2019 (12) TMI 1149 - HC - Customs

Restriction on import of goods / Insecticides other than designated port - deletion of Kolkata from the list of places through which insecticides shall be imported into India, including the sea and air routes - Vires of a Notification dated December 22, 2017 (G.S.R.) 1588 (E) published by the Union Ministry of Agriculture and Farmers Welfare (Department of Agriculture, Cooperative and Farmers Welfare) - amendment brought to Rule 45 of the Insecticides Rules, 1971 - HELD THAT - In the present case, the respondents have not pleaded anywhere in their affidavit-in-opposition or in their written notes of argument that any such consultation with the Board was held prior to the amendment or that the Board was consulted within six months of the making of the Rules. The existence of necessary criteria, to satisfy the proviso to Section 36(1), for the dispensation of consultation with the Board, was not made out in the pleadings of the respondents - As such, the lame excuse of curbing illegal imports does not hold water, since there are several statutory provisions and measures in place to curb such imports and penal provisions to deal with such illegal imports. Moreover, isolated events of illegal imports cannot justify shutting out the entire Eastern and North-Eastern region of India from getting the benefits of imports of insecticides, which is patently violative of Article 14 of the Constitution of India from the perspectives of both importers as well as agriculturists. Not only would the importers of Eastern and North-Eastern India be forced out of market competition due to the huge increase in duties in the event they have to bring in the insecticides through the permitted places of import in other parts of India, the said increase in price would directly translate to the poor agriculturists of the East and North-East being unable to purchase insecticides at such high price, which would affect not only their livelihood, but the economy of the region as a whole. Such an event would have a cascading effect and would percolate to the citizens of India residing in the Eastern and North-Eastern parts of the country, since the prices of all agricultural and agro-industrial products would increase manifold, which is a complete violation of Article 14 of the Constitution of India. Even if the object of the 1968 Act is looked into, the same was enacted to regulate the import, manufacture, sell, transport, distribution and use of insecticides with a view to prevent the risk to human beings, animals and for matters connected therewith. There can be no reason why particularly the Kolkata port and airport, which is the gateway to the entire eastern and north-eastern states of the country, should be excluded from the zone of consideration as far as imports are concerned, while the other regions of the country will be getting benefits of such imports. As such, the introduction of the amendment by way of the impugned Notification is not a policy decision but an administrative decision which is palpably tainted with bias and designed to hit the economy of the Eastern and North-Eastern zones of India, for reasons best known to the Central Government - he said notification fails the tests of reasonableness and public interest, as stipulated in Article 19(6) of the Constitution, thus hitting Article 19(1)(g) as well as Article 14 of the Constitution of India. Even the object and policy of the 1968 Act, as reflected in Section 36(1), by providing for safeguards in that regard, has been violated in spirit by the Notification-in-question, thereby taking the Notification, and the consequential amendment, beyond the purview of the powers of the Central Government as conferred by the Act itself. Hence, the Notification is also de hors the 1968 Act itself. The impugned Notification, being GSR 1588(E) dated December 22, 2017, is declared ultra vires the Constitution of India and the Insecticides Act, 1968 and as such is struck down.

Summary

Issues Involved:
1. Constitutionality of the Notification dated December 22, 2017, amending Rule 45 of the Insecticides Rules, 1971.
2. Violation of Articles 14 and 19(1)(g) of the Constitution of India.
3. Reasonableness and public interest of the amendment.
4. Validity of the amendment as a policy decision.

Issue-Wise Detailed Analysis:

1. Constitutionality of the Notification dated December 22, 2017, amending Rule 45 of the Insecticides Rules, 1971:
The petitioners challenged the vires of the Notification dated December 22, 2017, issued by the Union Ministry of Agriculture and Farmers Welfare, which amended Rule 45 of the Insecticides Rules, 1971, by removing Kolkata from the list of places through which insecticides can be imported. This amendment was made under Section 36 of the Insecticides Act, 1968. The court observed that Section 36(1) of the 1968 Act requires the Central Government to consult the Board before making rules. The proviso allows dispensing with such consultation only under urgent circumstances, with mandatory consultation within six months. The respondents failed to show that such consultation occurred or that urgent circumstances justified bypassing it. Hence, the Notification was found to be de hors the 1968 Act and ultra vires the Constitution.

2. Violation of Articles 14 and 19(1)(g) of the Constitution of India:
The petitioners argued that the amendment violated Articles 14 and 19(1)(g) by imposing unreasonable restrictions on importers and manufacturers in the Eastern and North-Eastern States, including West Bengal. The court noted that the exclusion of Kolkata port and airport from the designated import places resulted in increased costs for importers, making their products uncompetitive and affecting farmers due to higher prices of insecticides. This exclusion was deemed arbitrary and discriminatory, thus violating Article 14. Furthermore, the restriction was found to infringe upon the right to carry on business under Article 19(1)(g), as it failed the tests of reasonableness and public interest under Article 19(6).

3. Reasonableness and public interest of the amendment:
The respondents justified the amendment by citing complaints about illegal imports and the need to monitor the quality of insecticides. However, the court found these reasons unsubstantiated and arbitrary. No specific instances of illegal imports were provided, and existing statutory provisions already addressed such issues. The court held that the amendment's impact on the economy of the Eastern and North-Eastern regions, particularly on agriculturists, was contrary to public interest. The resultant increase in prices and exclusion of these regions from import benefits were deemed unreasonable and violative of Article 14.

4. Validity of the amendment as a policy decision:
The respondents contended that the amendment was a policy decision, which should not be subject to judicial review unless arbitrary or irrational. The court rejected this argument, stating that the amendment was an administrative decision rather than a policy decision. A policy decision involves broader considerations and stakeholder consent, which were absent in this case. The court emphasized that a policy decision cannot arbitrarily exclude a major region from import benefits without a rational basis. The amendment was found to lack reasonableness and public interest, failing to qualify as a valid policy decision.

Conclusion:
The court declared the impugned Notification dated December 22, 2017, ultra vires the Constitution and the Insecticides Act, 1968. It directed the respondents to publish the striking down of the Notification in the Official Gazette and restore the Kolkata sea port and airport as designated import places under Rule 45 of the Insecticides Rules, 1971. The amendment was thus reversed, and Rule 45 was restored to its previous state. No order as to costs was made, and urgent certified copies of the order were directed to be supplied upon compliance with usual formalities.