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TMI Blog2011 (7) TMI 786X X X X Extracts X X X X X X X X Extracts X X X X ..... ion should be rendered by the DGFT in accordance with law. The issue as to whether the Petitioners were guilty of a misdeclaration, when they submitted their application for the registration of their contracts is kept open to be adjudicated upon by the DGFT. The impugned order dated 19 April 2011 is set aside, to facilitate a fresh order on remand. - Writ Petition No. 885 of 2011 - - - Dated:- 19-7-2011 - D.Y. Chandrachud, Anoop V. Mohta, JJ. Haresh Jagtiani, Sr. Adv. with Anil D Souza, Suprabh Jain and Abhijeet Shinde for the Petitioner R.V. Desai, Sr. Adv. with G. Hariharan i/by T.C. Kaushik, Rui Rodrigues with M.S. Bhardwaj for the Respondent JUDGMENT D.Y. Chandrachud, J 1. Rule, by consent, returnable forthwith. With the consent of Counsel and at their request, the Petition is taken up for hearing and final disposal. 2. The Petitioners are engaged in the business of export of raw cotton to foreign buyers mainly in Hong Kong and China. On 17 August 2010 the Foreign Trade Policy for 20-09-2014 was amended by the Central Government under Section 5 of the Foreign Trade Development and Regulation Act, 1992. By the amendment, the export of cotton w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of issue of the EARC or 15 December 2010, whichever was later. The online application system was declared closed on 10 October 2010 as, according to the Textiles Commissioner, applications for 55 lac bales were received and no further applications could be accepted for registration. 4. of the eleven contracts which were registered by the Petitioners for the export of 40,500 Metric Tones (Approximately 2.43 lac bales), the First Petitioner was given physical delivery of three EARCs, for 8000 Metric Tones representing approximately 48,000 bales. While submitting their applications Petitioners had wrongly included two contracts in the name of an alleged sister concern, KKM International. According to the Petitioners, by an email dated 4 November 2010, they had communicated that the application in respect of these two contracts which were in the name of KKM International should be rejected. There is a serious dispute on whether the communication was received by the Respondents and it has been the case of the Textiles Commissioner that the records of the case do not reflect that any such intimation was received by the office. 5. On 25 November 2010 the Textiles Commissioner i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llocation. Based on the same ratio on which allocation was made to the other applicants on 10 January 2011, the Petitioners have been allocated 675 bales of cotton for the export of raw cotton against the six applications. 8. The grievance of the Petitioners is that by the impugned order the DGFT has incorrectly purported to follow a new policy which was announced by the Government of India on 29 December 2010, while according to them, a vested right had accrued under the policy before it was modified. According to the Petitioners, the new policy would indicate that data on exports made from 1 November to 15 December 2010 was being collected and an allocation was to be made of the balance quantity keeping in view the decision of the Union Government to limit the export of raw cotton to 55 lac bales during the cotton year 20-10-2011. The new policy requires applicants to submit copies of their export contracts after allocation is made. The submission which has been urged on behalf of the Petitioners is that a vested right had accrued to them under the earlier Memorandum dated 7 September 2010. According to the Petitioners, this vested right is evident from a notification on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted and unless EARCs were issued in the physical form, the Petitioners would acquire no right to carry out the export of raw cotton. 10. The rival submissions now fall for determination. 11. Prior to 17 August 2010 the export of raw cotton was placed in the restricted category by a notification dated 21 May 2010 issued by the Government of India in the Ministry of Commerce. On 17 August 2010 the Union Government issued a notification under Section 5 of the Foreign Trade (Development and Regulation) Act 1992 under which the export of raw cotton reverted to the "free" category, to be governed by the OGL procedure. This was subject to the condition that contracts for the export of cotton were registered with the Textiles Commissioner prior to shipment. Customs authorities were required to grant clearance of cotton consignments after verifying that the contracts were duly registered. The filing of an EARC request or application was to be online. The guidelines which were issued by the Textiles Commissioner under his Press note dated 7 September 2010 stipulated that exporters could view the progress and status of their applications online. The guidelines provided that the office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act. A notice to show cause was issued to the Petitioners on 25 November 2010. One of the grounds in the notice to show cause was that the Petitioners had attempted to secure EARCs in respect of the export contract of a third party seller. According to the Petitioners, prior to the issuance of the notice to show cause, they had sent a communication on 4 November 2010 to the Textiles Commissioner requesting him to delete the two contracts from their applications for EARCs since they pertained to a sister concern of the First Petitioner. Whether that communication was received is a matter seriously in dispute. In the first order of rejection that was passed on 14 December 2010, the Textiles Commissioner recorded that no such intimation was available in his office. It was on this ground interalia that the Textiles Commissioner proceeded to hold that there was a willful misdeclaration on the part of the Petitioners in attempting to secure EARCs on the basis of the export contracts of a third party. The order of 14 December 2010 was set aside by a Division Bench on the ground that there was a breach of the principles of natural justice without the Court being required to consider the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al delivery of the EARCs would be issued in the normal course. Undoubtedly, if a publication on the website is found to be a result of error or dishonest conduct on the part of an official in the Department or a misdeclaration by or wrongful conduct of an exporter, it would be open to the Department to take necessary steps to set things right by following due process of law. Such an exercise is permissible in the public interest in order to ensure that the object of the policy is not defeated or flouted. 14. In order to enable the Department to explain the basis on which the publication was made on the website, this Court had by its order dated 6 July 2011 directed the Textiles Commissioner to file a further affidavit. In the affidavit it has been urged that the status on the website did not amount to a notification which would give a vested right to the applicant. Moreover, it has been submitted that there was a tremendous rush of applicants after the web based computerized system was introduced on 1 October 2010. The Textiles Commissioner states that the information which was generated through the online registration system could not be and was not scrutinized. In the present ..... X X X X Extracts X X X X X X X X Extracts X X X X
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