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TMI Blog2020 (2) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... took the view that the guidelines are a step towards implementing a policy that had been in place past couple of years but, was in furtherance of a policy to promote the larger public interest. Although we are not inclined to strike down the guidelines in the form of a policy as ultra vires the provisions of the Constitution of India, yet we remind the Union of India of the observations made by the Delhi High Court in DEVKI GLOBAL CAPITAL PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [ 2019 (9) TMI 1321 - DELHI HIGH COURT] . After the decision of the Bombay High Court referred to above, the policy came to be amended with effect from 13th September 2019. We have already given a fair idea as regards the fine points of distinction between the old policy and the new policy. There has been a remarkable shift in the new policy, however, what is hurting the writ-applicant is the policy of first-come-first-serve . This, according to the writ-applicant, is violative of Article 14 of the Constitution of India. Needless to mention at this stage that it is the prerogative of the respondents to frame a policy. However, such policy must be transparent, fair and reasonable. We suggest that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dance with Public Notice No.PS-11/2019 dated 13th September 2019. (d) Any other relief as may be deemed fit in the interest of justice. (e) To provide for the cost of this petition." The writ-applicant seeks to challenge the guidelines dated 13th September 2019 for the registration of the sales contract for the import of the poppy seeds from Turkey to India issued vide Public Notice No.PS-11-2019. The challenge is substantially on the following three grounds : 1. The amended policy dated 25.6.2019 which is now substituted by the policy dated 13.9.2019 is manifestly unjust and handmade for the purpose of favouring few big players. 2. The practice 'first come first serve basis' adopted in distributing the State largesse is violative of Article 14 of the Constitution of India. 3. The conduct of the respondents itself suggest that they have devised the impugned policy with a view to favour few players and also to ensure ouster genuine first-time importers. The writ-applicant has made available in writing for the convenience of this Court the relevant dates and events, which are as under : Date Event 2016 Condition No.(c) came to be introduced in Chapter No.12 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Department of Revenue on the basis of the recommendation by the committee comprising of the Respondent No.2, one representative of the Directorate General of Foreign Trade and one representative of the Department of Revenue. The country cap will be based upon the stock and production of the poppy seeds as communicated by the Turkish Grain Board (TMO) or Turkish Embassy in India. The other terms and conditions are as under: → Furthermore, under the revised public notice, the exporting company in Turkey shall get the sales contract registered with the TMO. → Once such contract is registered with the TMO, the Indian importer may approach the Respondent No. 2 for the registration of sales contract by filing the application in the manner specified by the Respondent No.2. However, if the importer has not got registered his sales contract for the import of the poppy seeds in the last three financial years, the verification of the genuineness of existence of the importer shall be got done through physical verification. In case where the sales contract is found to be registered by the TMO, the Respondent No.2 shall grant provisional registration to the importer. → ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not the methodology under the said guidelines. 28.08.2019 That in the said petition, the Respondent No.2 herein referred to a communication of the TMO and confirmed that the Turkish Authority will remove the old contracts in the system and re-upload the sale contract for year 2019-20. However, the advocate for petitioner in that matter contended that the clarification was insufficient in as much as it does not specifically state that only those contracts which were executed on or after the declaration of the country cap will be uploaded by the Turkish Authorities. 06.09.2019 Thereafter, the TMO addressed a letter to the Respondent No.2 stating that the crop year 2018-19 have lapsed along with the expiry of the shipment period i.e. 31.07.2019 due to the lack of import permits. Under the circumstances, upon declaration of the new Public Notice by the CBN, all the Turkish exporters would be required to make new application for fresh registration of their Export Contract with the TMO for shipment period 2019-20, and the valid application shall be uploaded by them with the CBN for the issuance of the import permits. 11.09.2019 In view of the above communication, the Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 90 MTS (18000 MTS will be exhausted 200 applicants) Now a single importer can import maximum of 450 MTS (18000 MTS will be exhausted 40 applicants) Number of times importer can apply One time in a crop year Six times in a crop year Method of Allotment Draw of Lots First Come First Serve Wait List Old policy provided for preparation of wait-list based on draw of lots New policy does not prescribe any method for wait-list. In the event of cancellation of contract of importer, the Respondent can award contract to anyone else according to their whims and fancies First Time Importers No physical verification of documents They are required to undergo physical verification of documents. According to Mr.Dave, under the new regime, any person who has some source of information will negotiate with the exporter in advance and rush to register a contract with the TMO. He submitted that the hike in the quota from 90 MTS to 450 MTS coupled with the allotment of quota based on the 'first-come-first-serve' basis is violative of Article 14 of the Constitution of India. Mr.Dave seeks to rely upon the decision of the Supreme Court in the case of Centre for Public Intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961. It also encourages Governments of member countries to put in place regulation to obtain country of origin certificates of poppy seeds for the purposes of importation into their countries. 2.3 The above resolution of Economic and Social Counsel of United Nation tries to ensure that poppy seeds generated in illicit cultivation of opium poppy by drug syndicates does not get market, otherwise such inadvertent procurement of poppy seeds (produced out of illicit crop) will indirectly promotes such illegal cultivation. In other words, the attempt was that sale of poppy seeds (produced as a by-product of illicit cultivation of opium poppy) should not become a source of finance for drug syndicates engaged in illegal cultivation of opium poppy. 2.4 The above resolution of 1999 of Economic and Social Counsel was reaffirmed by Commission of Narcotic Drugs in the year 2008 in the form of resolution 51/15. 2.5 India being signatory to United Nation Conventions on Narcotic drugs and being a member of United Nation followed the resolution of 1999 issued by Economic and Social Counsel. This position is also recognized in NDPS Policy of Government of India in Para 17 which is reproduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenged before Hon'ble Karnataka High Court who vide their order dated 09.02.2018 in WP No. 58197-58198/2016 repelled such challenge and inter-alia upheld that the said Notification is in accordance with law. 2.11 The above submissions clarifies the legal basis of regulating import of poppy seeds into India though admittedly poppy seeds are not covered under NDPS Act 1985, being a non-narcotic item. 3.1 The only grievance raised by the petitioner is that when exporter of petitioner approached Turkish Grain Board for registration of sales contract, it was intimated to him (exporter of Turkey) that country cap fixed for import of poppy seeds is already exhausted. This grievance is primarily against Competent Authorities of Turkish Grain Board and this grievance against TMO is within the jurisdiction of Competent Courts of Turkey. 3.2 The guidelines framed requires opening of irrevocable letter of credit in favour of Turkish exporter or to make advance payment of minimum 20% of the total contract value once provisional registration has been granted. For ease of appreciation the process envisages in guidelines dated 25.6.2019 by department of revenue can be depicted as under : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no real difficulty in making such advance payment as alleged by Petitioner. In case the Petitioner is facing any such difficulty then the matter falls between the banking and the importer. 3.4 Petitioner is challenging the guidelines alleging that it creates some monopoly in favor of few players and small time traders, importers are discriminated against. The fact that 220 contracts so far registered by TMO are in respect of 143 number of parties itself negates the claim of the petitioner. So far till 30.09.2019 Respondent No.2 has approved registration of 143 numbers of sales contracts which are in respect of 87 numbers of importers out of which 34 are new (verified) importers. So the fact on record itself negates the claim of the petitioner. 3.5 It is also submitted that similar grievances were also raised before Hon'ble Bombay High Court in WP No.7469/2019 filed by M/s.Chailbihari Trading Pvt. Ltd. Mumbai. However, the Hon'ble High Court has repelled this challenge vide its order dated 28th August 2019. That another Writ Petition No.7676 of 2019 filed by one Devki Global Pvt. Ltd. before the Hon'ble Delhi High Court has also been disposed of by the Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom it are derived opium and poppy seeds. The plant can be grown domestically in a garden, but is said to be historically native to the eastern Mediterranean. It is cultivated on a large-scale for three primary purposes. The first is to produce poppy seed for human consumption, chiefly in bread and pastry. In kitchens in India, we know it as khas-khas. The second is to produce opium for pharmaceutical use. The third is to produce other alkaloids, mainly thebaine and oripavine. These are processed by the pharmaceutical industry into drugs such as hydrocodone and oxycodone. Opium ("poppy tears"; Lachryma papaveris) is the dried latex obtained from Papaver somniferum. Approximately 12% of the opium latex is made up of the analgesic alkaloid morphine. This is processed chemically to produce heroin and other synthetic opioids. Opium was prohibited in many countries during the early 20th century, leading to the modern pattern of opium production as a precursor for illegal recreational drugs or tightly regulated legal prescription drugs. The sale of poppy seeds from Papaver somniferum is banned in several jurisdictions for this morphine content and heroin potential: Singapore, Taiwan, Chi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment from Turkey only until 31st July 2019. Then there are detailed provisions for procedure, validity, surrender and penalty. 7. What the Petitioners say is that this process of registration will create a monopoly in the hands of big players, and that the old system of drawing of lots is preferable. Then it is argued that once a Turkish exporter is registered with the Turkish Board, or TMO, then requirement of the Indian importer having to register is arbitrary and unreasonable. It is a duplication of work. It introduces unnecessary red tape. Earlier, the restriction was a maximum of five containers. By raising this to 25, the 'rich and powerful importers take all the cake', is the allegation. Finally, it is argued that the time- frames are unrealistic and are a form of invidious discrimination. These are the principal submissions and grounds to assail the notification. 8. In our view, they are without merit. There is no fundamental right to be an importer. There is no fundamental right to import poppy seeds. There is no fundamental right to import anything without restrictions, or only on terms beneficial to a particular person. In mounting such a challenge, the burden on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Similarly, Chapter IV of the Rules deals with manufacture, sale and export of opium. Chapter VI addresses import, export and transhipment of narcotic drugs and psychotropic substances. Now narcotic drug is defined in Section 2(xiv) to mean coca leaf, cannabis (hemp), opium poppy straw and includes all manufactured drugs. Opium poppy, under Section 2(xvii) means the plant of the species Papaver Somniferum L and the plant of any other species of Papaver from which opium or any phenanthrene alkaloid can be extracted or which the Central Government declares by notification to be an opium poppy. Opium straw is defined in Section 2(xviii) to mean all parts except the seeds of the opium poppy after harvesting, whether in their original form or cut, crushed or powered and whether or not any juices has been extracted therefrom. These definitions are immediately relevant to Rules 53 to 56 under Chapter VI of the NDPS Rules. These tell us that while the import of opium and concentrate of poppy straw is forbidden save by the Government Opium Factory (along with morphine, codeine, thebaine and their salts), every import of a narcotic drug or a psychotropic substance requires an import certif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubstances notes that while Narcotic Drugs and Psychotropic Substances do have many medical and scientific uses, yet they can be, and are, also abused and trafficked. India's policy to preventing drug abuse is part of the Constitutional mandate to the State to promote health and nutrition. This country is a signatory to at least three international conventions on drug-related matters, viz., Single Convention on Narcotic Drugs, 1961, Convention on Psychotropic Substances, 1971 and the UN Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, 1988. The Division Bench noted from an affidavit fled on behalf of the CBN, Gwalior that the Policy governing poppy seeds imports prescribes three conditions for such imports. The first of these is as to point of origin: the import must originate only from the countries stipulated in the Import Policy as amended. The second condition is that the importer must produce a certificate from the competent authority of the exporting country that the opium poppy has been grown legally in that country. The third condition is that all import contracts have to be compulsorily registered with the Narcotics Commissioner, Central Bur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a power to regulate and a power to impose quantitative restrictions, and in the absence of challenge to the exercise of such power, the guidelines in the form of policy cannot be declared as ultra vires the provisions of the Constitution of India. The Bombay High took the view that the guidelines are a step towards implementing a policy that had been in place past couple of years but, was in furtherance of a policy to promote the larger public interest. After the decision of the Bombay High Court referred to above, the policy came to be amended with effect from 13th September 2019. We have already given a fair idea as regards the fine points of distinction between the old policy and the new policy. There has been a remarkable shift in the new policy, however, what is hurting the writ-applicant is the policy of 'first-come-first-serve'. This, according to the writ-applicant, is violative of Article 14 of the Constitution of India. Mr.Dave seeks to fortify this submission by placing reliance on the decision of the Supreme Court in the case of Centre for Public Interest Litigation (supra). The relevant observations are as under : "There is a fundamental flaw in the first-co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, by which it rejected the petitioner's application for renewal of the mining lease of sand (minor mineral). The lease period came to an end in the year 2003, on which the applications were invited. The petitioner claimed for renewal under Rule 6A of the U.P.Minor Minerals (Concession) Rules, 1963, and alleged that since he had not breached any of the conditions or provisions of the lease, he was entitled for renewal of the lease in accordance with law. It was submitted on behalf of the petitioner that the application was forwarded by the District Magistrate with his recommendation to the State Government. The State Government had earlier approved the renewal, but with the change of the Government of the State, the opinion in renewal of the mining lease also was changed. The State Government took the stance that the petitioner was granted lease in the year 2001 in pursuance to the preferential rights given to him as he belonged to 'Mallah' caste, under Rule 9A, and which preferential rights, to the complete exclusion of persons belonging to other castes, had been declared as ultra vires by the Full Bench of the Allahabad High Court. As Rule 9A came to be deleted from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligible in an open competition and that there should be open invitation of offer by competitive bidding for the amount to be paid to the State Government for prospecting the area. The Supreme Court observed that "every action/decision of the State and/or its agencies/instrumentalities to give largesse or confer benefit must be founded on a sound, transparent, discernible and well-defined policy, which shall be made known to the public by publication in the Official Gazette and other recognised modes of publicity and such policy must be implemented/executed by adopting a non-discriminatory and non-arbitrary method irrespective of the class or category of persons proposed to be benefited by the policy. The distribution of largesse like allotment of land, grant of quota, permit licence, etc. by the State and its agencies/instrumentalities should always be done in a fair and equitable manner." In Pawan Bhatia (supra), the petitioner claimed a writ of mandamus directing an inquiry into the functioning of the Department of Town and Country Planning, Haryana, whereby the licences and/or the change of land use had been granted in an arbitrary manner and for illegal consideration. A D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... competition. To put it differently, the State and its agencies/instrumentalities must always adopt a rational method for disposal of public property and no attempt should be made to scuttle the claim of worthy applicants. When it comes to alienation of scarce natural resources like spectrum etc., it is the burden of the State to ensure that a non-discriminatory method is adopted for distribution and alienation, which would necessarily result in protection of national/public interest. 96. In our view, a duly publicised auction conducted fairly and impartially is perhaps the best method for discharging this burden and the methods like first-come-first-served when used for alienation of natural resources/public property are likely to be misused by unscrupulous people who are only interested in garnering maximum financial benefit and have no respect for the constitutional ethos and values. In other words, while transferring or alienating the natural resources, the State is duty bound to adopt the method of auction by giving wide publicity so that all eligible persons can participate in the process." 28. The issue of grant of state privileges by the process of auction alone came up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vy capital in the discovery of natural resources. A concern would risk undertaking such exploration and incur heavy costs only if it was assured utilisation of the resource discovered: a prudent business venture would not like to incur the high costs involved in exploration activities and then compete for that resource in an open auction. The logic is similar to that applied in patents. Firms are given incentives to invest in research and development with the promise of exclusive access to the market for the sale of that invention. Such an approach is economically and legally sound and sometimes necessary to spur research and development. Similarly, bundling exploration and exploitation contracts may be necessary to spur growth in a specific industry. xx x xxx xxx 146. To summarise in the context of the present Reference, it needs to be emphasised that this Court cannot conduct a comparative study of the various methods of distribution of natural resources and suggest the most efficacious mode, if there is one universal efficacious method in the first place. It respects the mandate and wisdom of the executive for such matters. The methodology pertaining to disposal of natural r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a licence, a land owner continues to be owner of the land. There is no compulsion for him to change the land use or to set up a colony, but once it is proposed to set up a colony, then the statutory conditions, pre-requisite for grant of a licence, are to be satisfied. 30. We further find that the principle of first come first served basis has led to an unholy race. The petitioners submitted their application dated 10.9.2010 which was received on 13.09.2010 soon after the finalization of the lay out plan on 25.08.2010. Some of the other aspirants submitted applications for licences on the day the Draft Development Plan was published on 4.10.2010. We find that the public notice does not give any starting time for submission of an application nor the last date. It is an open ended scheme. Any applicant can apply at any point of time. Such application would be considered if the density is available. It does not take into consideration as to whether the external developments have been completed or shall be completed by the time the constructed apartments in the Group Housing shall be offered for possession. It does not reflect the preparedness of the State for the grant of liccence. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the importable quantity amongst all the applicants. In my view this is totally based on hypothesis and presumptions and as and when the situation would arise, it would be for the respondents to take a decision thereon. It is also noted that Clause-3 of the MOU between India and Turkey on Trade of Poppy Seeds published on 23.05.2018 in paragraph-3 thereof, in fact, makes the above eventuality almost an impossibility." Needless to mention at this stage that it is the prerogative of the respondents to frame a policy. However, such policy must be transparent, fair and reasonable. We suggest that the Union should consider framing a policy which provides for a fair chance to every applicant in procuring the importable quantity irrespective of the date of their application. Such process must be transparent and fair. The process can be made more transparent if the list of successful candidates is uploaded on the website of the respondent no.2 as was being done before the policy dated 25th June 2019. In our opinion, adopting a methodology of first-come-first-serve has inherent flaws and anybody having access to the power corridor at some level is likely to secure unfair advantage at the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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