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TMI Blog1973 (8) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... Order 1968 referred to as the 1968 Order came into existence under these powers. Clause 3(1) of the 1968 Order provides that no person shall export goods of the description specified in Schedule 1 of the 1968 Order except under and in accordance with the licence granted by the Central Government or by an officer specified, in Shedule I I of the 1968 Order. Mica scrap and mica waste are included as item No. 22(a) of Part B of Schedule 1 of the 1968 Order. Part B of Schedule 1 of the 1968 Order enumerates the items the export of which is allowed on merits or subject to ceilings 'or other conditions to be specified form time to time. The impugned Notice is issued by the Controller of Imports & Exports under the aforesaid statutory provisions. Under Trade Notice dated 13 March, 1968 reproducing Export Control Order No. 1/68-EIC dated 8 March, 1968 export of mica including mica splittings, blocks, scrap waste which are included in the list of items in Part B of Shedule I of the Export Control Order was allowed on merits. Under the impugned notice the export of mica is decided to be under the scheme to canalise the export of all grades and variety of mica, excepting manufactured and f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exceeding 1 % of the FAS value. The price at which sales will be concluded will not be less than the FAS prices fixed under the Government of India 'Mica Export Policy' Notification dated 27 June 1966 as amended from time to time or voluntarily adopted on the recommendation of the Mica Export Promotion Council. The foreign buyers will open confirmed, irrevocable, assignable, divisible without recourse to drawer and unrestricted, letters of credit in favour of the Corporation. The Press Note further states that where letters of credit have been opened on or after 24 January, 1972 in the name of private shippers, foreign buyers have to be requested through cable, so that the letters of credit are duly amended in the name of the Corporation and contracts finalised directly by shippers are also to be amended in favour of the Corporation for the balance quantity. The payment due to the supplier will be paid by cheque after realising the proceeds of sales from the foreign buyers after retaining the marginal one per cent of the FAS value as service charges of the Corporation. Subsequent to the Press Note the petitioner wrote to the respondent and gave details of contracts accepted by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deny the same to the petitioner. Sixth, the levy of a charge of' one per cent on FAS value without conferring- any corresponding benefit is an unreasonable restriction and is in substance a tax and is therefore in contravention of Article 265 of the Constitution. The scheme of canalisation of export through the Corporation is pursuance to section 3(1) (a) of the 1947 Act and clause 6(1) of the 1968 Order. The 1947 Act confers power to restrict, control or prohibit or otherwise control imports and exports. Clause 6(1) of the 1968 order is as follows :- "The licensing authority may refuse to grant a licence if the licensing authority decides to canalize exports through special or specialised agencies or channels". This Court in Davason of Bhimji Gohil v. Joint Chief Controller of Imports & Exports (1963) 2 S.C.R. 73 considered the State policy regarding export of ore. The Government regulated export of ore through three classes of exporters. First, there were established, shippers who would be granted export quota on the average of the quantities exported during the years 1953, 1954 and 1955. The second class consisted of mica-owners based on an annual average of the quantity of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al trade but also on monetary policy, the development of agriculture and industries and even on the political policies of the country but rival theories and views may be held on such policies. If the Government decides an economic policy that import or export should be by a selected channel or through selected agencies the 'court would Proceed on the assumption that the decision is in the interest of the general public unless the contrary is shown. This Court in glass Chatons case (supra) said that the scheme of canalisation is not acquisition of right to carry on trade. The canalisation scheme means that only the recognised agency can carry on trade. The effect of refusal of hence to other traders is that the cannot carry on trade in those goods. The Corporation carries on trade itself but not because of any acquisition by the Corporation of the right to carry on trade of the unsuccessful applicant for licence,. Therefore, there is no violation of Article 31 or Article 19(1)(f) of the Constitution by the canalisation of export through the State Trading Corporation. In Devason of Bhimji Gohil case(1) (supra) it was said that the State Trading Corporation might be a special agency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore the State Rave concession to the traders in order to eliminate hardship. The traders were given the choice to export provided they fulfilled certain conditions. These were that they could export through the Corporation and they were to pay service charges. It is significant that if the Press Note had not laid down the procedure conferring the privilege of exporting goods even after 24 January, 1972 in performance of contracts which were not supported by irrevocable letters of credit being opened prior to 24 January, 1972 the traders would have suffered loss. The traders could not perform the contracts with the foreign buyers after 24 January, 1972 where fetters of credit had not been opened. Therefore, it is apparent that there was no transfer of business or goodwill in favour of the Corporation. The contention with regard to contract-, entered into before 24 January, 1972 but where letters of credit have not been opened before that date is that the traders are exposed to loss of business and loss of profits and thereby unreasonable restrictions have been put on the traders' right to carry on business in violation of Article 19 (1)(g). This contention is unacceptable. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed for bringing into effect the canalisation scheme. Contracts may be for short or long terms. Usually long term contracts are worked out through instalment delivery at intervals. It will depend on the terms of the contract whether each is an instalment contract severable from other instalments or whether it is one contract to be performed in instalments. On the construction of such a contract depends whether the breach of contract is a repudiation of the whole contract or whether it is a severable breach giving rise to a claim for compensation but not a right to treat the whole contract as repudiated. In the present case, the affidavit evidence is that the obligation to export goods arises when the foreign buyers open letters of credit for the specified quantity of goods. If no date is fixed for bringing into effect the canalisation scheme with reference to opening of letter of credit it will give rise to ingenious devices of creating specious contracts. Contracts may be brought into existence by antedating such contracts. The entire purpose of the canalisation scheme with a view to increasing the export trade of the country, assisting small mine-owners, exporters and processo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts in the present case were not subject to the usual terms of contract in such cases that the export was subject to the licence laws of our country for the export of goods. It was said on behalf of the petitioner that the impugned Notice violated Article, 14 of the Constitution on the ground that there was discrimination between exporters of mica powder on the one hand and exporters of mica scrap on the other. It was emphasised that the export of mica powder is not within the ambit of the canalisation scheme. The impugned Notice canalises export of all grades and varieties of mica excepting manufactured and fabricated mica (including die cut condenser films, spacers, bridges, washeres etc.) micanite, raconstituted mica, mica powder and mica paper. The mica export policy published at pages 77-78 of the Export Trade Control Hand Book of Policy and Procedure 1970 published by the Government of India, Ministry of Foreign Trade deals with shipment of any variety other than fabricated mica, inter alia, on the basis of an application in that behalf and compliance with other terms laid down in that policy and in particular opening irrevocable letter of credit by a foreign buyer in a Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said that the relaxation was to minimise the hardships which the traders were likely to suffer on account of the coming into force of the impugned Trade Notice. The three representations received by the Ministry are from the Bihar Mica Exporters' Association dated 25 January, 1972, the Mica Chamber of Commerce, Gudur, Andhra Pradesh dated 9 February, 1972 and the Bihar Mica Exporters' Association dated 16 March, 1972. Broadly stated, the representations of the traders were that the absence of any detailed information or direction as to the procedure to be followed under the new system, presented three difficulties to the traders. First, there was serious set back in usual flow of mica exports. Second, there was financial loss to the mica exporters. Third, there was financial crisis in the mica industry. The difficulties pointed out were that export consignments worth about Rs. 70 lakhs in the names of different exporters supported by valid contracts and letters of credit were under processing through Joint Chief Controller of Imports & Exports and Customs at Calcutta Port for shipment within 31 January, 1972. The Orders and Credit were not assignable, and were covered under Buyers ..... X X X X Extracts X X X X X X X X Extracts X X X X
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