Raj Prakash Chemicals Ltd. & ANR Vs.
Union of India & Ors [1986] INSC 28 (5 March 1986)
PATHAK, R.S. PATHAK, R.S. TULZAPURKAR, V.D.
MUKHARJI, SABYASACHI (J)
CITATION: 1986 AIR 1021 1986 SCR (1) 448 1986
SCC (2) 297 1986 SCALE (1)297
CITATOR INFO:
E&R 1987 SC 175 (2,6,7,13,16) F 1987 SC
179 (1,2) R 1987 SC1794 (6,7,9,11,12,15,21) RF 1989 SC 690 (5,6) RF 1992 SC 696
(8,9,11,12,13)
ACT:
Practice & Procedure Order of Court -
Construction of - To be consistent with principle that Court must be presumed to
have given effect to the law.
HEADNOTE:
The first appellant, a public limited
company, engaged in the manufacture of acrylic ester monomers (Butyl Acrylate,
Bthyle acrylate, 2-Ethyle Hexyl Acrylate and Methyle Acrylate) under an
industrial licence granted in February 1975, commenced manufacture in December
1980 and was until then the only manufacturer in India. In the year 1981 a
public sector organisation also began to manufacture acrylic ester monomers.
In the period before 1980 in the absence of
lndigenous manufacture of acrylic ester monomers, the Government of India
permitted the import of those items on Op n General Licence. Thereafter, in the
Import Policy 1981-82, with a view to protect indigenous industry and to
conserve foreign exchange the Government of India placed acrylic ester monomers
in Appendix 5 (List of Restricted Items), ant in July, 1981 Ethyl Acrylate was
taken from Appendix 5 to Appendix 3 (List of Banned Items). A public notice
dated July 7, 1981 announced that Export Houses which were eligible to import
Ethyl Acrylate would be allowed to import lt only to the extent of irrevocable
Letters of Credit opened before the date of the notice.
Under Import Policy 1982-83, the nomenclature
of the headings of the Appendices was altered, and the heading "List of
Banned Items" of Appendix 3 was changed to "List of Limited
Permissible Items". Likewise, the heading "absolutely Banned
List" of Appendix 4 was altered to "list of Non-permissible 449 Items
(Banned)". And the heading "List of Restricted Items" of
Appendix 5 became the "List of Automatic Permissible Items". Ethyl
Acrylate remained in Appendix 3 and all other acrylic ester monomers remained
in Appendix 5.
Under Import Policy 1983-84, the headings of
Appendices 3, 4 and 5 remained as they were, and all four acrylic ester
monomers were placed in Appendix 3 (list of Limited Permissible Items).
Under Import Policy 1984-85 Appendix 2 Part A
became the "List of Banned Items" and Appendix 2 Part became the
"List of Restricted Items". Appendix 3 continued to be the "List
of Limited Permissible Items". Appendix 5 was the "List of Canalised
Items". Appendix 6 mentioned the import of items under Open General
Licence.
That nomenclature ant arrangement was
reflected again under Import Policy 1985-88, except that Appendix 4 was deleted
and the new Appendix 6 (the "Open General Licence" List) contained
Part II which listed items open to import under Export House Additional
Licence. Under both Import Policies, 1984-85 and 1985-88 the four acrylic ester
monomers appeared at item 9 of Appendix 3 (List of Limited Permissible Items).
Changes in the nomenclature of the headings
of the Appendices in the Import Policy 1982-83 and thereafter were considered
necessary to bridge the gap in India's balance of payment. The change in the
nomenclature tit not alter the principle underlying the grouping of items under
the various heads. Each grouping was determined in accordance with two major
objectives of import policy, the conserving of foreign exchange and protecting
the development of indigenous industries by limiting the import of
corresponding manufactured products. The items in Appendix 3 (List of Limited
Permissible Imports) were those whose import was not permissible ordinarily but
could be permitted by the Government if their import was necessary and
justified, while the import of items absolutely banned ( and later simply
described as "Banned") was not permissible at all.
The Import Policy 1978-79 incorporated a
scheme under which Registered Exporters were eligible for the grant of 450
Export House Certificates on the basis of the exports actually made in the
three-year base period 1975-76, 1976-77 and 1977-78. Export Houses were
entitled to the following facilities:- (i) Import replenishment licences eligible
to them as registered Exporters, (ii) Import replenishment licences transferred
to them by others.
(iii) Import of items placed on Open General
Licence, and (iv) Additional Licences.
Several diamond e porters applied for Export
House Certificates and consequent Additional Licences, which were refused on
the ground that they had not diversified their exports. A number of writ
petitions were filed by these diamond exporters in the High Court of Bombay and
the High Court of Delhi. The High Courts held that the ground on which the
Export House Certificates had been refused was wholly untenable and directed
the issue of Export House Certificates as well as the consequent Additional
Licences, but while defining the right of the diamond exporters to import items
under the Additional Licences they also took into account the Import Policy
prevailing at the time of import in regard to the items which could not be
imported.
Appeals against the orders of the High Courts
were disposed of by this Court by its order dated April 18, 1985. The
authorities were directed to issue the necessary Export House Certificates for
the year 1978-79. It was further directed that "save and except items
which are specifically banned under the prevalent i port policy at the time of
import, the diamond e porters shall be entitled to import all other items
whether canalised or otherwise in accordance with the relevant rules".
Pursuant to this order of the Court, the diamond exporters were issued
Additional Licences which permit them to import acrylic ester monomers.
Feeling aggrieved by the grant of such
Additional Licences, the appellants filed a writ petition under Art. 32 co
plaining that the order dated April 18, 1985 of this Court 451 was
misinterpreted and, in consequence thereof the import of acrylic ester monomers
was being allowed. This is Court dismissed the writ petition with liberty to
move the High Court of Bombay. The appellants then filed a writ petition in the
High Court of Bombay which a dismissed by a Single Judge, and this order was
confirmed in Appeal by the Division Bench on the ground that withdrawal or
cancellation of the additional endorsement made on the Additional Licences
would conflict with this Court's Order and would amount to modifying or
nullifying it.
On the question as to what is the true
meaning and scope of the order dated April 18, 1985 made by this Court,
dismissing the appeal and writ petition, ^
HELD : 1. The meaning and scope of this
Court' order dated April 18, 1985 must be discovered from the terms of the High
Court orders, because the language in which the order of this Court is couched
bears close comparison with one or other of the High Court orders. [471 F-G]
2. The Additional Licences to be issued to
diamond exporter entitled then to import items permissible to Export Houses
under such Licence under the Import Policy 1978-79 excluding those items which
fell within Appendices 3 and 4 of the Import Policy 1978-79 and also excluding
items which fell in Appendix 3 and Appendix 2 Part A of the Import Policy
1984-85. That is the meaning which must also be given to the ter s of the order
dated April 18, 1985 of this Court. Where the Import Policy prevailing at the
time of the import is the Import Policy 1985-88, the items excluded are those
enumerated in the corresponding Appendix 3 and Appendix 2 Part A of that Import
Policy. That conclusion follows irresistibly on the analysis attempted by this
Court and in the context in which the order was made. [473 A-C]
3. When the word "banned" was used,
it was intended to take in items which were banned altogether as ell as items
which were banned for import by the holder of an Additional Licence. The Court
was concerned with the right to import of the holder of an Additional Licence.
The holder of an Additional Licence as prohibited from i porting items which
452 were banned altogether and also items which he, as the holder of an
Additional Licence, a banned from importing.
[473 E-F]
4. This Court would be enlarging the scope of
relief granted by the High Court if the more liberal interpretation was given
to the words "specifically banned" and such a construction is clearly
impermissible when no diamond exporter had appealed against that order before
this Court.
When this Court made the orders dated April 18,
1985, when the Import Policy. 1985-88 was in force, there ere only t which were
absolutely banned, and the ere animal tallow and rennet. That was also
substantially the position under the Import Policy 1984-85. [473 G-H; 474 A]
5. The right of a diamond exporter to an
Additional Licence does not issue from paragraph 265 of the Import Policy
1985-88. Paragraph 265 enables grant of Additional Licences to other port
Houses, and diamond exporters entitled to Additional Licence under that Import
Policy. The Export House Certificates granted to the diamond exporters pursuant
to the orders of the High Courts and of this Court are those envisaged under
the Import Policy 1978-79. But for the purpose of granting relief in their
favour the Courts took into account the conditions prevailing at the tit and,
therefore, the provision of the Import Policy 1985-88 become relevant. The are
relevant for the purpose of construing the terms in which relief has been
granted by the Courts. They do not constitute the source of those rights. [474
D-F]
6. The diamond exporters on the construction
placed by this Court on its order dated April 18, 1985, cannot be regarded as
denying restitution. But the restitution available to the has been reduced by
the e press direction of the Court that the are not entitled to import items
excluded under the Import Policy prevailing at the time of Import in addition
to those excluded under the Import Policy 1978-79. [474 H; 475 A]
7. The construction placed by this Court on
the order dated April 18, 1985 is consistent with the principle that the Court
must be presumed to have given effect to the law.
That presumption can be rebutted only upon
evidence showing a clear intention to the contrary, either expressly or by
necessary implication. There is no such evidence before the Court.[475 D-E] 453
8. Those diamond exporters who were granted
Additional Licences under the Import Policy 1978-79 and had opened and
established irrevocable Letters of Credit before October 18, 1985 should be
permitted, notwithstanding the construction placed on the order dated April 18,
1985 of this Court, to clear the goods Imported, or to be imported, by them
pursuant to such irrevocable Letter of Credit. [477 E-Fl
9. All imports effected pursuant of such
Letters of Credit should be deemed to have been legally and properly made, and
should entail no adverse consequences whatsoever on the basis of principles of
justice, equity and fair play and by the need to avoid undeserved hardship
ignoring the legal technicalities. [477 F-G]
10. The diamond exporters who pursuant to the
issue of Additional Licences under the Import Policy 1978-79 have opened and
established irrevocable Letters of Credit on or after October 18, 1985 will not
be entitled to the benefit of this order. [478 B-C] Deputy Asstt. Iron Steel
Controller Anr. v. L. Manickchand, Proprietor, Katrella Mettel Corpn. Madras,
[1972] 2 S.C.R. 1, relied upon.
Joint Chief Controller of Import &
Exports, Madras v. M/s Aaichand Mutha etc., [1966] 1 S.C.R. 262, Union of India
Ors,. M/s. Indo-Afgan Agencies Ltd., [1968] 2 S.C.R. 366 and Jagannath Aggprwal
v. B.N. Dutta, (Civil Appeal No.801 of 1964 decided on January 10, 1967),
referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
4978 of 1985.
From the Judgment and Order dated 16.8.1985
of the Bombay High Court in Appeal No. 726 of 1985.
V.M. Tarkunde and Rajiv Datta for the
Appellants.
B. Datta, Additional Solicitor General, K.K.
Venugopal, Ashok H. Desai, A.K. Ganguli, R.N. Poddar, S. Ganesh, Anand Bhatt,
Harish Salve, Raian Karanjawala, Mrs. Manik 454 Karanjawala, G.E. Vahanvati,
B.R. Agarwala, M.M. Jayakara and Miss V. Menon for the Respondents.
The Judgment of the Court was delivered by
PATHAK, J. This appeal is directed against the judgment and order dated August
16, 1985 of a Division Bench of the High Court of Bombay summarily rejecting an
appeal filed by the appellants against the dismissal of their writ petition by
a learned Single Judge of that High Court.
The first appellant, Raj Parkash Chemicals
Limited, is a public limited company with its registered office at Bombay. It
is engaged in the manufacture of acrylic ester monomers (Butyl Acrylate, Ethyl
Acrylate, 2- Ethyl Hexyl Acrylate and Methyl Acrylate) at its factory in
Tarapur, Maharashtra. These items are used by various industries engaged in the
manufacture of Binders required in textiles, leather paint and paper
Industries. The second appellant is the Managing Director and a shareholder of
the appellant company. In February 1975, the appellants were granted an
industrial licence for manufacturing acrylic ester monomers in a total quantity
of 3,000 tones per annum. The installed capacity of the factory is, however,
1,000 tones per month.
It commenced manufacture in December 1980,
and was until then the only manufacturer in India of acrylic ester monomers. In
the year 1981 the Indian Petrochemicals Corporation Limited, a public sector
organisation, also entered the market and began to manufacture acrylic ester
monomers at its factory at Baroda, which possesses a capacity of 10,000 tones
per year.
In the period before 1980 in the absence of
any indigenous manufacture of acrylic ester monomers, the Government of India
permitted the import of those items on Open General Licence. Thereafter in the
Import Policy 1981- 82, with a view to protect indigenous industry and to
conserve foreign exchange the Government of India placed acrylic ester monomers
in Appendix 5 (List of Restricted Items), and in July 1981 Ethyl Acrylate was
taken from Appendix 5 to Appendix 3 (List of Banned Items). A public notice
dated July 7, 1981 announced that Export Houses which were eligible to import
Ethyl Acrylate would be allowed to import it only to the extent of irrevocable
Letters of Credit opened before the date 455 of the notice. Under Import Policy
1982-83, the nomenclature of the headings of the Appendices was altered, and
the heading "List of Banned Item of Appendix 3 was changed to "List
of Limited Permissible Items". Likewise, the heading " Absolutely
Banned List" of Appendix 4 was altered to "List of Non-permissible
Items (Banned)". And the heading "List of Restricted Items" of
Appendix 5 became the " List of Automatic Permissible Items." Ethyl
Acrylate remained in Appendix 3, and all other acrylic ester monomers remained
in Appendix 5. Under Import Policy 1983-84, the headings of Appendices 3, 4 and
5 remained as they were, and all four acrylic ester monomers were placed in
Appendix 3 List of Limited Permissible Items). Under Import Policy 1984-85,
there was another change in the nomenclature of the headings of the Appendices.
Appendix 2 Part A became the "List of Banned Items" and Appendix 2
Part became the "List of Restricted Items". Appendix 3 continued to
be the "List of Limited Permissible Items." Appendix 5 was the
"List of Canalised Items." Appendix 6 mentioned the import of items
under Open General Licence. That nomenclature and arrangement was reflected
again under Import Policy 1985-88, except that Appendix 4 was deleted and the
new Appendix 6 (the "Open General Licence" List) contained Part II
now which listed items open to import under Export House Additional Licence.
Under both Import Policies, 1984-85 and 1985-88 the four acrylic ester monomers
appeared at item 9 of Appendix 3 (List of Limited Permissible Items). Changes
in the nomenclature of the headings of the Appendices in the Import Policy
1982-83 and thereafter were considered necessary in the context of loans and
financial assistance received from international agencies to bridge the gap in
India's balance of payment, and because the Import Policy of India is
considered a vital document by foreign countries in the formulation of their
fiscal policies. me change in the nomenclature did not alter the principle
underlying the grouping of items under the various heads. Each grouping was
determined and continued to be so determined in accordance with two major
objectives of import policy, the conserving of foreign exchange by limiting the
total imports to a level ensuring that payment for them could be met by the
available foreign exchange resources or by maintaining a minimum deficit in the
balance of trade, and the further objective of giving impetus to, and
protecting, the development of indigenous industries by limiting the import of
corresponding manufactured products.
456 The items in Appendix 3 (List of Limited
Permissible Imports) were those whose import was not permissible ordinarily but
could be permitted by the Government if their import was necessary and
justified on the merits of the relevant consideration mentioned in the Import
Policy, while the import of items Absolutely Banned (and later simply described
as "Banned") was not permissible at all.
The Import Policy 1978-79 incorporated a
scheme under which Registered Exporters were registered as Export Houses and
granted special facilities to strengthen their negotiating capacity in foreign
trade and to build up a more enduring relationship between them and their
supporting manufacturers. They were eligible for the grant of Export House
Certificates on the basis of the exports actually made in the three year base
period 1975-76, 1976-77 and 1977-78.
Export Houses were entitled to the following
facilities :- (i) Import replenishment licences eligible to them as Registered
Exporters, (ii) Import replenishment licences transferred to them by others,
(iii) Import of items placed on Open General Licence. and (iv) Additional
Licences.
Replenishment Licences issued in the names of
Export Houses, or transferred to them by others, entitled them to import capital
goods placed on Open General Licence subject to Actual Users condition, and raw
materials, components, and spares placed on Open General Licence for Actual
Users (Industrial). The Additional Licence granted for 1978-79 would be valid
for the import of items appearing in Appendix 5 (List of Restricted Items) and
Appendix 7 (Restricted List - Iron and Steel Items) excluding, however, the
items appearing in Appendix 26. An Additional Licence would also be valid for
import of raw materials, components and spares placed on Open General Licence
for Actual Users (Industrial), the Export House being obliged to dispose of the
items so imported to eligible Actual Users only.
457 Several diamond exporters including the
fourth respondent, N. Nayan Kumar and Company, and the fifth respondent,
Rajnikant Brothers, applied for Export House Certificates and consequent
Additional Licences. Their applications were refused on the ground that they
had not diversified their exports number of writ petitions were filed in the
High Court of Bombay and in the High Court of Delhi, and in each case the High
Court held that the ground for rejecting the application was invalid and
directed the grant of an Export House Certificate and an Additional Licence to
the applicant. As those orders became the subject of corresponding appeals by
the Union of India in this Court which were disposed of by this Court by its
order dated April 18, 1985, the construction of which is central to the
controversy in this appeal, it would be appropriate to refer to those orders at
this point.
Taking the orders seriatim passed by the High
Court of Bombay there is first the order dated November 26, 1982 by Pendse, J.
in Writ Petition No. 1458 of 1979 filed by Narendra Mafatlal Mehta, whereby the
learned Judge directed the grant of an Export House Certificate under Import
Policy 1978-79 to the petitioner, but while extending the time for making
application for an Additional Licence he held the petitioner entitled to those
facilities only which were provided by paragraph 174 of that Import Policy.
Thereafter the same learned Judge passed an order dated November 11, 1983 in
Writ Petition No. 1293 of 1979 filed by D.
Navinchandra & Co. in which, while
directing the grant of an Export House Certificate under the Import Policy
1978-79 to the petitioner, Pendse, J. noted the objection on behalf of the
Government that some of the items which could have been imported under the
Import Policy 1978-79 could have been banned under the Import Policy 1983-84,
and the learned Judge observed that if any item was banned under the Import
Policy 1983-84 the petitioner would not be entitled to import that item even
though it was not banned under the Import Policy 1978-79. Another objection by
the Government that the petitioner should not be permitted to import items
which were canalized items under the Import Policy 1983-84 was rejected by
Pende, J., and he observed that canalised items were not banned items and the
petitioner should not be compelled to approach the canalising agency for the
import of items which were not canalised item under the Import Policy 1978-79.
He directed that the peti- 458 tioner would not be entitled to import only
those items which were specifically banned under the Import Policy 1983- 84
prevalent at the time of import. On December 23, 1983, Pendse, J. passed an
order in Writ Petition No. 761 of 1983 filed by Messrs. N. Nayankumar and
Company where he directed the issue of an Export House Certificate to the
petitioners under the Import Policy 1978-79 and held the petitioners entitled
to an Additional Licence for the import of items in the same terms as was set
forth in the order dated November 11, 1983 in the earlier case. The fourth
order in the series was passed on January 25, 1984 by Bharucha, J. in Writ
Petition No. 1048 of 1983 filed by Messrs. Mehta Gems., and that learned Judge
taking note of the orders passed earlier by Pendse, J. in similar cases, also
directed the issue of an Export House Certificate to the petitioners and while
granting time to the petitioners for applying or an Additional Licence he
directed:
"Save and except items which are
specifically banned under the prevalent import policy at the time of import,
the Petitioners shall be entitled to import all other items whether canalised
or otherwise.
Then followed the order dated January 30,
1985 passed by Sawant, J. In Notice of Motion No. 1194 of 1984 in Writ Petition
No. 761 of 1983 filed by N. Nayankumar Co. and the order directed :-
1. The Respondents should make the following
endorsement on the licence in question :- "This licence is valid for
import of items permissible to export houses under additional licence category
as per paragraph 176 of the Import and Export Policy for the period 1978-79
excluding those items which are banned for the period 1978-79 and which have
been banned during the import policy for the period 1984-85. The additional
licence category import allowed to be imported subject to the provisions of
paragraph 176 of the Import and Export Policy for the Period 1978-79.
2. The banned items referred to above mean
items which are "banned" and "absolutely banned".
459
3. The Petitioners will take out a separate
Motion for Import Replenishment (REP) Licence transferred to them by others, if
any.
4. No other order on the present Motion and
the Motion stands disposed of as above with no order as to costs.
Adverting to the orders passed by the High
Court of Delhi in the several Writ Petitions filed before it, we find that the
High Court by its order dated July 15, 1980 in Writ Petition No. 250 of 1979
filed by Jayantilal Mangalji Mehta held the petitioner entitled to an Export
House Certificate under the Import Policy 1978-79, and observed that the
Certificate would operate with effect from the "original entitlement keeping
in view the date of the application and the year for which 't was
applied". On September 3, 1982 the High Court directed in Civil Writ
Petition No. 251 of 1979 filed by Vijay Trading Company that an Export House
Certificate for the year 1978-79 should be issued o the petitioner and declared
him entitled to all the consequential Replenishment and Additional Licences,
and further directed, on a concession made by the petitioner that he would be
satisfied if he was permitted to import those items only which were not banned
in the year 1 1980-81 (as the case had originally come up for hearing on July
15, 1980), that the Replenishment and Additional Licences be issued in those
terms. Thereafter, on April 7, 1983 the High Court, while disposing of Writ Petition
No. 1501 of 1981 filed by Rajnikant Brothers, ordered the renewal of their
Export House Certificate for the Year 1978-79 and directed that as they had
filed the Writ Petition on May 11, 1981 they would be entitled to the
consequent licences for the import of those items only which were open to
import under the Import Policy 1981-82. The High Court went on to observe :-
"It may be that some of the items, which were permitted to be imported in
the year 1981-82 may now have been absolutely banned under the Policy for the
current year, i.e. 1983-84. In such a case the petitioner, of course, cannot be
permitted to import those items. If, for example, an item which could be freely
imported under the Policy for the year 1981-82 is now only canalised, then the
460 petitioner may still be entitled to import that item because merely
canalising an item cannot be regarded as import of that item being absolutely
banned.
It has been mentioned earlier that the Union
of India appealed against the orders of the High Court of Bombay and the High
Court of Delhi, the appeal being Civil Appeal No. 1423 of 1984 (Union of India
v. Rajnikant Brothers) and Civil Appeals Nos. 3232,3233 and 29020 to 29027 of
1984. A number of Special Leave Petitions, being S.L.Ps. Nos. 13826 to 13829 of
1983,9161,9174,10868, 952 to 971, 7190,2892 to 2899, 8224 of 1984, 14471 of
1982 and 9338 of 1983 were also disposed of along with the appeals. The order
dated April 18, 1985 disposing of those case reads as follows :- "We have
heard counsel for the parties and have gone through the judgments of the High
Courts of Bombay and Delhi. We are unable to find, in the facts and
circumstances of the case, any require- ment of diversification of exports as a
condition for the grant of Export House Certificates in the Import Policy for
the year 1978-79. While confirm- ing the High Court's Judgment quashing the
order impugned in the Writ Petitions in the High Court we direct the appellants
to issue the necessary Export House Certificates for the year 1978-79.
The Export House Certificates shall be
granted within 3 months from this date. Save and except items which are
specifically banned under the prevalent import policy at the time of import,
the respondents hall be entitled to import all other items whether canalised or
otherwise in accordance with the relevant rules. The appeals are disposed of
accordingly with no order as to costs." Pursuant to the orders of this
Court and of the High Court of Bombay and the High Court of Delhi, the diamond
exporters have been issued Additional Licences which permit them to import item
such as acrylic ester monomers.
The appellants are aggrieved by the grant of
such Additional Licences and see in the import of items under those 461
Licences grave danger to their indigenous industry.
Moreover, they say, valuable foreign exchange
will unnecessarily go out of the country. In the circumstances, the appellants
filed Writ Petition No. 11676 of 1985 in this Court complaining that the order
dated April 18, 1985 of this Court was being misinterpreted and, in
consequence, the import of acrylic ester monomers was being allowed. On August
1, 1985, this Court dismissed the Writ Petition with liberty to the appellants
to move the High Court of Bombay.
me appellants then filed Writ Petition No.
1549 of 1985 in the High Court of Bombay, but the writ petition was rejected in
limine by Pendse, J. On August 12, 1985. An appeal from that order, being
Appeal No. 726 of 1985, was dismissed by a Division Bench on August 16, 1985.
The appeal was dismissed on the ground, inter alia, that the withdrawal or
cancellation of the additional endorsement made on the Additional Licences
would conflict with the order of this Court and would amount to modifying or
nullifying it.
Thereafter, the appellant filed a special
leave petition in this Court, and on special leave being granted, this appeal
is now before us.
It is admitted between the parties in this
appeal that the fundamental question for consideration is the true meaning and
scope of the order dated April 18, 1985 made by this Court. There is no dispute
that the diamond exporters enjoying the benefit of the order are entitled to
the issue of Export House Certificates under Import Policy 1978-79 and to the
facilities flowing from such grant. There can also be no dispute that the
consideration where the items sought to be imported by such diamond exporters
are canalised cannot act as an impediment to the import directly by them. The
order declares further that such diamond exporters shall be entitled to import
all items "save and except items which are specifically banned under the
prevalent import policy at the time of import." The controversy between
the parties centres around the meaning of the expression "specifically
banned", specially in the context of an Additional Licence granted to such
diamond exporter.
Shri V.M. Tarkunde, counsel for the appellant
company, contends that under the aforesaid order dated April 18, 1985 Export
Houses holding Additional Licences are prohibited under the Import Policy
1985-88 from importing items other than 462 those appearing in Part II they are
taken into account the result would be the same. He points out that under the
Import Policy 1978-79 an Additional Licence was valid for the import of raw
materials placed on Open General Licence for Actual Users (Industrial) and the
relevant item 1 of Appendix 10 (List of Items on Open General Licence) excluded
from import the items under Appendix 3 (Banned List). As acrylic ester monomers
did not appear in that list nor were excluded by the other terms of item 1 of
Appendix 10 they could, under the Import Policy 1978-79, be imported under Open
General Licence by the holder of an Additional Licence, who was under paragraph
176 of the Import Policy, obliged to dispose them off to Actual Users
(Industrial) only. But now under the Import Policy 1985-88, prevalent at the
time of import, the holder of an Additional Licence is no longer entitled to
import acrylic ester monomers because that item is now insert ed in Appendix 3
Part A, which by a change of nomenclature, is currently described as the List
of Limited Permissible Items. Further, learned counsel contends, inasmuch as
the purpose of issuing Additional Licences is to satisfy the needs of small
scale manufacturers who are unable to import directly the small quantities of
raw materials required by them, and there fore the holder of an Additional
Licence is obliged to supply the imported item to Actual Users (Industrial),
regard must be had to the circumstances that under the Import Policy 1985-88
even Actual Users are debarred from importing acrylic ester monomers because
this item has been placed in Appendix 3 Part A. Item 1 of Appendix 6 of the
Import Policy 1985-88, which lists the items to be imported under Open General
Licence, excludes the items appearing in Appendix 3 Part A from import by
Actual Users (Industrial). Learned counsel urges that if Actual Users
(Industrial) are themselves barred from importing that item the holder of an
Additional Licence is also barred from doing so because in the final analysis
he imports only to supply the item to Actual Users (Industrial). The ban has
been imposed, it is pointed out, as part of a policy to protect indigenous
industry. Learned counsel urges that when the orders of the High Courts and of
this Court directed the grant of an Export House Certificate under the Import
Policy 1978-79 to diamond exporters for use during the operation of a
subsequent Import Policy, it must be regarded as the grant of an exceptional
right to them, because in all the years after 1978-79 diamond exporters were
not entitled to 463 any Additional Licence. In the circumstances, it is said,
when construing the scope of those orders, regard must be had to the
observations of this Court in Deputy Asst. Iron & Steel Controller &
Anr. v. L. Manickchand, Proprietor, Katrella Metal Corpn. Madras, [1972] 3
S.C.R. 1.
The Union of India has made common cause with
the appellant company, and Shri B. Datta, the learned Additional Solicitor
General of India, who appears on its behalf urges that the Export House
entitlement under the Import Policy 1978-79 has to be reconciled with the
entitlement and facilities available under the Import Policy 1985-88. He urges
that the expression "specifically banned" in the order dated April
18, 1985 of this Court must be given a meaning consistent with the changed
Import Policy now prevailing at the time of import, and that what is
impermissible for import against Additional Licences under the current Import
Policy cannot be allowed to be imported now. In the first place learned counsel
points out that the High Courts and this Court have already permitted a
departure from the current Import Policy in holding the diamond exporters
entitled to Export House Certificates. Under paragraph 173 of the Import Policy
1978-79 an Export House Certificate is normally valid for three years only. It
would no longer be valid now. In the year 1978-79 due to the need for
protecting export trade and providing incentives to diamond exporters they
became eligible for a total import licence to the extent of Rs. 108 against an
export valued at Rs. 100.
The Replenishment Licence entitled them to
import on an average of 75% of the F.O.B. value of exports while Additional
Licences entitled them to another 33%. With the development of the national
economy and the availability of indigenous products the policy was changed from
the year 1979-80 onwards, and for the prupose of calculating the entitlement
for an Additional Licence the value of exports of select products carrying an
import replenishment rate of more than 50% in Appendix 17 of the Import Policy
1979-80 was not to be taken into account, and the value of such exports was not
to be included by an Export House while applying for an Additional Licences. In
the result, the year 1978-79 was the only year for which diamond exporters
could be granted Additional Licences. Learned counsel emphasises the need, in
the circumstances, to ensure that further departure from the current Import
Policy should not be permitted. He 464 invites our attention to paragraph 35(1)
of the Import Policy 1985-88 which provides that Replenishment Licences and
Additional Licences held by Export Houses would cease to be valid for the
import of any item which could have been imported under Open General Licence
during the preceding financial year or earlier but was no longer so under the
Import Policy 1985-88.
Shri K.K. Venugopal appearing for the fourth
respondent, N. Nayankumar & Company, opposes the confined construction
sought to be put by Shri V.M. Tarkunde, learned counsel for the appellant
company and Shri B. Datta, Additional Solicitor General of India on the order
dated April 18, 1985 of this Court, and urges that diamond exporters, who were
entitled under the orders of the High Courts to the issue of Exports. Houses
Certificates and consequently Additional Licences were entitled under the terms
of those orders to import all items which could be imported under Open General
Licence under the Import Policy 1978-79 as well as all items which could be
imported under the Import Policy 1985-88, including items in Appendix 3 Part A
(List of Limited Permissible Items), but not items absolutely banned under the
Import Policy 1985-88. He contends that the rights of such diamond exporters
must be considered in the context of the Import Policy 1978-79 and not of the
Import Policy 1985-88. The applications for Export House Certificates were made
under the Import Policy 1978-79 and were denied by the Chief Controller of
Imports on a wholly untenable ground and consequently the intent of the orders
of the Courts was to entitle such diamond exporters to restitution. Such
restitution could be effected only if the diamond exporters could,
notwithstanding the passage of time occasion ed by the pendency of the
proceeding in Court for releif against the wrongful order, be placed back in
the position which they would have occupied had Export House Certificates being
granted. As regards the items which such diamond exporters were entitled to
import, he has referred to material on the record indicating how respondent 1
to 3 themselves under stood the orders of the Court. Our attention has been
invited to paragraph 5 of the counter affidavit of Dr. R.K. Dhawan, Deputy
Chief Controller of Imports and Exports, filed on behalf of respondents Nos. 1
to 3 which states :- "5. In terms of the Court order the parties can 465
import all the items which were under O.G.L.
during 1978-79 except animal tallow and
animal rennet which were now banned under Appendix 2-A." In this connection,
reference may also be made to the affidavit of Kanayalal J. Chellani, Deputy
Chief Controller of Imports and Exports, filed before the High Court of Bombay
in Writ Petition No. 1686 of 1985 (Reliance Industries Limited v. Union of
India), a copy of which has been included as Exhibit 19 to the affidavit of N. Nayankumar
and Company in reply to Civil Miscellaneous Petition 43,000 and 43,001 of 1985
in Civil Appeal No. 3233 of 1985 (Union of India & Ors. v. N. Nayankumar
& Ors.).
Paragraph 9 states :- "9. I say that it
is significant to note that the subject item has not been banned or restricted
(Appendix 2 of 1985-88 Policy. It has only been shifted from O.G.L. to L.P.L.
The petitioners after receiving a licence for import of the said item can very
well still import the item." Shri Venugopal has attempted to demonstrate
that there is need for importing acrylic ester monomers and that in fact the
Government of India envisages such import notwithstanding that the item is no
longer on the O.G.L. list but finds place now in Appendix 3 of the Import
Policy 1985-88. He invites our attention to the counter affidavit of Nikhal
Premchand Shah filed on behalf of N. Nayankumar & Company to the effect
that because of the inability of the Indian Petrochemicals Corporation Limited
to run its plant at full capacity the commodity which was being sold to Actual
Users at Rs.30 per kilogram was now being sold at Rs.
150 per kilogram. There is reference to a
news item in the Indian Express dated April 18, 1985 stating that although the
official price was about Rs. 67 per kilogram, a premium of over 155 per cent
was being charged in the open market, and the purchaser was compelled to pay a
total of Rs. 152 per kilogram. There are several provisions of the Import Policy
1985-88 under which import of acrylic ester monomers is permitted. They can be
imported by Actual Users as specified in paragraphs 82 (1) and 82(3) of that
Import Policy read with Appendix V-D of the Hand Book of Import and Export
procedures 1985-88. A Registered Exporter holding Replenishment Licences is
entitled to import the item under paragraph 466 195(1) of the Import Policy
inasmuch as Ethyl Acrylate Monomer and Butyl Acrylate Monomer appear as item
B.36 in Appendix 17 of the Import Policy. Under paragraph 204(1) of the Import
Policy, a special facility has been given to a manufacturer exporter holding a
valid Replenishment Licence issued in his name against exports of select
products manufactured by him to import the item specified in Appendix
3. It is contended by Shri Venugopal that the
Word "Banned" in the order dated April 18, 1985 of this Court should
be interpreted in a manner consistent with Joint Chief Controller of Imports
& Exports, Madras v. M/s. Aminchand Mutha etc., [1966] 1 S.C.R. 262 and
Union of India & Ors. v.
M/s. Indo-Afghan Agencies Ltd., [1968] 2
S.C.R. 366 and it should, therefore, be construed as referring to the import of
goods into the country and not in relation to the bar placed on an individual
to import goods which can otherwise be imported into the country. Even if the
goods covered by the Licences issued under the Import Policy 1978-79 were found
to be canalised under the Import Policy 1985-88 and, therefore, excluded from
import directly by private importers, the licences would still operate in
regard to such goods. Learned counsel urges that the word "in accordance
with such rules" in the order of the Court would govern only the manner
and method of import and the procedure for application, the fees to be paid,
the duties to be paid and other particulars and does not govern the entitlement
to import the goods.
Shri S.J. Sorabjee, appearing for N.
Nayankumar and Company, a respondent in Civil Appeal No. 3233 of 1984 filed by
the Union of India against the order of the High Court of Bombay, urges that
there is a fundamental qualitative difference between the goods the import of
which is prohibited and goods the import of which is restricted or controlled.
The goods of which import is prohibited cannot lawfully cross the customs
frontiers of India and enter the stream of trade and commerce in the country.
The expression "banned goods" or "banned items", he says,
as understood in the discourse of the import and export trade, means prohibited
goods. Restricted or controlled goods whose import is permitted into the
country subject to the fulfillment of certain conditions, learned counsel
submits, cannot be described as banned goods. The feature of non- importability
is a characteristic or an attri- 467 bute of the goods themselves and does not
depend upon the person who imports the goods. Our attention is drawn to the
distinction between the prohibition of prescription of certain goods, for
example, narcotics, counterfeit coins, obscene and seditious literature on the
one hand and goods the import of which is qualified by the category of the
person entitled to import the goods. Canalised goods are goods of which import
is subject to restriction, in that they cannot be imported directly by the
private importers and such goods are not considered "banned" goods.
It is urged that the import of goods can be validly prohibited only by an order
under s.3 of the Imports and Exports Act, 1947, and learned counsel refers to
Aminchand Mutha's case (supra) and Jagannath Aggarwal v. B.N. Dutts (Civil
Appeal No. 801 of 1964 decided on January 10, 1967). According to the learned
counsel, it is the import of only the items mentioned in Appendix 2-A of the
Import Policy 1985-88 which is covered by a notified order under the Act. No
such notified order has been made in respect of acrylic ester monomers. Learned
counsel points out that the ban on the import of goods into India is to be
found not only under the Imports and Exports Act, but under other enactments,
such as the Customs Act, the Foreign Exchange Regulation Act, the Drugs and
Cosmetics Act, and the Insecticides Act. Learned counsel contends that the
objective of the orders of the High Courts and of this Court was to effect
restitution to aggrieved diamond exporters, who were victims of an unlawful
denial of their applications for Export House Certificates.
It is urged that they are entitled to full
and complete restitution, and they have suffered already a diminution of their
rights in the additional fetter imposed by the Courts in excluding items which
were banned under the prevalent Import Policy at the time of import. There is
no justification, learned counsel contends, in further reducing the scope of
the restitution to which the diamond exporters were entitled and the orders of
the Courts should be construed against any further reduction of their
entitlement. It is asserted that the entitlement of the diamond exporter flows
from the Import Policy 1978-79 and not from the Import Policy 1985-88. There
are several items which can be imported under the Additional Licences issued
under Import Policy 1985-88 but the import of which was not permissible to
Additional Licences holders under the Import Policy 1978-79 and, it is said, if
the construction sought by the appellant company and the Government of India
468 were accepted the diamond exporters would suffer the worst under both
Import Policies and even partial restitution accorded by the order dated April
18, 1985 of this Court would be nullified. Finally, learned counsel contends
that assuming there is an ambiguity in the matter we should choose such a
construction as would not subject the party to pains and penalties under
various statutes besides the loss and hardship which would be inevitable. That
two views are possible, it is pointed out, is evident from the fact that the
Import Control authorities have taken the view that the expression
"specifically banned" in the orders of the Courts does not include
items placed on the Limited Permissible List of the Import Policy 1985-88.
Shri Ashok Desai, appearing for Rajnikant
Brothers, Respondent No. 5, relies on considerations somewhat parallel to those
placed before us by Shri Sorabjee and urges in particular that the right of the
importer to an Export House Certificate and to a consequential licence does not
alter with variations affected in the Import Policy during the passing of time
when litigation was pending and is not dependent on the exact point of time at
which the benefits were made available. In construing the order dated April 18,
1985 of this Court, learned counsel states that the central objective of
effecting restitution should be borne in mind and that the entitlement to the
Additional Licence is founded in the Import Policy 1978-79 and not in the
Import Policy 1985-88 and, it is said, paragraph 265 of the Import Policy
1985-88 cannot be invoked for construing the rights of the holders of
Additional Licences issued under the Import Policy 1978-79. The successive
screening of the rights through the two Import Policies, of 1978-79 and 1985-
88, would result in a construction so severe as to deny the diamond exporters
any restitution at all. Learned counsel cites, as an example of the scope which
this Court intended in its order dated April 18, 1985, the direction in that
order that the canalisation of items under the Import Policy 1985-88, which
were open to direct import under the Import Policy 1978-79, cannot operate as a
restriction. It is said that the ban against direct import by private importers
imposed by canalisation as thus removed, and the invention of the court always
was that only the items "specifically banned" fell within the
exception to the rights of the diamond exporter, "specifically
banned" items being those 469 absolutely banned and appearing in Appendix
2-A of the Import Policy 1985-88.
Shri Anil Dewan, who appears for Messrs
Hiralal Chaganlal and Shrijee Sales Corporation, Intervenors in this civil
appeal, has also been heard by us. He contends that the expressions used by the
courts in their orders must be understood in the sense in which those involved
in the import of goods and in import licensing understand such expressions, and
that if the construction suggested by the appellant Company and the Union of
India is accepted the diamond exporters would be wholly prohibited from
obtaining an Additional Licence under the Import Policy 1985-88. The expression
"specifically banned" must, according to learned counsel, refer to
items the import of which is banned not by reference to the person importing,
but because they are prohibited from any import whatsoever. Reference was made
to the change in the headings of the Appendices in successive Import Policies
and, it is urged, the change of the heading "List of Banned Items" in
Appendix 3 to the heading "List of Limited Permissible Items" must be
given due significance.
In other words, items which were banned are
now regarded as open to restricted import. Besides this, learned counsel has
adverted to the particular facts of his case, and asserts that while his case
was not one of those in appeal before this Court and therefore not directly
covered by its order dated April 18, 1985, no appeal had been filed by the
Government against the grant of licence in the case of these two diamond
exporters, and that the said diamond exporters had opened irrevocable Letters
of Credit before the writ petition filed by the appellant company, full payment
had been made and foreign exchange had left the country, and shipments had been
effected in June, 1985, and the Customs authorities had interpreted the order
in their case to mean that the goods imported were not "banned". It
is pointed out that only a small quantity of 32 tonnes had been detained at the
port, that the insurance cover of the shipper or seller no longer covered the
goods, that the goods were of hazardous nature and were lying uninsured, and he
prayed that the goods should be allowed to be cleared.
We think it necessary to keep in the
forefront the limits of the enquiry before us. We are not concerned with the
question of what order should be made on the controversy 470 arising between
the parties in the appeals. The Appeals have already been disposed of. They
were disposed of by the order dated April 18, 1985. It is not our function to
redetermine the issues arising in those appeals, and this is not a rehearing of
those appeals. We are charged with a more limited and pedestrian task. And that
is merely to construe the meaning and scope of the order dated April 18, 1985.
The submissions of learned counsel have been thoughtful and elaborate, and
having regard to the range covered by them they would have done justice to a
full hearing of the appeals themselves. We can take assistance from them, but
only for the purpose of discovering what has been said by the Court in its
order of April 18, 1985. That defines the scope of the present proceeding.
The terms in which the order has been made
appear simple on the surface, and yet as the range and depth of the contentions
at the Bar have demonstrated, they embody a certain complexity. At the outset,
it is necessary to examine the context in which the order was made. Diamond
exporters, who had been denied Export House Certificate under the Import Policy
1978-79, filed writ petitions in the High Court of Bombay and the High Court of
Delhi. The High Courts ruled that the ground on which the Export House
Certificates had been refused was wholly untenable. They directed the issue of
such Certificates as well as the consequent Additional Licences, but while
defining the right of the diamond exporters to import items under the
Additional Licences they also took into account the Import Policy prevailing at
the time of import in regard to the items which could not be imported. The
pendency of the litigation had inevitably occupied time, and meanwhile events
had not remained stationary. The contextual framework determining the import
structure had altered. Considerations pertaining to current economic and fiscal
needs had led to the periodic reorientation of the country's Import Policy.
Indigenous industry had put in appearance
over the years, and it was necessary to protect its growth and encourage its
development. Many items which could formerly be imported with comparative
freedom under Open General Licence were no longer so permissible. And, therefore,
items were moved from one List to another. There was a change in the
nomenclature of the Headings of different Lists, but that change was effected
merely by way of clarification in order to promote a clearer comprehension
among foreign countries of India's import 471 policy. it was a change
essentially in nomenclature, and for the most part effected no alteration in
the basis governing the classification reflected in the Lists. The basis of the
classification was supplied by the principle which determined the constitution
of each group. That principle bound the group together. It was a principal
which along with others formed the network of principles constituting the
current Import Policy. It is in this light that we must understand the order
dated April 18, 1985. The Courts were confronted with the problem that items
which were open to import under Open General Licence to an Export House holding
an Additional Licence were no longer included in that List and had meanwhile
been transferred to a List not accessible to the holders of Additional
Licences. me dictates of reality rendered it necessary for the Courts to take
into account the altered situation, and this they attempted to do by framing
their respective orders in appropriate terms.
They took into account not only the rights of
the diamond exporters under the Import Policy 1978-79 but also the effect and
impact on those rights of the Import Policy operating at the time of the
import.
It is desirable at this point to keep in mind
that the appeals filed in this Court against the orders of the High Courts were
appeals filed by the Union of India. There were no appeals by the diamond
exporters. The complaint by the Union of India before this Court was that the
High Courts had granted too much to the diamond exporters or even that no grant
was called for at all. There was no complaint by the diamond exporters before
the Court that the grant was insufficient and that more should have been
granted. This Court was required to consider only whether the relief granted by
the High Courts should have been granted at all, not whether it should be
enhanced. In other words, the terms of the High Court orders determined the
outer limit of the rights of the diamond exporters. As this Court dismissed the
appeals and affirmed those orders, the meaning and scope of this Court's order
dated April 18, 1985 must be discovered from the terms of the High Court
orders. And that would plainly be so because the language in which the order of
this Court is couched bears close comparison with one or other of the High
Court orders.
In construing the order dated April 18, 1985
of this Court, it is necessary to note that the real controversy 472 between
the parties centres on the meaning of the words "specifically
banned". They are the key words, and indeed the principal submissions made
by the array of learned counsel before us have been devoted to ascertaining the
significance of those words. They are words which were used by Pendse, J. and
Bharucha, J. in the orders made by them, and our task is to find out what they
were intended to mean.
Now, all the appeals before this Court were
disposed of by the order dated April 18, 1985. It was a single order in respect
of the different appeals, and what lt intended to say in one appeal it did in
another. The Court proceeded on the assumption that the Judges of the High
Court of Bombay should be considered to have spoken with one voice and meaning
although in different language. And that Pendse, J., Bharucha, J. and Sawant,
J. were all in agreement as to the extent of relief to be granted to the
diamond exporters. To appreciate then what is intended by the words
"specifically banned" it is necessary to have recourse also to the
order made by Sawant. J. He directed that the Additional Licences were valid
for the import of items permissible to Export Houses under such Licence
according to paragraph 176 of the Import Policy 1978-79 "excluding those
items which are banned for the period 1978-79 and which have been banned during
the Import Policy for the period 1984-85," and then explained that
"banned items referred to above mean items which are 'banned' and
'absolutely banned'. The word "banned" in that order has been used
for the period 1978-79 , and it has also been used in relation to the period
1984-
85. It is obvious that in the light of the
explanation appended by the learned Judge when he spoke of items which were
banned for the period 1978-79, he had in mind items which were
"banned" and items which were "absolutely banned", and he
was clearly referring to Appendix 3 (List of Banned Items) and Appendix 4 (List
of Absolutely Banned Items). Appendix 3, it will be recalled, 5; the list of
items which could not be imported by an Export House on an Additional Licence.
It was a ban with reference to the category of importer. Appendix 4 is the list
of items which could not be imported by anyone whosoever. When regard is had to
the Import Policy 1984-85, reference must necessarily be made to the
corresponding Appendix 3, formerly described as the List of Banned Items, and
now described as the List of Limited Permissible Items, and Appendix 2 Part A
which is now the List of Banned Items replacing Appendix 4 (List of Absolutely
Banned Items). In 473 other words, the Additional Licences to be issued to
diamond exporters entitled them to import items permissible to Export Houses
under such Licence under the Import Policy 1978-79 excluding those items which
fell within Appendices 3 and 4 of the Import Policy 1978-79 and also excluding
items which fell in Appendix 3 and Appendix 2 Part A of the Import Policy
1984-85. Upon what we have said earlier, that is the meaning which we think
must also be given to the terms of the order dated April 18, 1985 of this
Court. Where the Import Policy prevailing at the time of import is the Import
Policy 1985-88, the items excluded are those enumerated in the corresponding
Appendix 3 and Appendix 2 Part A of that Import Policy. That conclusion follows
irresistibly on the analysis attempted by us and in the context in which the
order was made.
We are mindful of the submissions made before
us by learned counsel for the different diamond exporters that the word
"banned" in the import trade should mean item which are absolutely
banned and cannot be imported under any circumstance whatever, and that an
import of items subject to restrictions respecting the category of importer
should not fall within the expression "banned". Reliance has been
placed on Awinchund Mutha's case (supra) as well as Indo- Afghan Agencies Ltd.'s
case (supra). Goods can be banned it is urged, only by an order under s. 3 of
the Imports and Exports Act, 1947, and we are referred to Jagannath Aggarwal v.
B.N. Dutta (supra) (Civil Appeal No. 801 of 1964 decided on January 10, 1967).
It seems to us that when the word "banned" was used, it was intended
to take in items which were banned altogether as well as items which were
banned for import by the holder of an Additional Licence. The Court was
concerned with the right to import of the holder of an Additional Licence. The
holder of an Additional Licence was prohibited from importing items which were
banned altogether and also items which he, as the holder of an Additional
Licence, was banned from importing. If the more liberal interpretation
suggested by learned counsel for the diamond exporters was given to the words
"specifically banned" we would be enlarging the scope of relief
granted by Sawant 7 J., and such a construction is clearly impermissible when
no diamond exporter had appealed against that order before this Court. It may
be of some relevance to note that when this Court made the order dated April
18, 1985 when the Import Policy 1985-88 was in force, there were only two items
474 which were absolutely banned, and they were animal tallow and animal rennet.
That was also substantially the position under the Import Policy 1984-85.
It has been urged on behalf of the respondent
diamond exporters that if the order dated April 18, 1985 is constured in the
manner suggested by the appellants it will result in nullifying the relief
envisaged by the Court in making the order. We are unable to subscribe to that
view.
In the Import Policies of 1984-85 and 1985-88
the items open to import under Open General Licence are now set forth in
Appendix 6. A perusal of Part II of List 8 in Appendix 6 shows that it
enumerates in fairly long detail the items allowed to be imported by Export
Houses holding Additional Licences for the sale of those items to eligible
Actual Users (Industrial) subject to Actual User Condition. That is the
entitlement of the holder of an Additional Licence under paragraph 265(4) of
the Import Policy 1985-88.
We are conscious that the right of a diamond
exporter to an Additional Licence does not issue from paragraph 265 of the
Import Policy 1985-88. Paragraph 265 enables the grant of Additional Licences
to other Export Houses, and diamond exporters are not entitled to Additional
Licences under that Import Policy. There can be no dispute that the Export
House Certificates granted to the diamond exporters pursuant to the orders of
the High Courts and of this Court are those envisaged under the Import Policy
1978-79. But for the purpose of granting relief in their favour the Courts took
into account the conditions prevailing at the time of import, and therefore the
provisions of the Import Policy 1985-88 become relevant. They are relevant for
the purpose of construing the terms in which relief has been granted by the
Courts. They do not constitute the source of those rights.
Great emphasis has been laid by learned
counsel on the overriding consideration that the intent of the High Courts and
of this Court was to effect restitution to the diamond exporters, who had been
denied Export House Certificates to which they were clearly entitled, and there
is no justification, it is said, for so construing the order dated April 18,
1985 that the extent of restitution stands attenuated. We think it necessary to
point out that the diamond exporters cannot, upon our construction of the
order, 475 be regarded as denied restitution. But the restitution available to
them has been reduced by the express direction of the Court that they are not
entitled to import items excluded under the Import Policy prevailing at the
time of import in addition to those excluded under the Import Policy 1978-79.
We may, in this connection, refer to the observations of this Court in
Manickchand's case (supra) where it was pointed out:
"In granting licences for imports, the
authority concerned has to keep in view various factors which may have impact
on imports of other items of relatively greater priority in the larger interest
of the over-all economy of the country which has to be the supreme
consideration ; and an applicant has no absolute vested right to an import
licence in terms of the policy in force at the time of his application.
It seems to us that the construction placed
By us on order dated April 18, 1985 is consistent with the principle that the
Court must be presumed to have given effect to the law. That presumption can be
rebutted only upon evidence showing a clear intention to the contrary, either
expressly or by necessary implication. We see no such evidence before us. En
passant, we may refer to paragraph 35(1) of the Import Policy 1985-88, which
declares:
"35.(1). REP licences and Additional
licences held by Export Houses/Trading Houses will cease to be valid for import
of any item which could be imported under Open General Licence during the
preceding licencing year or earlier but is no longer so in this Import-Export
Policy." But while the construction suggested by the appellant company and
the Union of India of the order dated April 18, 1985 of this Court has found
favour with us, the scope of the relief to be granted remains to be considered.
The interim orders passed by the Court in this appeal were made on the basis
that they operate in respect of all diamond exporters seeking to import acrylic
ester monomers pursuant to the Additional Licences issued to them and this case
has been heard on the assumption that the orders made on the appeal 476 will
govern all such diamond exporters. In drawing up those orders, a few facts need
to be carefully considered. As mentioned earlier, consequent upon the rejection
of their applications for Export House Certificates under the Import Policy
1978-79 a number of diamond exporters approached the High Court of Bombay and
the High Court of Delhi and were granted relief. The directions made by the
High Courts issued in a steady and continuous stream from the year 1980
onwards, and the High Court of Bombay in particular detailed the facilities to
which the petitioner diamond exporter would be entitled on the issue of an
Export House Certificate. me orders continued all the way upto January, 1985.
Appeals filed by the Union of India in the High Court of Bombay against the
orders of the respective learned Single Judges were dismissed by a Division
Bench of the High Court and those orders were affirmed. In the writ petition
filed by Messrs. Vijay Trading Company in the High Court of Delhi, the High
Court had directed that although the petitioner was entitled to an Export House
Certificate for the year 1978-79 it would be entitled to import those items
only which were not banned in the year 1980-81, the writ petition having been
taken up for hearing during that year.
A Special Leave Petition by the union of
India against that order was dismissed by this Court on April 18, 1983. An
application by the Union of India for review of that order was dismissed by
this Court on May 4, 1984. Meanwhile, the Union of India appealed to this Court
against the orders of the High Court of Bombay and of the High Court of Delhi
made in favour of the diamond exporters in the writ petitions filed by them and
it has not been shown that any stay order was granted by this Court in those
appeals. The appeals were heard along with several special leave petitions by
this Court, and were dismissed by the order dated April 18, 1985 in terms
which, as has been mentioned earlier, affirmed the High Court orders. The
appellant company in this case filed a writ petition in the High Court of
Bombay and that writ petition was dismissed on August 12, 1985. Meanwhile,
Additional Licences had been issued to some of the diamond exporters by the
Import Control Authorities, and it appears clearly from the affidavit of Dr.
R.K. Dhawan, Deputy Chief Controller of Imports and Exports and the affidavit
of Shri Kanayalal J. Chellani, Deputy Chief Controller of Imports and Exports
that the Import Control Authorities themselves considered that the diamond
exporters holding Additional Licences were entitled to import all the 477 items
accessible to them under Open General Licence under the Import Policy 1978-79
except those placed in Appendix 2 Part A of the Banned List under the Import
Policy 1985-88.
It also appears that some of those diamond
exporters who had been granted Additional Licences pursuant to the orders of
the High Courts have already fully utilised those Licences and in some cases
have partly utilised them. Throughout this period any diamond exporter granted
an Additional Licence under the Import Policy 1978-79 could bona fide believe
having regard to the ccnsistent orders made by the Courts and the equally
consistent manner in which the Import Control Authorities had construed those
orders, that he was entitled to effect imports accordingly. Many of them opened
irrevocable Letter of Credit on orders placed with foreign suppliers convinced
that they were fully entitled to import the items ordered by them. This popular
impression continued unabted until October 18, 1985, when for the first time
since lt all began this Court made an order, on the Special Leave Petition
giving rise to the present appeal (Special Leave was granted on November 5,
1985), imposing a restraint on the clearing of acrylic ester monomers by the
customs authorities. The date, October 18, 1985, is a critical date, because
for the first time diamond exporters can be said to have been warned that the
Court could possibly take a different view from that prevailing hitherto.
Meanwhile, as we have said, some of the diamond exporters had already
irretrievably committed themselves by opening and establishing irrevocable
Letters of Credit. We think it appropriate that those diamond exporters who
were granted Additional Licences under the Import Policy 1978-79 and had opened
and established irrevocable Letters of Credit before October 18, 1985 should be
permitted, notwithstanding the construction we have placed on the order dated
April 18, 1985 of this Court, to clear the goods imported, or to be imported,
by them pursuant to such irrevocable Letters of Credit. In other words, all
imports effected pursuant to such Letters of Credit should be deemed to have
been legally and properly made, ant should entail no adverse consequences whatsoever,
In taking this view we are impressed by the broad principles of justice, equity
and fair play and by the need to avoid undeserved hardship, and we are not
persuaded to the contrary by legal technicalities. We may point out that the
validity of this principle has been recognised in paragraph 35(3) of the Import
Policy 1985-88 itself, where while declaring that Additional Licences issued to
Export Houses in the Preceding licencing 478 year or earlier shall cease to be
valid for the import of items of spares appearing in certain Appendices,
including Appendix 3, of the Import Policy for the licencing year an exception
has been carved out insofar that "these restrictions will not apply to the
extent the licence holders have made firm commitments by irrevocable Letters of
Credit opened and established.......... before 1st April 1985", the date
when the Import Policy 1985-88 came into force.
At the same time we make lt clear that
diamond exporters who pursuant to the issue of Additional Licences under the
Import Policy 1978-79 have opened and established irrevocable Letters of Credit
on or after October 18, 1985 will not be entitled to the benefit of this order.
The appeal, and therefore the writ petition
filed by the appellants, are disposed of accordingly. There is no order as to
costs.
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