1989 (7) TMI 229 - HC - Indian Laws

Summary

Issues Involved:

1. Contamination of exported frozen shrimp consignment.
2. Withdrawal and revocation of approval for the manufacturer.
3. Show-cause notice and allegations against the exporter.
4. Responsibility and liability of the exporter.
5. Applicability of Clause 7(1)(d) and (e) of the Exports (Control) Order, 1977.
6. Alternative remedy and maintainability of the writ petition.

Issue-wise Detailed Analysis:

1. Contamination of Exported Frozen Shrimp Consignment:
The petitioner, I.T.C. Limited, exported a consignment of frozen shrimps to Japan, which was found to be contaminated with Vibrio Cholera germs by the Japanese Quarantine Authority. The entire consignment was subsequently destroyed by the Japanese authorities. The petitioner argued that only one master carton of ten 2 kg slabs was allegedly found infected, and the consignment had been cleared by the Export Inspection Agency (EIA) after rigorous inspection.

2. Withdrawal and Revocation of Approval for the Manufacturer:
The manufacturer of the contaminated consignment, M/s. Triveni Food Products, had their approval for processing marine products withdrawn by the Export Inspection Agency, Calcutta, under Rule 3B 2(a) of the Rules. This withdrawal was later revoked after further inspection and stricter control measures were imposed.

3. Show-cause Notice and Allegations Against the Exporter:
The Deputy Chief Controller of Imports and Exports issued a show-cause notice to I.T.C. Limited, alleging breaches of Clause 7(1)(d) and (e) of the Exports (Control) Order, 1977, accusing the exporter of attempting to cheat the foreign buyer by exporting contaminated goods. The petitioner responded, denying any corrupt or fraudulent practice, and highlighting that the consignment was cleared by the EIA and that contamination could have occurred during transshipment.

4. Responsibility and Liability of the Exporter:
The Deputy Chief Controller held I.T.C. Limited responsible for exporting contaminated frozen shrimp, despite acknowledging that their action was not deliberate or malafide. The court, however, noted that the exporter could not be solely responsible for contamination that might have occurred during transshipment or while in the custody of the transporter.

5. Applicability of Clause 7(1)(d) and (e) of the Exports (Control) Order, 1977:
The court emphasized that for Clause 7(1)(d) and (e) to apply, there must be evidence of corrupt or fraudulent practice by the exporter. The court found no such evidence, noting that the contamination could have occurred after the cargo was shipped and that the exporter relied on the EIA's inspections. The court concluded that a single incident of contamination over 14 years of export history did not constitute a corrupt or fraudulent practice.

6. Alternative Remedy and Maintainability of the Writ Petition:
The respondents argued that the petitioner had an alternative remedy of appeal. However, the court noted that the writ petition was filed before the alternative remedy was time-barred and entertained the petition on its merits, citing the Supreme Court's judgment in L. Hirday Narain v. Income-tax Officer, Bareilly.

Conclusion:
The court quashed the show-cause notice dated 7th November 1986 and the order dated 11th September 1987, restraining the respondents from giving effect to these. The court held that the facts did not establish a case under Clause 7(1)(d) and (e) of the Exports (Control) Order, 1977, and that the petitioner was not guilty of any corrupt or fraudulent practice. The court also granted a stay of operation of its order for a period of 4 weeks.