 : [1966]1SCR466 . In this case the court has held :
'The principle of natural justice requires that a quasi-judicial tribunal should not make any decision adverse to a party without giving him an effective opportunity of meeting any relevant allegations against him R. 55 Mineral Concession Rules (1960) recognizes the said principle and states that no order shall be passed against any applicant unless he has been given an opportunity to make his representations against the comments, if any, received from the State Government or other authority. The said opportunity need not necessarily be by personal hearing. It can be by written representation. Whether the said opportunity should be by written representation or by personal hearing depends upon the facts of each case and ordinarily it is in the discretion of the tribunal.'
31. The learned counsel has also cited M/s. Travancore Rayons Ltd. v. Union of India and Others - : 1978(2)ELT378(SC) . The Court in this case observed that,
'Though the rules do not require that a personal hearing should be given to a revision petitioner under Section 36 if in appropriate cases where complex and difficult questions requiring familiarity with technical problems are raised, personal hearing is given, it would conduce to better administration and more satisfactory disposal of the grievances of citizens.'
32. H.W.R. Wade on Administrative Law, while dealing with 'hearing' has mentioned that, 'A hearing will normally be an oral hearing. But it has been held that a statutory board, acting in an administrative capacity, may decide for itself whether to deal with applications by oral hearing or merely on written evidence and arguments, provided that it does in substance 'hear' them; and that dealing with an appeal on written communications only is not contrary to natural justice.'
33. Ms. Meera Bhatia also appearing for the Union of India has drawn out attention to Vijay Prakash D. Mehta v. Collector of Customs - : [1989]175ITR540(SC) . In this case, the Court has held that right to appeal is neither an absolute right nor an ingredient of natural justice the principle of which must be followed in all judicial and quasi-judicial adjudications. The right to appeal is a statutory right and it can be circumscribed by the conditions in the grant.
34. Counsel for the respondents referred to and relied upon P.N. Eswara Iyer and Others v. Registrar. Supreme Court of India - . In this case, the court observed the importance of hearing and mentioned that courts are not caves nor cloisters but shrines of justice accessible for public prayer to all the people. Rulings need not be cited for this basic proposition. But every judicial exercise need not be a public show. When judges meet in conference to discuss, it need not be televised on the nation's network. The right to be heard is of the essence but hearing does not mean more than fair opportunity to present one's point a dispute, followed by a fair consideration thereof by fair-minded judges.
35. The court agreed that the normal rule of the judicial process is oral hearing and its elimination an unusual exception.
36. In that case, the Court while dealing with the virus of a rule relating to review in the highest court observed that the goal to be attained in maximisation of judicial time and celerity of disposal of review petitions. And, despite the heavier burden thrown on the judges during the hours outside court sittings by agreeing to read through and discuss the review petitions for themselves, there is obvious acceleration of disposal of review petitions without intrusion into court time. The court observed that to disperse and re-arrange regular Benches especially when most of the review petitions are repeat performances in futility, is a judicial circus the court can ill afford. The rule is rational, the injury is marginal.
37. Stressing on the importance of written submissions, the court observed that, the magic of the spoken word, the power of the Socratic process and the instant clarity of the bar-Bench dialogue are too precious to be parted with, although a bad advocate can successfully spoil a good case if the judges rely only on oral arguments for weaving their decision. The written brief, before careful judges, can be a surer process of deeper communication that the 'vanishing cream' of speaking submissions. The court observed that 'in this Court, counsel have begun to rely heavily with good reason, on written submissions and oral sweeteners'.
38. We have carefully examined the rival contentions of the parties. We have also scrutinized the various decisions cited by the learned counsel in support of their contentions. On the basis of decisions of the Supreme Court, High Courts and other English decisions, the ratio which can be extracted of all these decisions is that the person concerned who has to pay duty and penalty should have a reasonable opportunity of presenting his case. Any decision taken without affording reasonable opportunity to the concerned parties would be vocative of the principles of natural justice. The reasonable opportunity has to be governed according to circumstances and the domain of practicability as mentioned in Russel v. Duke of Norfolk - 1949 (1) All ER 109. We are of the opinion that as far as possible, oral hearing must be given to the parties concerned. In the instant case, the decision of the concerned authority on the pre-deposit application is extremely vital because this decision would eventually determine the petitioner's substantive statutory right of appeal, and while determining such right, the petitioner ought to be given oral hearing. That would also be necessary so that the petitioner is in a position to demonstrate his prima facie case and the financial hardship. The principle of audi alteram partem be given its true meaning and this principle can be properly implemented if oral hearing in a case of this nature is given.
39. Accordingly, we hold that oral hearing has to be given before deciding application mentioned in second proviso to Section 4-M of the Act. As a result of this, we hereby overrule the decision rendered in Amrutlal Ganpatrai Panchal (supra).
40. Accordingly, the petitions are allowed. The impugned order is quashed. We direct the petitioners to appear before the concerned authority on 11-10-1993, and the said authority shall decide the petitioner's application after hearing the petitioner. However, there would be no order as to costs.