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TMI Blog2020 (8) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowed. Under sub-rule (4) to the above Rule, the Authorised Officer has power to initiate suo moto action if he is satisfied with the information received from any source that sufficient evidence exits regarding increased imports; serious injury or threat of serious injury to the domestic industry; and causal link between increased imports and serious injury or threat of serious injury to the domestic industry. By another order dated 2nd July, 2020 the Union of India was directed to file an affidavit clearly stating whether the impugned notifications are in the nature of quantitative restrictions and if so whether the procedure under Section 9A of the FTDR Act read with Safeguard Measures (Quantitative Restrictions) Rules, 2012 had been followed and to produce the relevant record thereof. Challenge to the role and authority of the DGFT to issue the Notifications and Trade Notice and interpretation of the words total quantity - HELD THAT:- The effect of the Notifications, as noticed and beyond doubt, is to bring the specified commodities from free to the restricted category and therefore the imports in question would require a prior authorisation for import. The requirement of lic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral ideas which are intertwined and is of specific concern in cases of constitutions allowing direct application. Here invocability is a generic term which means to embrace a small inventory of means of judicial control over the use in a particular law suit of the direct applicability of the treaty. As in case of act of transformation , even in direct application cases, some jurisdictions accept the principle of partial direct application and, therefore, the treaty is directly applicable for some purposes and not others. While interpreting the domestic law enshrining Human Rights (and sometimes environment issues) this Court on some occasions has relied on international conventions and treaties where the terms of any legislation are absent, not clear or are reasonably capable of more than one meaning. In such cases, where there are statutes, rules etc. the meaning which in consonance with the treaties can be relied upon, for there is a prima facie presumption that the Parliament did not intend to act in breach of international law, including State treaty obligations. Part-III of the Indian Constitution a-priori incorporates and recognises the Human Rights, consequently recourse to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imported in any form necessary for enforcement of governmental measures specified therein. Similarly, Article XII of GATT-1994 states that notwithstanding the provisions of paragraph (1) of Article XI, any contracting party, in order to safeguard its external financial position and its balance of payments, may restrict the quantity or value of merchandise permitted to be imported, subject to the provisions of paragraphs of that Article. Notwithstanding Section 9A, the Central Government continues and has authority to impose quantitative restrictions by an order under Section 3(2) of the FTDR Act. Principle of Lex specialis derogat legi generali, therefore, is not applicable to the case in hand - Section 9A has to be interpreted as an escape provision when the Central Government i.e. the Union of India may escape the rigours of paragraph (1) of Article XIX of GATT-1994. Section 9A is not a provision which incorporates or transposes paragraph (1) of Article XI into the domestic law either expressly or by necessary implication. The impugned notifications would be valid as they have been issued in accordance with the power conferred in the Central Government in terms of sub-section (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls for the parties, vide order dated 29th June 2020 had deemed it appropriate to hear and decide challenge to the validity of the notifications dated 29th March 2019 bearing S.O. Numbers. 1478-E,1479-E, 1480-E and 1481-E pending in several Writ Petitions filed before different High Courts. We have also examined and decided the connected challenge to the Trade Notice dated 16th April 2019 issued by the Directorate General of Foreign Trade on the ground of excessive delegation as not being in accord with sub-section (2) to Section 3 read with the bar under sub-section (3) to Section 6 of the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as 'FTDR Act'). 3. Accordingly, we had heard arguments and by this common judgment would be disposing of the respective Writ Petitions, subject matter of these Transfer Petitions. This decision would also apply to the Writ Petitions filed by the intervening applicants. 4. For the sake of convenience, we would be referring the Central Government and the authorities collectively as 'the Union of India' and the Writ Petitioners synchronously as 'importers'. For clarity and wherever necessary we have referred to the Direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st April, 2019 to 31st March, 2020, total quantity of 1.5 Lakh MT of Peas shall be allowed against licence as per the procedure to be notified by Directorate General of Foreign Trade 0713 90 10 Split 0713 90 90 Other 2. This notification shall come into force with effect from 1st April, 2019. xx xx xx S.O. 1480(E).- In exercise of powers conferred by section 3 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1922), read with paragraphs 1.02 and 2.01 of the Foreign Trade Policy, 2015-2020, as amended from time to time, the Central government hereby amends the Import Policy Conditions of items of Chapter 7 of the Indian Trade Classification (Harmonized System), 2017, Schedule-I (Import Policy), as under: Exim Code Item Description Existing Policy Condition Revised Policy Condition 0713 31 90 Beans of the SPP Vigna Radiata (L.) Wilezek Restricted Import of Urad shall be subject to an annual (fiscal year) quota of 1.5 lakh MT as per procedure to be notified by Directorate General of Foreign Trade: Provided that this restriction shall not apply to Government's import commitments under any Bilateral or Regional Agreement or Memorandum of Understa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 2018. 8. Considering the hardships faced by the traders who had made advance payments, the DGFT vide Trade Notice No. 19 dated 5th July 2018 had allowed the import of Peas proportionate to the advance payments made before 25th April 2018. By another Trade Notice dated 6th July 2018, Peas, other than Yellow Peas, imported during the intervening period between 25th April 2018 to 15th May 2018 and awaiting clearance at customs or consignment of Peas with Bill of Lading prior to 16th May 2018 were permitted freely. By the third Trade Notice dated 17th August 2018, import of maximum 125 MT of Peas per contract, irrespective of the advance payment, made before 25th April 2018, was allowed. 9. The Union of India had even earlier issued notifications dated 5th August 2017 and 21st August 2017 revising import of beans of Urad/Moong and Pigeon Peas/Toor dal from 'free' to 'restricted' with stipulations as to annual (fiscal year) quota and requirement of a prior licence from the DGFT. By notifications dated 24th April 2018 import of beans of Urad/Moong and Pigeon Peas/Toor dal was to remain restricted requiring a prior licence with stipulation as to annual quota for the fiscal year 2018-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Bombay High Court dismissed akin Writ Petitions filed by M/s. Taj Agro Commodities Pvt. Ltd. and others on 3rd July 2018. Similarly, Writ Petitions filed by M/s. Premium Pulses Products and others were dismissed by the Gujarat High Court on 19th December 2018. The Madhya Pradesh High Court had also dismissed similar petitions including the petition filed by M/s. Siddhi Vinayak and another, vide judgment dated 25th October 2018. Judgment of the Gujarat High Court was challenged before this Court in Special Leave Petition (Civil) No. 1922 of 2019 by M/s. Kusum Agency and the same was dismissed vide order dated 28th January 2019. Subject matter of these Writ Petitions were the Notifications dated 5th August 2017, 21st August 2017 and 25th April 2018 and the corresponding trade notices issued by the DGFT. 13. Notwithstanding the aforesaid dismissals, as many as 90 Writ Petitions were filed before the Rajasthan High Court at Jaipur challenging the Notifications dated 29th March 2019 and the Trade Notice dated 16th April 2019. Similarly, Writ Petitions were filed before the High Courts of Delhi, Punjab and Haryana, Andhra Pradesh, Bombay and Calcutta. In several cases interim order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the challenge to the role and authority of the DGFT to issue the Notifications and Trade Notice and interpretation of the words "total quantity". 15. At the outset, we must record that the importers, and in our opinion rightly, have not raised the contention that the DGFT could not have notified the impugned notifications. The notifications themselves record that they were published by the Ministry of Commerce and Industry, Department of Commerce, Directorate General of Foreign Trade. The first paragraph of the notification states that they had been issued by the Central Government in exercise of powers conferred under Article 77 of the Constitution. Clearly, the notifications were issued by the Central Government, and not the DGFT that had performed the ministerial act of publication. The decision to amend and issue the notification was of the Central Government. Neither Section 3(2) nor Section 6(3) of the FTDR Act was violated. This Court in Delhi International Airport Limited v. International Lease Finance Corporation and others (2015) 8 SCC 446, had referred to Articles 77 and 166 of the Constitution and held that the Constitution stipulates that whenever executive action is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the Central Government may by a notification in the Official Gazette prohibit, absolutely or subject to conditions as specified, import or export of any good. The listed purposes are wide and range from conservation of foreign exchange and safeguarding of balance of payments, avoiding shortage of goods, prevention of surplus of any agricultural or fisheries product, prevention of serious injury to domestic production, establishment of any industry and lastly compendiously includes "any other purpose conducive to the interest of the general public". Under clause (d) to Section 11 of the Customs Act goods imported or exported (or attempted to be imported or exported) contrary to any prohibition are liable to confiscation. 17. We would also without any hesitation reject the contention raised by some of the importers that the impugned notification is illegal because of vagueness or allows restricted quantity of 1/1.5 lakh MT of Peas (Pisum Sativum) including Yellow Peas, Green Peas, Dun Peas and Kaspa Peas as against a licence, meaning thereby each licensee is allowed to import the maximum quantity specified in the notification. In other words, the total quantity specified in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority to specify Procedures DGFT may specify procedure to be followed by an exporter or importer or by any licensing/Regional Authority (RA) or by any other authority for purposes of implementing provisions of FT (D&R) Act, the Rules and the Orders made there under and FTP. Such procedure, or amendments, if any, shall be published by means of a Public Notice. xx xx xx 2.08 Export/Import of Restricted goods/Services Any goods/service, the export or import of which is 'Restricted' may be exported or imported only in accordance with an Authorisation/Permission or in accordance with the procedure prescribed in a Notification/Public Notice issued in this regard. xx xx xx 2.10 Actual User Condition Goods which are importable freely without any 'Restriction' may be imported by any person. However, if such imports require an Authorisation, actual user alone may import such good(s) unless actual user condition is specifically dispensed with by DGFT." Paragraph 2.08 states that any goods or services, import or export of which is restricted, can be exported or imported only in accordance with the authorisation/permission or in accordance with the procedure prescribed in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies by default when imports require an authorisation. However, the DGFT can specifically dispense with or dilute the 'actual user' condition. C. Section 9A of the FTDR Act and it's interpretation. (i) General Agreement on Tariff and Trade - 1947 and 1994. 2. Conference at Bretton Woods, New Hampshire in 1944 lead to establishment of the 'International Monetary Fund' and the 'World Bank', but the attempt to establish 'International Trade Organisation' to develop and coordinate international trade faltered and was finally given up in 1950. However, multilateral trade negotiations had continued with the objective to prepare a multilateral treaty containing general principles of international trade and a schedule of tariff reductions. By the end of 1947, the work on the General Agreement on Tariff and Trade ('GATT'), 1947 and tariff reduction was finalised and agreed upon. Interim commission of the 'International Trade Organisation' became the GATT Secretariat based in Geneva, Switzerland. On or about 8th July 1947, Government of India became a signatory and ratified GATT-1947. However, GATT-1947 is considered to be a failure or at best had a limited impact. Most jurists and economi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les on valuation for customs purposes. Article XI, which we shall subsequently examine, prohibits quotas, import or export licences and other non-tariff measures, with some exceptions. Annexure 1A includes schedule of concessions from each major trading country and a general interpretative note that provides that in case of a conflict between provisions of GATT1994 and another Annexure A-1 agreement, the provisions of latter would control. Annexure 1B consists of the General Agreement on Trade in Services. Annexure 1C consists of the Agreement on Trade Related Aspects of Intellectual Property Rights. Annexure 2 consists of the Understanding on Rules and Procedures Governing Settlement of Disputes, referred to as the Dispute Settlement Understanding, providing mechanism for resolution of trade disputes among WTO members. Annexure 3 establishes the trade policy review mechanism, with procedure for periodic review of compliance with the WTO agreement by each member. Annexure 4 consists of plurilateral trade agreements binding only on the parties that have accepted them. 4. GATT-1994 also has provisions that allow and permit exceptions. There are exceptions to quotas for balance-of-pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years. Next there are four councils, including the General Council which has an overall supervising authority and to carry out many functions of the Ministerial Conference. In addition, we have Council for Trade Inputs, Council for Trade and Services, and Council for Trade Related Aspects of Intellectual Property Rights. The General Council, as per the WTO Charter, discharges the responsibility of the Dispute Settlement Body (DSB). Thus, the WTO Charter adopts a legalistic and a rule-oriented approach for resolving issues relating to violation of the GATT agreements. The DSB establishes Panel(s) and on adoption of Panel (and the Appellate Body) reports, provides for implementation of the recommendation and rulings, and can authorise action for failure to comply with the recommendation(s) and ruling. The DSB, though a part of the General Council, has its own Chairman and follows separate procedures. The Panels are normally composed of three persons, and in exceptional cases five, who are well qualified government or non-government individuals selected from a roaster of persons suggested by WTO members. The panel members serve in their individual capacities and not as representatives ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking are not treated as third party acts for which the State is not responsible. The national law, executive mandate and action and the decisions of the domestic courts are facts which express the will and constitutes activities of the State. In international law, municipal laws cannot prevail upon the treaties as internal actions must comply with the international obligation. They may constitute breach of the treaty. 8. Thus, breach of a stipulation in international law cannot be justified by the State by referring to its domestic legal position. This rule of international law is unexceptionable and prosaic, as the contra view would permit the international obligations to be evaded by the simple method of domestic legislation, executive action or judicial decision. Contracting States are under an obligation to act in conformity with the rules of international law and bear responsibility for breaches whether committed by the legislature, executive or even judiciary. In a way, therefore, international treaties are constraint on sovereign activity, albeit voluntarily agreed. 9. For the purpose of GATT-1994, municipal laws are evidences of fact, including evidence of conduct in vio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of the treaty norms. As explained below, there is distinction between direct application and 'invocability'. 'Act of transformation' principle means and implies that an international treaty is not directly applicable in the domestic law system and requires provision in the domestic rules before it is applied. 'Transformation' is a word of wide amplitude and does not refer to mere implementation as it includes the right of the country to adopt, amend or modify the treaty language into domestic jurisprudence. The 'act of transformation' is different from 'direct application' as in the former the treaty is not received and treated as part of domestic jurisprudence until it is published and made part of the domestic jurisdiction in the same manner as other law. 12. The Constitution of Netherlands is generally regarded as monistic since it expressly provides that certain treaties are directly applied and the treaties are superior to all law including constitutional laws. The 1958 Constitution of France also calls for the direct application and a higher status for treaties than later legislations. Similar provisions are to be found in different ways in the Constitutions of Belgium an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effects. United Kingdom and other parliamentary democracies, like Canada and Australian systems, are generally considered as prime example of a dualist system. In United Kingdom, the Crown is the constitutional authority to enter into treaties and this prerogative power cannot be infringed by the courts. Further, treaties cannot operate by themselves and require passing off an enabling statute. Lord Oliver in the House of Lords decision in Maclaine Watson & Co. Ltd. v. Department of Trade and Industry & Anr (1989) 3 All ER 523. had noted: "...as a matter of the constitutional law of the United Kingdom, the royal prerogative, whilst it embraces the making of treaties, does not extend to altering the law or conferring rights on individuals or depriving individuals of rights which they enjoy in domestic law without the intervention of Parliament. Treaties, as it is sometimes expressed, are not self-executing. Quite simply, a treaty is not part of English law unless and until it has been incorporated into the law by legislation." Except to the extent that a treaty becomes incorporated into the laws by a statute, the courts in United Kingdom have no power to enforce treaty rights an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , invocability can embrace several ideas which are intertwined and is of specific concern in cases of constitutions allowing direct application. Here 'invocability' is a generic term which means to embrace a small inventory of means of judicial control over the use in a particular law suit of the direct applicability of the treaty. As in case of 'act of transformation', even in direct application cases, some jurisdictions accept the principle of partial direct application and, therefore, the treaty is directly applicable for some purposes and not others. Professor John H. Jackson, a leading jurist on this subject, whose treatise and essays have helped us understand the GATT and the complexities, in his essay 'Status of Treaties in Domestic Legal System; A Policy Analysis' referring to 'invocability' even in cases of direct application in domestic law, has observed as under: "Even when the rule of direct application covers most, or theoretically all, treaties or certain broad categories of treaties, courts will find ways to avoid applying the treaty norm in particular cases, perhaps by relying on one or another concept that can be lumped under the rubric of invocability (e.g. stan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ib Ram Jawaya Kapur and Others v. State of Pubjab AIR 1955 SC 549 and Ram Kishore Sen and Others v. Union of India and Others and AIR 1966 SC 644 noticed the distinction between (i) formation of the treaty; and (ii) performance of the treaty obligation. The first is an executive act and the second a legal act if domestic law is required. Unless the Parliament assents to the treaty and accords its approval to the first executive act, the performance has no force of law though the treaties created by the executive action bind the contracting States and, therefore, means must be found for their implementation within law. Consequently, whenever a peace treaty involves municipal execution, statutes have to be passed. While accepting the contention that precedents of this Court are clear that no cession of Indian territory can take place without constitutional amendment, the Constitution Bench held that the settlement of a boundary dispute cannot be held to be cession of territory. Accordingly, the decision to implement the award by exchange of letters treating the award as an operating treaty by demarcating the correct boundary line was within the executive power of the government, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he power to legislate in respect of treaties lies with the Parliament under Entries 10 and 14 of List I of the Seventh Schedule. But making of law under that authority is necessary when the treaty or agreement operates to restrict the rights of citizens or others or modifies the laws of the State. If the rights of the citizens or others which are justiciable are not affected, no legislative measure is needed to give effect to the agreement or treaty." 18. It was also clarified that Article 253 deals with the legislative power of the Parliament and thereby confers power on the Parliament which it may not otherwise possess. This provision does not seek to circumscribe the extent of power conferred under Article 73. In other words, in consequence of the exercise of executive power, rights of the citizens or others are restricted or infringed, or laws are modified, the exercise of power must be supported by legislation; where there is no such restriction, infringement of the right or modification of the laws, the executive is competent to exercise the power. The dictum in Maganbhai Ishwarbhai Patel (supra) can be summarised Karan Dileep Nevatia v. Union of India, (2010) 1 Bom CR 588 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered to be part of the national law, unless they are in conflict with Act of Parliament. Comity of Nations or no, Municipal Law must prevail in case of conflict. National Courts cannot say yes if Parliament has said no to a principle of international law. National Courts will endorse international law but not if it conflicts with national law. National courts being organs of the National State and not organs of international law must perforce apply national law if international law conflicts with it. But the Courts are under an obligation within legitimate limits, to so interpret the Municipal Statute as to avoid conformation with the comity of Nations or the wellestablished principles of International law. But if conflict is inevitable, the latter must yield." 20. In Jolly George Varghese and Another v. The Bank of Cochin this Court 1980) 2 SCC 360, while dealing with the application of an international covenant pertaining to prohibition of civil imprisonment on nondischarge of decree debt, observed that even though India be a signatory of a covenant and Article 51(c) of the Constitution obligates the State to "foster respect for international law and treaty obligations in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O agreement. The shift from the concept of price of goods, as was classically understood, is clearly discernible in the new principles. Transaction value may be entirely different from the classic concept of price of goods. Full meaning has to be given to the rules and the transaction value may include many items which may not classically have been understood to be part of the sale price." 23. Similarly, in State of Punjab and Another v. Devans Modern Breweries Ltd. and Another (2004) 11 SCC 26, this Court while examining the rationale behind imposition of countervailing duty had referred to the WTO agreement to observe and hold as under: "305. The economic rationale is very doubtful, as the effect of a countervailing duty is to make the product more expensive in the importing country. However, there has been some level of an explanation provided. Every time a tariff barrier is negotiated and agreed on, WTO members have reasonable expectations that they can profit from the conditions of competition established in the market of the member, binding its tariff and gain market share. Moreover, members have "paid" for the binding by promising to open up their market, that is, by bind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able of bearing that meaning. The Eschersheim Anr v. The Jade Erkowit And Anr. (1976) 1 All ER 920 (HL). It was emphasised that the municipal law should not only carry out the treaty obligation but should be construed in a way not to be inconsistent with the terms of the treaty. This principle of interpretation is embodied in the principle that the statute needs to be construed uniformly by all member nations who are signatories and should, therefore, not be controlled by domestic precedents. The interpretation should be based on broad principles of general application in a purposive and not in a narrow literal manner. At times the answer to ambiguity can be found in the object and the structure of the convention, the language used and the subject matter with which it deals and what was sought to be achieved is a uniform international code. The legal position was summarised as under: "23. A conspectus of the aforesaid authorities would lead to the following conclusions: (1) Article 51(c) of the Constitution of India is a Directive Principle of State Policy which states that the State shall endeavour to foster respect for international law and treaty obligations. As a result, ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) as a means of interpretation; (ii) justification or fortification of a stance taken; (iii) to fulfil spirit of international obligation which India has entered into, when they are not in conflict with the existing domestic law; (iv) to reflect international changes and reflect the wider civilisation; (v) to provide a relief contained in a covenant, but not in a national law; and (vi) to fill gaps in law. Thereafter, reference was made on case-laws, beginning from His Holiness Kesavananda Bharati Sripadagalvaru v. State of Kerala and Another (1973) 4 SCC 225, wherein it was held that international conventions or the norms of international law can be used to interpret domestic law provided they are not inconsistent with domestic legislation i.e. by reason thereof, the tenor of domestic law should not be breached, and further in case of inconsistency the domestic legislation shall prevail. It was also observed that if there is no statutory law in India in the field, interpretation, if any, must give a regard to the ever-changing global scenario. This principle was accordingly applied in Pratap Singh v. State of Jharkhand and Anr (2005) 3 SCC 55 to interpret Juvenile Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogies and nuances to bailiwick Human Right jurisprudence. However, in the present case we are examining an economic and fiscal legislation or rather economic policy decision taken by the Union of India. These decisions on human rights therefore would not be of much assistance. (iv) Text of Articles XI and XIX of GATT-1994 and the statutory scheme vide Sections 3 and 9A of FTDR Act and the Safeguard Measures (Quantitative Restriction) Rules, 2012. 28. Having regard to the general law on the question of treaties and its application in domestic law in India and other countries, we would now reproduce Articles XI and XIX of the GATT-1994, which read as under: "Article XI General Elimination of Quantitative Restrictions 1. No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licences or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party. 2. The provisions of paragraph 1 of this Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the obligations incurred by a contracting party under this Agreement, including tariff concessions, any product is being imported into the territory of that contracting party in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers in that territory of like or directly competitive products, the contracting party shall be free, in respect of such product, and to the extent and for such time as may be necessary to prevent or remedy such injury, to suspend the obligation in whole or in part or to withdraw or modify the concession. (b) If any product, which is the subject of a concession with respect to a preference, is being imported into the territory of a contracting party in the circumstances set forth in sub-paragraph (a) of this paragraph, so as to cause or threaten serious injury to domestic producers of like or directly competitive products in the territory of a contracting party which receives or received such preference, the importing contracting party shall be free, if that other contracting party so requests, to suspend the relevant obligation in whole or in part or to withdraw or modify the concession in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ian Parliament, two years prior to the signing of GATT-1994, had enacted the FTDR Act which was enforced with effect from 7th August 1992. Sections 11 to 14 of the FTDR Act came into force immediately and other provisions came into force on 19th June 1992. The FTDR Act had repealed the Imports and Exports (Control) Act, 1947 and the Foreign Trade (Development and Regulation) Ordinance, 1992 with the stipulation that anything done or any action taken under the Ordinance shall be deemed to have been done or taken under the corresponding provisions of the FTDR Act. The Statement of Objects and Reasons for enacting the FTDR Act, as recorded, are to acknowledge that foreign trade is the driving force of economic activity as this spurs economic growth and there is increasing interdependence and that the goals of the new policy were to increase productivity and competitiveness by ensuring that the trade policies serve as an instrument to create an environment that will provide a strong impetus to exports, facilitate imports and render export activity more profitable. 30. In order to appreciate the contentions of the parties, we would now like to reproduce Sections 3 and 9A of the FTDR Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) The quantitative restrictions imposed under this section shall, unless revoked earlier, cease to have effect on the expiry of four years from the date of such imposition: Provided that if the Central Government is of the opinion that the domestic industry has taken measures to adjust to such injury or threat thereof and it is necessary that the quantitative restrictions should continue to be imposed to prevent such injury or threat and to facilitate the adjustments, it may extend the said period beyond four years: Provided further that in no case the quantitative restrictions shall continue to be imposed beyond a period of ten years from the date on which such restrictions were first imposed. (3) The Central Government may, by rules provide for the manner in which goods, the import of which shall be subject to quantitative restrictions under this section, may be identified and the manner in which the causes of serious injury or causes of threat of serious injury in relation to such goods may be determined. (4) For the purposes of this section- (a) "developing country" means a country notified by the Central Government in the Official Gazette, in this regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a country or territory which is a member of the World Trade Organization and includes the country or territory with which the Government of India has an agreement for giving it the most favoured nation treatment; 3. Responsibility of Authorised Officer for making enquiry in respect to safeguard quantitative restrictions- (1) The Central Government shall, by notification in the Official Gazette, designate an officer not below the rank of Additional Director General of Foreign Trade as an Authorised officer for making investigation for the purpose of this rules. (2) The Authorised Officer shall be responsible for conducting investigation, under sub-section (1) of section 9A, for the purpose of imposition of safeguard quantitative restrictions and making necessary recommendation therein to the Central Government. (3) The Directorate General of Foreign Trade shall provide secretarial support and the services of such other persons and such other facilities as it deems fit. 4. Duties of Authorised Officer .-- It shall be the duty of the Authorised Officer -- (a) to investigate the existence of serious injury or threat of serious injury to domestic industry as a consequence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k between increased imports and alleged serious injury or threat of serious Injury. (4) Notwithstanding anything contained in sub-rule (1), the Authorised Officer may initiate an investigation suo moto, if, it is satisfied with the information received from any source that sufficient evidence exists as referred to in clause (a), clause (b) or clause (c) of subrule (3). 6. Principles governing investigations. - (1) The Authorised Officer shall, after it has decided to initiate investigation to determine serious injury or threat of serious injury to domestic industry, consequent upon the increased import of a goods into India, issue a public notice notifying its decision which, inter alia, contain information on the following, namely: (a) the name of the exporting countries, the goods involved and the volume of import; (b) the date of initiation of the investigation; (c) a summary statement of the facts on which the allegation of serious injury or threat of serious injury is based; (d) reasons for initiation of the investigation; (e) the address to which representations by interested parties should be directed; and (f) the time-limits allowed to interested parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary information within a reasonable period or significantly impedes the investigation, the Authorised Officer may record its findings on the basis of the facts available and make such recommendations to the Central Government as it deems fit under such circumstances. xx xx xx 8. Determination of serious injury or threat of serious injury.- The Authorised Officer shall determine serious injury or threat of serious injury to the domestic industry taking into account, inter alia, the following principles, namely:- (a) in the investigation to determine whether increased imports have caused or are threatening to cause serious injury to a domestic industry, the Authorised Officer shall evaluate all relevant factors of an objective and quantifiable nature having a bearing on the situation of that industry, in particular, the rate and amount of the increase in imports of the goods concerned in absolute and relative terms, the share of the domestic market taken by increased imports, changes in the level of sales, production, productivity, capacity utilisation, profits and losses, and employment; and (b) the determination referred to in clause (a) shall not be made unless the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the interested parties. 10. Imposition of safeguard quantitative restrictions.- The Central Government may based on the recommendation of the Authorised Officer, by a notification in the Official Gazette, under sub-section (I) of section 9A of the Act, impose upon importation into India of the goods covered under the final determination, a safeguard quantitative restrictions not exceeding the amount or quantity which has been found adequate to prevent or remedy serious injury and to facilitate adjustment. 11. Imposition of safeguard quantitative restrictions on non-discriminatory basis.- Any safeguard quantitative restrictions imposed on goods under these rules shall be applied on a nondiscriminatory basis to all imports of the goods irrespective of its source. 12. Date of commencement of safeguard quantitative restrictions.-The safeguard quantitative restrictions levied under these rules shall take effect from the date of publication of the notification in the Official Gazette, imposing such quantitative restrictions. 13. Duration .- (1) The safeguard quantitative restrictions imposed under rule 10 shall be for such period of time as may be necessary to prevent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uantitative restrictions', whereas Section 3 is a general provision. The Union of India cannot take recourse to Section 3 when conditions of Section 9A are not satisfied and impose 'quantitative restrictions', otherwise, Section 9A would become redundant for the reason that Union of India could always impose 'quantitative restrictions' under the general power. This would be in conformity with the India's obligation under GATT-1994 and the domestic or municipal law must be construed in consonance with the GATT-1994 obligations. 33. For quantitative restrictions to be imposed under Section 9A of the FTDR Act, following conditions must be cumulatively satisfied, namely, (a) increased quantities of imports (b) that have caused (c) serious injury or threaten to cause serious injury to domestic industries. Further, as per the procedure prescribed by the Rules, the Appropriate Authority has to initiate proceedings, investigate, hear parties and adjudicate on the satisfaction of the conditions. In the present case, there has been no increase in imports as per the following table: 1 Apr - 31 Mar Peas in metric ton 2014-2015 19,51,973 2015-2016 22,45,390 2016-2017 31,02,75710 2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocedure prescribed by the applicable Rules. 34. The Union of India, in their affidavit filed on 26th June 2020, have pleaded that they were required to strike a balance between the farmers and the importers as largescale imports would adversely impact the interests of the farmers due to fall in prices in the local market. Reference was made to the Minimum Support Price (MSP) for Moong, Urad and Toor dal and Gram fixed on the recommendation of the Commission for Agricultural Costs and Prices. Further, the Central Government under the schemes being run had procured 85 lakh MT of pulses directly from 53 lakh farmers by paying them MSP in the last five years. There was also increase in production of pulses from 25.42 Million MTs in 2017-18 to 26.66 Million MTs in 2020-21. Imported Yellow Peas are the perfect substitute for Gram in making of Besan which is primarily used in preparation of Indian savouries. As the price of imported Yellow Peas in India is cheaper than the domestic price of Gram, a huge shift in industry usage from Gram to Yellow Peas has taken place. In these circumstances that the government has imposed restrictions from April, 2018 onwards with a small window of annua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosing serious injury or threat of serious injury to domestic industry and a causal link between imports and serious injury. The restrictions have been imposed not due to increased quantities of imports but to prevent panic disposal by farmers as the prices of Gram would come down. It is submitted that special provisions like 9A of the FTDR Act would be limited to areas within its scope leaving the general provision free to operate in other areas. (vi) Discussion and interpretation of Sections 3 and 9A of the FTDR Act. 35. Section 3 of the FTDR Act, as enacted, had undergone amendments by addition of proviso to sub-section (2) and by insertion of sub-section (4) vide Act 25 of 2010 with effect from 25th August 2010. Sub-section (1) of Section 3 states that the Central Government may, by an Order published in the Official Gazette, make provision for the development and regulation of foreign trade by facilitating imports and increasing exports. It is a general provision which has no reference to GATT-1994. It authorises the Central Government to publish an order in the Official Gazette for development and regulation of foreign trade, i.e. imports and exports. Sub-section (2) s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f other laws not barred.- The provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force." The provisions of FTDR Act, therefore, are in addition to, and not in derogation of, the provisions of any other law for the time being in force. This would be the correct way to harmoniously read and interpret sub-section (4) to Section 3 and Section 18A of the FTDR Act. We may, at this stage, notice that the original amendment had used the phrase 'Notwithstanding anything contained in any other law, rule, regulation, notification or order', but the Standing Committee had noticed the contradiction and also the object and purpose behind enacting sub-rule (4) and had recommended that the said expression should be replaced with the expression 'Without prejudice to anything contained in any other law, rule, regulation, notification or order'. Sub-section (4) to Section 3 of the FTDR Act, therefore, in the context of import and exports or prohibition of imports or exports of goods states that no permit or licence shall be necessary or required except as may be required under the FTDR Act, rules or orders made thereunder. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of that Article. Paragraph 23 (supra) lists a number of other provisions, which allow and permit exceptions. We have referred to these provisions to highlight that paragraph (1) to Article XI is not an absolute rule. It is subject to exceptions in the form of paragraph (2) to Article XI, Article XII and other provisions. Of course, the conditions specified the respective Articles have to be satisfied for a contracting party to be GATT1994 compliant. 39. Reference to this position is necessary and required when we interpret Section 9A of the FTDR Act which we would accept incorporates into the domestic law Article XIX of GATT-1994, but neither Article XI and nor all exceptions by implication. Consequently, Section 9A for the FTDR Act, is to be understood an enabling provision empowering imposition of 'quantitative restrictions' after following the procedure in the situations referred to therein. However it does not limit and restrict the expans and power of the Central Government to prohibit, regulate or restrict imports of goods in terms of Section 3(2) of the FTDR Act. As a sequitur, it has to be held that notwithstanding Section 9A, the Central Government continues and has aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-rule (d) to Rule 2 of the Safeguard Measures (Quantitative Restriction) Rules, 2012 and includes exporter or foreign producer or the importer of goods for the purposes of imposition of safeguard quantitative restrictions on trade or business association. It also includes the government of the exporting country or producer of goods or directly competitive goods in India or a trade or business association12. 41. The need to enact Section 9A arose from the obligations flowing from Article XIX, as restriction in form of 'quantitative restriction', require a procedure to be followed. Affected parties including exporters, importers have to be heard. Consequently, 'act of transformation' was required. Article XIX of GATT-1994 is an escape provision, i.e. a provision which entitles a contracting state to escape from the rigours of paragraph (1) of Article XI of GATT1994. Similar 'acts of transformation' have been undertaken by enacting Custom Valuation Rules, provision of antidumping, countervailing duty etc. but the entire GATT-1994 does not stand transposed and enacted by way of statutory law or delegated legislation. 42. This being the position, Section 9A has to be interpreted a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed by the High Court's whereas on the date when they filed the Writ Petitions and had obtained interim orders, the Madras High Court had dismissed the Writ Petition upholding the notification. Similarly, the High Court of adjudicature at Bombay, High Court of Gujarat and the High Court of Madhya Pradesh had dismissed the Writ Petitions filed before them and upheld the notifications and the trade notices. Notwithstanding the dismissals, the importers took their chance, obviously for personal gains and profits. They would accordingly face the consequences in law. In these circumstances, the importers it cannot be said had bona fide belief in the right pleaded. E. What is not decided 47. Learned counsel for some of the importers had submitted that they have preferred statutory appeals against orders suspending or terminating import export code. The said aspect has not been examined and decided and hence we make no comment and observation. The statutory appeals, if any, preferred by the importer(s) will be decided in accordance with law. F. Conclusion 48. Accordingly, we uphold the impugned notifications and the trade notices and reject the challenge made by the importers. The im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. 5. XXIII. Nullification or Impairment 1. If any contracting party should consider that any benefit accruing to it directly or indirectly underthis Agreement is being nullified or impaired or that the attainment of any objective of the Agreement is being impeded as the result of (a) the failure of another contracting party to carry out its obligations under this Agreement, or (b) the application by another contracting party of any measure, whether or not it conflicts with the provisions of this Agreement, or (c) the existence of any other situation, the contracting party may, with a view to the satisfactory adjustment of the matter, make written representations or proposals to the other contracting party or parties which it considers to be concerned. Any contracting party thus approached shall give sympathetic consideration to the representations or proposals made to it. 2. If no satisfactory adjustment is effected between the contracting parties concerned within areasonable time, or if the difficulty is of the type described in paragraph 1 (c) of this Article, the matter may be referred to the CONTRACTING PARTIES. The CONTRACTING PARTIES shall promptly investigate any matte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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