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TMI Blog2024 (5) TMI 835X X X X Extracts X X X X X X X X Extracts X X X X ..... or export of Basmati Rice from free to prohibited as per contention of Mr. Deshpande, learned DSGI is the domestic food security situation in India, which as claimed to be at risk and the need for price stabilization of food items, as is indicated, from para-3 of the reply of the respondent No. 2 (Pg.138). For this it is contended, that there was due consultation with the nodal Departments such as Departments of Agriculture and Farmers Welfare, Department of Food and Public Distribution and Department of Consumer Affairs and it is stated that the consultation process had taken into account all data relating to production and export of non-basmati rice. It is however material to note that except for a plain statement in this regard which is contained in Paras-3 and 4 (Pg.138 and 139) of the reply of the respondent No. 2, there is nothing else therein in the nature of what was the form of consultation, what data was collected and considered, in spite of the fact, that by amendment to the petition by inserting ground L (Pg.36-A), a specific plea was raised regarding absence of any such material, to indicate any food security threat or any need for price stabilization of food items, so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it of para 1.05 of the Foreign Trade Policy 2023 regarding transitional arrangement to the petitioners, is clearly not justified, in absence of any reasons in that regard, forthcoming from the respondents, specifically in view of the fact, that it is not disputed that the FTP 2023, is applicable to the petitioners. We therefore, hold and declare, that the impugned notification, dated 20/07/2023, insofar as it denies the benefit of the transitional arrangement as contained in para-1.05 of the FTP 2023, is bad-in-law and the benefit of this transitional arrangement would be available to the petitioners, in case the requirements, as indicated in clause (b) therein are complied by the petitioners. The petition is accordingly allowed in the above terms and to the above extent. Rule is made absolute in the above terms. Thus, there shall be no order as to costs. X X X X Extracts X X X X X X X X Extracts X X X X ..... f the conditions of Para 2 of Notification dated 20.07.2023 by the exporter. The said notification is challenged mainly on the ground that before taking such decision, the Government ought to have considered the concluded contracts which are partly performed. A challenge is also raised that the notification cannot be by retrospective effect so as to divest and adversely effect the concluded contracts which have already been entered into by the petitioners with their Foreign buyers. 6. The petitioners have placed a summary of details of various sales contracts entered into with various customers by the petitioners. It is contended that the petitioners are obligated to comply with each and every of such contract. These contracts were entered into before the issuance of impugned Notification when the policy of export was free, as such these contracts are saved from prohibition contained in the impugned Notification. The details of sales contract entered into by the petitioners are reproduced below : Sales Contract Date Sales Contract No. Buyer Quality Quantity in M.T. 13.01.2023 SE22Y-00513 Glometz International Indian White Rice 50,000 10.07.2023 SE23Y-0005814023637 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prohibition. Thus, it amounts to non application of mind or arbitrary exercise of power by the respondents. 8.4. The notification has not taken into consideration the concluded contracts which were based on the existing FTP. 8.5. It was legitimately expected from respondents to take into consideration the contracts executed up to the date of issuance of the notification, as it may lead to litigation, losses and adverse affect on the reputation of the exporters. It is expected of respondents statutory Authorities to be fair and reasonable in their approach so also they should be unbiased and follow the principles of fairness and justice. There is no data available to take such decisions which not only affect the petitioners but also to the Countries who depends on our Nation for rice. 8.6. The petitioners have legitimate expectation that they will be able to honour the concluded contracts and accordingly export the Non-basmati Rice. However, respondent Nos. 1 and 2 have not taken this into consideration which renders the impugned notification arbitrary and violation of Article 14 of the Constitution of India. 8.7. The respondents/Statutory Authorities deliberately suppressed ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power under Sections 3 and 5 of the Foreign Trade (Development and Regulation) Act, 1992, to amend and/or formulate the export and import policy is that of Central Government. The Director General of Foreign Trade has no such power. The power of Central Government under aforesaid provisions cannot be delegated to any Officer including the Director General, Foreign Trade. From the notification, the petitioners reasonably believe that the decision to amend the export policy in respect of Non-basmati rice from "free" to "prohibited' has been taken by the Director General, Foreign Trade and not by the Central Government. No such information is supplied under the Right to Information Act, 2005. As such, the decision is taken by the Director General, Foreign Trade and not by Central Government. 8.10. Relying upon para-15 in Union of India and Ors. vs. Agricas LLP and Ors., (2021) 14 SCC 341, it is contended that Article 77 does not provide for delegation of any power, albeit under sub-section (3) of Article 77, the President is to make rules for more convenient transaction of business and allocation of same amongst Ministers. It is vehemently contended that the notification issued requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter due consideration with the Nodal Departments. It is further submitted that in certain conditions, the Non-basmati rice was allowed to be exported. Those four conditions are mentioned in the notification, are as follow : "i) Where loading of non-basmati rice on the ship has commenced before this Notification; ii) Where the shipping bill is filed and vessels have already berthed or arrived and anchored in India ports and their rotation number has been allocated before this Notification; the approval of loading in such vessels will be issued only after confirmation by the concerned Port Authorities regarding anchoring/berthing of the ship for loading of non-basmati rice prior to the Notification; iii) Where non-basmati rice consignment has been handed over to the Customs before this Notification and is registered in their system/where Non-basmati rice consignment has entered the Customs Station for exportation before this Notification and is registered in the electronic systems of the concerned Custodian of the Customs Station with verifiable evidence of date and time stamping of these commodities having entered the Customs Station prior to 20.07.2023. The period of export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dy. SGI, has rightly placed reliance on Union of India and Ors. vs. Agricas LLP and Ors., (supra). This was a case which involved challenge to the validity of the Notifications dated 29/03/2019 bearing S.O. Nos. 1478-E, 1479-E, 1480-E and 1481-E pending in several writ petitions filed before different High Courts. The matter also involved connected challenge to the Trade Notice dated 16/04/2019 issued by the Directorate General of Foreign Trade on the ground of excessive delegation as not being in accordance 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. The Hon'ble Apex Court held as under: "11. Several traders had thereafter filed Writ Petitions before different High Courts challenging imposition of restrictions on import of Peas and pulses and interim orders were passed staying the notifications which had the effect of permitting imports without any restriction as to quota or licence. The primary grounds raised in the writ petitions before the High Courts were: 11.1. The impugned notifications issued by the DGFT had the effect of modifying or amending the EXIM policy as the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pectively, are vested. Article 77 does not provide for delegation of any power, albeit under sub-section (3) of Article 77, the President is to make Rules for more convenient transaction of business and allocation of same amongst Ministers. Under the Government of India (Transaction of Business) Rules, 1961, the government business is divided amongst Ministers and specific functions are allocated to different Ministries. The Director General of Foreign Trade is an ex officio Additional Secretary in the Government of India and is appointed by the Central Government under sub-section (1) to Section 6 of the FTDR Act to advise the Central Government in formulation and carrying out the Foreign Trade Policy. Wherefore, even the website of the Ministry of Commerce and Industry, Department of Commerce, states that the DGFT is an agent of the Central Government and attached office to it. Further, clause (2) of Article 77 provides that validity of an order or instrument made or executed in the name of the President, authenticated in the manner specified in the Rules made by the President, shall not be called in question on the ground that it is not an order or an instrument made or executed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome into immediate effect. The provisions as under Para 1.05 of the Foreign Trade Policy, 2023 regarding transitional arrangement shall not be applicable under this Notification for export of Non-basmati rice. Consignments of Non-basmati rice will be allowed to be exported under following conditions: i. where loading of Non-basmati rice on the ship has commenced before this Notification; ii. where the shopping bill is filed and vessels have already berthed or arrived and anchored in Indian ports and their rotation number has been allocated before this Notification; the approval of loading in such vessels will be issued only after confirmation by the concerned Port Authorities regarding anchoring/berthing of the ship for loading of Non-basmati rice prior to the Notification; iii. where Non-basmati rice consignment has been handed over to the Customs before this Notification and is registered in their system / where Non-basmati rice consignment has entered the Customs Station for exportation before this Notification and is registered in the electronic systems of the concerned Custodian of the Customs Station with verifiable evidence of date and time stamping of these commoditie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upon the request of such Government. 12. Before considering the issue further, it would be necessary to note what is indicated by para 1.05 of the Foreign Trade Policy 2023 regarding transitional arrangements, which for the sake of ready reference is quoted as under: "1.05 Transitional Arrangements (a) Any License/ Authorisation/Certificate/ Scrip/ instrument bestowing financial or fiscal benefit issued before commencement of FTP 2023 shall continue to be valid for the purpose and duration for which it was issued, unless otherwise stipulated. (b) Item wise Import/Export Policy is delineated in the ITC (HS) Schedule I and Schedule II respectively. The importability/exportability of a particular item is governed by the policy as on the date of import/export. The date of import/export is defined in para 2.17 of HBP 2023. Bill of Lading and Shipping Bill are the key documents for deciding the date of import and export respectively. In case of change of policy from 'free' to 'restricted/prohibited/state trading' or 'otherwise regulated', the import/export already made before the date of such regulation/restriction will not be affected. However, the import through High Sea sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is further indicated from conditions i to iv, as appended to Clause 2 of the impugned notification dated 20.7.23 (page 40), though in a limited sense, as indicated thereto. 16. Thus, when FTP 2023, provided for a transitional arrangement , to enable an exporter to complete its obligation under the contract, the impugned notification, for not applying the transitional provisions as contained in para 1.05, of the FTP 2023 , does not assign any reasons at all, why the benefit of such a transitional arrangement, which normally ought to have ben granted has not been granted in the case of Non-basmati Rice, all other things remaining the same. 17. Mr. Bhangde, learned Senior Counsel for the petitioner, is correct, in relying upon the notification No. 6/2015-20 dated 13.05.2022 (Page 108-H), which is an amendment in the export policy of wheat, by which while changing the free export policy in respect of wheat to be prohibited with effect from 13.05.2022, the same has vide clause 2 A permitted as a transitional arrangement of export of wheat in case of shipments where ICLC has been issued on or before the date of the notification, subject to submission of documentary evidence as prescri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to one and all and any denial of the policy will have to be construed as an action, which is arbitrary and unreasonable unless, acceptable reasons, for such denial are spelt out, which in the present matter, considering the reply affidavits of the respondents are absent. 19. Even otherwise when a right to export, which was earlier free, is sought to be restricted, that would be putting a fetter upon the right of a citizen guaranteed to him under Article 19(1)(g) of the Constitution which can only be curtailed, if it is demonstrable that the fetters being sought to be placed on the exercise of such right were reasonable, the reasonability, being based upon discernible and justifiable factors. 20. In this context, it is necessary to note that the Hon'ble Apex Court in Cellular Operators Association of India and Ors. (Supra), while considering the test of arbitrariness has held that when viewed from the angle of manifest arbitrariness or reasonable restriction, sounding in Article 14 and Article 19 (1) (g) respectively, the Regulation must, in order to pass constitutional muster, be as a result of intelligent care and deliberation, that is, the choice of a course which reason dict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra), which hold as under: 14. No doubt, the writ court has adequate power of judicial review in respect of such decisions. However, once it is found that there is sufficient material for taking a particular policy decision, bringing it within the four corners of Article 14 of the Constitution, power of judicial review would not extend to determine the correctness of such a policy decision or to indulge into the exercise of finding out whether there could be more appropriate or better alternatives. Once we find that parameters of Article 14 are satisfied; there was due application of mind in arriving at the decision which is backed by cogent material; the decision is not arbitrary or irrational and; it is taken in public interest, the Court has to respect such a decision of the executive as the policy making is the domain of the executive and the decision in question has passed the test of the judicial review. 24. It would therefore be apparent, that for the purpose of sustaining a policy, what is necessary to be demonstrated is that there was due application of mind in arriving at the decision which is backed by cogent material; the decision is not arbitrary or irrational and; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction by the Courts. 26. The relief which is being sought is for enabling the petitioners to complete the concluded contracts, which they have with foreign traders for supply of basmati rice. In this context, it would be material to note, that in case the petitioners establish concluded contracts, for supply of non-basmati rice, to foreign traders, for which they have established ICLC and the petitioners have already procured the goods, this would be an action, relatable to the Policy prior to the impugned notification, which indicated that the export was free. If this is the case, then the petitioners, would have legitimate expectation, of fulfilling of their contracts, which they had entered into on the basis of the free policy, with foreign traders. IT is also necessary to note that non-fulfilling the concluded contract would also make the petitioners open to litigation on account of breach of contract and consequently damages. Thus, the expectation of fulfilling an existing concluded contract, on the basis of the existing policy could be said to be legitimately available to the petitioners. In this context, it is necessary to note what has been held by the Hon'ble Apex Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to consider and give due weight to it may render the decision arbitrary, and this is how the requirement of due consideration of a legitimate expectation forms part of the principle of non-arbitrariness, a necessary concomitant of the rule of law. Every legitimate expectation is a relevant factor requiring due consideration in a fair decision-making process. Whether the expectation of the claimant is reasonable or legitimate in the context is a question of fact in each case. Whenever the question arises, it is to be determined not according to the claimant's perception but in larger public interest wherein other more important considerations may outweigh what would otherwise have been the legitimate expectation of the claimant. A bona fide decision of the public authority reached in this manner would satisfy the requirement of non-arbitrariness and withstand judicial scrutiny. The doctrine of legitimate expectation gets assimilated in the rule of law and operates in our legal system in this manner and to this extent. That the petitioners, had legitimate expectation of exporting basmati rice without any restrictions, is further indicated by the mandate of section 3 (4) of the FT Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to which document the petitioner has failed to produce or which the Authority expected it to produce. There are concluded contracts between the parties and in fact part of them was implemented as well. Another reason stated by the petitioner was that Skimmed Milk Products is a product taken out of normal milk and/or the normal milk products and there was no ban on export of such items. As such a ban was not justified and in any case would not be made effective retrospectively. May be the Court would not go into such question primarily for the reason that the demand of skimmed milk and its products may be high in domestic market and authorities concerned may have taken decision to ban such export retrospectively but to unsettle the settled rights or concluded rights of the parties would hardly be permissible in the garb of such notification. The decision of the authority does not appear to be in conformity with the settled canons of law." 29. Kanishka Trading (supra) relied upon by Mr. Deshande, learned DSGI, was a case in which it was found that the withdrawal of the exemption, was not on account of any fraud practiced by the Government nor any huge loss was caused to the importe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formulate the policy and to amend it. This is specific power. The power to regulate, therefore, cannot be read as a power to amend when a specific power to amend is given. If the power to regulate does not include the power to amend retrospectively such a power cannot be read into Section 3 of the Act. 135. We have already discussed these aspects in detail. To recapitulate, it is held by us that Section 5 of the Act does not empower the Government to make amendments with retrospective effect, thereby taking away the rights which have already accrued in favour of the exporters under the Scheme. No doubt, the Government has, otherwise, power to amend, modify or withdraw a particular Scheme which gives benefits to a particular category of persons under the said Scheme. At the same time, if some vested right has accrued in favour of the beneficiaries who achieved the target stipulated in the Scheme and thereby became eligible for grant of duty credit entitlement, that cannot be snatched from such persons/exporters by making the amendment retrospectively….." 32. If the policy is to be saved, we do not see any reason, why the same proposition should not be held to be applicabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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