2024 (10) TMI 232 - HC - Customs

Cartelization and monopolization of poppy seed imports - fraudulent practices and quota theft - Non-registration of their contracts for import of poppy seeds from Turkey - seeking to quash the Impugned Public Notice dated 07th January 2022 and Guidelines dated 25th June, 2019 issued by Respondent No. 2 for Registration of Sales Contract for Import of Poppy Seeds from Turkey - seeking a direction to modify/amend/streamline procedure for import of poppy seeds against the existing policy and a direction to amend the existing policy, in as much as, the allocation of quantity imported is done in the name of importer - HELD THAT - In Devki Global Capital 2020 (7) TMI 389 - DELHI HIGH COURT , the Court addressed similar grievances regarding the registration of sales contracts for the import of poppy seeds from Turkey. In that case, the Petitioners argued that their sales contracts were not registered by the TMO in Turkey, thereby preventing them from securing the necessary approvals from the Central Bureau of Narcotics (CBN) in India for importation. The key issue before the Court was whether the Indian authorities, particularly the CBN, could intervene in the registration process managed by the Turkish Grain Board (TMO) and whether the guidelines issued were arbitrary or discriminatory. The Court unequivocally held that the registration of sales contracts by the TMO is an internal matter governed by Turkish law and procedure, over which Indian authorities have no control or jurisdiction. It found that the role of Respondent No. 2, the CBN, is strictly limited to registering contracts that have been duly registered by the TMO. The Court accordingly observed that the allocation and registration of contracts are bound by the terms of the MoU between India and Turkey, and any grievances regarding non-registration or alleged manipulation of contracts must be addressed in Turkey through appropriate legal channels. Furthermore, the Court emphasized that, in matters of policy and trade agreements, judicial intervention is warranted only in cases of manifest illegality, mala fide intent, or violation of fundamental rights, none of which were found in that case. This precedent, therefore, directly negates the Petitioners plea for judicial intervention in the present matter. The Court also does not find merit in Petitioners contention that Indian authorities can and should demand explanations from Turkish authorities, including the TMO registration process. Such a demand would overstep the boundaries of the MoU, which delineates the responsibilities of the Indian and Turkish governments. The Indian authorities cannot impose their regulations on a foreign sovereign s internal procedures. The MoU and the guidelines empower the CBN to register contracts based solely on the TMO s registrations. As noted in Devki Global, the Court cannot compel Indian authorities to investigate or interfere with the TMO s processes. The guidelines, as they stand, strike a balance between regulating imports and respecting the sovereignty of Turkey. In Balco Employees Union (Regd.) v. Union of India 2020 (7) TMI 389 - DELHI HIGH COURT , the Supreme Court held that matters concerning economic policy fall squarely within the domain of the executive, and judicial interference should be exercised with extreme caution. It has also been emphasised that it is neither within the domain of the Courts nor the scope of the judicial review to embark upon an enquiry as to whether a particular public policy is wise or whether better public policy can be evolved. Nor should the Courts be inclined to strike down a policy at the behest of a petitioner merely because it has been urged that a different policy would have been fairer or wiser or more scientific or more logical. Therefore, in the sphere of economic policy or reform, the courts cannot sit in judgment over the wisdom of the executive. The Petitioners allegations remain unsubstantiated and also fail to show how the Respondents actions violate any statutory or constitutional obligation - Petition dismissed.

Issues Involved:
1. Non-registration of contracts for import of poppy seeds.
2. Validity of the Impugned Public Notice and Guidelines.
3. Allegations of fraudulent practices and quota theft.
4. Jurisdiction and role of Indian authorities in the import process.
5. Sovereignty and trade policy considerations.

Issue-wise Detailed Analysis:

1. Non-registration of contracts for import of poppy seeds:
The Petitioners are aggrieved by the non-registration of their contracts for the import of poppy seeds from Turkey. They sought to quash the Public Notice dated 7th January 2022 and the Guidelines dated 25th June 2019, which were issued by the Department of Revenue for the registration of sales contracts. The Petitioners argued that these guidelines were discriminatory and led to an unfair distribution of import quotas.

2. Validity of the Impugned Public Notice and Guidelines:
The guidelines for the registration of sales contracts were issued in accordance with a Memorandum of Understanding (MoU) between India and Turkey. These guidelines set the framework for determining the country cap, the registration process, and the procedure for the Central Bureau of Narcotics (CBN) to register contracts. The Court upheld the guidelines, noting that they were non-discriminatory and in line with the MoU. The guidelines aim to regulate the import process and prevent cartelization and monopolistic practices.

3. Allegations of fraudulent practices and quota theft:
The Petitioners alleged that certain Indian importers, in collusion with Turkish exporters, inflated revised contracts beyond the stipulated 30% cap, thereby securing registrations for quantities in excess of the allotted cap. However, the Court found that the Petitioners did not provide substantial evidence to support these claims. Without corroborative material, the allegations were deemed speculative and conjectural. The Court emphasized that disputes between Indian importers and Turkish exporters fall within the realm of private contractual disagreements.

4. Jurisdiction and role of Indian authorities in the import process:
The Court noted that the CBN's role in the import process is limited to registering contracts that have been duly registered by the Turkish Grain Board (TMO). The registration of sales contracts by the TMO is an internal matter governed by Turkish law, over which Indian authorities have no control or jurisdiction. The Court reiterated that any grievances regarding non-registration or alleged manipulation of contracts must be addressed in Turkey through appropriate legal channels.

5. Sovereignty and trade policy considerations:
The Court highlighted the principle of sovereignty that governs international agreements, such as the MoU between India and Turkey. It emphasized that Indian authorities cannot impose their regulations on a foreign sovereign's internal procedures. The guidelines issued by the Department of Revenue, including the 20% payment requirement, were developed in consultation with Turkish authorities to regulate and streamline the import process. The Court found no merit in the Petitioners' contention that Indian authorities should demand explanations from Turkish authorities regarding the TMO registration process.

Conclusion:
The Court dismissed the Petitioners' claims, finding that the allegations of fraudulent practices were unsubstantiated and that the guidelines were neither arbitrary nor discriminatory. The Court reaffirmed that matters concerning economic policy and international trade agreements fall within the domain of the executive and warrant limited judicial interference. The Petitioners' grievances regarding their advance payments were deemed to fall under the realm of private disputes, and the Respondents were not expected to act as guarantors of the Petitioners' financial transactions with foreign exporters.

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