Suspension or cancellation of Importer-Exporter Code without reasoned notice and hearing violates Section 8 and principles of natural justice.

The Appellant challenged an order dated 27.08.2024 passed by the Deputy Director of Foreign Trade, which cancelled Service Exports from India (“SEIS”) scrips and imposed a ₹10,00,000/- penalty for alleged misdeclaration.

On 12.09.2024, the Appellant was further informed of its inclusion in the “Denied Entity List,” effectively cancelling its Importer-exporter Code (“IEC”) Number.

A Single Judge of the Delhi High Court disposed of the Appellant's Writ Petition on 28.03.2026, relegating the Appellant to statutory appellate remedies under the Foreign Trade (Development and Regulation) Act, 1991 (“the Act”) for all grievances.

The Appellant filed this intra-court appeal arguing that while they would pursue the statutory remedy for the scrip cancellation, the "Denied Entity List" communication was issued in flagrant violation of natural justice and Section 8 of the Act.

1. Whether the Appellant should be relegated to a statutory remedy regarding the cancellation of scrips and imposition of penalty.

2. Whether the communication dated 12.09.2024 placing the Appellant on the “Denied Entity List” was issued in violation of the principles of natural justice and Section 8 of the Act.

The court applied Section 7 of the Act, which mandates a valid IEC Number for any import or export activity.

Section 8 of the Act stipulates that an IEC Number can only be suspended or cancelled after providing a written notice stating the grounds and a reasonable opportunity for representation and hearing.

The court relied on the precedent established in Whirlpool Corporation v. Registrar of Trade Marks, Mumbai & Ors. (1998), which holds that the availability of an alternative statutory remedy does not bar writ jurisdiction under Article 226 if the action is in violation of the principles of natural justice.

The Court affirmed the Single Judge's decision regarding the scrip cancellation, noting that the Appellant was granted a hearing for that specific order and should utilize the statutory remedy under Sections 15/16 of the Act.

Regarding the 12.09.2024 communication, the Court found that placing an entity on the "Denied Entity List" is equivalent to "civil death" as it bars all trade and deprives the entity of incentives.

The Court observed that the communication contained no reasons, no mention of the grounds for the action, and no evidence that the mandatory procedure under Section 8—specifically a notice of intended cancellation and a hearing—was followed.

The Court rejected the Respondents' argument that an earlier Show Cause Notice (SCN) dated 30.10.2023 sufficed, noting that the SCN only mentioned "suspension" under Section 8(c) and did not fulfill the statutory requirement to communicate grounds for the specific "Denied Entity List" marking issued nearly a year later.

The Court quashed the communication dated 12.09.2024, holding it was issued in flagrant violation of Section 8 of the Act and the principles of natural justice.

The Respondents are permitted to initiate fresh proceedings regarding the IEC Number strictly in accordance with the procedural safeguards of Section 8 and the Impugned Order of the Single Judge was modified accordingly.