D.
Navinachandra & Co., Bombay & ANR Vs. Union of India & Ors [1987] INSC
113 (15 April 1987)
MUKHARJI,
SABYASACHI (J) MUKHARJI, SABYASACHI (J) PATHAK, R.S. (CJ) MISRA RANGNATH
CITATION:
1987 AIR 1794 1987 SCR (2) 989 1987 SCC (3) 66 JT 1987 (2) 141 1987 SCALE
(1)790
CITATOR
INFO : RF 1989 SC 690 (5,6)
ACT:
Import
Policy, 1978-79--Diamond Exporters granted Export House Certificates and
Additional Licences pursuant to orders of Court dated April 18,
1985--Entitlement for import of items under the Import Policy current at the
time of import--Effect of subsequent decisions rendered by the Court.
HEADNOTE:
By
a common order dated April 18, 1985 in C.A. No. 1423 of 1984, etc., Union of
India v. Rajnikant Bros. the Court had directed issue of Export House
Certificates and Additional Licences to the petitioners and other diamond
exporters under the Import Policy 1978-79 stating: "Save and except items
which are specifically banned under the prevalent Import Policy at the time of
import, the respondents shall be entitled to import all other items whether
canalised or otherwise in accordance with the relevant rules".
The
petitioners, who were issued Additional Licences pursuant to this order,
imported several consignments of items falling under Appendices 2B, 3 and 5 of
Import Policy, 1985-88, and, while clearing them, the Customs Authorities
imposed a fine of Rs.45,000 in respect of certain items failing in Appendix 2B
and issued show cause notices in respect of certain other items failing in
Appendices 2B and
5.
The petitioners challenge was directed not only against these orders, but
extended to certain subsequent decisions of the Court which, according to them,
had cut down the effect of the Court's earlier order dated April 18, 1985 in
Union of India v. Rajnikant Bros.
Dismissing
the petitions,
HELD:
The decisions rendered subsequent to the decision dated April 18, 1985 in Union
of India v. Rajnikant Bros. do not take any different or contrary view. Indeed,
they give effect to the letter and spirit of that decision. The basic
background in which the decision in Union of India v. Rajnikant Bros. was
rendered was that Export Houses had been refused Export House Certificates on
the ground that they had not diversified their exports. It was found that was
wrong. The wrong was undone by directing issue of Export House Certificates for
990 the year 1978-79 though the order was passed in April, 1985.
That
was a measure of restitution, but the Court, while doing so, ensured that
nothing illegal was done. It is a presumption of law that the courts act
lawfully and will not ask any authority to do anything which is illegal. It was
directed that except those items which were specifically banned under the
prevalent import policy at the time of import, the respondents therein were
entitled to import all other items whether canalised or not canalised in
accordance with the relevant rules. Analysing the said order, it is apparent:
(1) that the importation that was permissible was of goods which were not
specifically banned, (2) that such banning must be under the prevalent import
policy at the time of import. and (3) whether items which were canalised or
uncanalised would be imported in accordance with the relevant rules. These
conditions had to be fulfilled. The court never did and could not have said
that canalised items could be imported in any manner not permitted nor it could
have given a go-bye to the canalisation policy. [1000C-H] (ii). In Raj Prakash
Chemicals v. Union of India,, it was explained that only such items could be
imported by diamond exporters under the Additional Licences granted to them as
could have been imported under the Import Policy 1978-79 and were also
importable under the Import Policy prevailing at the time of import. These were
the items which had not been 'specifically banned' under the prevalent Import
Policy. The items had to pass through two tests, firstly, they should have been
importable under the Import Policy 1978-79 and, secondly, they should also have
been importable under the Import Policy, 1985-88 in terms of the Order dated
18th April, 1985 and if one may add, in such terms 'in accordance with the
import rules' whether canalised or not canalised. The Court had no occasion to
consider in that case the significance of the words 'whether canalised or
otherwise' mentioned in the Order dated 18th April, 1985 in Union of India v.
Rajnikant Bros., because that point did not arise there. [1000H; 1001A-D] (iii)
What did the court then intend by the words 'whether canalised or otherwise'
used in the order dated 18th April, 1985 in Union of India v. Rajnikant Bros?
The diamond exporters could import the items which they were entitled to import
under the Import Policy 1978-79 provided they were importable also under the
Import Policy ruling at the time of import. These are items which were open to
import by Export Houses holding Additional Licences for Sale to the Actual
Users (Industrial). These are items which were directly imported, for example,
items in Part II List 8 of Appendix 6 of Import Policy 1985-88. These are items
which are not canalised. Canalised items are those 991 items which are
ordinarily open to import only through a public sector agency. Although generally
these are importable through public sector agencies, it is permissible for any
Import Policy to provide an exception to the rule and to declare that an
importer might import a canalised item directly. It is in that sense and that
sense only that the Court could have intended to define the entitlement of
diamond exporters. They would be entitled to import items which were canalised
or not if the Import Policy prevailing at the time of import permitted them to
import items failing under such category. [1001D-G] (iv) In the Order dated
18th April, 1985 in Union of India v. Rajnikant Bros., this Court did not do
away with canalisation. That was not the issue before this Court. This
expression 'whether canalised or not canalised' was to include both. This Court
did not say that canalised items could be imported directly by the importers
ignoring the canalisation process. High public policy, it must be emphasised,
is involved in the scheme of canalisation. This purpose of canalisation was
examined by.this Court in Daruka
of
this Court observed that the policies of imports or exports were fashioned not
only with reference to internal or international trade, but also on monetary
policy, the development of agriculture and industries and even on the political
policies of the country and rival theories and views may be held on such
policies. If the Government decided an economic policy that import or export
should be by a selected channel or through selected agencies, the court would
proceed on the assumption that the decision was in the interest of the general
public unless the contrary was shown. Therefore, it could not be collaterally
altered in the manner suggested. The policy of canalisation which is a matter
of policy of the Government was not given a go-bye by the observations referred
to in the Order of 18th April, 1985. Indeed, it is possible to read the Order
in a manner consistent with canalisation scheme in the way we have indicated.
If that is so, then it should be so read. When this Court observed that the
fact whether items were sought to be imported by diamond merchants were
canalised, would not be an impediment to the import directly by them, the Court
meant to say that this could be imported directly by them through the
canalisation organisation. The need for canalisation stands on public policy
and that need cannot be lightly or inferentially given a go-bye. It should not
be presumed that collaterally the court had done away with the system of
canalisation based on sound public policy. We have found nothing in the
different authorities on this subject, which militate against the above views.
Therefore, the action taken by the Customs Authorities in issuing adjudication
notice and proceeding in 992 the manner they did we are of the opinion that
they have not acted illegally or without jurisdiction. This must proceed in
accordance with law as laid down by this Court which, in.
our
opinion is clear enough. The fact that in subsequent decision, the petitioner
is not a party is not relevant.
Generally
legal positions laid down by the court would be binding on all concerned even
though some of them have not been made parties nor were served nor any notice
of such proceedings given. [1001H; 1002A-G] Union of India v. Rajnikant Bros.,
C.A. No. 1423 of 1984 decided on April 18, 1985; Raj Prakash Chemicals Ltd.
& Anr.
v.
Union of India & Ors., [1986] 2 S.C.C. 291; M/s. Indo Afghan Chambers of
Commerce &Anr., etc. v. Union of India & Ors., etc., [1986] 3 S.C.C.
352; Union of India v. Godrej Soaps Pvt. Ltd. &Anr., [1986] 4 S.C.C. 260;
and M/s. Star Diamond Co. India v. Union of India & Ors., [1986] 4 S.C.C.
246,
discussed, explained and reiterated. Daruka & Co. v.
Union
of India & Ors., [1974] 1 SCR 570, referred to.
&
ORIGINAL JURISDICTION: Writ Petition Nos. 1483, 1494 and 1544 of 1986 etc.
Under
Article 32 of the Constitution of India.
Dr:
Y.S. Chitale, Satish Chandra, P.K. Banerjee, S.N.
Kacker,
K.C. Agarawal, S.S. Rathore, L.K. Garg, M.K.D.
Namboodiary,
P.M. Amin, Ashok Grover, Bulchandani, M.N.
Shroff,
P.H. Parekh and Sohail Dutt for the Petitioners.
K.
Parasaran, Attorney Genera1, G. Ramaswamy Additional Solicitor General, G.
Subramaniam, A.S. Rao, Ms. Relan and P.P. Parmeshwaran for the Respondents.
R.S..Nariman,
(Indo Afghan Chamber of Commerce). Kapil Sibal, (M/s Raj Prakash Chemicals) and
Rajiv Dutta for the Interveners.
The
Judgment of the Court Was delivered by SABYASACHI MUKHARJI, J. Writ Petition
No. 1483 Of 1986 is directed. against 'the Show Cause Notices dated 21st
August, 1986, 11th September, 1986 and 26th September, 1986 issued to the
petitioners--Messrs.D. Navinchandra & Company, a partnership firm and Dilip
Kumar Dalpatlal Mehta, a partner'of the said firm. In order to 'appreCiate this
challenge;, it is necessary to refer to certain facts. This petition raises the
question of the rights of the petitioners and 993 other diamond exporters who
were entitled to export house certificates and additional licences under import
policy of 1978-79 and who were granted the same pursuant to the judgment and
'order of this Court dated 18th April,1985. As we shall explain later, there is
no conflict With this decision of a Bench which consisted of a bench of three
judges and the subsequent decisions of this Court which We. Shall presently
refer. It is necessary also that in order to make out. a case, the petitioners
have sought to emphasise on the point that the decision dated 18th April, 1985
was a decision of three learned Judges, in Order to spin out a case of some
sort of conflict with this decision and certain subsequent decisions of this
Court consisting of benches of two' learned judges. It appears that the import
policy issued by the Government of India for the year 1978-79 by paragraph 176
provided for, additional licences. On 29th April, 1979, the first petitioner, a
diamond exporters, was refused Export House Certificate. The said. petitioner
filed a writ petition before the High Court of Bombay. being Misc. petition No.
1293/1979. By his order and judgment, Pendse , J.
made
the rule absolute holding that canalised items were not banned items, and there
was no reason why the first petitioner should not be compel-" led to
approach the canalising agency for import of the same. On 7th April, 1983, the
Delhi High Court delivered a judgment in Civil writ Petition No.
1501
of 1981 (which for the sake of convenience, the party has chosen to describe as
Rajnikant Bros. & Ors. case allowing the diamond exporters the same and
holding that merely Canalising an item could not be regarded as import of that
item being absolutely banned. Against` these judgments special leave petitions
were filed in this Court, Appeal was also filed on 27th March. 1984 by the
Import Control Authorities and Union of India against the judgment dated 11th
November, 1983 mentioned hereinbefore passed by Pendse, J. and the said appeal
as dismissed on that date.
Against
the' same, the, Export Control authorities and Union of India filed special
leave petition No. 7190 Of 1984 in this Court. Similar special leave petitions
were filed in this Court against similar judgments of the Bombay High Court.
On
18th April, 1985, by a common judgment, the special leave. petitions were
disposed of. As much has been made out 'of this judgment and order, it is
necessary to refer to the same. The matter was disposed of by the order in
Civil Appeal No, 1423 of 1984' by a bench consisting Fazal Ali, J.,
Varadarajan, J. and one of us (Sabyasachi Mukharji, J.).
It
was held by the said order that there was no requirement of diversification of
exports as a condition for the grant of Export 994 House Certificate in the
Import Policy for 1978-79. Therefore, while confirming the High Court's
judgment, quashing the order impugned in the writ petitions in the High Court,
this Court directed the appellants namely Union of India and Import Control
authorities to issue necessary Export House Certificates for the year 1978-79.
It was further directed that Export House Certificates should be granted within
three months from that date. The order stated that 'save and except items which
are specifically banned under the prevalent import policy at the time of
import, the respondents shall be entitled to import all other items whether
canalised or otherwise in accordance with the relevant rules'.
The
appeals were disposed of accordingly with no order as to costs.
Pursuant
to the aforesaid order, on 29th July, 1985, import licence was issued, it is
claimed, to the first petitioner. of the c.i.f. value of Rs.71,15,900. Pursuant
to the said import licence, the first petitioner imported several consignments
of items failing either under Appendix 3 (List of Limited Permissible Items),
Appendix 2B (List of Restricted Items) or Appendix 5 (Canalised Items).
According to the petitioner, in the matter of clearance of such consignments
different standards were applied by the Custom authorities.
On
18th October, 1985, in special leave petition No.
11843
of 1985--In the case of Raj Prakash Chemicals Ltd. v.
Union
of India this Court directed that Acrylic Ester Monomors would not be permitted
to be cleared until further orders unless they had already been cleared.
Similarly, on 31st January, 1986, interim order was passed in the case of M/s
Indo-Afghan Chambers of Commerce v. Union of India (Writ Petition No. 199 of
1986) directing that Dry Fruits in respect of which Custom clearance had been
obtained till 30th January, 1986 would be allowed to be cleared and no
clearance of Dry fruits from 31st January, 1986 onwards would be made by the
Custom authorities until further orders.
On
5th March, 1986, judgment was delivered in the case of Raj Prakash Chemicals
Ltd. and Another v. Union of India and Others, [1986] 2 SCC 297 by a bench
consisting of three learned Judges-Tulzapurkar, J. and two of us (R.S. Pathak,
J. as the Chief Justice then was, and Sabyasachi Mukharji, J.). This Court held
that additional licence holders were entitled to import items permissible to
Export Houses under Import Policy 1978-79 excluding those items which fell in
Appendix 3 (List of Banned Items) of the Import Policy 1985-88. This Court
observed that diamond exporters who were granted Addi995 tional Licences had
formed a bona fide belief that they could import all the items accessible to
them under Open General Licence under the Import Policy of 1978-79 except those
placed in Appendix 2 Part A of the Banned List under the Import Policy 1985-88.
This belief was formed on the basis of consistent orders of the High Courts and
consistent manner in which Import Control authorities construed those orders.
In view of such a belief, it was further held by this Court, in the interest of
broad principles of justice, equity and fair play and to avoid undeserved
hardship, without going to the legal technicalities 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 18th
October, 1985 i.e. the date on which the interim order was passed by this Court
in Raj Prakash's case as mentioned hereinbefore, should be permitted,
notwithstanding the construction placed by this Court on the order dated 18th
April, 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, and should entail no adverse consequences
whatsoever. This Court further reiterated that the Court must be presumed to
have given effect to law--That presumption can be rebutted only upon evidence
showing a clear intention to the contrary, either expressly or by necessary
implication. This Court noted that the order dated 18th April, 1985 which we
have set out hereinbefore used the expression "specifically banned"
and the controversy before this Court in Raj Prakash's case was on the meaning
of the expression 'specifically banned' and the controversy between the parties
centered round the meaning of the words 'specifically banned'.
It
was mentioned that Appendix 3 is the list of items which could not be imported
by an Export House on additional licence, it was a ban with reference to the
category of importers. Appendix 4 is the list of items which could not be
imported by anyone whosoever. This Court, therefore, was of the view that 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 other words, said the Court, 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 996 Policy 1984-85. This Court was of the view that this is the
meaning which must be given to the terms of the order dated 18th April, 1985.
This Court noted that when this Court made the previous order on 18th April,
1985 when the Import Policy of 1985-88 was in force. there were only two items
which were absolutely banned. and these were animal tallow and animal cannot.
That was also Substantially the position under the Import Policy 1984-85.
This
Court was of the view that in the Import Policies of 1984-85 and 1985-88 the
items open to import under Open General Licence were then set forth, when Raj
Prakash's judgment was delivered i.e. in Appendix 6. A perusal of Part I1 of
List 8 in Appendix 6 indicated that it enumerated in fairly long detail the
items allowed to be imported by the Export Houses holding Additional Licences
for sale of those items to eligible Actual Users (Industrial) subject to Actual
User conditions. That was the entitlement of the holder of an Additional
Licence under paragraph 265(4) of the Import Policy 1985-88.
It
is necessary to set out in detail the aforesaid judgment and also to refer to
the order of 18th April. 1985 to emphasise that whether non-canalised items
could be imported directly. and not through canalised agency, was not in issue
in either of these two cases. nor decided or adjudicated upon.
In
the judgment in Raj Prakash's case (supra), it was held that Additional Licence
holders were entitled to import items permissible to Export Houses under the
Import Policy 1978-79 excluding those items which fell in Appendix 3 (list of
banned items) of the Import Policy 1985-88.
On
17th March, 1986, letter was written by the Joint Chief Controller of Imports
to Messrs. B. Vijay Kumar and Co. stating that against Additional Licences
issued in terms of this Court's Order dated 18th April, 1985, import of items
permissible against Additional Licences in terms of Policy for 1978-79 would be
allowed even if such items were in the list of canalised items in Policy for
1978-79..
On
3rd April, 1986, there was a meeting with Member of C.B.E.C. and Principal
Collector where the minutes recorded that items which were under O.G.L. during
1978-79 and subsequently canalised in Policy for 1985-88 would be allowed to be
imported. On 23rd April, 1986, a circular was issued from the Under Secretary
to the Government of India to port authorities stating that canalised items 997
were not covered within the purview of this Court's decision in Raj Prakash's
case and Additional Licence holders would be allowed to import canalised item.
By a letter on 14/15th May, 1986 from Principal Collector to Chairman, Western
Region, Federation of Indian Export Organisation, the matter had been clarified
and clearance of canalised items against Additional Licences was
unconditionally allowed.
This
Court again dealt with the question in the case of M/s Indo Afghan Chambers of
Commerce and Another etc. v. Union of India and Other etc., [1986] 3 SCC 352.
In that decision two of us (R.S. Pathak, J. as the learned Chief Justice then
was and Sabyasachi Mukharji, J.) were parties. It was held that under the
import policy of 1978-79 dry fruits (excluding cashewnuts) could be imported by
all persons under the Open General Licence. There was no need to obtain any
Additional Licence for importing items in the year 1978-79 and therefore, the
wrongful denial of Additional Licences to diamond exporters in the year
1978-79, could not justify any restitution subsequently in regard to the import
of dry fruits (other than cashewnuts). It was further observed that under the
Import Policy 1985-88, dry fruits (excluding cashewnuts and dates) were no
longer open to import under the Open General Licence. The sanction for
importing them must be found under some other provision of the Import Policy.
The diamond exporters, it was held,' could not be regarded as dealers engaged
in the trade of stocking and selling dry fruits (excluding cashewnuts and
dates). They were, therefore, not entitled to the advantage of paragraph 181
(3) of the Import Policy 1985-88. Dry fruits, it was further held, must be
regarded as consumer goods of agricultural origin. The words "agricultural
origin" in Item 121 of Appendix 2 Part B are used in the broadest sense.
The words 'consumer goods' in item 121 referred to dry fruits imported for
supply to Actual Users (Industrial). It was further held that dry fruits do not
appear in Appendix 3 Part A and 5 nor can be imported under the Open General
Licence under the Import Policy 1985-88, Inasmuch as they fail within Item 121
of Appendix 2 part B they are excluded from the scope of Item 1 of Appendix 6,
and cannot be imported as raw materials and consumables for sale to Actual
Users (Industrial).
Appendix
2 Part B (List of Restricted Items) was also successor of Appendix 4 (List of
Absolutely Banned Items) under the Import Policy 1978-79. This Court
reiterated, and it was important to emphasise, that On the reasoning which
found favour with this Court in Raj Prakash's case, it must be held that
diamond exporters holding Additional Licences were not entitled to import goods
enumerated in Appendix 2 Part B of the Import Policy 1985-88. As held in that
case, holders of Additional Licences were 998 entitled to import only those
goods which were included in Appendix 6 Part 2 List 8 of the Import Policy
1985-88. Dry fruits were not included in that list and therefore they could not
be imported under Additional Licences.
It
is stated that on 20th May, 1986, there was an order of adjudication in respect
of one consignment of the first petitioner in this case i.e. Messrs. D. Navinchandra
& Co.
of
items falling in Appendix 2B (List of Restricted Items) ( 10 Bills of Entry)
imposing fine aggregating to Rs.45,000.
Then
on 21st August, 1986, a show cause notice was issued to the first petitioner in
this petition in respect of consignment falling in Appendix 5 (Canalised Items)
of the Policy for 1985-88. Reply was duly given on 9th September, 1986 and a
show cause notice was issued on 11th September, 1986 to the first petitioner in
respect of one consignment falling in Appendix 2B (List of Restricted Items) of
Policy for 1985-88. In the meantime, this Court had occasion to examine some
passage of this decision. This question was examined and it is necessary to
refer to the said two subsequent decisions of this Court.
The
first one is the decision in Union of India v.
Godrej
Soaps Pvt. Ltd. and Another, [1986] 4 SCC. 260 and the second one is the
decision in M/s Star Diamond Co. India v. Union of India and Others, [1986] 4
SCC 246. It is necessary first to refer to Godrej Soaps' case. It was held that
a diamond exporter could import the items he was entitled to import under the
Import Policy 1978-79 provided they were importable also under the Import
Policy ruling at the time of import. These are items which are open to import
by an Export House holding an Additional Licence for sale to eligible Actual
Users (Industrial). These are items which could be directly imported, for
example, the items enumerated in Part 2 of List 8 of Appendix VI of the Import
Policy 1985-88. These are items which are not 'canalised'. 'Canalised' items
are those items which are ordinarily open to import only through a public
sector agency. There is, however, nothing to prevent an Import Policy from
providing in the future that an Export House holding an Additional Licence can
directly import certain canalised items also. In that event, an Export House
holding an Additional Licence would be entitled to import items "whether
canalised or otherwise", meaning thereby items open ordinarily to direct
import (non-canalised items) as well as items directly importable although on
the canalised list. It is in that sense that the Court had intended to define
the entitlement of a diamond exporter by using the words "whether
canalised or otherwise" in its order dated 18th April, 1985.
999
In that case this Court found that in respect of Palm Kernel Fatty Acid which
was a canalised item listed as Item 9(v) in Appendix V Part B of the Import
Policy 1985-88, there is no provision in that policy which permitted the import
of such item by an Export House holding an Additional Licence. Therefore, both
on grounds of equity and construction the claim of the diamond exporters, or,
as in that case, a purchaser from the diamond exporter, was held to be not
maintainable. As importation of canalised items, this Court reiterated,
directly by holders of additional licences was banned, it should not be
construed to have been permitted by virtue of the order of this Court and the
items sought to be imported do not come within List 8 of Part 2 of Appendix 6
of the Import Policy of 1985-88 against additional licences. It was found that
the goods were purchased by the respondents in that case after they were aware
of the position of law as enunciated in Raj Prakash's case as well as Indo
Afghan Chambers of Commerce's case. No question of any restitution of rights,
therefore, arose. Goods in question being specially banned goods, these could
not be imported under Item I of Appendix 6 (Import of items under Open General
Licence) of Import Policy, 1985-88, more so the import being not by the Actual
User (Industrial) but by somebody else from whom the respondent purchased the
goods.
This
position was reiterated in the case of M/s Star Diamond Co. India v. Union of
India and others (supra).
This
Court further reiterated that a decision of this Court is binding on all.
To
complete the narration of events, reply was given by the first petitioner to
the show cause notice dated 11th September, 1986 on 18th September, 1986.
On
26th September, 1986, another show cause notice was issued to the Petitioner in
respect of another consignment falling in Appendix 2B (List of Restricted
Items) of Policy for 1985-88. Personal hearing was given to the first
petitioner thereafter. The petitioner moved this Court under Article 32 of the
Constitution, for quashing the show cause notices dated 21st August, 1986, 11th
September, 1986 and 26th September, 1986 and the order of adjudication dated
20th May, 1986 and for consequential relief.
We
are, however, unable to find any merit in this application either in law or in
equity.
1000
One of the points on which an argument was sought to be built up was that the
Bench of two judges of this Court in the subsequent decisions had cut down the
effect of the decision of this Court dated 18th April, 1985 in the case of
Union of India v. Rajnikant Bros. It has been stated that in subsequent
decisions referred to hereinbefore, this Court had deviated and indeed differed
from the view expressed in that case. It was urged that in Rajnikant Bros. case
a bench of three judges categorically stated that the respondents would be
entitled "to import all other items whether canalised or otherwise"
except those which were specifically banned under the prevalent import policy
at the time of import, with the relevant rules. In our opinion, the subsequent
decisions referred to hereinbefore do not take any different or contrary view.
Indeed it gives effect to the letter and spirit of the said decision. It has to
be borne in mind, that the basic background under which the Rajnikant's
decision was rendered, the Export Houses had been refused Export House
Certificates because it was insisted that they should have diversified their
export and that was a condition for the grant or entitlement of an export house
certificate..It was found and it is common ground now that that was wrong.
Therefore, the wrong was undone. Those who had been denied Export House
Certificates on that wrong ground were put back to the position as far as it
could be if that wrong had not been done. To do so, the Custom authorities and
Govt. authorities were directed to issue necessary Export House certificates
for the year 1978-79 though the order was passed in April, 1985. This was a
measure of restitution, but tile Court, while doing so, ensured that nothing
illegal was done. It is a presumption of law that the courts act lawfully and
will not ask any authority to do anything which is illegal. Therefore, the
court directed that except those which were specifically banned under the
prevalent import policy at the time of import, the respondents shall be
entitled to import all other items whether canalised or not canalised in
accordance with the relevant rules. Analysing the said order, it is apparent,
(1) that the importation that was permissible was of goods which were not specifically
banned, (2) such banning must be under the prevalent import policy at the time
of import, and (3) whether items which were canalised or un-canalised would be
imported in accordance _with the relevant rules. These conditions had to be
fulfilled. The court never did and could not have said that canalised items
could be imported in any manner not permitted nor it could have given a go-bye
to canalisation policy.
It
must be emphasised that in the case of Raj Prakash (supra), this position has
been explained by saying that only such items could 1001 be imported by diamond
exporters under the Additional Licences granted to them as could have been
imported under the Import Policy of 1978-79. the period during which the diamond
exporters had applied for Export House Certificates and had been wrongly
refused and were also importable under the import policy prevailing at the time
of import which in the present case would be during the import policy of 1985-88.
These
were the items which had not been 'specifically banned' under the prevalent
import policy. The items had to pass to two tests. firstly, they should have
been importable under the import policy 1978-79 and secondly they should also
have been importable under the import policy 1985-88 in terms of the Order
dated 18th April. 1985 and if one may add. in such terms in accordance with the
import rules' whether canalised or not canalised. It must be emphasised that in
this case also. the Court had no occasion to consider the significance of the
words 'whether canalised or otherwise' mentioned in the Order dated 18th April.
1985 because that point did not arise in the case before it. What did the court
then intend by these words used by the court? We have seen that diamond
exporters could import the items which they were entitled to import under the
Import Policy 1978-79 provided they were importable also under the import
policy ruling at the time of import. These are items which were open to import
by Export Houses holding Additional Licences for sale to the Actual Users
(Industrial). These are items which were directly imported, for example, items
in Part 2 List 8 of Appendix 6 of Import Policy 1985-88.
These
are items which are not canalised. Canalised items are those items which are
ordinarily open to import only through a public sector agency. Although
generally these are importable through public sector agencies, it is
permissible for any import policy to provide an exception to the rule and to
declare that an importer might import a canalised item directly. It is in that
sense and that sense only that the Court could have intended to define the
entitlement of diamond exporters. They would be entitled to import items which
were canalised or not if the import policy prevailing at the time of import
permitted them to import items falling under such category. This was also
viewed in that light in the case of Indo Afghan Chambers of Commerce (supra).
It
must be emphasised that in the Order dated 18th April, 1985, this Court did not
do away with canalisation.
That
was not the issue before this Court. The expression 'whether canalised or not
canalised' was to include both.
This
Court did not say that canalised items could be imported directly by the
importers ignoring the canalisation process. We are of the opinion that this
Court did not say that canalisation 1002 could be ignored. That was not the
issue. High public policy, it must be emphasised, is involved in the scheme of
canalisation. This purpose of canalisation was examined by this Court in Daruka
& Co. v. Union of India & Ors., [1974] 1 SCR 570 where the Constitution
Bench of this Court observed that the policies of imports or exports were fashioned
not only with reference to internal or international trade, but also on
monetary policy, the development of agriculture and industries and even on the
political policies of the country and rival theories and views may be held on
such policies. If the Government decided an economic policy that import or export
should be by a selected channel or through selected agencies the court would
proceed on the assumption that the decision was in the interest of the general
public unless the contrary was shown. Therefore it could not be collaterally
altered in the manner suggested.
The
policy of canalisation which is a matter of policy of the Government was not
given a go-bye by the observations referred to in the Order of 18th April,
1985. Indeed it is possible to read the Order in a manner consistent with
canalisation scheme in the way we have indicated. If that is so, then it should
be so read. When this Court observed that the fact whether items were sought to
be imported by diamond merchants were canalised, would not be an impediment to
the import directly by them, the Court meant to say that this could be imported
directly by them through the canalisation organisation. The need for
canalisation stands on public policy and that need cannot be lightly or
inferencially given a go-bye. It should not be presumed that collaterally the
court had done away with the system of canalisation based, on sound public
policy. We have found nothing in the different authorities on this subject,
which militate against the above views. Therefore, the action taken by the
Custom authorities in issuing adjudication notice and proceeding in the manner
they did, we are of the opinion that they have not acted illegally or without
jurisdiction. This must proceed in accordance with law as laid down by this
Court which, in our opinion, is clear enough. The fact that in subsequent
decision, the petitioner is not a party is not relevant. Generally legal
positions laid down by the court would be binding on all concerned even though
Some of them have not been made parties nor were served nor any notice of such
proceedings given.
As
held in Star Diamond's case (supra), the meaning of the expression
"whether canalised or otherwise" used by this Court in Rajnikant
Bros' case as explained in Godrej Soaps Pvt. Ltd. case and reiterated and
followed in the present case is applicable to the present petitioner.
1003
We see no substance in the submission made in the petition and reiterated
before us in this Court for a reconsideration of this question by a larger
Bench. In the aforesaid view of the matter, we are unable to sustain the
grounds urged in support of this petition. We are, therefore, of the opinion
that proceedings must go in accordance with law. The government's understanding
of the matter at one point of time is irrelevant.
There
are several applications for impleadment. These are allowed, and they are
impleaded. Their statements are taken on record.
Before
parting with this case, certain factors must be noted. The diamond exporters
and dry fruit exporters have their full round in this Court. Speaking entirely
for myself, my conscience protests to me that when thousands remediless wrongs
await in the queue for this Court's intervention and solution for justice, the
petitions at the behest of diamond exporters and dry fruit exporters where
large sums are involved should be admitted and disposed of by this Court at
such a quick speed. Neither justice nor equity nor good conscience deserves
these applications to be filed or entertained. There is no equity of
restitution against the law declared categorically and repeatedly by this Court
and no principle of estoppel involved in these applications.
The
Writ petition is dismissed and in the facts and circumstances of this case, we
direct that the petitioner must pay cost of this application.
It
has been prayed that clear-cut date must be fixed where contracts had been
entered into and in which letters of credit prior to 15th April, 1986 have been
entered into, there should be no prosecution. It has been further prayed that
where however contracts have been entered into but no letters of credit have
been opened, such parties should not be penalised in the facts and
circumstances of the case. No direction is necessary by this Court on this
aspect. The authorities concerned will decide the same in taking into
consideration all the facts and circumstances and taking into consideration the
case of the petitioners and the alleged claim of bona fide on their part.
A
submission was made on the principle of promissory estoppel and reliance was
placed on the several observations of several cases including the case in Union
of India and Others etc. v. Godfrey Philips India Ltd. etc., AIR 1986 S.C. 806.
It is true that the doctrine of 1004 promissory estoppel is applicable against
the Government in the exercise of its government, public or executive functions
and the doctrine of executive necessity or freedom of future executive action
cannot be invoked to defeat the applicability of the doctrine of promissory
estoppel. But in this case no such case of promissory estoppel has been made
out. The intervention applications filed in this connection are allowed and the
submissions contrary to what we had stated hereinbefore are rejected.
As
the points involved in Writ Petition No. 1494 of 1986 are same, this is also
dismissed with costs. Interim orders, if any, are vacated forthwith. The
proceedings will proceed as expeditiously as possible in accordance with law.
For the same reasons, Writ Petition No. 1544 of 1986 is also dismissed with
costs with the same observations.
H.L.C.
Petition dismissed.
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