JUDGMENT
Baboo Lall Jain, J.
1. The petitioner No. 1,1.T.C. Limited has been an exporter of marine products since 1972. The case of the petitioner is that since 1972 and upto 1987, the petitioner No. 1 exported such marine produce of the value of more than Rs. 50 crores.
2. On 26th August, 1986 a letter was received by the writ petitioner M/s. I.T.C. Limited, wherein it was pointed out that one consignment of 300 master cartons of frozen shrimps exported to Japan by M/s. I.T.C. Limited, Calcutta, per vessal “President Eisen Hower” to M/s. Hanwa Co. Ltd. had been found to be contaminated with Vibrio Cholera germs. By the said letter the Deputy Director (Lab) asked the writ petitioner to take various precautions during the course of manufacture and to ensure the hygienic handling of the products, during the processing and packing operations. The Deputy Director (Lab) also intimated that it had been decided that total sampling and inspection will be taken.
3. On 2nd September, 1986 a letter was issued by the Export Inspection Agency, Calcutta to M/s. Triveni Food Products. The said M/s. Triveni Food Products were the manufacturer of the said consignment which was found at Japan to be contaminated by the Japanese Quarantine Authority, Kobe, Japan. By the said letter the said Export Inspection Agency, Calcutta, withdrew approval granted to M/s. Triveni Food Products, Calcutta for processing of Marine Products for export under Rule 3B2(a) of the Rules. Thereafter, by a letter dated 18th October, 1986, the said Export Inspection Agency, Calcutta revoked the order of withdrawal dated 2nd September, 1986.
4. It is to be noted that the petitioner No. 1 has no manufacturing unit of its own, but it purchased all the goods exported by it, from the said M/s. Triveni Food Products, ‘ who were the manufacturer, thereof.
5. On 7th November, 1986 the Deputy Chief Controller of Imports and Exports issued a show cause notice to M/s. I.T.C. Limited pointing out that the consignment of 7.5 M.Ts. of frozen shrimp exported by I.T.C. Limited to M/s. Hanwa Co. Limited, Japan and carried by the aforesaid ship was found to contain cholera Igerms on its arrival in Japan. It is also mentioned that the Japanese Quarantine Authorities detained the consignment on 11th August, 1986 and subsequently destroyed it. On the basis of the said facts, the Deputy Chief Controller of Imports & Exports stated that he had reasons to believe that the writ-petitioner No. 1 had tried to cheat the foreign buyer, by exporting contaminated goods which is health hazard and thus committed the breaches of clause 7(1)(d) and (e) of the Exports (Control) Order, 1977. The writ petitioner was asked to show cause within IS days of the receipt of he said notice as to why action should not be taken against the writ petitioner No. 1, its Directors under Clause 7 of the said order to debar M/s. I.T.C. Limited from receiving export licences and/or from exporting any goods.
6. By a letter dated 27th November, 1986 the writ-petitioner showed cause. The said letter appears to have been written after the required date. The writ-petitioner pointed out that only one master carton of ten 2 kgs. slabs of frozen shrimps was allegedly found infected with cholera germs. However, the Japanese Authorities destroyed the entire consignment. According to the writ-petitioner, the concerned consignment was subjected to tests, including tests for cholera by Exports inspection Agency and was cleared by the ETA Authorities.
7. By the said letter the writ-petitioner also pointed out that Triveni Food Products processed the concerned material as per agreement between the writ-petitioner and Triveni Food Products. The property in frozen shrimps passed to the writ petitioner immediately on being processed and thereafter the goods were kept stored in an approved cold storage. The Export Inspection Agency of the Government of India carried out rigorous inspection in respect of the concerned consignment. According to the petitioner, the Export Inspection Agency carried out organoleptical and bac-tereological examination of the concerned material and they found the same to be “export worthy”. It was only upon receipt of a certificate from the Export Inspection Agency that the said consignment was exported to Hanwa Company Limited, Japan. On 13th August, 1986, the importer concerned inspite of full knowledge about the detention of the consignment after detection of cholera germs, requested for supply of more material. They also mentioned in the said letter that the approval of the licence for manufacture, had since been revoked and after the inspection of the manufacturing unit by an appropriate officer of the Union of India, the said manufacturer, that is the Triveni Food Products had been allowed to continue to process the said products.
7. The writ petitioner company also took the point that the provisions of Clause 7(l)(d) and (e) of the Export (Control) Order, 1977 should not and does not apply, to the facts of the case.
8. A further letter was also written by the writ petitioner dated 19-1-1987 making further submissions.
9. Some of the points taking therein may be summarised as follows :-
(a) The consignment which was found to be infected was very small fraction of the entire consignment. (b) No opportunity was given to the Exporter for further tests or inspection. (c) The ship which carried the cargo to the Japanese port, is not the ship on which the exporter had loaded the consignment at the Calcutta port. That shows that there was transhipment of the cargo, in the course of the voyage, and it is quite possible, even likely that the product could have been infected with cholera germs during such transhipment. (d) the Export Inspection Agency on coming to know of the alleged detection of cholera germs, withdrew approval in respect of the processor's factory. On 23rd September 1986 the Export Panel visited the factory and thereafter the Appellate Panel revoked the decision to withdrew the approval in respect of the processor's factory. (e) N6 question of any corrupt of fraudulent practice should arise in the facts and circumstances of this case. 10. The said matter was heard and an order was passed on 11-9-1987 by the Deputy Chief Controller of Export and Imports. 11. Relevant portions of the said order dated 11-9-1987 are as follows :-
“I have considered the submissions made by ITC Ltd., both in written and orally. No doubt they had complied with the provisions of various regulations as y per information from the Export Inspection Agency, the entire lot of frozen shrimp was not tested by the Government Agency. It was tested on random basis. No doubt action of M/s. ITC Ltd., is not deliberate and their intention was not malafide but they cannot escape the responsibilities of exporting contaminated frozen shrimp though a fraction of the entire consignment has been found contaminated. It is immaterial whether the Japanese Authority have not given them an opportunity to get the goods rechecked but they cannot challenge the finding of Japanese Government by drawing inferences without any unchallengeable evidence. Their action has certainly created a bad name for the nation and the country and will have/is likely to have adverse effect on the national economy because Indian exporters will loose a market where competition is very strong. Accordingly, I hold M/s I.T.C. Ltd., guilty of violating the provisions of Clause 7(l)(d) and (e) of the Exports (Control) Order 1977 and in exercise of the powers conferred on me under Clause 7 of the said order debar M/s ITC Ltd., from receiving export licences for export of marine products including shrimp and/or exporting marine products including frozen shrimp from 7-11-1986 to 31-3-1992”.
12. The provisions of Clause 7(l)(d) and (e) of the Exports (Control) Order 1977 reads as follows :-
“7. POWER TO DEBAR FROM RECEIVING LICENCES FOR EXPORTING GOODS – The Central Government of the Chief Controller of Imports & Exports may debar a licensee or exporter or any other person from all or any of the following, i.e., receiving the licences or from exporting any goods and direct without prejudice to any other action that may be taken in this behalf, that no licence shall be granted to him or no permission shall be granted to him for exporting any goods, for a specified period under this order –
“(d) if he has, on any occasion, tampered with an export licence or has exported goods without a licence or has been a party to any corrupt or fraudulent “f practice in his commercial dealings or in obtaining a licence, or in exporting any goods, or is found to have solicited any licence by effecting an inducement to the holder of the licence or otherwise; or”
“(d) if his agent or employee has been a party to any corrupt or fraudulent practice in obtaining any licence or in exporting any goods on his behalf; or”
13. Withdrawal of approval (to manufacture frozen shrimps) in the case of Tribeni Food Products was done by the Export Inspection Agency under Rule 3(b)(2)(a) and (b) of the Rules framed under Section 17 of the Export (Quality Control) Inspection Act of 1963. The said rule reads as hereunder :-
(2)(a) “The approval accorded may be withdrawn in respect of a processor for the following reasons, after giving a notice of minimum period of 7 days, namely :-
(i) If the equipments, machinery and storage facilities are not in good working condition.
(ii) If the sanitary and hygienic conditions of the unit are not maintained satisfactorily.
(iii) If samples drawn for counterchecks fail to meet the laid down standards.
(iv) If the processor has violated or deliberately attempted to violate the provisions of these rule or instructions issued by the Council from time to time.
(b) Such withdrawal of approval shall be intimated in writing to the processor.”
This withdrawal of approval was as the consequence of the rejection of the very same consignment of frozen shrimps, which will appear from the letter dated 2-9-1986 of Export Inspection Agency. After causing further inspection imposing stricter control the said withdrawal of approval was revoked on 18-10-1986.
14. However the Deputy Chief Controller of Imports and Exports has held that they cannot escape their responsibility for exporting frozen shrimps though the fraction of the entire consignment was found to be contaminated.
15. In my view, if the case is to be brought under Rule 7(1)(d) & (e), the facts should establish that the Exporter has been a party to any corrupt or fraudulent practice in commercial dealings in exporting the goods on his behalf.
16. In the facts and circumstances of this case as it appears to me, the tests were held by the Japanese & Quarantine Authorities.
17. In course of such tests a fraction of the consignment was found to be contaminated with cholera germs and therefore, the Japanese Authorities destroyed the consignment without even referring to the exporter here or to the Indian Authorities. That had been done under the Japanese Law and/or rule and/or regulations. On the other hand, it is equally true that the Export Inspection Agency had cleared the cargo for export after due inspection. The manufacturer of the cargo has also been found to be fit for carrying on the manufacturing activity. After the inspection, the Department took various measures for Instructor’s control and Instructor’s inspection. It seems that the Deputy Chief Controller of Imports and Exports has not at all considered that after the cargo is put on board the ship, the shipper and/or the exporter is out of possession of the cargo which is under the care and custody of the transporters. If at all it is said that the export inspection agency might have failed in their inspection to defect the contamination if any, then it is a case of human failure. If export inspection agency failed to detect the contamination in a part of the consignment, how could any one else be expected to be fool-proof. The exporter was not the manufacturer and it could rely on the quality control inspections and the inspections of the Export control agency. That apart, so far as the instant case is concerned it has been alleged by the petitioner company that there appears to be a transhipment of the cargo during the course of voyage. It is quite probable that while the cargo had been in the custody of the transporter and while the same was transhipped during the course of the voyage, some of the cases could easily be infected by coming into contact with some infection. Under the circumstances, it is difficult to say that the exporter alone must be responsible for the contamination, which conclusion is in my opinion unjustified in the facts and circumstances of the case. The exporter may be responsible until the time the goods are put on board the ship or during the period of his custody of the goods. Therefore, unless, it can be established to the full satisfaction of the concerned authority that there is no possibility of any contamination, during the course of the voyage and/or the transhipment of the cargo, I do not think that any reasonable man would held the exporter to be solely responsible for the contamination.
18. There is another way of looking into the matter. It appears from the allegations that the petitioner has been an exporter since 1972. During 1983-84 it exported Marine products worth about Rs. 25.5 crores. During 1984-85 it exported such products of the value of Rs. 22.5 crores. During 1985-86 it exported such products of the value of Rs. 19.4 crores. It is not the case of the respondents that there had been any such incident during the past when a cargo was exported by them, of the Marine Products had been found to be contaminated. If there is one incident where one case has been found to be contaminated during the course of about 14 years, then in my opinion it cannot be said that the exporter is guilty of any practice. Simply, because one case has been found to be contaminated at the destination, it cannot either be said that the exporter must, under all circumstances, be responsible for the same. Furthermore, there could not in this case be any intention of gaining any economic advantage or committing any fraud upon anyone, and far less an intention to adopt corrupt practice.
19. One of the objections taken on behalf of the respondents was that there was an alternative remedy open to the writ petitioner to go in appeal. The impugned order was passed on the 11th September, 1987 and this application was filed on 18th September, 1987. On 18th September, 1987 this Court entertained this application and passed an interim order in terms of prayer (f) of the petition. On that date the alternative remedy of the petitioner was not time barred.
20. The learned Counsel appearing on behalf of the petitioners relied on the judgment of the Supreme Court report in (L. Hirday Narain v. Income-tax Officer, Bareilly). In the said case the Supreme Court held as follows :
“An order under Section 35 of the Income-tax Act is not appealable. It is true that a petition to revise the order could be moved before the Commissioner of Income-tax. But Hirday Narain moved a petition in the High Court of Allahabad and the High Court entertained that petition. If the High Court had not entertained his petition, Hirday Narain could have moved the Commissioner in revision because at the date on which the petition was moved, the period prescribed by Section 33-A of the Act had not expired. We are unable to hold that because of revision application could have been moved for an order correcting the order of the Income-tax Officer under Section 35, but was not moved, the High Court would be justified in dismissing as not maintainable the petition, which was entertained and was heard on the merits. The High Court observed that under Section 35 of Indian Income-tax Act, 1922, the jurisdiction of the Income-tax Officer is discretionary. If thereby it is intended that the Income-tax Officer has discretion to exercise or not, the power to rectify, that view is in our judgment erroneous. Section 35 enacts that the Commissioner or the Appellate Assistant Commissioner or the Income-tax Officer may rectify any mistake apparent from the record. If a Statute invests a Public Officer with authority to do an act in a specified set of circumstances, it is imperative upon him to exercise his authority in a manner appropriate to the case when a party interested and having a right to apply moves in that behalf and circumstances for exercise of authority are shown to exist. Even if the words used in the statute are prima facie enabling, the courts will readily infer a duty to exercise power which is invested in aid of en-dorcement of a right public or private of a citizen.”
Under the circumstances, in the instant case, I do not think that this court should allow and direct the petitioner to seek his alternative remedy which by this time must have become time barred.
21. In my opinion, even on the facts as alleged in the show cause notice, no case could be made out under Rule 7(1) (d) and (e) of the Exports (Control) Order 1977. The facts stated in the show cause notice do not make out any ground to affix the entire responsibility on the petitioner company. Furthermore, the facts do not also make out the ground that the petitioner-company was guilty of corrupt practice or fraudulent practice as mentioned in the said Rules.
22. Under the circumstances, the said show-cause notice is liable to be quashed and is hereby quashed and set aside.
23. Furthermore, so far as the said order dated 11th September,1987 passed by the Deputy Chief Controller of Imports & Exports is concerned the same shows that the entirely of facts as stated by the said Deputy Chief Controller of Imports & Exports do not sustain a case under Rule 7(1)(d) and (e) of the Exports (Control) Order, 1977.
24. Furthermore, it appears that the Deputy Chief Controller of Imports & Exports, had totally ignored the fact that after the inspection by the Export Inspection Agency and the shipment of the cargo, the cargo was in the custody of the carrier during the course of transportation. It seem that the said important fact has been totally lost sight of. It is not even considered as to under what conditions the cargo was put on board the ship and that in what condition the same was kept stored in the ship in which the same was loaded and under what conditions the transhipment took place and under what condition, the cargo was kept in the transhipped ship. There is no fact to establish that the cargo was kept by the shipping company in perfectly hygienic conditions from the time it was taken on board the ship until discharge at the destination point.
25. Furthermore and in any event, in my opinion even if the petitioner-company had failed, on one occasion to take proper care to keep the consignment free from infection while the same was in its custody that cannot in my opinion establish a case of corrupt and fraudulent practice. Corrupt and fraudulent practice has to be intentional with the motive of economic gain and in order to be a practice it has to be repeated on more than one occasion. Neither in the show-cause notice nor in the order, there is any allegation or finding which can, in my opinion, establish a case of any corrupt and fraudulent practice.
26. Under the circumstances, the said show-cause notice dated 7th November, 1986 and the said order dated 11th September, 1987 are hereby quashed and set aside. The respondents are restrained from giving any effect to the said impugned show-cause notice dated 7th November, 1986 being Annexure ‘F’ to the petition and also from giving any effect to the said order dated 11th September, 1987 being Annexure T to the petition.
27. There will be no order as to costs.
28. The learned Counsel appearing on behalf of the respondents prays for stay of operation of this order for a period of 4 weeks.
29. Stay of operation of this order is granted limited to a period of 4 weeks from to-day.