Bharat Warehousing Corporation and Others vs Collector of Customs

Suhas Chandra Sen, J.—In this writ petition, M/s. Bharat Ware Housing Corporation, and others have challenged a show cause notice dated 19th July 1984 and also a circular dated 31st January 1984 by which it is alleged that the petitioners'' licence Nos. 145/83 and 146/83 respectively were sought to be cancelled. The show cause notice has not been annexed to the petition. It has been stated by the petitioners that a copy of the circular was never furnished to the petitioners by the Customs Authority.

The reasons for the proposal of the cancellation of the licences are not very clear. The affidavit filed on behalf of the Customs Authority, to say the least, is most unsatisfactory and contain many generalities which are not applicable to the petitioners and why an affidavit of this sort has been filed, is not clear. However, from paragraph 8 of the affidavit in opposition, it clearly appears that the licences granted to the petitioners have now expired. Therefore, there is no question of revocation or cancellation of those licences. Therefore, to that extent the writ petition has become infructuous.

Now, it is a question of renewal of licence. On behalf of the petitioners, an extreme argument was advanced that the licence u/s 58 of the Customs Act, 1962 is of indefinite duration. The Customs authority has no right to refuse to grant the extension of the licence once it has been granted. My attention was drawn to the conditions under which a licence is issued/renewed which, inter alia, provides as follows :

"8. The licence holder shall apply for renewal of the licence so that the application for renewal of the licence (in prescribed form) should reach in this office at least Two months before the date of expiry of the licence. In the event of failure so to do no clearance shall be permissible between the period after the expiry of the licence and its renewal."

From this, it has been sought to be argued that once a licence holder makes an application two months before the date of expiry, the customs authority is bound to grant renewal of the licence. It is only the failure of the licensee that will make the licence non-renewable.

I am entirely unable to uphold with this contention. The power to grant a licence is the discretionary power of the authority. Section 58(2) of the Act also contains clause for cancellation of licence granted under Sub-section (1) of the Act. It is well settled and is specifically laid down in the General Clauses Act that a power may be exercised from time to time and a power to do a certain thing includes the power to do that thing temporarily. In this case, the licence was issued for a limited duration. The renewal of licence cannot be an automatic process. The licence holder has to apply in the prescribed form to the licensing authority and the said authority has to apply its mind whether it should be renewed or not. This cannot be a mechanical act. The decision to grant or refuse to grant must be taken on a conscious application of mind, taking into consideration all the relevant factors for the purpose.

Therefore, the argument that the licence that was granted will continue automatically provided the licensee makes an application for renewal at least two months before the expiry of the licence is, in my opinion, without any merit.

Since the licence has expired while this writ petition was pending the writ petition has become infructuous. It has been stated that no order has been passed pursuant to the show cause notice because of the injunction issued in this writ petition. In any event, the stage of cancellation of the licence is now over. It has been stated on behalf of the petitioners that they have already applied for renewal of the licence. I direct the respondents to deal with and dispose of the application for renewal of licence of the petitioners with an open mind and having regard to the facts and circumstances of the case, after giving the petitioners an opportunity of hearing in the matter. The licensing authority is directed to pass a reasoned order in ease they decide not to grant extension and/or renewal of the licence. The licensing authority is directed to deal with and dispose of the application for licence within a period of two (2) months from date.

In the meantime, the petitioners will be at liberty to carry on business only for the purpose of removal of the goods that may be lying in the Bonded Warehouse. The respondents also will not refuse to renew the licence only the basis of the Circular dated 31-1-1984, but will be entitled to proceed independently.

The writ petition is thus disposed of without costs. The 7th February 1986.