2025 (7) TMI 582 - HC - Customs

Seeking issuance of directions for making the necessary changes in EDI system and transmitting the details to DGFT w.r.t. 174 Nos of shipping bills within a time-bound schedule - HELD THAT - There is no justification for the DGFT not processing the Petitioner s MEIS applications with respect to the 174 shipping bills due to some systemic glitches which appear to have now been largely resolved. In Larsen Toubro 2024 (11) TMI 808 - BOMBAY HIGH COURT in somewhat similar circumstances it was held that The DGFT cannot adopt an attitude that its technological systems are not geared to deal with such situations and that its officials will not deal with such situations. Human and artificial intelligence must join to serve the people and achieve ease of business and not be at loggerheads. Suppose any party is entitled to any benefits under the law or under the schemes formulated by the Government to promote exports or trade. In that case such benefits must not be denied or unduly delayed by citing technological glitches or the fact that the current electronic systems meant to assist the implementation of the law or operation of such schemes are inadequate or need revamping. What the law grants cannot be denied or unduly delayed by technology meant only to assist in implementing the law. If such an approach continues the claims of leveraging technology to serve the people or ease of doing business will remain paper slogans. Considering the decisions in Technocraft Industries 2023 (2) TMI 74 - BOMBAY HIGH COURT and Larsen Toubro and applying to the facts of the present case the 2nd and 3rd Respondent are directed to process Petitioner s MEIS applications with respect to the 174 shipping bills as expeditiously as possible and in any event within six weeks from the date of uploading of this order. The 2nd and 3rd Respondents must communicate their decision to the Petitioner within six weeks. Petition disposed off.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in this matter were:

• Whether the Respondents (specifically Respondents 4 and 5) are obligated to make necessary changes in the Electronic Data Interchange (EDI) system to transmit details of 174 shipping bills to the Directorate General of Foreign Trade (DGFT) to enable processing of the Merchandise Exports from India Scheme (MEIS) applications;
• Whether the Respondents 2 and 3 are required to allow and process the MEIS rewards with respect to the 174 shipping bills;
• Whether the DGFT can refuse or delay processing MEIS applications due to technological or systemic glitches not attributable to the applicant;
• The extent to which technological systems and human discretion must interact in the administration of Government schemes like MEIS;
• The applicability and binding effect of precedents from coordinate benches, specifically the decisions in Technocraft Industries (India) Limited and Larsen & Toubro Limited, on the present dispute.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Obligation to make changes in the EDI system for transmitting shipping bill details to DGFT

Relevant legal framework and precedents: The Court relied on the decision in Technocraft Industries (India) Limited Vs Union of India & Ors, wherein directions were issued for necessary changes in the EDI system to facilitate transmission of shipping bill details to DGFT. This precedent established the principle that systemic or technological deficiencies must be addressed to enable the proper functioning of export promotion schemes.

Court's interpretation and reasoning: The Court noted that pursuant to the directions in Technocraft Industries, the necessary changes in the EDI system had been made. This was supported by the Petitioner's counsel's submission and corroborated by Respondent No. 5's manual amendment and communication to DGFT. Thus, the Court found that the prayer for mandamus against Respondents 4 and 5 to effect changes in the EDI system was effectively rendered moot as the relief sought had been substantially achieved.

Key evidence and findings: The Petitioner placed on record communications indicating both manual and electronic corrections had been effected. Respondent No. 5 confirmed having written to DGFT to proceed with the MEIS applications.

Application of law to facts: The Court applied the precedent in Technocraft Industries to the facts and found that the systemic glitches had been "largely resolved," removing any justification for refusing transmission of shipping bill data.

Treatment of competing arguments: The Respondents contended that processing could not occur without online transmission of shipping bills to DGFT. The Court accepted this but noted that the transmission system had now been rectified, aligning with the Petitioner's submissions.

Conclusion: The Court concluded that the Respondents 4 and 5 had complied with the necessary changes in the EDI system, and the issue was thereby resolved.

Issue 2: Obligation of Respondents 2 and 3 to process MEIS applications relating to 174 shipping bills

Relevant legal framework and precedents: The Court heavily relied on the decision in Larsen & Toubro Limited vs Union of India & Ors, which held that the DGFT cannot refuse to process MEIS applications for reasons not attributable to the applicant. This judgment emphasized the interplay of technology and human discretion in administering Government schemes.

Court's interpretation and reasoning: The Court reiterated the principle that "artificial intelligence cannot be at the cost of mortgaging human intelligence entirely" and that technology must serve people rather than create obstacles. Officials cannot abdicate responsibility by citing technological glitches and must exercise discretion to ensure bona fide parties are not prejudiced.

Key evidence and findings: The Petitioner's applications were delayed due to systemic glitches in the EDI system, which have now been addressed. The Respondents had not processed the MEIS applications despite corrections being made.

Application of law to facts: Applying the Larsen & Toubro precedent, the Court found no justification for DGFT's refusal or delay in processing the MEIS applications. The Court emphasized that benefits under Government schemes cannot be denied or unduly delayed by technological inadequacies.

Treatment of competing arguments: Respondents argued that processing could only occur after proper transmission of shipping bills. The Court acknowledged this but found that with the system corrections in place, no further delay was warranted.

Conclusion: The Court directed Respondents 2 and 3 to process the MEIS applications expeditiously, within six weeks, and to communicate their decision to the Petitioner within the same timeframe.

Issue 3: The role of technology and human discretion in administration of Government schemes

Relevant legal framework and precedents: The Larsen & Toubro judgment articulated the principle that technology is a tool to assist, not replace, human discretion and responsibility in the administration of schemes. The Court underscored that officials must exercise sensitivity and intelligence in dealing with technological failures.

Court's interpretation and reasoning: The Court observed that reliance solely on technological systems without human intervention can lead to injustice. Officials must not "abdicate responsibility" by hiding behind technological glitches. The Court stressed the necessity of a harmonious relationship between artificial and human intelligence to ensure the ease of doing business and to prevent denial or delay of lawful benefits.

Key evidence and findings: The Court referred to the factual scenario where technological glitches caused delays but officials eventually took manual corrective action, highlighting the importance of human intervention.

Application of law to facts: The Court applied this principle to direct the DGFT and other respondents to process the applications despite earlier technological issues, reinforcing that technology should not become a barrier to legitimate claims.

Treatment of competing arguments: The Respondents' initial reliance on technological limitations was rejected in favor of a balanced approach where officials must ensure bona fide applicants receive due benefits.

Conclusion: The Court mandated that technology and human discretion must jointly operate to serve the public interest and ensure timely processing of Government benefits.

3. SIGNIFICANT HOLDINGS

The Court's crucial legal reasoning includes the following verbatim excerpts from the Larsen & Toubro judgment, which were adopted and applied:

"Artificial intelligence cannot be at the cost of mortgaging human intelligence entirely. Technology is to serve the people and not to place booby traps and make life extremely difficult for the people. It is otherwise. If there are some gaps in the existing handling systems, bona fide parties cannot be made to suffer. The human element endowed with discretion and reason must step in. The officials operating such systems, or the officials tasked with implementing the law and the Government schemes, cannot abdicate responsibility, raise their hands, deny legitimate relief or make parties run from pillar to post and ultimately the Courts to get their dues. The officials who handle technology must deal with matters with the sensitivity and intelligence that the situation requires."

"The DGFT cannot adopt an attitude that its technological systems are not geared to deal with such situations and that its officials will not deal with such situations. Human and artificial intelligence must join to serve the people and achieve ease of business and not be at loggerheads. Suppose any party is entitled to any benefits under the law or under the schemes formulated by the Government to promote exports or trade. In that case, such benefits must not be denied or unduly delayed by citing technological glitches or the fact that the current electronic systems meant to assist the implementation of the law or operation of such schemes are inadequate or need revamping. What the law grants cannot be denied or unduly delayed by technology meant only to assist in implementing the law. If such an approach continues, the claims of leveraging technology to serve the people or ease of doing business will remain paper slogans."

Core principles established by the Court include:

• Technological systems are facilitators and must not be allowed to become impediments to the lawful rights of bona fide applicants;
• Government officials have a duty to exercise discretion and intervene manually when technological systems fail;
• Precedents from coordinate benches are binding and applicable to similar factual scenarios;
• Timely processing of Government scheme benefits is imperative and cannot be deferred on account of systemic glitches;
• The Court's directions are binding on the Respondents to process MEIS applications within a stipulated time frame and to communicate decisions promptly.

Final determinations on each issue:

• The Respondents 4 and 5 have complied with the obligation to amend the EDI system and transmit shipping bill details to DGFT;
• The Respondents 2 and 3 are directed to process the Petitioner's MEIS applications relating to 174 shipping bills expeditiously and within six weeks;
• The DGFT cannot refuse or delay processing MEIS applications on grounds of technological glitches not attributable to the applicant;
• Technology and human discretion must jointly function to ensure the effective administration