Testeels Ltd. Vs. Union of India [1989] INSC 42 (6 February 1989)

Saikia, K.N. (J) Saikia, K.N. (J) Oza, G.L. (J)

CITATION: 1989 AIR 857 1989 SCR (1) 502 1989 SCC (2) 274 JT 1989 (1) 204 1989 SCALE (1)273

ACT:

Imports and Exports--Import Trade Control Policy 1972- 1973Export of Transmission Towers--Cash Assistance Scheme--Subsequent amended scheme prescribing time-bound period--making exports ineligible for cash assistance beyond that period--Validity of.

HEAD NOTE:

In 1969, the Govt. of India announced, through public notice a scheme for registration of contracts involving deliveries extending over a period of not less than 12 months for cash assistance m respect of certain exports. The scope of the scheme was extended in 1970, allowing cash assistance at the same percentage as was prevailing on the date of the firm contract so registered provided the invoice was attested by the Banks concerned. It was also provided that even if the rate of cash assistance is reduced by Govt.

the higher rate that existed on the date of the Firm con- tract would be admissible. And in case of increase in the rate, exports made during the contract would normally be eligible for the benefit of the increased rate. It was also made clear that if the rate is likely to affect an exporter adversely, Govt. would consider its matter on merits.

In 1972 the cash assistance scheme on export of engi- neering goods was modified allowing additional cash assist- ance of 5% of the f.o.b. value on all exports effected during 1.4.72 to 30.9.72 to certain countries. It was fur- ther announced that in respect of transmission towers ex- ported from Ist Oct. 1972 till 31st March, 1973 cash assist- ance would be at the rate of 25% of the f.o.b. value.

The appellant company entered into contracts with the National Electricity Board of Malaysia and in respect of some of the exports of transmission towers, the appellant received cash assistance and in respect of others, it was denied on the ground that the exports made during the ex- tended delivery period of the contract were not covered under the Import Trade Control Policy and as such no cash assistance could be granted on exports made after March, 1974.

The appeal preferred by the appellant was rejected by the Deputy 502 503 Chief Controller of Imports and Exports on the ground that the benefit of registration on export in execution of the supplementary contract was additional quantity at increased rates and could not be allowed under Govt. policy. The second appeal was rejected by the Chief Controller of Im- ports & Exports, stating that after execution of the supple- mentary order there was increase in quantity of goods to be supplied as also price on the date of execution of the supplementary order and the import policy did not provide for protection of benefits where there was increase in the value of contract. The review petition filed by the appel- lant was also rejected.

Thereafter the appellant moved the High Court under Article 226 of the Constitution. The High Court partly allowed the petition restraining the respondents from en- forcing the demand for the refund of the cash assistance already paid and rejected the appellant's claim in respect of contracts, entered into in the context of the offers made subsequent to April 1972, since the cash assistance declared as on April 1, 1972 and thereafter was in terms made avail- able upto a specific date.

This appeal by special leave is against the High Court's judgment.

On behalf of the appellant, it was contended that at different stages, the respondents gave different reasons for refusing to pay cash assistance.

Dismissing the appeal,

HELD: 1.1 There could arise no question of granting cash assistance to different exports under the original scheme and the prevalent amended scheme at the same time. [508E]

1.2 Paragraph 10 in the 1970 scheme made it quite clear that exports effected after the specified date would not be eligible for cash assistance. Consistently with this para- graph, in the subsequent schemes the periods were pre- scribed. The amended scheme dated 20th April, 1972 pre- scribed the period from 1.4.72 to 30.9.72 and the amended scheme dated 16th June 1973 applicable to this case, pre- scribed the period from 1st October 1972 upto and including 31st March 1973. In other words, exports of Transmission Towers made after the prescribed period would not be eligi- ble to assistance under the prevalent scheme. The word 'amendment' would imply that the scheme of 1969 stood amend- ed. [508C-E] 504

1.3 In view of the unequivocal language of paragraph 10 of. the 1970 scheme and clear prescription of the different periods during the subsequent amended schemes and the admit- ted facts that the export in respect of these two contracts were made only after July 1974, there is no reason to allow the appellant's claim. Whether the Government's policy was conducive to maximisation of exports and foreign exchange earning is entirely a different matter. [508F-G]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3482 of 1987.

From the Judgment and Order dated 10.3.1983 of the High Court of Gujarat in Special Civil Application No. 1294 of 1977 S.K. Dholakia, P.C. Kapur and R.C. Bhatia for the Appellant.

A. Subba Rao, C.V. Subba Rao and Mrs. Sushma Suri for the Respondents.

The Judgment of the Court was delivered by K.N. SAIKIA, J. This appeal by special leave is from the judgment of the High Court of Gujarat in Special Civil Application No. 1294 of 1977 under Article 226 of the Con- stitution of India.

The Government of India Ministry of Foreign Trade an- nounced through public notice No. 196-ITC(PN)/69 dated 8th December, 1969 a scheme for registration of contracts in- volving deliveries extending over a period of not less than 12 months for cash assistance, hereinafter referred to as 'the scheme'. The Government decided to extend the scope of the scheme as was announced by letter No. 12 (22/67EAC) dated 4th February, 1970, hereinafter referred to as 'the 1970 scheme', stating inter-alia, in paragraph 3 that the registered exporter of export products under a contract involving deliveries extending over a period of not less than 12 months, registered by the banks in terms of para- graph 3 of the public notice dated 8th December, 1969 will be eligible for claiming cash assistance at the same per- centage as was prevailing on the date of the Firm contract so registered provided that the bank attested invoice which is normally produced for the purpose 'of claiming cash assistance, bears a further attestation from the negotiating bank to the effect that exports effected in this invoice is against a contract registered with them giving the Registra- tion number and date. If during the currency of the regis- tered contract the rate of 505 cash assistance is reduced by Government, the higher rate of cash assistance existing on the date of the Firm contract would be admissible on exports under the said contract. If, on the other hand there is an increase in the rate of cash assistance percentage during the currency of the registered contract, exports made during the contract would not normal- ly be eligible for the benefit of the increased rate; in special cases where the operation of this rule is likely to affect an exporter adversely, Government would be prepared to consider the matter on merits. It was also stated in paragraph 5 that the registered exporter would be entitled to claim cash assistance as and when the exports are made against the registered contracts and the application would be submitted to the disbursing authority in accordance with the policy and procedure announced from time to time by that Ministry. By letter No. 12(4)72-EAC dated 20th April, 1972 on the subject of Amendment No. 53 the cash assistance scheme on export of engineering goods was modified to the effect that an additional cash assistance of 5% of the f.o.b. value will be allowed on all exports made to North American and South American countries and to New Zealand and these facilities of normal cash assistance and additional cash assistance will be allowed on exports effected during the period from 1.4.1972 to 30.9.72, the later date being included. By letter No. 12(13)/73-EAC dated 16th June, 1973 referring to Amendment No. 59 it was announced that cash assistance on transmission towers will be made admissible on exports thereof made during the period from Ist October 1974 upto and including 31st March, 1973 at the rate of 25% of the f.o.b. value.

The appellant is a company registered or deemed to be registered under the Companies Act, 1956 for exporting Line Towers Galvanised; Mild Steel Towers, hereinafter called 'Transmission Towers', (Item No. A. 27.1) by entering into contracts with the National Electricity Board of the State of Malaysia, a public utility service of Malaysian Govern- ment, briefly called 'the N.E.B.' which had invited a global tender in October 1971 for design, fabrication and supply of Transmission Towers, and the appellant's tender submitted on January 29, 1972 was accepted by them, and pursuance thereto a contract was entered into on May 17, 1972. The said con- tract was duly registered with the Central Bank of India, Lal Darwaza, Ahemdabad on May 30, 1972 and was allotted registration No. 50/1. Subsequently, the NE.B. having needed more Transmission Towers more contracts entered into and the same were registered as follows:

506 S. No. Date of Offer Date of acceptance Date of regis- tration of the offer of the contract with the bank.

1 2 3 4

1. 29.1.1972 17.5.1972 30.5.1972 2A. 29.1.1972 20.6.1972 26.7.1972 2B. 31.8.1972 27.10.1972 13.11.1972

3. 28.4.1973 5.6.1973 15.6.1973 (Telex 31.5.1973) In respect of the exports made pursuant to two of the afore- said contracts, namely No. 1 and 2(A), the respondents paid to the appellants a cash assistance of Rs.3,48,555 but refused to pay the claimed amount of Rs.4,10,784.93p in respect of the exports made pursuant to the other two con- tracts and instead demanded refund of aforesaid Rs.3,48,555 already received by the appellant. By letter dated 10.3.1975 to the appellant the Controller of Imports and Exports informed that the exports made during the extended delivery period of the contract were not covered under the provisions of paras 56-64 of Part B of Import Trade Control Policy Volume-II, April 1972-March 1973 and as such no cash assist- ance could be granted on exports made after March, 1974.

The Deputy Chief Controller of Imports and Exports rejecting the appellant's appeal vide his letter dated 30.6.1976 informed the appellant that the benefit of regis- tration on export in execution of the supplementary contract was additional quantity at increased rates and could not be allowed under Government Policy. The appellant's second appeal was also rejected by the Chief Controller of Imports and Exports vide his letter dated 8th January, 1977 stating that after execution of the supplementary order there was increase in quantity of goods to be supplied as well as price as on the date of execution of the supplementary order, and the import policy did not provide for protection of benefits under the scheme for registration of contracts on the cases where there was increase in the value of con- tract. The appellant's review petition was also rejected by letter dated 19th July 1977 stating that as per provision of the policy contained in the relevant Policy Book, if there was an increase in the value of contract on account of price escalation clause or renegotiation on the ground of increase in prices of raw-materials, protection to registered con- tract was not available.

507 The appellants thereafter moved an application under Article 226 of the Constitution of India in the Gujarat High Court which partly allowed the petition restraining the respondents from enforcing the demand for the refund of the amount already paid by way of cash assistance and rejecting the appellant's claim in so far as the contracts entered into in the context of the offers made subsequent to April 1972 because the cash assistance declared as on April 1, 1972 and thereafter was in terms made available upto a specific date. The exports under the two concerned contracts namely No. 2-B and 3 were admittedly made after July 1974, though in case of contract No. 2-B the date of offer was 31.8.1972 and the date of acceptance was 27.10.1972 and the date of registration 13.11.1972, and in the case of contract No. 3 date of offer was 28.4.1973 and date of acceptance of 5.6. 1973 and date of registration was 15.6.1973.

Learned counsel for the appellant, Mr. S.K. Dholakia, first, submits, that the appellants are entitled to cash assistance in respect of these two contracts also inasmuch as the scheme of registration of contracts for cash assist- ance dated 8th December, 1969 as also that of 4th February, 1970 were not time-bound and did not prescribe any period for export to be eligible under the scheme; that it was only the subsequent scheme that prescribed a period; and that the appellant exported Transmission Towers pursuant to the contracts entered into during the earlier period but due to increased demand subsequent supplementary contracts had to be entered into, and for price escalation and other diffi- culties actual exports were delayed. He relies on Section 1, Part-B of Import Control Policy Volume-II April 1972March 1973, "Import Policy for Registered Exporters, Registration of Export Contracts," contained in paragraph 56-64 thereof.

Secondly, the learned counsel submits that cash assistance scheme of 1969 as well as that of February 1970 were based on the Government's policy of long term assistance to ex- porters and it was with that end in view that the scheme of registration of contracts with the banks was introduced.

Relying on paragraph 3 of the 1970 scheme, he emphasises that it was the date of the Firm contract which was to be reckoned and not the date of export of the products. Relying on paragraph 6 of the scheme he submits that it envisaged contracts involving deliveries extending over a period of not less than 12 months and contracts for export were to be registered by the banks in the manner prescribed. As regard the Government's policy of assisting the exports for the purpose of augmenting foreign exchange earnings of the country he submits that the deprivation of cash assistance to the exporter who registered their contracts would defeat the very purpose of the scheme.

508 Mr. C.V. Subba Rao learned counsel for the respondents demurs submitting that it could not be said that once the contracts were registered cash assistance would be available irrespective of the date of the exports.

We are inclined to agree with this submission. Paragraph 10 of the scheme dated 4th February, 1970 reads:

"Cash assistance is sometimes announced upto a specified date. Exports effected after the specified date even though the contract has been got registered in terms of the provision of this letter will not be eligible for cash assistance." This paragraph made it quite clear that exports effected after the specified date would not be eligible for cash assistance, Consistently with this paragraph in the subse- quent schemes the periods were prescribed. The amended scheme dated 20th April 1972 prescribed the period from 1.4.1972 to 30.9.1972 and the amended scheme dated 16th June 1973 applicable to this case, prescribed the period from Ist October, 1972 upto and including 3 Ist March, 1973. In other words, exports of Transmission Towers made after the pre- scribed period would not be eligible to assistance under the prevalent scheme. The word 'amendment' would imply that the scheme of 1969 stood amended. If that be so, there could arise no question of granting cash assistance to different exports under the original scheme and the prevalent amended scheme at the same time.

1n reply Mr. Dholakia submits that at different stages the respondents gave different reasons for refusing to pay cash assistance to the appellants. However, in view of the unequivocal language of paragraph 10 of the 1970 scheme and clear prescription of the different periods during the subsequent amended schemes and the admitted facts that the export in respect of these two contracts were made only after July 1974, we see no reason to allow the appellant's claim. Whether the Government's policy was conductive to maximisation of exports and foreign exchange earning is entirely a different matter.

In the result we find no merits in this appeal and it is accordingly rejected, leaving the parties to bear their own-costs.

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