9911796707
TMI Blog1994 (2) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... y in this country, these are allowed to be imported under the Open General Licence Scheme of the Government of India contained in the Import Policy 1988-91 subject to the conditions imposed regarding, inter alia, importation through canalising agency and/or importation under specific licences granted by the Import Licensing Control Authorities. 3.Under the said Import Policy, the Government of India, in exercise of powers conferred upon it under Section 3 of the Imports and Exports (Control) Act, 1947 (hereinafter referred to as the said Act) issued an order on or about 30th March, 1988 being Open General Licence Order No. 1/88, whereby the said goods were allowed to be imported under the Open General Licence Scheme by an actual user subject, inter alia, to the condition that the contract for importation of such goods had to be registered, prior to the import of the said goods with the Textile Commissioner of the Government of India. It was only after the contracts were registered with the said Textile Commissioner and the appropriate registration number was granted by the said authority, the said goods could be imported. 4.It was stated that the appellants had been running its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "(iii) Imports of Woollen rags, Synthetic rags, Shoddy wool will be allowed through two ports only, viz. Bombay and Delhi ICD." The above amendment in the Import Export Policy has been made in public interest." 7.The appellants-writ petitioners, thereafter, by a letter dated 24th May, 1989 drew the attention of the Joint Chief Controller of Imports and Exports, Respondent No. 3, to the serious prejudice that would be caused to it by the said purported amendment whereby the importation of the said goods was allowed under Open General Licence Scheme only through two ports of the country, viz. Bombay and Delhi. The appellants requested that the said purported amendment should be kept in abeyance in so far as the said contracts were concerned and the appellants should be allowed to import the said goods under the said contracts through the Calcutta Port. In the meantime, while no reply was received by the appellant from the respondent No. 3, the Collector of Customs, respondent No. 4, on or about 16th June, 1989, issued a public notice bearing No. 242/89 allowing importation of the said goods through the Calcutta Port, if the shipments of the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Government of India to restrict the entry of the goods through two specified ports did not, in the opinion of the learned Trial Court, infringe the rights of the appellants-writ petitioners nor did it violate any constitutional provisions. The learned Trial Judge accordingly dismissed the writ petition filed by the appellants. 11.In the context and setting up of the facts and in the light of the provi- sions of Sec. 3 of the Imports Exports (Control) Act, 1947 (Act XVIII of 1947), the contentions of the learned Counsel appearing for the parties have to be examined. It is, therefore, necessary, at this stage, to set out Sec. 3 of the Act :- "3.Powers to prohibit or restrict imports and exports. - (1) The Central Government may, by order published in the Official Gazette, make provisions for prohibiting, restricting or otherwise controlling, in all cases, or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the order; the import, export, carriage coastwise or shipment as ships'(a) stores of goods of any specified description; the bringing into any port or place in India of goods of any(b) specified description intended to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scription. The power under Section 3 of the said Act is general in nature and is restricted to the goods only and the scope of the said Act was never intended nor could be construed to empower the authorities under the said Act to pick and choose a port through or at which only the goods could be imported. Hence, any restriction or prohibition imposed under the said Section has to be applicable to, inter alia, all ports of the country, to be in the public interest. The power under the said Section 3 of the said Act although omnibus in nature, cannot by any stretch of imagination be construed to enable the Central Government to pick and choose at its whims and fancy particular ports through which only certain goods can be imported into the country and restricting and/or prohibiting importation of such goods from other ports in the country. Any prohibition or restriction or control of any kind whatsoever under the said Section 3 of the said Act in order to be valid, has to be applicable to the entire country. Hence, if the said goods are allowed to be imported into the country under the Open General Licence Scheme of the Government of India, there can be no valid basis or jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat under the current Defence of India Rules, 1971 the Government has been empowered to prohibit or restrict imports and exports of goods. Rule 126 specifically provides that the Central Government may by notified order prohibit or restrict the import and export of all goods or goods of any specified description from or to any specified person or class of persons. This is sub-rule (2) of the Rule 126. Sub-rule (3) of Rule 126 further empowers the Central Government to prohibit or restrict or control in all cases or in specified classes of cases and subject to exceptions as may be made, the import or export of all goods or goods of any specified description. It is, therefore, clear that in a parallel legislation which is in pari materia with Act of 1947 a distinction has been made between goods of specified description and all goods. We also agree with the view taken by the learned Judge that Section 3 of the Act of 1947 empowers the authorities to impose restriction on trade and, therefore, should be construed with some strictness." 19.Heavy reliance has been placed by Mr. Roy Chowdhury, learned Counsel appearing for the respondents, on the decision of the Supreme Court in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase. The observation of the Supreme Court in the said decision was in connection with the contention that once the importation has been completed of particular goods, the Import Licence Control Authorities can have no power or jurisdiction to control their subsequent disposal and no steps can be taken against an importer for any contravention post importation of goods under the said Act. In repelling the said contention, the Supreme Court has observed that Section 3(1) of the said Act does not merely prohibit or restrict the imports at the point of entry but extends also to controlling the subsequent disposal of the goods imported. Nowhere in the said decision including in paragraph 10 thereof the Supreme Court has observed that the respondents were entitled to restrict the importation of any goods through particular ports in the country only. On the contrary, the said decision speaks about either totally prohibiting importation of certain goods or allowing partial or limited quantities thereof being imported. Thus, the restrictions as aforesaid relate to goods or class of goods only. 21.As indicated earlier, Mr. Roy Chowdhury submitted that sub-section (3) of Section 3 of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition vis-a-vis their competitors in the North-Western and Western parts of the country. There cannot be any public interest in making such hostile discrimination. 25.Further, there is no intelligible basis which has been disclosed before this Court either in the affidavits filed by the Customs Authorities or in the Import Licensing Control Authorities of the Government of India or during the course of argument before this Court on the basis whereof Delhi and Bombay ports have been distinguished as a different class from other major ports in the country like Calcutta, Madras, Cochin or Vizagapatnam. Further, there is no rational nexus for imposing the restrictions on importation of the subject goods only through Delhi ICD and Bombay ports with the object to be achieved by the discrimination that has been sought to be made by the impugned control order or the impugned public notice. 26.In the affidavit filed by the Deputy Chief Controller of Imports and Exports on behalf of the Import Licensing Control Authorities, the reasons have been disclosed for issuance of the said impugned Public Notice and/or impugned control order. It has been stated in the said affidavit, inter alia, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the importation of such goods into India. 27.The document disclosed in support of the said allegations is annexure `A' to the said affidavit, which is a telegram dated 18th December, 1989. It is necessary to set out the said telegram which is to the following effect :- "Kindly refer to telephone discussion regarding the case of M/s. Kalindi Woollen Mills, relevant extracts from minutes of inter-ministerial meeting to discuss problems relating to report of woollen synthetic rags are as reproduced below :- The problems arising out of large scale importations of rag consignments through various ports including some minor ports and also those which were sought for clearance through Delhi ICD were further elaborated. He also showed samples of different categories of rags being imported to show how the unscrupulous importers were trying to import either serviceable garments or such cut garments which could be easily stitched for use as serviceable garments ..... Many of the importers were either bogus or only weavers and it was not known how they could be considered as `actual users'. The fact of considerable accumulation of uncleared consignments lying at ICD, Delhi was also me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Delhi as well as Calcutta of serviceable garments imported by misdeclaring them as woollen/synthetic rags, both Calcutta and Delhi ICD should have been either excluded or included. There is no rational basis for allowing importation through Delhi ICD and prohibiting importation through Calcutta Port. 31.It is the specific case of the appellant that all facilities for clearance of woollen/synthetic rags including facilities for checking remutilation and warehousing therefor etc. are available at the Calcutta Port. All the facilities available at Bombay Port are also available at Calcutta Port. In addition, the Bombay Port is, admittedly, overcongested. But, there is no denial of the said specific case made by the appellants. Thus, there could be no rational nexus of basis whatsoever for allowing importation of the subject goods through the Bombay Port and prohibiting importation thereof through the Calcutta Port. 32.The principle in respect of classification without violating Article 14 of the Constitution has been restated and summarised by the Supreme Court recently in the decision in Federation of AIC CE Stenographers (Recogsd.) v. Union of India, reported in AIR 1988 SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the Supreme Court observed as follows :- It is exclusively within the province of the legislature and" its delegate to determine, as a matter of policy how the provisions of the Statute can best be implemented and what measures, substantive as well as procedural would have to be incorporated in the rules or regulations for the efficacious achievement of the objects and purposes of the Act. It is not for the Court to examine the merits or demerits of such a policy because its scrutiny has to be limited to the question as to whether the impugned regulations fall within the scope of the regulation-making power conferred on the delegate by the Statute." 36.It is, therefore, open to the Court to scrutinise as to whether the authorities have or have not the power to impose restrictions as has been done by the impugned public notice and/or impugned control order. As we have already indicated that the concerned authority had no jurisdiction under the said Act to impose restrictions under the impugned public notice and/or impugned control order. 37.Mr. Roychowdhury has also relied on decision of the Supreme Court in Gopal Narain v. State of Uttar Pradesh and Another, reported i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TC entered into contracts with indigenous suppliers. Technically, there is no contractual relationship between the foreign buyer and the indigenous supplier like Damani. As stated earlier, the amendment to the Exports (Control) Order dated February 20, 1979, barred all silver exports, including by the STC. Of course, Government had a residual power to permit exports although normally and in the absence of such special permission, silver was a banned item. Pursuant to the prohibition, a trade notice of February 27, 1979 was published for the benefit of the commercial community. It is indisputable, on account of the amendment of the law on February 20, 1979, that export of silver became impossible for the STC or for that matter for anyone else. The thorny issue being by-passed for the while, the next question is whether the constitutionality of the Export (Control) Fifteenth Amendment Order, 1979 should be examined closely vis-a-vis pre-ban contracts. Constitutional questions should be considered by courts only when it is absolutely necessary, not otherwise. In the present case, broadly speaking, we are not inclined to stand in the way of the full operation of a policy decision by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pendix 6 of the said Import Policy would be also applicable to goods importable under the Additional Licences issued under para 215 of the said Import Policy. Clause 2(i) of para 215 of the said Import Policy refers only to the `items' contained in a part of the 10 Lists of Appendix 6 of the said Import Policy. The reference is only to the goods contained in the said Lists and not to the conditions under which the said goods can be imported under the Open General Licence Scheme, which are contained under the head `conditions governing Imports under Open General Licence' in Appendix 6. 42.The conditions governing importation of goods under Additional Licence are provided in the various classes, as aforesaid of the said para 215 itself. In the premises, there being no amendment to Part I, List 8 of Appendix 6 of the said Import Policy including in the `Notes' contained therein, the said goods can be continued to be imported through any port in the country including the Calcutta Port under the said Additional Licence. The amendments made to the Open General Licence No. 1/88 or in the `conditions governing imports under Open General Licence', in Appendix 6 of the said Import Policy, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gory cannot automatically apply to the latter category. 46.In the instant case, the conditions governing imports under the Open General Licence have been purported to be changed by the impugned control order and/or public notice. However, there has been no corresponding amendment or change in the conditions, governing the grant or importation of Additional Licences which are contained in Chapter 18, Para 215 of the Import Policy. Thus, the amendments made in the conditions governing imports under Open General Licence cannot apply to the importation under an Additional Licence. The abovementioned clause relied on by the respondents in support of their aforesaid contention relates to any prohibition or regulation which might have been introduced after issuance of the subject Additional Licence by the Licensing Control Authorities till the date of importation of the subject goods thereunder in the conditions governing the import of goods under Additional Licence, that is, in para 215 of the said Import Policy. 47.It has also been contended by the learned Advocate for the respondents that para 215 has no statutory force and cannot override the provision, restriction and/or conditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therein that the same can be imported against Additional Licences by Export Houses/Trading Houses `as per Policy' which means as per Para 215 of the said Import Policy. 50.In Jain Exports (supra), the issue involved was that whether or not coconut oil which had been transferred from the OGL List to the Canalised List could be imported under an Import Licence issued in the year 1980-81 which was revalidated on June 28, 1982, when the Import Policy of 1982-83 was in force. Therein both the Delhi High Court and the Supreme Court have held that once a particular item is transferred from the OGL List to the Canalised List during the period when the Licence has been issued and the goods arrived at the port of Importation in the country such goods no longer remain importable under Open General Licence Scheme and thus can be imported only by the Canalising Agency. This is the contention herein also. If the item, woollen/synthetic rags as contained in List 8, Part I, Appendix 6 of the Import Policy would have been taken out of the said List and placed in the list of canalised goods or any other List of different Appendix of the Import Policy, 1988-91 even under an Additional Licence the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be furnished. Compliance with other laws It is implied that every applicant for an import licence has26. complied with and continues to comply with the provisions of all other laws applicable to himself or any other person on whose behalf he submits an application. The grant of an import licence does not also confer any immunity, exemption or relaxation at any time from an obligation or compliance with any requirements to which the licence-holder may be subject to under other laws or regulations. This would apply also to materials allotted directly by the canalising agencies under the policy, as also to the imports made under the Open General Licence, with or without an `actual user' condition attached thereto." 52.It is contended that the interpretation given by the concerned department is binding and the Court cannot ignore such interpretation. We are, however, unable to accept the contention that any interpretation given by the Import Policy authorities without disclosing any justifiable and legally valid basis or reason therefor has to be accepted by all concerned including this Court. In any event, paragraph 24 of the said Import Policy has no manner of application wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the cost, relative to that of the manufacturers adjacent of the said two ports, would drive the disadvantaged or handicapped manufacturers like the petitioner herein out of the market. The artificially created geographical demerit of a manufacturer cannot but be viewed as a geographical barrier that offends against Article 301. Article 301 reads as follows :- "Subject to the other provisions of this part, trade, commerce, and intercourse throughout the territory of India shall be free." Here the privilege of importing wool rags which is an item under OGL has been curtailed as far as the importers outside the region close to Delhi or Bombay are concerned. The same import shall now be dearer to importers like the petitioner on account of a geographical barrier created by an executive fiat impugned herein. 54.We have taken note of the unreported decision of Madras High Court on a writ petition challenging the validity of the identical order. Since, a manufacturer in Madras is also hit hard by the arbitrary and discriminatory effect of the order, it was challenged before the Madras High Court. The executive order was quashed by the Madras High Court in its judgment in the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary to be examined by the Madras High Court. True, unreasonableness of the restriction imposed on the fundamental right guaranteed by Article 19(1)(g) by itself is sufficient to strike down the order impugned. But, in our view, the order certainly offends as well against Article 301 inasmuch as it has the ultimate result, intended or unintended, of regional favouritism, one region being favoured to the detriment of the another in the matter of a trade by making the goods imported as raw materials dearer for a region. Thus, it interferes with the freedom of trade enshrined in Article 301. 55.Such restrictions are bound to produce regional domination in trade and commerce trenching upon freedom of trade. Any executive action forcing one region into an unequal trade competition is subversive of equal treatment of all traders which is the very fibre of federated Union of India. The demerits of geographical situation where natural cannot be helped but geographical demerits cannot be generated by human design to cause traders of one favoured region to eclipse the rest of the country. The freedom is, however, not to be absolute freedom. They are subject to restrictions provided for i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 92 of Commonwealth of Australian Constitution Act 63 and 64 Vict. c. 12 of 1900. In dealing with the contention that no individual right was guaranteed by Section 92 of the Commonwealth of Australian Constitution Act, the Judicial Committee in Commonwealth of Australia v. Bani of New South Wales, (1950) AC 235 observed at p. 305 :- `The necessary implications of these decisions [James v. Cowan - (1932) AC 542 and James v. The Commonwealth of Australia - (1936) AC 578] are important. First may be mentioned an argument strenuously maintained on this appeal that Section 92 of the Constitution does not guarantee the freedom of individuals. Yet James was an individual and James vindicated his freedom in hardwon fights. Clearly there is here a mis-conception. It is true, as has been said more than once in the High Court, that Section 92 does not create any new juristic rights but it does give the citizen of State or Commonwealth, as the case may be, the right to ignore, and, if necessary, to call on the judicial power to help him to resist, legislative or executive action which offends against the section. And, this is just what James successfully did. `Our Constituent Assembly bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rightly, the Madras High Court has pointed out that the Customs Department has no dearth of men and machinery for exercising the necessary vigilance and check against the malpractice said to have been rampantly indulged in by the importers. In agreement with the Madras High Court, we also say that like Madras, Calcutta is also a recognised port and a major port which handles substantial imports and exports of the country. There is no reason why the other major ports of the country should not be as equipped as Bombay or Delhi. The entire excuse which is advanced as reasonable cause for the restriction is unconscionable specially when it upsets the constitutional guarantees. 59.For the reasons aforesaid, this appeal is allowed. The writ petition succeeds. Rule is made absolute. Let appropriate writs be issued. The impugned notice(s), order(s) and proceedings are set aside and quashed. It is stated that a sum of Rs. 9,49,780/- was paid as and by way of the penal demurrage charges. In view of the finding that the appellants were entitled to import the said goods to the Calcutta Port, we direct the Customs Authorities to issue wharf rent exemption certificate in respect of the consig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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