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TMI Blog2006 (8) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... the world. In many countries, the currently popular cuisine is an adaptation of a foreign one. The popularity in our country of Chinese, Italian and recently Lebanese food bears testimony to this growing trend. Indian spices and pulses were among the earliest to be traded at the height of the ancient civilizations of Egypt, Greece and Rome. As much as we relish our chick peas (chana) and the imported Kabuli variety, our 'desi? chick peas it seems is equally popular abroad. Chick peas are devoured in many forms: The Arab speaking world relishes its falafel (ground chickpeas shaped into balls and fried) and hummus (a smooth thick mixture of mashed chick peas with garlic). Global trade in chick peas as in other pulses has indeed grown. The Act and the Policy 3. The relevant provisions of the Act may be first noticed. Section 3 of the Act reads as follows :- "3(1) The Central Government may by order published in the Official Gazette, make provisions for the development and regulation of Foreign Trade by facilitating imports and increasing exports; (2) The Central Government may also, by order published in the Official Gazette, make provisions for prohibiting, restric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they are regulated by the provisions of this Policy or any other law for the time being in force. The item wise export and import policy shall be, as specified in ITC(HS) published and notified by Director General of Foreign Trade, as amended from time to time." 5. Whenever there is an amendment to the Policy, either in the area of the import or export, such change will doubtless affect transactions that are underway in the form of contracts already entered into prior to the change. To account for such transactions that may have already been entered into prior to the change, the Policy itself sets out the consequence of the change on such transactions in Para 1.5 which reads as under :- "1.5 In case an export or import that is permitted freely under this Policy is subsequently subjected to any restriction or regulation, such export or import will ordinarily be permitted notwithstanding such restriction or regulation, unless otherwise stipulated, provided that the shipment of the export or import is made within the original validity of an irrevocable letter of credit established before the date of imposition of such restriction." 6. The very idea of introduci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was decided that there would be a ban on the export of pulses with a view to augmenting the supply side. It was decided to allow private players to import wheat and to a limited extent, sugar. 10. The Finance Minister met the Press soon after the Meeting of the Cabinet Committee on Pricing and announced these decisions. The newspapers of 23-6-2006 (photocopies of the news clippings have been placed on record) prominently announced the aforesaid decision of the Government of India. The Asian Age and the National Herald from New Delhi, both dated 23-6-2006, indicated in the headlines that the export of pulses was banned. The government claims that the electronic media also carried this news on 22-6-2006 itself. 11. Admittedly, the aforementioned ban on the export of pulses was not issued in the form of a notification simultaneously. That notification was issued on 27-6-2006, five days after the news of the ban appeared in the press. 12. Three days prior to the notification, on 24-6-2006, pursuant to the contract entered into between the TCP and Petitioner No. 2, and the furnishing of the Performance Guarantee by the petitioners, two irrevocable letters of credit (L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to be exported. equina, vicia faba var minor) 0713 90 Kg. Other : Prohibited Not permitted to be exported. 0713 90 10 Kg. Tur (arhar) Prohibited Not permitted to be exported. 0713 90 91 Kg. Split Prohibited Not permitted to be exported. 0713 90 99 Kg. Other Prohibited Not permitted to be exported. 3. The above amendment shall remain in force for a period of six months from the date of its issue and shall not apply to imports already effected against Advance Licences/Authorisations issued prior to the date of issue of this notification. 4. This issues in Public Interest. (K.T. CHACKO) DI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n No. 15 dated 27th June 2006, to include the following sentence, at the end of the said para :- "Further the transitional arrangements notified under para 1.5 of the Foreign Trade Policy, 2006 shall not be applicable for export of pulses against irrevocable Letters of Credit opened on or after 22-6-2006 as the decision of the Government prohibiting the export of pulses was announced and got widely publicised on 22-6-2006 in the electronic and print media." 2. This issues in Public Interest. (K.T. CHACKO) DIRECTOR GENERAL OF FOREIGN TRADE AND EX-OFFICIO ADDITIONAL SECRETARY TO THE GOVT. OF INDIA" 17. The Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teeth of the mandate under Section 5 which permits the export policy to take effect only from such date it is formulated and announced by a means a notification in the official gazette, that is to say, from the date of notification." 20. In reply to the writ petition, the Union of India and the DGFT, respondents 1 and 2 respectively, contended that the Central Government was fully within its powers to amend the Policy from time to time in public interest. Explaining the steps leading to the imposition of the ban, the counter affidavit stated thus : ".....the respondent Government in its bid to check the seasonal rise in prices of some essential commodities banned the export of pulses on 22-6-2006 and allowed the private sector to import wheat and sugar to augment the supplies and supplement the Government efforts through PDS route. The States have been asked to clamp down on holding and black marketing to bring down the prices. This decision was taken by the Government in a high level meeting to look into such regulations of exports of essential commodities and in the public interest. The decision on export were restricted to two commodities such as pulses and sugar. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omain to issue such notifications in public interest and also regulate and check the high-rise prices of various essential commodities. Therefore, there is a rational and justification of the prohibition imposed by the respondents on the export of pulses and other essential commodities and the approach of utmost caution adopted by the respondents on the issue of abovementioned public interest for controlling the prices of essential commodities and such action of the respondents has in fact, dampen inflation and brought restrain in the market. It is also not out of place to mention here that the mala fide intentions of the petitioners and other exporters could be evident and judged from the fact that as per the information received by DGFT, so far (the actual figures may be much higher), irrevocable Letter of Credits were opened for exporting more than 1.20 lacs MTs of pulses between 22-6-2006 and 27-6-2006. 'This is close to 45% of the country's entire pulses export during the financial year 2004-2005 (2.75 lacs MTs). Thus, in this respect, it is clear that intentionally and deliberately, the petitioners procured the Letter of Credits within the above period after the pronouncemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioners had given a performance guarantee of approximate US 1.0 million to ensure the timely performance/supply. To save time the petitioners had started mobilizing Chick Peas from 21st June 2006. The Shipping Invoices cum packing lists were prepared on 22nd June 2006 to expedite the process at the end of the Petitioner. The said Shipping Invoices were forwarded to the Clearing and Handling Agent (CHA) at Kandla for further submitting with Customs, Kandla. The publication of the news of prohibition on export of pulses created confusion with the Custom Authorities as they were not sure about the pending/transitional exports. Thus the Customs Authorities informally refused to accept the Shipping Invoice till the time position was clear to them. Finally, the Notification was issued on 27th June 2006. The Petitioner asked its CHA to claim that the petitioner already has irrevocable L/Cs in their favour and thus their shipment is saved/protected under paragraph 1.5 of the Foreign Trade Policy. Accordingly, the CHA mentioned the details of L/C in the Shipping Invoices already lying with it. The inconsistency in the document is due to the above circumstances." Submissions of the counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. P.P. Malhotra, the learned Additional Solicitor General of India, submitted as follows : (a) The power of the Central Government to either announce or amend the Policy is undeniable. By the very wording of the statutory provisions, the power to give effect to such change retroactively was implied. (b) It was permissible for the Central Government to introduce an amendment to the earlier notification dated 27-6-2006 so as to take away the benefit of Para 1.5 of the Policy. The impugned Notification dated 4-7-2006 was in effect only adding a further paragraph to the original Notification dated 27-6-2006 and if so read, the retrospective nature of the change would become apparent. (c) The petitioners cannot claim the benefit of Para 1.5 of the Policy as a matter of right since that paragraph only states that in certain circumstances the export pursuant to a concluded transaction would 'ordinarily be permitted'. Mr. Malhotra submitted that the word 'ordinarily' meant that it was not invariable and that therefore the Central Government would be within its powers to withdraw this benefit in the larger public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned here that in their written submissions, the respondents have made submissions and referred to case law on the point whether the petitioners could base their claim on promissory estoppel. However, since no such argument was advanced by the petitioners, we refrain from examining such issue. Re : Issue No. 1 31. In support of the writ petition, an affidavit has been filed of Shri Pradeep Jindal, son of Shri Faqir Chand Jindal, describing himself as the authorized representative of Petitioner No. 2. He also claims to be authorized to file the supporting affidavit on behalf of Petitioner No. 1. In response to the objection raised in a counter affidavit by the respondents to the effect that the petitioners have not disclosed how the deponent is authorized to file the writ petition, the petitioners have alongwith their rejoinder produced a Resolution dated 17-7-2006 passed by the Directors of the Petitioner No. 2 Company authorizing Shri Pradeep Jindal to take all necessary steps including legal action in connection with the transactions that form the subject matter of the present petition. Dr. A.M. Singhvi, the learned senior counsel for the petitioners, during the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi on 29-6-2006. This fact has been pleaded in the writ petition itself and not denied in the counter affidavit filed by the respondents. Applying the ratio of the aforementioned decisions of the Hon'ble Supreme Court to the facts on hand we are of the view that the facts pleaded in the writ petition show that these facts are integral to the cause of action which arose in Delhi, namely, the issuance of Notification dated 4-7-2006 by the DGFT, Delhi. We accordingly hold that this Court has the jurisdiction to entertain this writ petition. This point is accordingly answered in favour of the petitioners and against the respondents. Re : Issue No. 3 33. The principal ground on which the petitioners assail the validity of the impugned Notification dated 4-7-2006 is that even if the power to amend the Policy exists in the Central Government in terms of Section 5 of the Act, such an amendment cannot be sought to be given retrospective effect, and in any event not from a date on which the prohibition was in fact not in force. 34. In order to appreciate this argument, it requires to be broken into its constituent elements. The admitted position is that the notification anno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4-7-2006 are both instances of delegated legislation made by the Central Government in exercise of the power under Section 5 of the Act. 37. Mr. Malhotra sought to place heavy reliance upon the judgment of the Hon'ble Supreme Court in R.C. Tobacco v. Union of India (supra) to contend that as long as the measure was in public interest, it was open to the Central Government to impose a restriction from a retrospective date. The general power of imposing a ban through legislation from a retrospective date is undeniable. That general proposition hardly needs reiteration. However, what we are dealing here is a delegated legislation and the rules concerning retrospective delegated legislation are not identical with those governing legislations themselves. The power to make a retrospective delegated legislation has to be either conferred in express words or inferred by necessary implication. The law in this regard requires the express words of the statute to be examined for this purpose. In Shri Vijayalakshmi Rice Mills v. State of A.P. - AIR 1976 S.C. 1471 the question was whether the price to be paid for certain supplies of rice made by the appellants in January-February, 1964, wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -1948 by the Central Government under Section 8 of the Foreign Exchange Regulation Act, 1947 on the bringing of gold into India. By a Notification of the same date issued by the Reserve Bank of India (RBI), this ban was not to apply provided the gold brought into India was on through-transit i.e. from places outside India for the purposes of transhipment to places similarly situated and where the gold so brought is not removed from the aircraft. On 8-11-1962, the RBI modified its notification dated 25-8-1948 and added an additional condition for exemption, i.e., the gold must have been declared in the 'Manifest' of the aircraft as transhipment cargo. Admittedly, this change was not officially notified till 24-11-1962. The respondent, Mayer Hans George was on an aircraft from Zurich to Manila transiting through Mumbai. On 28-11-1962, when his plane arrived in Mumbai, the Customs authorities, acting on a tip off and finding that George had not disclosed in the manifest that he was carrying Gold, stopped the aircraft and searched his person. He was found carrying 34 gold slabs. He was prosecuted and convicted of an offence under Section 8 read with Section 23(1-A) of the Act. In chall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnataka - AIR 1987 S.C. 1059 and held that once the prescribed mode of publication was complied with, it was immaterial whether the notification was actually made known to persons affected by it. The issue there was whether a notification dated 13-2-1986 under Section 25(1) of the Customs Act 1962 prescribing higher rates on import duties was effective from the date of such notification or only from the date when copies of which were made available to the importers, because admittedly such notification was not made available till 19-2-1986. The Hon'ble Supreme Court held that Section 25 of the Customs Act, 1962 had already prescribed the mode of granting exemption which was by a notification in the Gazette and once that mode was complied with and the notification was published on 13-2-1986 that would be the date on which it became effective irrespective of the fact that a copy of it was not made available till 19-2-1986. 42. The correctness of the view taken in Pankaj Jain Agencies' case (supra) was put in doubt on account of two subsequent decisions of the Hon'ble Supreme Court in Collector of Central Excise v. New Tobacco Company - 1998 (97) E.L.T. 388 (S.C.) = (1998) 8 S.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parent statute prescribes the mode of publication or promulgation that mode has to be followed and that such a requirement is imperative and cannot be dispensed with." In our view, the above decision in ITC Bhadrachalam Ltd. (supra) is a complete answer to the contention of the respondents that the ban became effective from a date earlier than the date of the actual notification. 44. Therefore, as far as the present case is concerned, applying the above law, there could be no manner of doubt that the only acceptable mode of bringing about the change in Policy is by a notification in the Official Gazette. Admittedly the ban on export of Chick Peas was notified on 27-6-2006 and it must be held that this was the date on which the ban became effective. We accordingly hold that there is no merit in the submission of the respondents that the ban imposed on the export of pulses became effective on 22-6-2006 when it was announced in the media and not on 27-6-2006 when it was actually notified in accordance with the mandatory requirements of Section 5 of the Act. 45. This brings us to the next contention of the petitioners that the impugned Notification dated 4-7-2006 is ultra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll. 47. There is yet another problem with the impugned Notification dated 4-7-2006. What it in effect seeks to do is to make unavailable the benefit of the Para 1.5 of the Policy. In other words, the transitional arrangements that otherwise would stood protected notwithstanding the ban by the Notification dated 27-6-2006, would now by virtue of the impugned Notification dated 4-7-2006, not stand so protected. Mr. Malhotra urged that the volume of exports in the short period was so large that the public interest involved in the matter constituted sufficient justification for the government making the ban retrospective and at the same time make unavailable the benefit of para 1.5 of the Policy. He repeatedly stressed that the word 'ordinarily' occurring in Para 1.5 of the Policy indicated that the petitioners could not seek the benefit thereunder as a matter of right and therefore there was nothing arbitrary in taking away the benefit of Para 1.5 altogether. 48. The issue requires further examination to glean what is in fact intended by the Act and the Policy. The legal domain of fiscal statutes often witnesses exercises of imposition of or lifting of prohibition, grantin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is also possible that it might be the date on which it is posted on the official website of the Central Government. However, for the present, we have to apply the law as we find it. 50. Also, we are afraid that the public interest mantra cannot be repeated as a panacea for avoiding the consequence of mandatory legal provisions. As explained by the Hon'ble Supreme Court in ITC Bhadrachalam Ltd. (supra) there is a certain logic in stipulating the date on which a notification is officially gazetted to be the effective date. The Government may announce several policies and several changes to such policies in different fora. However, the specifics of such changes, the nuts and bolts of the scheme, may be required to be worked out before the formal notification can be published. Usually the Government gives itself time to work these details out. Merely because such a requirement is not convenient to the government in the instant case, it cannot be dispensed with. It is not possible to adopt one yardstick when the Government seeks to grant a benefit and the other when it seeks to withdraw it. Government's decisions are to be expressed in a certain form. In the area of export and i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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