Union of India & Others Vs. M/S Chowgule & Co. Ltd. & Others
[2003] Insc 22 (24
January 2003)
Syed
Shah Mohammed Quadri & Ashok Bhan. Bhan, J.
1. Union of India has
filed these appeals against a common judgment/order of the High Court of
Bombay, Panaji Bench, Goa dated 16th December, 1993 passed in Writ Petition Nos. 480 of 1993, 490 of
1993, 522 of 1993 and 521 of 1993 filed by the respondents who were the
petitioners before the High Court. By the impugned judgment the High Court has
quashed the orders passed by the authorities rejecting the claim of the
respondents for grant of additional licence against the export orders. But
because of the intervening circumstances, i.e., issuance of REP Circular No. 11
of 1993 dated 5th May, 1993 by the Directorate General of Foreign Trade,
instead of granting the additional licence the Union of India has been directed
to pay to the respondents the premium amount of 20% in terms of the said
Circular. Union of India was directed to work out the amount payable subject to
the respondents producing the Bank Certificate in respect of the realisation of
foreign exchange of export proceeds.
2. The
facts which are common to all the appeals being similar are Others.
3.
Respondent is a limited company incorporated under the Companies Act, 1956. It
is engaged, inter alia, in the export of processed iron ore of Goan origin. It
is also recognised as a trading house. Under the Import Export Policy for April
1988-March 1991 (hereinafter referred to as 'the old policy') trading houses
were eligible for the benefit inter alia of additional licences of defined
value against the export of processed iron ore under the policy. Old policy was
terminated and instead a new policy starting w.e.f. April 1990- March 1993 (for
short 'the New Policy') was introduced. During the period 1.4.1989 to 31.3.1990
the respondents had exported processed iron ore of the value of Rupees 21,92,15,711.69.
On 4.6.1990 the company applied to the Assistant Chief Controller of Imports
& Exports for additional licence of a value of Rs.2,12,63,924/- against the
said exports. The application was rejected by the Assistant Chief Controller of
Imports & Exports on 24th September, 1990 on the ground that application
for additional licence for the licensing year 1990-1991 could not be considered
on the basis of the items appearing in Appendix 12 of the New Policy because
there was no provision for grant of licence under the heading transitional
arrangements in terms of the paragraph 222 of the New Policy. Respondents
preferred an appeal which was dismissed on 21st January, 1991. Likewise second appeal was
dismissed on 12th
March, 1992. Review
Petition filed by the respondents was also rejected on 9th June, 1993.
4.
Government of India , Ministry of Commerce, Directorate General of Foreign
Trade, Udyog Bhavan, New Delhi issued REP Circular No.11/93 dated 5th May, 1993
(hereinafter referred to as 'the Circular 11 of 93') providing therein:
"(b)
Where the applications for issue of Exim Scrips/REP etc. licences are pending
in respect of exports made and export proceeds realised there against prior to
1.3.92, the 20% premium will be straightway paid, instead of issuing the licences,
provided that licensing authority after processing the application and
determining the eligibility for issue of licences is satisfied that the
applicant is eligible for grant of Exim Scrips/REP etc. licences."
5. On 14th July, 1993 respondents lodged its claim for
20% premium instead of additional licence for the licensing year April-March
1991 against exports of processed iron ore in the preceding licensing year
April-March 1990. The claim of the company was rejected by the Deputy Director
General of Foreign Trade, Panaji vide letter dated 1st September, 1993 on the ground that minerals and ores appearing in
Appendix 12 of the policy book 1990-1993 were ineligible for additional licence.
6.
Aggrieved against the aforesaid sets of orders the respondents filed the writ
petitions in the High Court of Bombay, Panaji Bench, Goa seeking two-fold relief. Firstly, for quashing of
the orders passed by the various authorities as mentioned above refusing their
prayer for additional licence and secondly a writ of mandamus or any other
appropriate writ directing the Union of India to forthwith pay to them premium
of 20% of Rs.2,12,63,924/- being the face value of the additional licence for
April-March 1991 to which the respondents were entitled to under the Circular
11 of 1993.
7. The
respondents in their writ petitions raised three-fold contentions, firstly, it
was urged on their behalf that by exporting processed iron ore during the
period 1.4.1989 to 31.3.1990 under the import export policy for the years
1988-1991 (old Policy), they had acquired a vested right to get additional licence
in the licensing year April-March 1990-1991 of the value prescribed in the
import export policy relevant for April 1988- March 1991 and the said right
could not be defeated by the provisions of the new policy. Secondly, it was
contended that on a true construction of the relevant provisions of the import
export policy for April 1990 March 1993, in particular, paragraph 220 thereof,
the respondents were entitled to additional licence for the licensing year
April 1990 March 1991 against exports of processed iron ore made in the
preceding licensing year, i.e., April 1989-March 1990 and that the authorities
have misconstrued the relevant provisions. Thirdly, it was contended that the
Union of India was precluded by the doctrine of Promissory Estoppel for denying
the additional licence to the company during the licensing year April-March
1991 of the value defined having represented to the Trading Houses/Exporters
that they would be entitled to the additional licence, the parties having acted
upon that representation and having exported processed iron ore during the
period 1.4.1989 to 31.3.1990.
8. The
appellants apart from raising certain preliminary objections regarding the
maintainability of the writ petitions which were rejected by the High Court and
which have not been pressed before us did not dispute the factual statements of
facts made in paragraphs 1 to 8 in the writ petitions stating that these were
matters of records. In so far as the claim of the respondents for 20% premium
it was contended that there was no application from the party pending for
entitlement of additional licence as their application for additional licence
was rejected. It was denied that their action in rejecting the application of
the respondents for the grant of additional licence was contrary to law or null
and void or in excess of jurisdiction. That the claim for additional licence in
subsequent year was ineligible under the new policy although that might have
been available under the old policy, which, however, ceased to exist after 31st March, 1990. Claim of respondents/writ
petitioners that they had acquired any vested right to get an additional licence
by virtue of exports made during the year 1989-1990 was denied. That the
amendment made in the policy was valid and the consequences flowing thereof
were in the public interest and therefore not opened to challenge.
Circumstances which necessitated the amendment in public interest were set out.
According to the appellants the export incentive was subject to changes from
time to time during the policy period. A change when it was brought in the
policy after 30th March 1990 could thus be made and was binding upon the
parties and that the said amendment was made in public interest particularly
taking into account that in spite of other existing financial burden on the
exchequer, incentive on iron ore was further amounting to large amount of
outflow of foreign exchange by way of additional licence and higher REP
benefits. For these reasons, according to the appellants, there did not arise
any question of any promise having been made by the government to the Trading
Houses/Exporters and, therefore, the principal of Promissory Estoppel could not
be invoked and the same was not applicable to the facts of the case. It was
maintained that the application for additional licence made by the respondents
was rejected in accordance with the position of law as it obtained on that
date.
9. It
may be highlighted that appellants did not dispute that the respondent's
company was a recognised Trading House. The extent of export of processed iron
ore made by the respondents between 1.4.1989 to 31.3.1990 and the value thereof
stated in the writ petition were not controverted. The value shown by the
respondents for the purpose of additional licence was also not disputed. No
issue as regards the net foreign exchange earnings as may have been earned
against the export of iron ore was raised. Except from contending that the
respondents were ineligible for grant of additional licence as per the new
policy it was not stated that the application for licence was liable to be
rejected on any other ground. Issuance of the Circular 11 of 93 for payment of
premium in the manner provided instead of additional licence to which the
applicant may have been entitled to was also not disputed.
10.
The High Court by the impugned order independent of and relying upon an earlier
division bench judgment of its own court held that the writ petitioners were
entitled to the grant of additional licence and accordingly quashed the orders
passed by the authorities rejecting their claim for the additional licence.
Because of the coming into force of the Circular 11 of 93 instead of directing
the authorities to grant the additional licence it was declared that the
respondents would be entitled to the payment of premium of 20% in terms of the
relevant clause of which extracted in paragraph no.4 of this judgment.
11.
The short point to be decided in these appeals is: as to whether the
respondents who were admittedly entitled to grant of additional licence under
the old policy stand debarred from claiming the said additional licence because
of the new import export policy which came into force from 1st April, 1990 and
further the applicability of the Circular 11 of 93 dated 5th May, 1993 and the
effect thereof.
12.
Before addressing on the controversy, the salient features of the old import
export policy effective for April 1988-March 1991, which was terminated on 30th March, 1990 and was replaced by the new import
export policy April 1990-March 1993, may be set out.
Paragraph
211 of the old policy sets out the objectives of the scheme for registration of
export houses and trading houses. It states that it is to grant recognition and
facilities to a select band of efficient registered exporters who would develop
a strong marketing capability and that it is expected that they would operate
as highly specialized and dynamic institutions with a strong marketing
infrastructure and act as an important instrument for export growth. Paragraph
212 provides that the eligibility for grant of Trading Houses/Export Houses
certificate shall be determined on the basis of the net foreign exchange
earnings from the exports actually made during the past period subject to the
conditions set out in sub-paragraph (2) of the said paragraph. Paragraph 215
provides for additional licence.
Thereunder
the Trading Houses/Export Houses will be eligible to additional licence on the
basis of the admissible exports made in the preceding licensing year and that
the value of this licence will be calculated at 10% of the net foreign exchange
(NFE) earnings on the total eligible exports made in the preceding licensing
year.
Remaining
part of the paragraph is not material and therefore is not being set out.
Sub-paragraph (2) laid down that the additional licence shall be valid for the
export of the items listed thereunder. Sub- paragraph (8) provides that the
items permissible shall be those eligible under the policy on the date of issue
of the licence. Paragraph 218, inter alia, provides that where the applications
for additional licence have not been disposed of by 31st March of the preceding
licensing year, the rate of entitlement will be the same as permissible during
the licensing year to which the applications pertained but the items to be
allowed will be as per the import policy on the date of the licence. Appendix
12 of the old policy does not list iron ore as ineligible product for import
replenishment licence or additional licence.
13.
Paragraph 204 of Chapter XV of the new policy provides that in the case of
exports made prior to 1.4.1990 against which REP licence was issued on or after
1.4.1990, the rate of import replenishment will be as admissible on the date of
export but subject to the conditions laid down in 1988-1991 policy book.
Chapter XVI deals with deemed exports. Under paragraph 210 the deemed exports
will qualify for grant of import replenishment licence. The material provision,
however, is contained in Chapter XVIII. Part-A thereof deals with Export
Houses/Trading Houses. The objective is similar to that of earlier policy. The
eligibility criteria laid down in paragraph 218 for the grant of export/trading
housing certificate is to be determined on the basis of NFE earnings from the
exports actually made in the preceding three licensing years termed as
"base period". The earnings from export of products in Appendix 12
shall not qualify for this purpose. Paragraph 220 deals with additional licence
and provides, inter alia, that the export houses/trading houses will be
eligible for additional licences on the basis of admissible exports made in the
preceding licensing year and the value of the licence will be calculated at the
rate of 10% NFE earnings on the total eligible exports made in the preceding
licensing year. Paragraph 222 deals with transitional arrangements and the same
reads as under:
"
222. Where the applications from Export Houses/Trading Houses for Additional Licences
for any of the preceding licensing year, have not been disposed of by the end
of the licensing year, licences will be issued as per the relevant Policy
provisions prevailing during the period to which the Additional Licences
relate, subject to the condition that the permissibility of the items allowed
for import against such licences will be governed by the relevant provisions of
the Import Policy in force, at the time of their actual import."
14.
Coming to the point raised it is to be noticed that paragraph 215 of the old
policy is clear and provides that eligibility to the additional licence was to
be determined on the basis of the admissible exports made in the preceding
licensing year. Paragraph 222 of the new policy which has been extracted above
provides that where the applications from export houses/trading houses for
additional licences for any of the preceding licensing year, have not been
disposed of by the end of the licensing year, licences will be issued as per
the relevant policy provisions prevailing during the period to which the
additional licences relate. Meaning thereby that if an application for additional
licence for any preceding licensing year is pending which in this case shall be
deemed to be pending as the controversy is still alive being adjudicated then
the licence has to be issued as per the relevant policy provisions prevailing
during the period to which the additional licence relates which in the present
case would be under the old policy. The grant of additional licence in
paragraph 222 has been made subject to the condition that the permissibility of
the items allowed for import against such licences will be governed by the
relevant provisions of the import policy in force at the time of their actual
import meaning thereby that the items which can be imported would be relatable
to the import policy in force, i.e., the new policy.
Transitional
arrangements stated in paragraph 222 makes it abundantly clear that the
applications from export houses/trading houses which have not been finally
disposed of by the end of the licensing year would be entitled to the issuance
of the additional licence as per the relevant policy provisions prevailing
during the period to which the additional licences related. The entitlement of
the export houses/trading houses to get the additional licence has not been
taken away. The only condition to which the additional licence has been
subjected is that the permissible items allowable for import against such
(additional licencing) would be governed by the provisions of the import policy
in force at the time of their actual import. Contentions raised on behalf of
the Union of India that the respondents/writ petitioners had to lodge their
right/entitlement to get the additional licence under the new policy for the
exports made during the period when the old policy was in force cannot be
accepted. The application for the additional licence could be made only after
the end of the fiscal year, as only thereafter the export house could know its
entitlement. The High Court was, therefore, right in holding that the
interpretation put by the authorities on the new policy in declining the claim
of the respondents for the grant of additional licence was unacceptable. Under
the new policy as well, the export houses/trading houses would remain entitled
to the additional licence for the exports made during the period when the old
policy was in force but subject to the condition that they would be allowed to
import against the additional licence such items which are governed by the
policy in force at the time of the import of the goods.
15.
For the reasons stated above, we do not find any infirmity in the orders passed
by the High Court in quashing the orders passed by the authorities rejecting
the claim of the respondents for grant of additional licence.
16.
Similarly, we do not find any infirmity in the orders passed by the High Courts
in the issuance of writ of mandamus directing the Union of India to forthwith
pay to the respondents the premium of 20% instead of issuing the additional licence
in terms of the Circular 11 of 93. Circular 11 of 93 provides that where
application for grant of additional licence are pending in respect of the
exports made and export proceeds relating to the period prior to 1.3.1992 then
instead of issuing the licences, the 20% premium shall be paid. The order
passed by the High Court is strictly in conformity with the Circular 11 of 93
issued by the appellants itself.
17.
Bank guarantee given by the respondents in pursuance to the Order of this Court
dated 28.3.1994 shall stand discharged. The appeals being without any merit
are, therefore, dismissed. Parties shall bear their own costs in these appeals.
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