9911796707
TMI Blog1979 (1) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... f Articles 14. 19(i) (f) and (g) and 31 of the Constitution. A mandamus is also sought restraining the respondents from enforcing the aforesaid provisions of the impugned Act, Control Orders and Public Notice with directions to permit export of teak-wood in sawn sizes. (3) India is one of the biggest producers of various types of timber including teak and rose wood. Apart from home consumption, timber in log form and in sawn sizes was being exported to various countries of the world and in particular to Arabian Gulf countries. This export is regulated by the provisions of Imports and Exports (Control) Act, 1978 and policy of the Central Government in that behalf declared from time to time. Prior to March 24, 1977 there was no restriction for the export of teak in log form or sawn sizes. On March 24, 1977 export of teak in log form was prohibited but export of teak in sawn sizes was permitted. On December 6, 1977 what is called on merits procedure was introduced for sawn sizes. The export Policy for the financial year 1978-79 in respect of timber including teak was announced by the Central Government on April 3, 1978. According to this policy the ban on export of teak in log fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier. (4) The Imports and Exports (Control) Act, 1947 has been enacted to prohibit or control imports and exports and the legislative policy appears to be, as contained in the preamble of the Act, that it was expedient to prohibit, restrict or otherwise control exports and imports and Therefore it was necessary to enact such a law. Section 3 of this Act reads as under : 3. Powers to prohibit or restrict imports and exports. (1) The Central Government may, by order published in the Official Gazette, make provisions for prohibiting, restricting or otherwise controlling in all cases or in specified classes, of cases and subject to such exceptions, if any, as may be made by or under the order : (A) the import, export carriage coastwise or shipment as ships stores of goods of any specified description; (B) the bringing into any port or place in India of goods of any specified description intended to be taken out of India without being removed from the ship or conveyance in which they are being carried. (2) All goods to which any order under sub-section (1) applies shall be deemed to be goods of which the import or export has been prohibited under section 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which application moved till May 19, 1978 could be honoured in given conditions. (6) The Central Government has issued an official publication known as Hand Book of Import-Export Procedures . This is dated May 4, 1978. This Hand Book deals with various aspects of import and export of commodities and goods into and from India. It also lays down the procedures which various authorities follow and are required to follow in permitting or not permitting import or export of goods and commodities. Chapter Xiii of this Hand Book deals with Export Licensing Procedures. It first sets out the categories of exporters and then deals with the various types of licenses. It also deals with situations where exports were permitted of a particular commodity but banned later and what is to happen in case of pre-ban commitments. Paragraph 316 deals with this contingency. It lays down that unless otherwise provided, the pre-ban (including pre-control) commitments will be ordinarily honoured for export control purposes. This includes a situation where against the specific export order either an irrevocable Letter of Credit had been opened and accepted by a scheduled Indian Bank or an advance payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teak wood planks are over 25 feet in length which are required for replacement of the wooden section damaged or to be repaired on the vessels plying on the high seas. In order to effectuate replacement and repairs it is not possible to bring these vessels to the Indian Coast in a state of disrepair. It is claimed that the ancient trade flourishing in the State of Kerala from time immemorial would be adversely affected by the impugned ban. It is further submitted that whereas on the one hand it is the Government policy to encourage manufacture and export of wooden ships and crafts and yet on the other the spare items for repairs and replacements are being banned which amounts to a policy which cannot be called intelligible. The petitioners state that unlike rose wood, teakwood is not an exclusive product of India as good quality of teak is available in neighbouring countries like Burma, Malaysia, Thailand, and Indonesia etc. Singapore is stated to be a thriving market for many of the eastern countries dealing in teak. In case, it is submitted, teak wood is not made available for export from India, the trade which has been flourishing in India for a long time would be diverted to ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exporters to Middle East countries and of operators of transport vessels including sailing vessels to and from Middle East countries. The case of the petitioners in this case is identical to the case of petitioners in C.W. No. 1221 of 1978. The petitioners in this case claim that between October, 1977 and May 1978 they exported teak in sawn sizes of the value of ₹ 17.65 lakhs to various buyers in the Gulf region. They have received advance payments against valid and specific orders to the extent of ₹ 16,22.632. The firm contracts they have entered into are with Arab buyers in Baharain, Dubai, Qatar and Kuwait. The advance payment is said to have been received prior to June 5, 1978 through Indian Banks who are authorised dealers of foreign exchange. The petitioners further contend that prior to the impugned ban they had purchased at the Kerala Government's auction teak wood worth ₹ 10 lakhs in order to meet their obligations to Arab buyers. The stock of teak wood made ready for export after sawing is lying in various depots and yards of petitioners I and 2, located at South Beach Road, Calicut, exposed to the vagaries of the weather. The petitioners contend tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on the export of teak wood has been placed keeping in view the fact that the export of the teak wood in this sawn form had to be banned in the interest of national economy keeping in view the aforesaid factors and teak wood in processed form only having an added value potential and realisation of foreign exchange may be permitted to be exported. It is said that the Government's emphasis is more and more on promoting export of value added products which results in better earnings of foreign exchange and creation of employment opportunities in the country rather than exporting primary products as such. It is claimed that all these factors were taken into consideration while placing the ban on the export of teak wood, first in log form and then also in sawn sizes. It is claimed that national economy cannot be sacrificed for a few individuals and, Therefore, the historical background relied upon by the petitioners was irrelevant. The affidavit of Shri Bansal admits that petitioners I and 2 in both the cases have been exporting teak wood to Gulf countries but Shri Bansal is not able to state whether the figures of export given by the petitioners were as claimed. Shri Bansal also d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bitrariness a Public Notice dated November 10, 1978 was placed on record under which some further 20 types of wood were permitted to be exported, besides rose wood. It was asserted that there was no reasonable criteria vis-a-vis teak wood in sawn sizes. The contention to that there is no intelligible reason and no policy which could warrant such discrimination. It was denied that prior to May 19, 1978 the petitioners had ever applied to the Chief Controller of Imports and Exports for license under the merits procedure. It was asserted that the petitioners had always got their shipping bills endorsed which amounted to license. It is further claimed that neither in the impugned Act or the Control Orders passed from time to time by the respondents or in the Public Notice issued by the respondents is there any definition, criteria, guideline or specific circumstances in the light of which factors like merit, ceiling or conditions for determining exportability of a particular commodity or item may be determined. It is further submitted that consultation with the concerned authorities is very vague as claimed by the respondents for grant of licenses under the merits procedure because tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he alternative requirement, namely, that against a specific export order (pre-ban period) advance payment had been received through an authorised dealer in foreign exchange, covering the full f.o.b. value of the consignment, prior to the date of the ban. When considering this aspect, same considerations will be kept in view when considering the other alternative of irrevocable Letter of Credit having been opened and accepted by scheduled Indian Bank. The authorities would, after considering these aspects pass appropriate orders. We may in this connection mention that the reason why we are asking the authorities to consider the application of the petitioners even though filed after 19th May, 1978 is because the petitioners maintain that prior to the said date no application was necessary to be filed and was not filed for the purpose of exporting sawn teak wood. The department, however, is maintaining in the reply that previously also the petitioner was applying to the C.C.I. E., New Delhi for license of export of sawn teak wood. The department will examine this aspect and if it found that the petitioners had applied previous to 19th May, 1978 for license for export of sawn teak wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in terms of para 316(4) of Hand Book of Import-Export Procedures, 1978-79 in view of the provision, made in Public Notice No. 37-ETC(PN)/78 dated 5-6-1978 regarding opening and acceptance of irrevocable letters of Credit and by an Indian bank in support of the firm commitment entitled into during the pre-ban period ; (II)Whether in case of items placed on merits list, it was obligatory to submit an application for allowing the export of the item placed in that list. This court's directions were clear and specific and were not as slated by Shri Grewal. Indeed, he goes on to hold that moving of an application on or before May 19, 1978 was sine qua non to establish the petitioners' right to export under a license to be issued under the merits procedure. With regard to paragraph 316(4) of the Hand Book he observes that whether Government would be inclined to treat on per a case where full payment has been received in advance with a case of the type covered by Public Notice No. 37-ETC (PN)/78 which permitted firm commitments covered by irrevocable Letter of Credit opened and accepted by Indian Banks on or before May 23, 1978, it may be mentioned that in a' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrational; (C)no reasons have been given in the return for imposition of the ban and the reasons as given are sham; (d) the ban is discriminatory and has been imposed without reference to any valid classification or nexus or reasonable or consistent criteria ; (e) the imposition of ban is hit by the principles of promissory estoppel. (4)(a) The Public Notice dated June 5, 1978 is void because it is arbitrary, discriminatory and in violation of the provisions of Article 14 of the Constitution. (B)the said Public Notice is hit by the principles of promissory estoppel keeping in view the declaration of the annual policy and the existing provisions to honour pre-ban commitments. (15) Dr. Singhvi, learned counsel for the petitioners, submitted that we may first decide the third and fourth propositions formulated by him and go to the other propositions only if we are not in agreement with his contentions on those propositions. In other words he submitted that the validity of Section 30 of the Act or the exercise of powers under Section 3 being bad in the absence of any legislative control or guidelines may not be pronounced upon. Therefore, in considering the validity of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Where the law providing for grant of a license or a permit confers a discretion upon an administrative authority regulated by rules or principles expressed or implied, and exercisable in consonance with rules of natural justice, it will be presumed to impose a reasonable restriction. Where, however, power is entrusted to an administrative agency to grant or withhold a permit or license in its uncontrolled discretion, the law ex fade infringes the fundamental right under Article 19(1). Imposition of restriction on the exercise of a fundamental right may be in the form of control or prohibition, but when the exercise of 3; fundamental right is prohibited, the burden of proving that a total ban on the exercise of the right alone may ensure the maintenance of the general public interest lies heavily upon the State. (17) In M/s. Dwarka Pd. Laxmi Narain v. State of U.P. others, [1954]1SCR803 , the Supreme Court reiterated its opinion in Chintaman Rao v. The State of Madhya Pradesh, [1950]1SCR759 and once again laid down that, the phrase 'reasonable restriction' connotes that the limitation imposed upon a' person in enjoyment of a right should not be arbitrary or of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he court to investigate whether the impugned restriction satisfies the test of reasonableness and is in the interest of what may be called the good of the community. For this necessary data must be placed before the court to enable it to satisfy itself that the restrictions had been placed not arbitrarily but or a consideration of relevant factors of justifiable material. (19) In Narendra Kumar and others v. The Union of India and others, [1960]2SCR375 observed. In applying the test of reasonableness, the Court has to consider the question in the background of the facts and circumstances under which the order was made, taking into account the nature of the evil that was sought to be remedied by such law, the ratio of the harm caused to individual, citizens by the proposed remedy, to the beneficial effect reasonably expected to result to the general public. It was also be necessary to consider in that connection whether the restraint caused by the law is more than was necessary in the interests of the general public. (20) In Harakchand Rattanchand Banthia and others etc. v. Union of India and others, [1970]1SCR479 , the Supreme Court was considering the validity of the vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the restriction is necessary in public interest on disclosed data. Secondly, whether the restriction imposed is necessary to the extent that it has been imposed. If the restriction imposed is disproportionate to the object to be achieved or the evil or mischief to be eradicated, then the restriction must be held to be invalid. In Badri Prasad v. Collector of Central Excise, AIR1971SC1170 , the Supreme Court tested the validity of Section 71 of the Gold (Control) Act, 1968 with reference to clauses (5) and (6) of Article 19 of the Constitution. It was held that there was no justification for an order of confiscation of gold under Section 70 of the Act merely because of a failure to comply with Section 16 relating to declaration as the provision of confiscation was harsh and it may be applied indiscriminately resulting in unreasonable restriction on the right of a person to acquire, hold or dispose of gold articles or gold ornaments. (24) It is now settled law that the various provisions of Chapter Iii of the Constitution show an integrated scheme and are not to bo applied to the extinction of each other. If fundamental rights are guaranteed with provision for social control, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible criteria. The affidavit filed on behalf of the respondents states, as noticed earlier, that the policy of the Government in respect of export depends on many factors such as domestic demand, industrial demand, need for conservation of the specie etc. It goes on to say that the restriction on the export of the teak wood has been placed keeping in view the fact that the export of teak wood in sawn sizes had to be banned in the interest of national economy, the aforesaid factors and that teak wood in processed form having an added value potential in realisation of foreign exchange. But no material has been placed before us to show that there was any data available with the respondents to achieve the objectives of national economy, conservation of the specie or domestic and industrial demand. Indeed, the petitioners had moved applications during the hearing on January 9, 1979 for directions to the respondents to produce the relevant record to show the basis or the material on which the satisfaction or opinion was formed to impose a total ban. No formal orders were passed on these applications because learned counsel appearing for the respondents had assured us that the relevant re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial is distinguished from the sufficiency thereof was desirable. If the record was not made available, it could legitimately reach an adverse inference. This rule applies with greater force when the writ prayed for is in the nature of certiorari or mandamus. In the present cases we were not satisfied with the State's affidavit that the factors mentioned above were all taken into consideration and, Therefore, we had given liberty to the State and indeed the State counsel had agreed initially to place material before us to show that it did exist and it was considered. As noticed .earlier, respondents failed to place the record despite repeated opportunities. We, therefore. hold that the impugned total ban was imposed without there being any relevant material justifying its imposition or its imposition to the extent that it has been imposed. (25) In coming to the above conclusion we are fortified by the material that has been placed by the petitioners before us to show that if export was not permitted there would be glut of teak, at least in Kerala. Furthermore, the State of Kerala itself has requested the Central Government to reconsider the total ban imposed and has given co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proportionate in the absence of any material placed before us. It is discriminatory for reasons already stated. The principles of law have already been dialed upon and no justification is shown to exist why a total ban should have been imposed. (27) Coming now to be impugned Public Notice of June 5, 1978, it has to be struck down, first, because we have held the Exports (Control) Twenty-seventh Amendment Order, 1978 to be bad. Secondly, it has to be struck down because the date of May 19, 1978 fixed by it has no intelligible basis. The Public Notice of May 19, 1978 clearly stated that the policy regarding teak would be announced later. The impugned Public Notice of June 5, 1978 could not rationally fix May 19, 1978 retrospectively as the date from which it was to operate. On May 19, 1978 persons exporting teak in Sawn sizes could have no idea that by that date they must make applications to the Chief Controller of Imports and Exports or that Letters of Credit or contracts entered into prior to this date would only hold good for future licenses to be granted under the merits procedure. There also seems to be no logic in fixing May 23, 1978 as the date by which Letters of Credit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be bound to, protect the rights of the aggrieved citizen. The Supreme Court thus clearly negatived the defense of executive necessity and pointed out that it did not release the Government from its obligation to honour the promise made by it, if the citizen, acting in reliance on the promise, had altered his position. This rule of law has been re-enunciated by the Supreme Court in a recent decision in Civil Appeal No. 1597 of 1972, M/s. Motilal Padampat Sugar Mills Co. Private Ltd. v. The State of U.P. and others (16), Indeed in this decision Bhagwati, J. after a review of the entire case law on the doctrine of promissory estoppel has gone on to hold that this doctrine which was previously available only 'as a shield' can in appropriate case be also used 'as a sword'. This doctrine in the country of its origin has been somewhat watered down on account of judicial controversy and is not available as a sword in England but in India the law has made further advancement in this behalf. This has been noticed by a bench decision of this court in C.W. No. 802 of 1977, M/s. Jain Shudh Vanaspati Ltd. and another v. Union of India and.. another (17). In the judgment da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mean injustice to the promise which would result if the promisor were to recode from his promise, then detriment would certainly come in as a necessary ingredient. The detriment in such a case is not some prejudice suffered by the promise by acting on the promise but the prejudice which would be caused to the promise, if the promisor were allowed to back to on the promise.......... If this is the kind of detriment contemplated, it would necessarily be present in every case of promissory estoppel because it is on account of such detriment which the promise would suffer if the promisor were to act differently from his promise, that the Court would consider it inequitable to allow the promisor to go back upon his promise. It would, Therefore, be correct to say that in order to invoke the doctrine of promissory estoppel it is enough to show that the promise has acting in reliance on the promise, altered his position and it is not necessary for him to further show that he has acted to his detriment......... (28) In the present case the export policy in respect of teak for the year 1978-79 was announced in March, 1977. The petitioners on the basis of that policy entered into firm co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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