P L D 1965 Supreme Court 605 (PLP)

FAZLE‑AKBAR, J.‑This appeal by special leave is from the judgment and order of a Division Bench of the High Court of West Pakistan at Karachi dismissing in limine an application for a writ. The petition was filed under Article 98 of the Constitution impugning the validity of certain orders issued under the provisions of the Registration (Importers and Exporters) Order, 1952, by the Assistant Controller of Imports and Exports. The facts briefly are as follows: On 27th August 1956 the appellants Messrs East-End Exports, a proprietorship concern, was granted in terms of clause 3 of the Registration (Importers and . Exporters) Order, 1952 (hereinafter referred to as `the Order') an Export Registration Certificate being No. Export/W/004700 and it thereafter carried on business as a Registered Exporters. Firm from October 1956, till 15th October 1960 when it received the following office memorandum from the Assistant Controller of Imports and Exports:, Karachi, the 11 / 15th October 1962 Export Registration Certificate No. W/004700 dated 27‑8‑56 issued in favour of Messrs East‑End Exports, 87 P. M. A. Building, Nicol Road, Karachi, is hereby suspended with immediate effect." This was followed by a letter dated 18th October 1962: "Karachi, the 18th October 1962 Messrs East‑End Exports, 87, P. M. A. Building, Nicol Road, Karachi. Subject: Cancellation of Export Registration. Gentlemen, I am directed to refer you to this office letter of even number dated I1/15th October 1962 and to state that on the basis of reports received in this organization, that you had indulged in activities involving violation of foreign exchange, and the consequential loss to .the State Exchequer, the Chief Controller of Imports and Exports, in exercise of powers conferred on him under clause 4 (1)(b) read with clause 4(1)(g) of the Registration (Importers and Exporters) Order of 1952, has suspended your Export Registration Certificate No. W/004700 dated 27‑8‑1956 with effect from 11‑15th October 1962, as communicated to you vide letter referred to above. Furthermore, having satisfied ,himself, that your action as mentioned above is detrimental to the public interest, the Chief Controller of Imports and Exports has also ordered that a notice be served on you to give reasons as to why your Export Registration Certificate should not be cancelled under the provisions of clause 4(1)(b) read with clause 4(1)(g) of the said Order. Accordingly, this show‑cause notice is served on you to give reasons within 15 days of the issue of this notice as to why your Export Registration Certificate should not be cancelled. Please note that if no satisfactory reply is received within the given time, this office will be constrained to decide‑the case unilaterally. Yours faithfully, (Sd.) (S. M. H. S. Bokhari) 17‑10‑62 Assistant Controller of Imports and Exports" On 30th October 1962, the Exporter in his reply to the above letter asked for a copy of the report on which the Department contemplated taking action against him. As no reply was received, his lawyer made a request for a copy of the complaint or report on the basis of which action was contemplated against his client but he also did not get any reply. The Exporter then wrote to the Controller, Exchange Control Department, State Bank of Pakistan, Karachi complaining that his Export Registration Certificate had been suspended on a false report and requested him to issue necessary instructions for removing all restrictions with regard to his Export Registration Certificate. The Exchange Control Department however, asked him to take up the matter with the Chief Controller of Imports and Exports, Karachi. He then on 21st June 1963, sent a representation to the Chief Controller of Imports and Exports. In reply the Assistant Controller wrote on 8th August 1963, that the matter was under consideration and, further communication would follow in due course. As he did not receive any further communication from them, he filed a petition for a writ in the High Court on 1st October 1963. Under the direction of the Court the Assistant Controller submitted along with his comments a report of the Special Police Establishment and also a copy of letter of the Controller of Foreign Exchange. It was stated in the Police report that Abdul Hafeez, Proprietor of Messrs East‑End Exports, was a notorious foreign exchange racketeer, and that "the investigation is still continuing and efforts are being made to find out evidence for a judicial trial." It was also pointed out in that report that "the records seized from Abdul Hafeez also proved that he is an associate of a notorious currency racketeer namely, Hukumdad, who has since been convicted by the Martial Law Court on 13‑5‑

62. This Hukumdad had written on 1‑3‑1962 to his bank Messrs Lloyds Bank Limited, 163‑Aston Road, Birmingham to credit 2,500 in the account of Rehman Hafeez in Midland Bank Limited, 71‑A, Queen Victoria Street, London. A copy of this letter was delivered to Abdul Hafeez by Hukumdad. This clearly indicates that he must have received Pak currency from Abdul Hafeez for this illegal exchange of sterling. " The Controller of Foreign Exchange in his letter to the Department stated that the said Abdul Hafeez was doing illegal business in foreign exchange in collaboration with his two sons namely,, Mr. A. Salam and Mr. Rahman Hafeez who were then in United Kingdom. He therefore, recommended for cancellation of the Export Registration Certificate of Abdul Hafeez. The High Court on perusal of the above papers dismissed the petition in limine. In a short order the High Court observed as follows: "In our view the Assistant Controller .had by his order dated the 15th and 18th of October 1962, sufficiently indicated the nature of the accusations against "the petitioner that were being investigated at the time when his Export Registration Certificate had been suspended. We do not think that it was essential for him at this stage to apprise the petitioner of all the detailed particulars of the charges that were being investigated against him." The only question which requires determination by this Court is: Whether there has been a failure of natural justice in this case as a result of the procedure adopted by the Assistant Controller of Imports and Exports. It has been argued on behalf of the appellant that not only the exporter was not given a fair and full opportunity of being heard before issue of the order suspending his Export Certificate but lic was also never informed as to what was the exact charge against him. It was pointed out that the show=cause notice merely reproduced the provisions of clauses 4(1)(b) and 4(1)(g) of the Registration (Importers and Exporters) Order, 1952 and did not give any clear idea to the appellant about the nature of the charges that had been levelled against him. On the other hand, the Attorney General contended that the Controller had, acted in this case according to his obligation laid down in the Order. It will be convenient at this stage to consider the relevant provisions of the Order as it stood at the time of the issue of the notice of suspension. Clause 3(1) provides: "No importer or exporter who has not been granted registration by the Chief Controller shall indent, import or export any goods into or out of Pakistan." Clause 4 says: "(1) No importer or exporter shall be entitled to registration as of right, and registration may be refused, or if granted, may be suspended or cancelled, for any of the following reasons:‑ (a) for contravening or failing to comply with any provision of this. Order; (b) for contravening or failing to comply with any regulation relating to import, export or foreign exchange control; (c) for under‑invoicing or over‑invoicing the value of imports or exports; (d) for selling, transferring or violating the conditions of an import or export licence issued to him by the Chief Controller or any officer authorised in this behalf; (e) for obtaining or attempting to obtain any such licence by fraud (f) for evading payment of dues to the Government in connection with import and export; (g) for committing any practice relating to trade, commerce and industry which in the opinion of the Central Government, is . detrimental to the public interest; (h) for committing breach of any order of the Central or Provincial Government regarding price or distribution of imported goods, or quality, standards and prices of exported goods; (i) for conviction in a Court of law for an offence relating to trade, commerce or industry; (j) for non‑possession of real assets in Pakistan to the extent considered adequate by the Central Government; (k) for refusal to accept indent. . (2) If registration is refused, suspended or cancelled the reasons for refusal, suspension or cancellation shall be communicated by the Chief Controller to the importer or exporter concerned . . . . . , Clause 5 empowers the Chief Controller "to require a registered importer or exporter or an importer or exporter applying for registration to furnish, in the manner prescribed by the Chief Controller, such evidence or information as the Chief Controller may deem necessary for the purpose of this Order, including evidence and information relating to the organisation and conduct of the business . . . ." Clause 6 authorises the Chief Controller to direct "a Gazetted Officer authorised by him in this behalf to inspect all documents, books and accounts relating to the import or export of goods and the premises ‑ of any importer or exporter applying for registration." Clause 7 is in these terms: "After the Chief Controller has examined such evidence or information as may be available to him or as may have been called for by him under clause 5, he may grant registration and issue a certificate in the prescribed form, or for reasons to be recorded in writing may refuse registration or suspend or cancel registration if the importer or exporter is already registered." Clause 8 then says: "Without prejudice to the generality of the powers conferred upon him by clause 7,‑ (a) if the evidence of information supplied by any importer or exporter under clause 5 is found to be incorrect in any material respect, the Chief Controller may refuse registration or, where registration has already been granted, may suspend or cancel the same but shall record his reasons for such refusal, suspension or cancellation which reasons shall be communicated to the importer or exporter concerned; (b) if an importer or exporter registered or applying for registration does not permit any officer duly authorised in this behalf to inspect documents, books and accounts relating to the import or export of ‑goods and his premises, the Chief Controller may suspend, cancel or, as the case may be, refuse the registration." These provisions came up for consideration before this Court in the case of Messrs Faridsons Limited, Karachi and another v. Government of Pakistan and another (P L D 1961 S C 537). In the above case Import Registration Certificates were suspended under ‑clause 4(1)(b)(c) and (g) of the .Registration (Importers and Exporters) Order, 1952, as amended on 17th April 1956 without giving a hearing to the Importers and the Court while considering whether the order of the Chief Controller of Imports and Exports was in conformity with the provisions of clauses 4 and 5 of the Order observed: "In these circumstances, it seems plain that the impugned orders suffer from the initial defect that they communicated no `reasons' to the person concerned, leaving him to conjecture why the adverse order had been passed against him. No effective appeal could be lodged to the Central Government against such an order. The observation of the learned Judges of the High Court to the effect .that no elaborate statement was necessary because in appeal, the Central Government would examine the record of the Chief Controller to test ‑his decision, seems to me, with all respect, to over simplify the situation. Without knowing the real ground of the decision, how could, the appellants controvert them before the 'appellate authority?" (From the judgment of S. A. Rehman, J.). On the question whether the Chief Controller was under a duty to give a show‑cause notice to the Importer before taking action against him and to give him an opportunity for offering objections, the Court observed: "A plain reading of the provisions of the Order clearly leads to the inference that the Chief Controller had to ascertain facts objectively, before he could take action adverse to the appellants in respect of their registration. Clause 7 makes this clear and it then becomes incumbent on the Chief Controller to put down the reasons for the action in writing. There may be no right in a person to obtain registration as an importer or exporter. Once having been registered, however, he is enabled to run a profitable business and he cannot be deprived of it unless he can be found to have committed some specific act against the provisions of clause 4 or is found guilty of supplying incorrect information under clause

5. The suspension or cancellation of a registration would be a serious matter for the importer or the exporter concerned. No licence could be granted to him for import or export henceforward and the action taken would further cause loss of prestige and reputation to him in the commercial world." (From the judgment of S: A. Rahman, J.). As no opportunity was given to the importers, the Court held that the orders passed by the Chief Controller were vitiated by his failure to follow the principles of natural justice. Mr. Manzur Qadir, the learned counsel for the appellant strongly relies on the above observations of this Court in Faridsons' case. On the other hand the learned Attorney‑General has contended that the above observations are not applicable to the instant case inasmuch as the facts here are quite distinguishable from that case. He has pointed out that here the order suspending the certificate was passed pending enquiry into the conduct of the Exporter and this the Assistant Controller was empowered to do under the provisions of the Order. In support of his contention he has relied on the decisions of this Court in University of Dacca v. Zakir Ahmad (P L D 1965 S C 90), Abdur Rahman v. Collector and Deputy Commissioner (P L D 1964 S C 461), Abul A'la Maudoodi v. Government of [Vest Pakistan (P L D 1964 S C 673) and Muhammad Hayat v. Province of [Vest Pakistan (P L D 1964 S C 321). It is true that in Faridsons' case the order of suspension was passed as a punishment ' and to that extent, this case is distinguishable from the above case. The question therefore, is: Whether the principles of‑natural justice would be attracted to a case of temporary suspension of an export or import certificate pending enquiry into the conduct of the exporter. Suspension may be a punitive suspension or one in aid of an enquiry. An order in the nature of punishment is always required to be preceded by a properly constituted enquiry. The other kind of suspension is designed to facilitate the due prosecution of the enquiry. Such a temporary suspension is deemed to be an implied term in every contract of service. Section 16 of the General Clauses Act also lays down that an authority who has got power to appoint has also the .power to suspend. It has therefore been held that if an authority when holding an enquiry, is satisfied that the charge against the public servant is connected with his position as a Government servant or is likely to embarrass him in the discharge of his duties or involves moral turpitude, he can suspend him, pending the enquiry. On this principle it may be said that the Chief Controller can also exercise this power summarily pending an enquiry. It must however, be remembered that the Government servant, by reason of his suspension, does not lose his office or suffer degradation. His rank remains the same. He merely ceases to discharge the duties of his office during pendency of the departmental enquiry against him. He also draws a subsistence allowance during the period of suspension. In the event of his honourable acquittal he is allowed to draw full salary for the period of suspension. On the other hand, if an Export or Import Registration Certificate is temporarily suspended, it may cause incalculable harm to the importer or exporter for which he cannot get any redress even if later the order of suspension is withdrawn. If suspension continues longer it may even totally destroy his trade. It is therefore, desirable that this summary power should be exercised very sparingly, and that too only when the urgency of the situation demands it. Even then the authority concerned should, without the least possible delay inform the person concerned of the charges against him. Now in this case, soon after issue of the order of suspension the Assistant Controller sent a letter to the Exporter in which he asked him to show cause why "his Export Registration Certificate should not be cancelled under the provisions of clause 4(1)(b) read with clause 4(1) (g) of the said order." In spite. of the Exporter's pointing out that because of the vagueness of the charges it was not reasonably possible for him to answer the same, he did not receive any reply whatsoever, from the authority. Item (b) of sub-clause (1) of clause 4 talks of contravening or failing to comply with any regulation relating to import, export or foreign exchange control. Item (g). says that penal action may be taken "for committing any practice relating to trade, commerce and industry . which in the opinion of the Central Government, is detrimental to the public interest." A mere reference to these items cannot apprise the exporter or importer of the precise charge against him. In Faridsons' case the impugned order contained a bald statement that the importer or exporter had been guilty of contravening items (b), (c) and (g) of sub‑clause (1) of clause 4 of the. order and this Court while holding that mere reference to the items could not be regarded as sufficient compliance with the provisions of the Order, observed: "The object of mentioning reasons clearly was to inform the delinquent importer or exporter of the allegations against him, so that if possible he might attempt to rebut them. The material collected by the Chief Controller may be partial or may come front a source inimical to the person concerned. The facts may assume a wholly different complexion in the light of explanations to be furnished by the accused party. A safeguard would thus be provided against carelessness or ignorance, though the authority may, according to its own lights be acting in good faith. It would be a poor solace to the aggrieved party to learn that the officer acting to his detriment had not done so mala fide. The formula adopted in this case by the Chief Controller, of making a reference to some of the items of sub- clause (1) of clause 4 was peculiarly empty of all significant content. I am disposed to hold, therefore, that there has been no compliance with the provisions of sub‑clause (2) of clause 4 of this Order." (From the judgment of S. A. Rahman, J.). The above observations are fully applicable to the show‑cause notice which had been sent in this case. We have really failed to understand why the Controller did not communicate to the Exporter the allegations that were contained in the Police report and in the letter of the Controller of Foreign Exchange. Sub-clauses (2) and (3) of clause 4 clearly impose an obligation on the Controller to give reasons for his order. We may further add that in view of the fact that delay was causing irremediable harm to the Exporter, the Assistant Controller should have investigated the case with reasonable promptitude. In this case the Export Registration Certificate was suspended on 11th/15th March 1962; the show‑cause notice was given on 18th October 1962;‑ and for almost a year the Exporter, in spite of his best endeavours, could not get the details of the charges that were levelled against him. and thereafter filed a writ petition in the High Court on 1st October 1963: We understand that uptil now the enquiry has not been concluded in this case. The only reason given by the Attorney General for this inordinate delay that the Special Police has not yet completed the investigation cannot be considered at all satisfactory. The Assistant Controller cannot be permitted to evade his duty by this device of delaying the enquiry on some pretext or other and then refusing to reach a decision To support such a conduct would make the safeguard given to the Exporter or Importer wholly illusory. The Exporter could not carry on his trade because of this indefinite suspension of his Registration Certificate for about three years. This undue prolongation of the proceedings has practically ruined his export business. He cannot like a Government servant even look to crumbs of mercy which the latter gets in the shape of subsistence allowance. In these circumstances it would be wrong to pretend that the Exporter had been afforded an opportunity of showing cause either against the order of suspension or against the proposed action of cancellation of his licence. It is apparent that by delaying the enquiry on the vague charges the order of ind4nite suspension is operating a severe punishment. In our opinion the Assistant Controller's action in continuing the proceedings without giving the Exporter proper opportunity of making any defence cannot be supported on any reasonoble ground. Keeping in view the observations of this Court in Faridsons' case we hold that the Assistant Controller did not give the appellant full and effective opportunity to present his case before him. We would, therefore, issue a writ of certiorari quashing the impugned orders. We should however, make it clear that it would be still open to the Chief Controller to deal with this mater in accordance with law. The appellant will be entitled to his costs throughout. S. A. H./S. Q. Appeal allowed.