A) ABSTRACT / HEADNOTE
This landmark decision in Messrs. Fedco (P) Ltd. & Anr. v. S. N. Bilgrami & Ors., reported in (1960) 2 SCR 408, deals with the cancellation of import licences under the Imports Control Order, 1955, and raises significant constitutional questions regarding natural justice and fundamental rights under Articles 19(1)(f), 19(1)(g), and 31 of the Constitution of India. The case challenged the cancellation of import licences obtained by a private company alleged to have used fraudulent means. The petitioners contested the validity of the cancellation order on the grounds that they were denied a reasonable opportunity of being heard, as required under Clause 10 of the Imports Control Order, and also challenged the constitutional validity of Clause 9(a) of the Order.

The Supreme Court, by majority (B.P. Sinha, C.J., P.B. Gajendragadkar, K.C. Das Gupta, J.C. Shah, JJ.), held that Clause 9(a) did not confer arbitrary power and satisfied the requirements of reasonable restrictions under Article 19(5). It held that even if a licensee was not personally involved in the fraud, the fact that a licence was obtained by fraud was sufficient for cancellation. However, Justice Subba Rao dissented, holding that the principles of natural justice were violated, as the petitioners were denied adequate details of the allegations and access to the documents relied upon for the cancellation. This dissent underscores the importance of procedural fairness.

The case is a critical precedent for administrative law in India, especially regarding the quasi-judicial character of licensing authorities and their duty to provide fair hearings before taking punitive action.

Keywords: Imports Control Order, Fraudulent Licences, Natural Justice, Reasonable Opportunity, Article 19, Article 31, Administrative Law, Quasi-judicial Action

B) CASE DETAILS

i) Judgement Cause Title: Messrs. Fedco (P) Ltd. & Another v. S. N. Bilgrami & Others

ii) Case Number: Petition No. 171 of 1958

iii) Judgement Date: December 9, 1959

iv) Court: Supreme Court of India

v) Quorum: B. P. Sinha, C.J., P. B. Gajendragadkar, K. Subba Rao, K. C. Das Gupta, and J. C. Shah, JJ.

vi) Author: Majority opinion by K. C. Das Gupta, J.; Dissenting opinion by K. Subba Rao, J.

vii) Citation: (1960) 2 SCR 408

viii) Legal Provisions Involved:

• Clause 9(a) and 10 of the Imports Control Order, 1955

• Articles 19(1)(f), 19(1)(g), and 31 of the Constitution of India

ix) Judgments overruled by the Case: None reported

x) Case is Related to: Constitutional Law, Administrative Law, Import and Export Regulations

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The dispute arose when Fedco (P) Ltd. received five import licences from the Joint Chief Controller of Imports and Exports, Bombay, based on applications allegedly forwarded from the Chief Controller, New Delhi. These licences were later canceled by the Chief Controller on the grounds of being obtained by fraud. The company challenged this cancellation before the Supreme Court under Article 32 of the Constitution, alleging violation of fundamental rights, and seeking certiorari to quash the cancellation and mandamus to allow clearance of imported goods.

The petitioners argued that the cancellation breached natural justice, as they were not provided particulars of the fraud nor allowed inspection of relevant documents. They also questioned the validity of Clause 9(a) of the Imports Control Order, claiming it imposed unconstitutional restrictions.

The case presented a conflict between the State’s regulatory control on imports and the licensee’s right to property and occupation under the Constitution, testing the limits of administrative discretion.

D) FACTS OF THE CASE

The petitioner company had submitted five applications for import licences in mid-1958. They received communication from the Chief Controller’s office indicating that their applications were forwarded to the Joint Chief Controller at Bombay. Consequently, five import licences valued at ₹25.75 lakhs were issued. The company placed orders and some goods arrived at the Bombay port.

Before clearance, a notice dated September 24, 1958, was issued stating that the licences were suspected to have been fraudulently obtained, invoking Clause 9(a) of the Imports Control Order, 1955. The petitioners sought inspection of documents and specifics of the alleged fraud, which were denied. They were orally informed that the Chief Controller had not authorized the issue of licences and that the letters recommending issuance were forged.

Despite repeated requests for inspection and detailed charges, the Chief Controller cancelled the licences on October 14, 1958, alleging fraud without disclosing full particulars or documents. The petitioners challenged this on constitutional and procedural grounds.

E) LEGAL ISSUES RAISED

i. Whether Clause 9(a) of the Imports Control Order is unconstitutional as it violates Articles 19(1)(f), 19(1)(g), and Article 31?

ii. Whether the cancellation of import licences without disclosing the particulars of fraud and denying inspection of documents violates Clause 10 of the Order and principles of natural justice?

iii. Whether the Chief Controller of Imports and Exports had legal authority to cancel the licences?

iv. Whether there was discrimination under Article 14, as similarly situated parties received fair hearing, which was denied to the petitioners?

F) PETITIONER/ APPELLANT’S ARGUMENTS

i. The counsels for the Petitioners submitted that the cancellation order violated the fundamental rights under Article 19(1)(f) and 19(1)(g), as it imposed arbitrary and unreasonable restrictions on the right to property and trade.

ii. They asserted that Clause 9(a) is unconstitutional, as it allows cancellation solely based on fraud, even if the licensee is not party to it.

iii. They argued that the requirement of “reasonable opportunity” under Clause 10 was not met, since no particulars of the alleged fraud were provided, and inspection of documents was denied.

iv. It was contended that the principles of natural justice were violated, and the decision-making process was arbitrary, infringing their right to fair hearing.

v. Lastly, they highlighted that others similarly situated were given full hearing, indicating violative discrimination under Article 14.

G) RESPONDENT’S ARGUMENTS

i. The counsels for the Respondents submitted that Clause 9(a) is constitutionally valid and constitutes a reasonable restriction in the interest of public policy, permissible under Article 19(6).

ii. They emphasized that the Import Control Scheme is based on accurate disclosure. Any licence obtained by misrepresentation or fraud nullifies the foundation, justifying cancellation.

iii. They stated that personal hearing was granted, and the petitioners were orally informed about the fraudulent nature of the documents.

iv. They argued that even if the fraud was by a third party, the fraudulent nature of the licence justifies cancellation, regardless of the licensee’s intent.

v. They further submitted that since the Chief Controller was duly authorized post-1958 amendment, the action was within jurisdiction.

H) RELATED LEGAL PROVISIONS

i. Clause 9(a) of the Imports Control Order, 1955: Permits cancellation if licence is obtained through fraud or misrepresentation.

ii. Clause 10 of the Imports Control Order, 1955: Mandates a reasonable opportunity of being heard before cancellation.

iii. Article 19(1)(f) and 19(1)(g): Guarantee right to property and freedom of occupation.

iv. Article 31: Protects from deprivation of property without authority of law (prior to its repeal).

v. Article 32: Provides for constitutional remedy.

H) JUDGEMENT

a. RATIO DECIDENDI

i. The majority held that Clause 9(a) was valid and did not confer arbitrary power. The provision for cancellation of licences obtained through fraud was a reasonable restriction under Article 19(6).

ii. The Court held that it was immaterial whether the licensee was party to the fraud. Fraud undermines the entire foundation of the licensing process.

iii. The cancellation was valid as the petitioner was given a hearing, albeit limited, and had knowledge of the nature of the fraud. Thus, no violation of Clause 10 occurred.

b. OBITER DICTA 

i. There cannot be a universal standard for reasonableness in opportunity to be heard. Each case depends on its own facts and contextual fairness.

c. GUIDELINES 

i. When an order affects fundamental rights, the authority must:

• Disclose material grounds,

• Provide fair hearing,

• Allow inspection of documents, when feasible.

ii. Fraudulent procurement vitiates licence, irrespective of licensee’s involvement.

iii. Administrative decisions under economic controls must ensure natural justice, especially when rights under Article 19 are involved.

I) CONCLUSION & COMMENTS

The judgment highlights a significant evolution in Indian administrative law, particularly regarding procedural fairness. The majority ruling underscores State’s right to cancel fraudulently obtained licences, prioritizing the integrity of import regulations. However, Justice Subba Rao’s dissent powerfully defends the principle of natural justice, emphasizing the requirement of fair disclosure and genuine hearing.

His dissenting opinion stands as a valuable reference in Indian jurisprudence for defining the contours of “reasonable opportunity”. The case established that while fraud undermines legality, procedural safeguards cannot be circumvented in the name of efficiency.

J) REFERENCES

a. Important Cases Referred
i. Rex v. Electricity Commissioners, Ex Parte London Electricity Joint Committee Co., [1924] 1 K.B. 171
ii. Rex v. London County Council, Ex Parte Entertainments Protection Association Ltd., [1931] 2 K.B. 215
iii. Province of Bombay v. Khusaldas S. Advani, [1950] SCR 621

b. Important Statutes Referred
i. Imports Control Order, 1955
ii. Article 19 of Constitution of India
iii. Article 31 of Constitution of India (repealed)
iv. Article 32 of Constitution of India