JUDGMENT
Bharucha, J.
1. On 7th January 1982 an R.E.P. import licence was issued to M/s. Hindustan Trading Company. The licence was endorsed, inter alia, for Mono, Di and Tri-Enthanolamine. It is the petitioners’ case that the said licence was purchased by them from M/s. Hindustan Trading Company on 1st September 1982. The petitioners placed an indent on 17th September 1982 on the foreign suppliers of the aforesaid goods and opened letters of credit in their favour on 21st September 1982. On 15th October 1982 the goods were shipped, as is evident from the bills of lading. Bills of entry in respect of the goods were filed by the petitioners at Bombay on 2nd November 1982 and 2nd December 1982. The goods not having been allowed clearance, this petition was filed. At the stage of its admission, clearance of the goods was allowed on the condition that the petitioners furnished a bank guarantee.
2. It is the respondents’ case that M/s. Hindustan Trading Company had made a wrong declaration, upon the basis of which the said licence had been issued. Therefore, on 6th October 1982 it was requested to return the said licence. It informed the respondents on 16th October 1982 that it would do so but it did not, in fact, return the said licence. A reminder was issued on 19th November 1982. This also not having been complied with, a notice was issued to it on 24th November 1982 to show cause why the said licence should not be cancelled because the goods could not be used directly in the cultivation of vegetables. On 8th December 1982 the said licence was suspended by the J.C.C.I.E., Bombay.
3. The applicable provision of the Import and Export Policy, April 1982 to March 1983, is contained in paragraph 141. It provides that the transfer of R.E.P. licences would not require any endorsement or permission from the licensing authority and clearance of goods governed thereby would be allowed by the Customs authorities on production by the transferee of only the document of transfer of the licence concerned in his name.
4. It is contended on behalf of the respondents that the transfer of the said licence was effected fraudulently, pending the proceedings initiated by the J.C.C.I.E., Bombay. This is sought to be supported on the basis that the petition does not disclose when the transfer of the said licence was effected or the dates of the indent on the foreign supplier and of the opening of the letters of credit.
5. The petition does mention the dates on which the bills of entry were filed and those are prior to the date on which the said licence was suspended. This indicates a bonafide transfer. This was a freely transferable licence and the conclusion of fraud cannot be easily drawn. Fraud would have to be established. And, even if established, the principle that would apply is laid down in the judgment of the Supreme Court in East India Commercial Co. Ltd. v. Collector of Customs, Calcutta , namely, that a licence obtained by fraud is voidable and is good till avoided. Therefore, goods imported prior to its avoidance are validly imported.
6. The petition, therefore, succeeds. Clearance of the goods having already been allowed at the admission of the petition, no order in that behalf need be made. Clearance was allowed on the furnishing of a bank guarantee. That bank guarantee must now stand discharged.
7. Mr. Bulchandani for the respondents applies for leave to take appropriate proceedings against Hindustan Trading Company and the petitioners. The respondents shall be free to adopt such proceedings, if any, against the petitioners and are available to them under the law.
Rule absolute accordingly.
No order as to costs.