9911796707
TMI Blog2011 (1) TMI 707X X X X Extracts X X X X X X X X Extracts X X X X ..... made to the AOA of the AEPC to bring about the classification of exporters into ‘member exporters’ and ‘registered exporters’, granting them different rights and privileges, will stand invalidated for the above reasons. X X X X Extracts X X X X X X X X Extracts X X X X ..... sales teams/delegations abroad. However, the Ministry of Textiles/Ministry of Commerce of the Government of India, as the case may be, would interact with the Managing Committee of the EPC concerned, twice a year, once for approving their annual plans and budget and again for a mid-year appraisal and review of their performance. Para 13.7 of the Exim Policy, which talks of support from the Central Government, reads as under : "13.7 Government Support The EPCs may be supported by financial assistance from the Central Government. The support given to the EPCs by the Government, financial or otherwise, would depend upon (a) effective discharge of functions assigned to them; (b) democratization of the membership of the EPCs; (c) democratic elections of office bearers of the EPCs on a regular basis; (d) timely audit of the accounts of the EPCs." 6. As regards the Registration-cum-Membership Certificate ('RCMC'), para 13.8 of the Exim policy is relevant and reads as under : "13.8 Registration-cum-Membership An exporter may, on application, register and become a member of an EPC. On being admitted to membership, the applicant shall be granted forthwith Regist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and Regulation) Act, 1992 ('FTDR Act') and the rules and orders made thereunder. 10. It is stated by the Petitioners that since its incorporation, the AEPC has been conferred a monopoly status by the Central Government to channelise and regulate the export of garments from India in accordance with the Exim Policy of the Government from time to time. Every exporter is bound to export garments to the quota countries through the AEPC. While applying for quotas for making necessary exports, the exporter is required to give an earnest money deposit or a bank guarantee and/or a letter of undertaking to the AEPC to ensure the fulfilment of the quota obligations as allotted to such exporter. Clauses of the Articles of Association concerning membership 11. It is stated that no exporter can make any export of garments without getting itself registered with the AEPC. The AOA of the AEPC defines a member in Clause 1(a) as a member whose name for the time being is entered in the Register of the AEPC. Clause 4 (a) of the AOA prescribes no number limit on the number of members. Under Clause 5 (a) of the AOA, any person who is an exporter of garments or is otherwise interested in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ractice of two separate categories of members, as created by the AEPC in its AOA. The first category was a member who was entitled to vote and the second category included associate members and institutional members who were not entitled to vote. 14. A challenge was raised by certain exporters by filing a Suit no. 873 of 1981 in this Court. The suit was decreed by a judgment dated 19th May 1983 in Pramod Chopra v. Apparels Export Promotion Council - ILR (1984) I Del Delhi 718 holding the Rules of Election of the Members of the EC of the AEPC to be void to the extent that they debarred the associate members and the institutional members from voting rights. Impugned Regulations of AEPC concerning membership 15. It is stated that even after the aforementioned judgment AEPC persisted with two classes of exporters i.e. (a) member exporter and (b) registered exporter. In the Regulations framed by the AEPC on Registration, a separate conditionality has been prescribed for an applicant exporter to be recognised as a registered exporter. It is stated in Regulation 1(ii) that the applicant shall not be entitled to be registered as a 'registered exporter' if : "(a) he is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regulation 1(d) of the Regulations of Membership of the AEPC was rejected by this Court by its order dated 12th September, 2001. It was, however, clarified that the 950 registered exporters who did not fulfil the criteria and Regulation 1(d) would be permitted to vote, but such votes would not be counted until further orders of this Court and that the declaration of the results of the election would be subject to further orders of this Court. Submissions of Counsel 20. Mr. Suhail Dutt, learned counsel appearing for the Petitioners focussed the challenge to the validity of the Membership Regulations of the AEPC. He submitted that the very existence of the AEPC was owed to Chapter 13 of the Exim Policy and in particular, para 13.1 thereof. Under para 13.8, every exporter was entitled to be registered as such with the AEPC subject to such exporter possessing an IEC Number and the RCMC issued by the EPC would be subject to such terms and conditions, as may be specified in this behalf It is stated that at the bottom of the RCMC issued by the AEPC a clarification was issued that the RCMC did not confer "any membership rights as per the provisions of the Companies Act, 1956 and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporated by guarantee under Section 25 of the CA, then their remedy was under Section 111 of the CA by filing a petition before the Company Law Board (CLB) and not by way of the present writ petition. He sought to make a distinction between becoming a member of the company and being a member of the AEPC in the capacity of a registered exporter, which was for the limited purpose of being issued an RCMC. Reliance was placed on the decisions of the Supreme Court in Balkrishan Gupta v. Swadeshi Polytex Limited (1985) 58 CC 563 and Clariant International Limited v. Securities and Exchange Board of India - AIR 2004 SC 4236 as well as of this Court in K.P. Jain v. S.K. Gupta [1978] 48 CC 774 (Del.). 22. It was then submitted that rights of a member are purely contractual and unless name of an exporter is entered in the register of members of the AEPC, in accordance with the procedure outlined in the AOA and the Membership Regulations framed thereunder, the exporter cannot exercise rights as such member. Thirdly, it was submitted that the proforma of the application in Appendix 3-A of the HBP 1997-2002 showed that there was no automatic right of RCMC holder to become a member of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rit petition under Article 226 of the Constitution, which is much wider than Article 32. 33. This Court in the case of Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust v. V.R. Rudani (1989) 2 SCC 691 has held: (SCC @ pp. 692-93). "Article 226 confers wide powers on the High Courts to issue writs in the nature of prerogative writs. This is a striicing departure from the English law. Under Article 226, writs can be issued to 'any person or authority'. The term 'authority' used in the context, must receive a liberal meaning unlike the term in Article 12 which is relevant only for the purpose of enforcement of fundamental rights under Article 32. Article 226 confers power on the High Courts to issue writs for enforcement of the fundamental rights as well as non-fundamental rights. The words 'any person or authority' used in Article 226 are, therefore, not to be confined only to statutory authorities and instrumentalities of the State. They may cover any other person or body performing public duty. The form of the body concerned is not very much relevant. What is relevant is the nature of the duty imposed on the body. The duty must be judged in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the validity of the Membership Regulations cannot be raised before the CLB in a petition before the CLB under Section 111 of the CA. The scope of such a petition is restricted to challenging the decision on an application for transfer of shares in terms of AOA of the AEPC. The reliefs sought in the present petition cannot be granted by the CLB. Consequently, the second preliminary objection is also negatived. Validity of the Regulations making a distinction between 'Registered' Exporters and 'Member' 27. The central issue in this petition is whether the AEPC can possibly make a Regulation that further classifies exporters registered with it into two categories: - (1) those that been given right to participate in the election to the EC on the basis of the export performance in the past three years; and (2) those that have been denied such rights. The contention of the Petitioners is that the Exim Policy does not permit such sub-classification of exporters registered with the EPCs. The further contention is that even the AOA of the AEPC do not recognise such classification and that the AOA has in any event to be in conformity with the Exim Policy. In order to appreciate t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stence to the Exim Policy has to abide by the conditionalities of the Exim Policy and cannot incorporate into its AOA restrictions as to the eligibility for membership of the AEPC in a manner inconsistent with or in excess of what is contained in the Exim Policy. The words "subject to such terms and conditions as may be specified in this behalf" occurring in para 13.8 of the Exim Policy, necessarily mean such terms and conditions as may be specified in the Exim Policy itself. If such terms and conditions are specified in the Regulations made by the EPC concerned, they have to be consistent with the Exim Policy. This position is unique to an EPC and, therefore, none of the decisions cited by learned Senior counsel for the AEPC, which concerned the position in companies in general, have any relevance to the situation on hand. 31. The submission that the registration of an exporter under Para 13.8 of the Exim Policy is only for the purposes of issuance of an RCMC and not for becoming a member of the AEPC is, on the face of it, fallacious. The sequence envisaged in Para 13.8, which has been extracted hereinbefore, is that upon registration the exporter becomes a member of the AEP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bearers. The Membership Regulations, in particular Regulation 1(d), is contrary to this mandate. There is no denial by the AEPC that by 2001 there were nearly 33,000 exporters registered with it in terms of Clause 13.4 of the Exim Policy. Of these, not even 10% were recognised as 'members' eligible to vote at the elections to its EC. This can, by no means, be considered democratic. The electorate has to comprise the registered exporters from among whom the EC can be elected. Consequently, this Court is unable to appreciate how the AEPC can possibly create a further classification amongst registered exporters and restrict the eligibility for membership of the AEPC in the manner it has chosen to do by means of the Regulations of Membership. The classification of exporters registered with the AEPC into 'registered exporters' and 'member exporters' has no nexus with the object of ensuring democratisation of such membership or democratic elections to the EC of the AEPC. The Membership Regulations are, therefore, violative of Article 14 of the Constitution. The restriction on membership brought about by the Membership Regulations, apart from being ultra vires the Exim Policy, are unrea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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