Himachal Shoddy Mills Ltd. and Another vs Union of India (UOI) and Others

D.B. Lal, J.—This writ petition filed by Messrs Himachal Shoddy Mills Ltd. under Article 226 of the Constitution is directed essentially against the Textile Commissioner and the State Trading Corporation Ltd., asking for a writ of mandamus calling upon the Respondents to do their public duties, by recalling the impugned secret instructions directing with-holding of the raw material already allocated to the Petitioners and asking for a writ of prohibition so that the Respondents are prohibited from acting in any manner in furtherance of the said impugned secret instructions and further asking for immediate release of the allocated raw material, namely, imported woollen rags in favour of the Petitioners from the State Trading Corporation of India. The Petitioners are an incorporated Company of which the registered office is at Bhadrinagar, Paonta Sahib, in the District of Sirmur. The Petitioners manufacture shoddy yarn from the imported raw material, namely, woollen rags and also manufacture blankets and fabrics. According to Petitioners they have installed 1600 spindles and employ near about 115 persons including staff and workers and their monthly wage bill comes to about Rs. 42,000/-. The basic raw material required for the manufacture of shoddy yarn is old woollen rags of different description, which are imported from the foreign suppliers. Formerly on the basis of essentiality certificate granted by the Textile Commissioner the Petitioners were being granted import licence by the Chief Controller of Imports and Exports but subsequently the import was canalised through the State Trading Corporation Ltd., (hereto referred as the S.T.C.) and this was done in 1968. The S.T.C. makes purchases on behalf of the actual users in which category the Petitioners are included, and the allocations are made by the Textile Commissioner. In fact the bulk import licences are issued by the Government of India in favour of the S.T.C. and the imports are allocated to various actual users like the Petitioners and allocation letters are issued by the Textile Commissioner. The Petitioner company at present enjoys the annual allocation of woollen rags for its manufacture to the tune of about two lacs per annum although it should be much more according to their spindlage capacity. In order to procure the raw material through the S.T.C. the Petitioners have to establish internal letters of credit in favour of the S.T.C. according to its buying programme. Thereafter external letters of credit are opened by the S.T.C. in favour of the foreign suppliers. The Petitioners availed of the facilities of the Punjab National Bank Ludhiana who are their bankers in that connection. The goods remain pledged with them. The Petitioners have obtained L-4 Licence under the provisions of the Central Excise Act, 1944, and the Central Excise Rules, 1944. As such the manufacture of shoddy woollen yarn and its clearance is completely regulated and controlled by the provisions of the Excise Act and the Excise Rules. The company maintains prescribed books which are called R.G.I. and the said books are periodically scrutinized by the Excise Officers. Since April 1974 the Petitioner-mill has been working intermittently due to prolonged labour trouble and several complaints were made against them because the labour wanted frantic increase in wages. According to Petitioners the pending allocations from April 1973 to September 1974 were to the tune of more than two lacs. Besides, the Petitioners opened internal letters of credit for the back log of allocations to the tune of five lacs and the material was to be supplied by the foreign suppliers, namely, Atlas Textile, Winni Peg Wiper, B.L. Kassel Company, Wool and Rayon Waste Wool and Waste Wool (Aust.) Co. These foreign suppliers, however did not make the supplies to the Petitioners. Subsequently by letters dated 12th February and 15th February, 1975 (Annexure ''D''), the S.T.C. wrote to the Petitioners that they have been advised by the Textile Commissioner to keep unserviced allocations in abeyance. No reason was assigned as to why this order of abeyance was passed by the Textile Commissioner. The effect is that a complete embargo has been placed on the right of the Petitioners to make purchases of woollen rags against their pending actual users allocations. The action of the Textile Commissioner as well as of the S.T.C. is illegal, arbitrary and devoid of jurisdiction. The Petitioners have a legal right to the allotment of material u/s 18-G of the Industries (Development and Regulation) Act, 1951. They are entitled to get proper and fair allocations of raw materials without which they cannot carry on their business of the manufacture of shoddy yarn. In fact by the abeyance order, the Petitioners have been condemned un-heard and no opportunity to show cause was afforded to them. It was all due to false and frivolous complaints sent to the Textile Commissioner against the Petitioners. Subsequently a settlement was arrived at with the union of the labour and the Petitioners, in December, 1974, and the Petitioners agreed to make an increase in the yearly wage bill which was nearly doubled. Under the Imports Control Order, 1955, the abeyance order could not be made against the Petitioners without a show cause notice and the entire decision is non-est. In fact the Petitioners have been black listed and have also been discriminated. Articles 14, 19 and 31 of the Constitution give the Petitioners fundamental rights which have thus been violated. There is a violation of a principle of natural justice as the Petitioners were condemned un-heard, the action itself was mala fide and vindictive and above all the Textile Commissioner had no jurisdiction to issue the impugned directions. On these facts and allegations the Petitioners claim release of the allocated raw material and withdrawal of the impugned abeyance order issued by the Textile Commissioner.

The Textile Commissioner (Respdt. No 2) and the S.T.C. (Respdt. No. 3) have both filed their returns. It is contended in reply, that the Court has no jurisdiction, as the office of the answering Respondents is located at New Delhi and that the Petitioners have no locus standi to file the writ petition. The Respondents explained that they are not responsible for non-supply by the Atlas Textile Waste (Aust.) Ltd., and by Winni Peg Wiper, Australia, because in the case of the former the shipping documents were incomplete while in the case of the latter an objection was raised as to the mutilation certificate. As regards the other foreign suppliers they did not supply the material for no fault of the Respondents. The abeyance order was issued by the S.T.C. under a direction or guideline given by the sponsoring authority, namely, the Textile Commissioner and the S.T.C. was bound, under paragraph 97 (5) of the Import Trade Control Handbook of Rules and Procedure (hereinafter referred to as the Red Book) to comply with that direction or Guideline. In fact the last date for the import of the material was 31-5-1975 but the Petitioners represented to the Court that the last date was 31-3-1975 and thereby committed fraud and mis-representation and obtained an interim stay of the abeyance order. Due to this fraud and misrepresentation committed by the Petitioners they are not entitled to any relief in the writ petition. The Collector of Customs as well as the Central Excise authorities reported against the Petitioners that they were misutilizing the imported raw material and enquiries were pending against them. Due to these complaints the impugned order of abeyance has been made by the Textile Commissioner. The Petitioners were asked to produce their accounts but they have "persistently failed" to produce their records for verification. According to Respondents the raw materials have been sold in black market at Ludhiana and Amritsar. At any rate the complaints related to that misuse or mis-utilization of the raw material. Highly disputed questions of facts arise in the writ petition and that too is a ground for refusing the relief sought to be granted. It is denied that the instructions were given by the Textile Commissioner without notice or without affording the Petitioners any opportunity. In fact sufficient opportunities were afforded inasmuch as, they were repeatedly asked to produce their accounts for inspection. As they did not do so, the abeyance order was made. It is, therefore, pleaded that the Petitioners are not entitled to any relief.

It is undisputed that the Petitioner-company possesses L-4 Licence under the Central Excise Act, 1944, and it is also a registered industry under the provisions of the Industries (Development and Regulation) Act, 1951. The woollen rags as well as the woollen yarn are no doubt items of a scheduled industry as defined in Section 3(i) and as such the Petitioners are an existing industrial undertaking within the meaning of that Act. It is also evident that the provisions of the Central Excise Act and the Customs Act are applicable to the Petitioners. This would mean that the raw material is to be utilised strictly under the supervision of the Central Excise and Custom authorities. There is bound to be a periodical check and the Petitioners have also quoted instances when such physical checks have taken place.

As to the system of making supply of imported raw material, it is again undisputed that the sponsoring authority, namely, the Textile Commissioner makes the allocation and the S.T.C. gives allotment. The internal letters of credit are opened by the Petitioners while external letters of credit are opened by the S.T.C. The orders of supply are placed with the foreign suppliers and the material is received by the Petitioners. There is an elaborate procedure laid down for all this in the Red Book. A detailed reference to the relevant paragraphs of the Red Book shall be made. It is also admitted on all hands that complaints were made against the Petitioners as a result to labour trouble which had started. The Excise and Custom authorities received such complaints and some preliminary-enquiry is pending. The Petitioners have been asked to show their accounts and they have also shown some of their accounts which according to the Respondents have remained incomplete. There is no dispute as regards all these facts between the parties.

Before I deal with the points of controversy that have arisen in this petition, I need make a reference to the statutory provisions and the paragraphs of the Red Book which appear to be relevant. As I have stated before the Petitioners carry on a scheduled industry within the meaning of the Industries (Development and Regulation) Act, 1951. Their establishment has been registered under that Act. u/s 18-G the Central Government, in the case of the scheduled industry, has to provide for regulating the supply and distribution of the raw material. In other words in order to maintain the manufacture of shoddy yarn it was the legal duty of the Central Government through its agency to regulate the supply and distribution of raw material. The Petitioners rightly claim a legal right for the supply and distribution of raw material because otherwise they cannot obtain it except under the orders of the Central Government contained in the Red Book. As in the present case the raw material is to be imported, the provisions of the Imports and Exports (Control) Act, 1947, as well as the Imports (Control) Order, 1955, are attracted. In fact any penal action to be levied against the Petitioners has to take its authority under the Act of 1947 or the Order of 1955. Clause 8 gives power to the Central Government or the Chief Controller of Imports and Exports to debar a licensee or importer or any other person from receiving allotment of imported goods. Clause 8-A gives power to the same authorities to suspend allotments of imported goods pending investigation into one or more of the allegations mentioned in Clause 8. Clause 8-B gives power to these authorities to keep in abeyance allotments of imported goods. The impugned order is obviously to be made under this clause. Clause 9 deals with cancellation of licences while Clause 10 specifically lays down that no action can be taken under Clause 8, 8-A or 9 unless the person has been given a reasonable opportunity of being heard. All these provisions will be referred to in order to ascertain if the impugned order of abeyance could be justified against the Petitioners.

As regards the paragraphs of the Red Book, para 7(1)(ii) gives the category of Actual Users, to which obviously the Petitioners belong. Para 69 (1) defines the Actual Users and the Petitioners are covered under it. Para 76(6) defines the Licensing Authorities and the Controller of Imports and Exports is the Licensing Authority for the Petitioners. The Sponsoring Authority is defined in Para 79 (2). The Textile Commissioner, Bombay, is the Sponsoring Authority for the Petitioners. Para 81 (b) is important, as it gives the Role of Sponsoring Authorities. The impugned order of abeyance having been passed by the Sponsoring Authority, is required to be directly covered under this provision. In Sub-Clause (viii) the Sponsoring Authority can undertake ex-post check of the industrial unit to see whether the imported material has been properly utilized and to report cases involving misuse of such material or breach of conditions of licences to the licensing authority and C.C.I. and E. In other words after ex-post check of the industrial unit only a report is required to be sent by the Sponsoring Authority to the Licensing Authority or the Chief Controller and nothing beyond it. If the order of abeyance under Clause 8-B of the Imports (Control) Order, 1955, is at all to be made, it has to be made by the Central Government or by the Chief Controller. Such an order of abeyance cannot be made by the Sponsoring Authority, as has been done in the present case. Para 81 (c) gives the role of licensing authority which in the case of the Petitioners is the Chief Controller and under Sub-Clause (iii) the penal action can be taken only by the Chief Controller in accordance with the Import and Export Control Regulations, namely, the provisions of the Red Book or the provisions of the Act of 1947 or the Order of 1955. Para 87 authorises the import of law material through the S.T.C. which has been done in the present case. Para 89 deals with the conditions of actual user licences. It lays down that the imported raw material is to be processed in the factory and no portion thereof is to be sold or in any other manner utilized. The undertaking is required to maintain a proper account of consumption and utilization of the goods imported against a licence. Para 92 (1) and (2) deal with the misuse of actual users licences. It is laid down: "If any licensee infringes the aforesaid condition, no further assistance will be given to him for the import of goods in the category of actual users, without prejudice to any other action which may be taken against him under the Imports and Exports (Control) Act, 1947, and the Imports (Control) Order, 1955". Thus the prohibition is for any "further assistance" and not for keeping in abeyance the pending allocation for which penal action can be taken under the provisions of the Act of 1947 or the Order of 1955. Para 92(3) deals with the accounts to be maintained by the licensees and again the penalty is not to issue further licences or allotments and not the withholding of the pending allocated raw material. If the accounts are not produced penal action can follow but that is under the Act of 1947 or the Order of 1955. There is nothing in para 92(3) which provides for any other punishment like abeyance of pending allocations. It could not, therfeore, be made use of by the Sponsoring Authority. Para 92(4) again deals with the check by the Sponsoring Authority as to whether the material has been properly utilized. It is provided for: "In cases involving contravention of conditions of licences or allotments of imported goods, the reports will be sent by the Directors of Industries and other Sponsoring Authorities to the licensing authorities concerned to enable the latter to initiate action against the parties concerned". Thus the Sponsoring Authority could only send a report and there after the penal action could follow. The Sponsoring Authority was not authorised to issue the abeyance order. Para 97(1)(ii) lays down the procedure for allotment of imported goods canalised through public sector agencies. It is done by release orders to be issued on applications made to the Sponsoring Authorities concerned. Under this provision the disputed release orders of allocation orders, have been issued by the Textile Commissioner. The release orders issued by the Sponsoring Autorities are dealt with under sub-para (4) of para 9 7 and its sub-para (c) specifically deals with the release order issued by the Sponsoring Authority on the canalising agency in favour of the Applicant. Sub-para (5)(c) of para 9 7 points out the allotment to be made by canalizing agency and these allotments are made in accordance with the directions/guidelines obtained by the canalising agency from the sponsoring authority. The S.T.C. claims that the guidelines were issued by the Textile Commissioner and so the abeyance order was made. The point at issue will be, as to whether such a direction or guideline could at all be issued by the Textile Commissioner and had he the jurisdiction to issue such a direction or guideline? Sub-para (8) of para 97 again deals with the condition of the actual user utilising such material in his own factory and not otherwise. This is obviously to avoid mis use of the imported material. These paragraphs are pertinent to the points at issue and so these have been referred to at one place.

It has been contended that these paragraphs are only administrative instructions. They are not statutory rules. This is so held by Bant Singh and Others Vs. Man Singh and Others, , as well as Sha Poosafi Mangilal v. The Secretary, Govt. of India, Ministry of Commerce and Ors AIR 1976 Mad 82, As held by the Punjab and Haryana High Court these instructions do in no way amend, supersede or after the existing rules: rather the same have the effect of filling the gap and supplementing the existing rules. At the same time the authorities dealing with such matters are required to strictly comply with the procedure laid down in the instructions and wherever the authorities have not followed the instructions, then their action has always been quashed when questioned. As will presently be pointed out, these instructions or administrative orders are entirely in consonance with the provisions of the Imports (Control) Order, 1955. In the form of directions or guidelines contemplated in para 97(8) no violation of any statutory provision of the Imports (Control) Order, 1955, would be permissive. The action if found in negation of such a statutory provision will have to be struck down as without jurisdiction.

Now I shall indicate a few of the annexures which are material to be referred to in this connection. The release orders or allocation order by the Sponsoring Authority are in Annexure ''A''. These are dated March 1974 to May 1974. The Textile Commissioner made the allocation orders and copies of the letters were sent to the Petitioner. These allocation orders are in dispute as they have been kept in abeyance by the subsequent order of the Textile Commissioner. Annexure ''D'' are dated 12th and 19th February, 1975 and the S.T.C. wrote to the Petitioners that the Textile Commissioner had kept in abeyance the unserviced allocations. These are the two impugned annexures and the case of the Petitioner is that these abeyance orders are without jurisdiction. There is a bunch of a few other annexures which deal with complaints received against the Petitioners and enquiries made in that connection. Annexure R.A. 5 dated 7-9-1972 is the complaint sent by the Deputy Director of Industries, Himachal Pradesh, to the Textile Commissioner. R.A. 6, dated 4-12-1972 is a similar such complaint. So the trouble started from 1972. F.R. is the letter, dated 26/27-6-1973 addressed to the Petitioners from the Textile Commissioner. It deals with the verification of utilization of imported raw material. R.A. 1, dated 30-8-1974 is the letter addressed to the Petitioners by the Textile Commissioner for verification of imported raw material. R.A. 2, dated 12-9-1974, R.A. 3, dated 19-12-1974, R.A. 4, dated 9-1-1975, and R.B. dated 29-3-1975 are the letters to the Petitioners which indicate that they were asked to show the accounts for verification but there was some procrastination on their part. R.B. 2 is the statement of Shri Santosh Kumar Gupta, Director of the Petitioner-company, explaining the utilization of raw material. This statement was recorded on 23-12-1974. R.E. dated 20-1-1975 is a letter from the Petitioners to the Textile Commissioner showing inability to show the accounts because the records were misplaced on account of labour trouble. It appears the Textile Commissioner or the Central Excise Authorities wanted to have their own verification while the Director of the Petitioner company gave statement in his own interest. The enquiry somehow dragged on during the year 1974. R.C. dated 16-1-1975 is the report sent by the Deputy Collector of Customs to the Textile Commissioner against the Petitioners. It was mentioned specifically: "since the released goods have not reached the unit for the intended use therefore, this diversion of the material to other places casts doubt on the bonafides of the party and the possibility can''t be ruled out that the imported material may not at all go into consumption of shoddy yarn in the works". This would indicate that there was only a doubt or suspicion of misuse of imported raw material. In fact at the Bombay Port there was some dispute regarding demurrage and the bales of woollen rags were forfeited and subsequensly detained by the bankers. In that connection a litigation also started before the Bombay High Court. The entire enquiry was so involved, that allegations and counter allegations were made. The Petitioners were making their position clear and showing helplessness for not paying so much demurrage charge. In that contingency the abeyance order was issued by the Textile Commissioner.

I shall then come straight to the pleas raised by the Petitioners. It may, however, be stated at the outset that several pleas were given up and were not pressed at the time of arguments viz. please under Articles 14, 19 and 31 of the Constitution, the plea regarding the consequential black listing of the Petitioner-company, and the plea based on mala fide and vindictive conduct assigned to the Respondents. Similarly the pleas as to the Petitioners not being a "State" within the meaning of Article 12 and having no locus standi to file the petition were not pressed into service. As such these pleas need not be considered.

The learned Advocate-General persisted in his preliminary objection that the High Court had no jurisdiction to entertain the writ petition. In that connection reference need be made to the order of the Court, dated June 16, 1975, whereby amendments were allowed to be made in the writ petition and paragraph 25 (a) was added to the petition. The argument of the learned Advocate-General that the amendment conferring jurisdiction should not have been allowed is amply met with by the order of the Court dated June 16, 1975. The amendments were considered only by way of elucidation and elaboration of the plea already taken in the unamended petition. When once the amendment was allowed, the order can only be reviewed on the basis of certain set principles and not merely because the learned Counsel intends it to be reviewed. It cannot be stated that there is error patent on the record or that some fresh material is obtained for reconsideration of the order or that any manifest injustice has been done. Even if the decision is wrong on a question of law that will hardly be a ground for review. Once the amendment was allowed and paragraph 25 (a) was introduced in the petition, prima facie the petition was cognizable by this Court. The learned Advocate-General fairly and rightly conceded that in case paragraph 25(a) is considered part of the petition his preliminary objection regarding jurisdiction will lose its value. In my opinion the allegations made in paragraph 25(a) which are taken to be incorporated in the petition, gave ample jurisdiction to this High Court for entertaining the petition. It is, therefore, safe to conclude that this High Court had jurisdiction to entertain the petition.

It is then submitted by the Petitioners and rightly so, that a legal right existed in their favour for allocation of raw material with reference to Section 18-G of the Industries (Development and Regulation) Act, 1951. There was a legal duty to be performed by the Sponsoring Authority as spelled out from the Imports (Control) Order, 1955, read with the paragraphs of the Red Book. If the Sponsoring Authority or the S.T.C. have failed to perform their statutory duties, interference will certainly be obtained from the Court. The Petitioners have opened the internal letters of credit and as such they have relegated themselves to the position of purchasers of the goods. They are the owners and the orders to foreign suppliers are to be placed on their behalf by the S.T.C. who is merely an agent of the Petitioners. It is under this contingency that one has to determine the rights and liabilities between the parties. The power to keep in abeyance under Clause 8-B of the Imports (Control) Order, 1955, vested in the Central Government or the Chief Controller of Imports and Exports. In the instant case the Textile Commissioner, namely, the Sponsoring Authority has exercised that power. It is, therefore, more than clear that Annexure ''D'' was issued without jurisdiction and must be struck down. As pointed out above under paragraph 8-(b)(viii) the Sponsoring Authority had to undertake ex-post check of the industrial unit to see whether the imported material was properly utilized. Thereafter they had to make a report for a case involving misuse of such material to the licensing authority or the Chief Controller of Imports and Exports. It was, therefore, for the licensing authority or he Chief Controller of Imports and Exports to take action may be of keeping in abeyance the allotments of the imported goods. The Sponsoring Authority could not by itself keep in abeyance the allocations or the allotments. Under paragraph 81 (c)(iii) the licensing authority had to take penal action and not the Sponsoring Authority. Similarly under paragraph 92(4) the Directors of Industries or other sponsoring authorities were to send reports against the industrial units to the licensing authorities concerned to enable the latter to initiate action against the parties concerned. As such the sponsoring authority could not keep in abeyance the allocated raw material. In this connection a distinction was drawn by the learned Advocate General between ''allocation'' and ''allotment''. The argument was founded in this manner. It was stated that Annexure ''D'' was a direction or guideline issued by the sponsoring authority to the S.T.C. and the latter was to follow that direction or guideline. After allocation by the sponsoring authority the allotment was to be made by the S.T.C. be it as it may, the distinction between ''allocation'' and ''allotment'' whatever it is, does not improve the position of the Respondents. If the sponsoring authority issued the direction or the guideline to keep in abeyance the allocation and the S.T.C. was compelled not to make the allotment therefor, the consequence is nothing but abeyance of the allotted imported goods. That action is penal and covered under Clause 8-B and that penalty can only be imposed by the Central Government or by the Chief Controller of Imports and Exports. Thus the order of abeyance was decidedly without jurisdiction, under paragraph 97(5)(c) the directions or guidelines to be obtained by canalising agency from the sponsoring authority cannot be a substitute for the statutory power conferred by Clause 8-B. If the power to keep in abeyance cannot be exercised by the sponsoring authority under Clause 8-B the said power cannot be exercised in the form of direction or guideline issued by the sponsoring authority to the canalising agency. Thus it is manifest the order of sponsoring authority whereby the allotted goods were kept in abeyance was without jurisidiction and hence non-est.

The Petitioners submitted that in any event a notice to show cause was necessary. The argument proceeds with reference to Clause 8 and it is stated that the allotment can be kept in abeyance only pending investigation ''into any of the allegations mentioned in Clause 8'' and Clause 10 refers to Clause 8 for which opportunity of being heard has to be given. In this connection it was pointed out by the learned Advocate-General that the power to keep in abeyance to be exercised under Clause 8-B is not necessarily governed with the condition of prior show cause notice, because Clause 8-B is not mentioned in Clause 10. There may be a case where investigation is pending under Clause 8 and a notice to show cause may defeat the very purpose for which investigation is going on. In that contingency perhaps a notice to show cause will not be a sine qua non of issuing the order of abeyance. But the investigation should be by the Central Government or the Chief Controller of Imports and Exports under Clause 8 and not by any other authority. In the instant case the investigation if at all is being conducted yet at the preliminary stage when a checkout is made by the sponsoring authority upon complaints from the custom authorities. It is after the preliminary enquiry that the stage of investigation will arise. That will be, when a report will be submitted to the licensing authority or to the Chief Controller of Imports and Exports. The latter will then start investigation under paragraph 8. That stage has not yet arrived. Therefore, the power to keep in abeyance could not even be exercised under Clause 8-B at the present stage. It is then submitted by the learned Counsel for the Petitioners that the power to keep in abeyance is in fact a power to suspend the allotted material. This power to suspend is contained in Clause 8-A and again the Central Government or the Chief Controller of Imports and Exports have got that power. The sponsoring authority could not exercise it. In T.N. Mahajan v. Union of India and Ors. 1965 P.L.R. 845, which is a case under the Imports (Control) Order, 1955, it was held that the meaning of "abeyance" is ,''state of suspension". The learned Judges held that power to keep in abeyance was nothing but the power to suspend which is covered under Clause 8-A and the Central Government or the Chief Controller of Imports and Exports could only exercise that power. It was further observed:

Consequently, the grant of a licence etc. to the Petitioner could not have been suspended or kept in abeyance even by the competent authority without giving him a reasonable opportunity of being heard which in this case evidently has not been done.

Similarly in the present case it can be held that the power to keep in abeyance was nothing short of a power to suspend which could only be exercised under Clause 8-A and the sponsoring authority could not exercise that power.

Even otherwise the power to keep in abeyance even if amenable to the sponsoring authority, which in fact it is not, could only be exercised by giving a show cause notice to the Petitioners. The complaints only referred to a doubt or suspicion which needed verification and further probe into the matter. Before issuing the order of abeyance the Petitioners should have been asked to explain because virtually they were deprived of the raw material leading to the closure of their mill. In The Government of Mysore and Ors. v. J.V. Bhat and Ors. (1975) SCC 110, it was oberved:

It has already been held by the Supreme Court that if there is power to decide and determine to the prejudice of a person, duty to act judicially is implicit in the exercise of such power. If the essentials of justice be ignored and an order to the prejudice of a person is made, the order is a nullity. It has further been held that the former distinction between administrative power and quasi-judicial power is being gradually obliterated.

Administrative action has to be given free scope within its legitimate sphere without jeopardizing rights of individuals affected. Policies and schemes, framed under statutory provisions, which affect rights of individuals impose the obligations upon the authorities taking what were essentially administrative decisions at points at which they begin to impinge on specific individual rights. It is only where there is nothing in the statue to actually prohibit the giving of an opportunity to be heard, but, on the other hand, the nature of the statutory duty imposed itself necessarily implied an obligation to hear before deciding that the ''audi alteram partem'' rule could be imported.

Being fortified with the ratio of this case a notice to show cause was necessary to the Petitioners and a rule of natural justice has been violated. The abeyance order under Clause 8-B could only ordinarily be for six months. It has far exceeded its time. Had not the Petitioners been granted, under interim orders the allotted material, they would have been deprived of the raw material. The mill would have been closed and the entire labour would have gone idle to their homes. This the order of the sponsoring authority can also be struck down as having violated a rule of natural justice.

In this connection reference can also be made to Andhra Industrial Works Vs. Chief Controller of Imports and Others, Their Lordships were considering the jurisdiction of the Supreme Court under Article 32 and held in that connection that where the statute concerned is Intra vires but the impugned action is without jurisdiction on account of a basic defect in the constitution of the authority or tribunal or owing to the absence of a preliminary jurisdictional fact i.e. a condition precedent to the exercise of jurisdiction or where the impugned action is based on a misconstruction of the intra vires statute or is so contrary to the established procedure or rules of natural justice that it results in violation of a fundamental right, interference by the Court will be essential. The ratio of this decision can be applied in the present case. The action of the sponsoring authority is without jurisdiction and defeats a rule of law. It has also denied a principle of natural justice and resulted in violation of a basic right of the Petitioners to get supply of raw material u/s 18-G of the Act of 1951. As such the action of the sponsoring authority or of the S.T.C. is likely to be struck down.

It is also manifest that there has been a contravention of a statutory law. The order of abeyance has been passed by the sponsoring authority and as such Clause 8-B of the Imports (Control Order, 1965, has been violated. Writ jurisdiction can be exercised when obviously the Respondents have not performed their legal obligation arising under the Imports (Control) Order, 1955. It is submitted on behalf of the Respondents that the provision of the Woollen Textiles (Production and Distribution) Control Order, 1962, applied and u/s 10-A of that Order an appeal lies to the Central Government. Firstly the impugned Order has not been passed under any provision of the woollen Textiles (Production and Distribution) Control Order, 1962, and secondly the Central Government could not be appealed against an order of abeyance made under Clause 8-B of the Imports (Control) Order, 1955. Therefore, the plea of the Respondents is devoid of any merit. As regards fraud and misrepresentation alleged to be committed by the Petitioners, the plea refers to the date 31-3-1975 which was specified in Annexure ''B'' as the date which was fixed for import of shoddy raw material. It is stated that in fact the date was 31-5-1975 and the information was withheld by the Petitioners. But this does not appear to be the position. Annexure ''B'' and annexure ''C'' are the letters which refer to the date 31-3-1975. One is the letter of the Textile Commissioner to the S.T.C. and the other is the letter of the Petitioners to the S.T.C. after they received a copy of the letter Annexure ''B'' from the Textile Commissioner. In both these letters the Petitioners specified the date as 31-3-1975. They could do so only when this very date was communicated to them. Both the Textile Commissioner and the S.T.C. kept quiet after they received the communication from the Petitioners and did not specify at once that the date was in fact 31-5-1975 and not 31-3-1975. It proves that there was some confusion as to the date and the Respondents actually mentioned the last date as 31-3-1975. On that basis the Petitioners issued Annexure ''C'' and the date mentioned by them was not denied by the S.T.C. Thus there was no question of any fraud or misrepresentation committed by the Petitioners. In the last the Respondents took a desprate plea by alleging that disputed questions of facts are involved and as such the writ petition could no be granted. As I have stated above, the Petitioners come up to Court on the main plea that the sponsoring authority had no jurisdiction to pass the order of abeyance. Moreover a rule of natural justice is violated inasmuch as they were not heard before the abeyance order was passed. The consequence of such an order was far reaching and the Petitioners were deprived of the raw material. Such pleas could be proved or disproved without going into a question of fact of any complicated nature. The provisions of the statute as well as the paragraphs of the Red Book could be availed of to substantiate the pleas. Therefore, the writ petition cannot be defeated merely because certain other questions of facts arise which may or may not be decided. These questions of facts merely relate to the complaints instituted against the Petitioners and reply submitted by them. This Court is not required to give a finding as to whether the enquiry is justified or not against the Petitioners. In the ultimate analysis, the writ petition is allowed and the impugned Annexure ''D'' which is order of abeyance by the sponsoring authority is quashed. The Respondents are directed to release in whole or in part the allocated raw material including the pending allocation for the period April 1973 to September 1974, if not already released, in favour of the Petitioners, in accordance with law, and the release of such raw material shall not be withheld merely on the ground of the impugned abeyance order (Annexure ''D''). In the special circumstances of the case the parties are left to bear their own costs.