Case Note & Summary
The petitioners, M/s. Euroflax Industries and Shri Anuj Mittal, were engaged in the export of raw cotton to Hong Kong and China. On 17 August 2010, the Central Government amended the Foreign Trade Policy for 2009-2014 under Section 5 of the Foreign Trade Development and Regulation Act, 1992, making cotton export free and subject to Open General Licence (OGL), provided that export contracts were registered with the Textile Commissioner prior to shipment. Consequently, the Ministry of Textiles issued a Memorandum on 7 September 2010, requiring exporters to obtain Export Authorization Registration Certificates (EARCs) from the Textile Commissioner, Mumbai. The guidelines stipulated that upon satisfaction of the information furnished, the Textile Commissioner or authorized officers would issue EARCs with a validity of 45 days. The petitioners applied for and obtained EARCs for various export contracts. However, without any show cause notice or opportunity of hearing, the Textile Commissioner cancelled the EARCs. The petitioners challenged this cancellation by way of a writ petition. The legal issue was whether the cancellation of EARCs without affording a hearing violated principles of natural justice. The petitioners argued that the cancellation was arbitrary and in violation of natural justice. The respondents contended that the cancellation was justified due to certain irregularities. The court analyzed the facts and held that the cancellation of the EARCs without any show cause notice or opportunity of hearing was a clear violation of the principles of natural justice. The court set aside the cancellation and directed the respondents to restore the EARCs. The court also directed that the petitioners be given an opportunity of hearing before any further action is taken. The decision favored the petitioners.
Headnote
A) Administrative Law - Principles of Natural Justice - Audi Alteram Partem - Cancellation of Export Authorization Registration Certificates - The Textile Commissioner cancelled EARCs without any show cause notice or opportunity of hearing to the petitioners, which is a clear violation of the principles of natural justice. The court held that such cancellation cannot be sustained in law. (Paras 4-6) B) Foreign Trade - Export of Cotton - Registration of Contracts - Foreign Trade Development and Regulation Act, 1992, Section 5 - The Central Government amended the Foreign Trade Policy to make cotton export free subject to registration of contracts with the Textile Commissioner. The guidelines required issuance of EARCs upon satisfaction of information. The court held that cancellation without hearing is arbitrary. (Paras 2-6)
Issue of Consideration
Whether the cancellation of Export Authorization Registration Certificates (EARCs) without issuing a show cause notice or affording a hearing to the petitioners violates principles of natural justice.
Final Decision
The court allowed the writ petition, set aside the cancellation of the Export Authorization Registration Certificates (EARCs), and directed the respondents to restore the EARCs. The court further directed that before taking any adverse action, the petitioners shall be given an opportunity of hearing.
Law Points
- Principles of natural justice
- audi alteram partem
- cancellation of export authorization without hearing
- Foreign Trade Development and Regulation Act
- 1992 Section 5
