TMI Blog2006 (8) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... ot a recent phenomenon one has only to look at the history and the evolution of cuisines around the world. In many countries, the currently popular cuisine is an adaptation of a foreign one. The popularity in our country of Chinese, Italian and recently Lebanese food bears testimony to this growing trend. Indian spices and pulses were among the earliest to be traded at the height of the ancient civilizations of Egypt, Greece and Rome. As much as we relish our chick peas (chana) and the imported Kabuli variety, our desi? chick peas it seems is equally popular abroad. Chick peas are devoured in many forms: The Arab speaking world relishes its falafel (ground chickpeas shaped into balls and fried) and hummus (a smooth thick mixture of mashed chick peas with garlic). Global trade in chick peas as in other pulses has indeed grown. The Act and the Policy 3. The relevant provisions of the Act may be first noticed. Section 3 of the Act reads as follows :- 3(1) The Central Government may by order published in the Official Gazette, make provisions for the development and regulation of Foreign Trade by facilitating imports and increasing exports; (2) The Central Government may also, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regulated free, except in cases where they are regulated by the provisions of this Policy or any other law for the time being in force. The item wise export and import policy shall be, as specified in ITC(HS) published and notified by Director General of Foreign Trade, as amended from time to time. 5. Whenever there is an amendment to the Policy, either in the area of the import or export, such change will doubtless affect transactions that are underway in the form of contracts already entered into prior to the change. To account for such transactions that may have already been entered into prior to the change, the Policy itself sets out the consequence of the change on such transactions in Para 1.5 which reads as under :- 1.5 In case an export or import that is permitted freely under this Policy is subsequently subjected to any restriction or regulation, such export or import will ordinarily be permitted notwithstanding such restriction or regulation, unless otherwise stipulated, provided that the shipment of the export or import is made within the original validity of an irrevocable letter of credit established before the date of imposition of such restriction. 6. The v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6, it was decided that there would be a ban on the export of pulses with a view to augmenting the supply side. It was decided to allow private players to import wheat and to a limited extent, sugar. 10. The Finance Minister met the Press soon after the Meeting of the Cabinet Committee on Pricing and announced these decisions. The newspapers of 23-6-2006 (photocopies of the news clippings have been placed on record) prominently announced the aforesaid decision of the Government of India. The Asian Age and the National Herald from New Delhi, both dated 23-6-2006, indicated in the headlines that the export of pulses was banned. The government claims that the electronic media also carried this news on 22-6-2006 itself. 11. Admittedly, the aforementioned ban on the export of pulses was not issued in the form of a notification simultaneously. That notification was issued on 27-6-2006, five days after the news of the ban appeared in the press. 12. Three days prior to the notification, on 24-6-2006, pursuant to the contract entered into between the TCP and Petitioner No. 2, and the furnishing of the Performance Guarantee by the petitioners, two irrevocable letters of credit (LCs) wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bited Not permitted to be exported. 0713 40 00 Kg. Lentils Prohibited Not permitted to be exported. 0713 50 00 Kg. Broad beans (Vicia faba var major) and horse beans (Vicia faba var- Prohibited Not permitted to be exported. equina, vicia faba var minor) 0713 90 Kg. Other : Prohibited Not permitted to be exported. 0713 90 10 Kg. Tur (arhar) Prohibited Not permitted to be exported. 0713 90 91 Kg. Split Prohibited Not permitted to be exported. 0713 90 99 Kg. Other Prohibited Not permitted to be exported. 3. The above amendment shall remain in force for a period of six months from the date of its issue and shall not apply to imports already effected against Advance Licences/Authorisations issued prior to the date of issue of this notification. 4. This issues in Public Interest. (K.T. CHACKO) DIRECTOR GENERAL OF FOREIGN TRADE AND EX-OFFIC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the transitional arrangements notified under para 1.5 of the Foreign Trade Policy, 2006 shall not be applicable for export of pulses against irrevocable Letters of Credit opened on or after 22-6-2006 as the decision of the Government prohibiting the export of pulses was announced and got widely publicised on 22-6-2006 in the electronic and print media. 2. This issues in Public Interest. (K.T. CHACKO) DIRECTOR GENERAL OF FOREIGN TRADE AND EX-OFFICIO ADDITIONAL SECRETARY TO THE GOVT. OF INDIA 17. The Petitioners made two further representations ? one to the Prime Minister and the other to the Union Agriculture Minister. Thereafter, on 20-7-2006, the petitioners filed this writ petition seeking inter alia the following reliefs : (a) for quashing the Notification dated 4-7-2006 on the ground that it is ultra vires Section 5 of the Act as well as Article 14 and 300A of the Constitution. (b) that the benefit of Para 1.5 of the Foreign Trade Policy would be available to the petitioners notwithstanding the impugned Notification dated 4-7-2006 and (c) a mandamus to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some essential commodities banned the export of pulses on 22-6-2006 and allowed the private sector to import wheat and sugar to augment the supplies and supplement the Government efforts through PDS route. The States have been asked to clamp down on holding and black marketing to bring down the prices. This decision was taken by the Government in a high level meeting to look into such regulations of exports of essential commodities and in the public interest. The decision on export were restricted to two commodities such as pulses and sugar. It was also reported in various newspapers of such decision of the respondent regarding the above ban and prohibition on the export of pulses and sugar. The only idea of the respondent was to check and control the rise in prices of essential commodities and to liberalise import of wheat through private sector and sugar in strictly time bound manner, beside placing a blanket ban on the export of pulses and sugar in the public interest. It was also reported and informed to all the exporters about the intention and decision of the Government for making such prohibitions and publishing the relevant notifications banning the export of pulses and ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther exporters could be evident and judged from the fact that as per the information received by DGFT, so far (the actual figures may be much higher), irrevocable Letter of Credits were opened for exporting more than 1.20 lacs MTs of pulses between 22-6-2006 and 27-6-2006. This is close to 45% of the country s entire pulses export during the financial year 2004-2005 (2.75 lacs MTs). Thus, in this respect, it is clear that intentionally and deliberately, the petitioners procured the Letter of Credits within the above period after the pronouncement of the Policy and decision of respondents banning and prohibiting the export of pulses with a view to cause wrongful loss to the respondents and wrongful gain to themselves. Hence, it shows the utmost mala fides and manipulations on the part of the petitioners and hence, they are not entitled for any relief sought, therefore, the present petition is liable to be dismissed with exemplary costs. 23. The counter affidavit did not specifically deny any of the correspondence relied upon by the petitioners or the fact of the furnishing of the bank guarantee or opening of the LCs on 24-6-2006. However, the respondents contended that there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities informally refused to accept the Shipping Invoice till the time position was clear to them. Finally, the Notification was issued on 27th June 2006. The Petitioner asked its CHA to claim that the petitioner already has irrevocable L/Cs in their favour and thus their shipment is saved/protected under paragraph 1.5 of the Foreign Trade Policy. Accordingly, the CHA mentioned the details of L/C in the Shipping Invoices already lying with it. The inconsistency in the document is due to the above circumstances. Submissions of the counsel 26. Considering the urgency of the matter and with the consent of the parties, the Court took up the writ petition for final hearing on 8-8-2006 and 11-8-2006. The submissions of Dr. A.M. Singhvi, the learned senior counsel appearing for the petitioners, are as under : (a) The express wording of Section 5 of the Act does not permit a change or an amendment to the Policy in a manner other than what is contemplated by that Section. In other words, the amendment could only be by way of a notification in the Official Gazette. The Central Government cannot rely on Press releases and Press announcements to construe the actual date the amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Para 1.5 of the Policy as a matter of right since that paragraph only states that in certain circumstances the export pursuant to a concluded transaction would ordinarily be permitted . Mr. Malhotra submitted that the word ordinarily meant that it was not invariable and that therefore the Central Government would be within its powers to withdraw this benefit in the larger public interest. (d) In a span of just 5-6 days exports constituting 45 percent of the total export of pulses were sought to be made by the traders. Therefore, public interest required the withdrawal of the benefit under Para 1.5 and this necessitated the subsequent Notification dated 4-7-2006. There was nothing illegal or arbitrary therefore about this subsequent Notification dated 4-7-2006. (e) The respondents in their counter affidavit had taken a specific objection that the deponent of the affidavit in support of the writ petition had not shown how he was authorised to swear the said affidavit on behalf of the petitioners. In rejoinder, the petitioners had only shown the authorisation of the deponent vis-a-vis Petitioner No. 2 and not Petitioner No. l. This was fatal to the maintainability of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pradeep Jindal to take all necessary steps including legal action in connection with the transactions that form the subject matter of the present petition. Dr. A.M. Singhvi, the learned senior counsel for the petitioners, during the course of arguments on 11-8-2006 submitted that a specific authorisation by Petitioner No. 1 did exist and sought time to produce it on or before 17-8-2006. The said authorisation has been since produced and we are satisfied, therefore, that there is no merit in the first preliminary objection of the respondents as to the authority of the deponent of the affidavit in support of the writ petition. Issue No. 1 is accordingly answered in favour of the petitioners and against the respondents. Re : Issue No. 2 32. The issue of territorial jurisdiction in the context of Article 226 of the Constitution has come up for consideration time and again before the Hon ble Supreme Court of India. In Oil and Natural Gas Commission v. Utpal Kumar Basu - (1994) 4 S.C.C. 711, it was held that the question whether the Court had territorial jurisdiction to entertain a writ petition under Article 226 had to be resolved with reference to the pleadings in the writ petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any event not from a date on which the prohibition was in fact not in force. 34. In order to appreciate this argument, it requires to be broken into its constituent elements. The admitted position is that the notification announcing the ban on the export of Chick Peas was issued only on 27-6-2006. Section 5 of the Act recognises this as the only possible mode of amending an existing Policy. Although it is perhaps possible that the effect of the ban was made known earlier in the electronic media on 22-6-2006 itself, soon after the Meeting of the Cabinet Committee on Pricing, and in the print media on 23-6-2006, the Official Notification in terms of Section 5, was issued only on 27-6-2006. The petitioners therefore contend that the ban could not have been imposed on any earlier date, i.e., on a date earlier than 27-6-2006. They contend that what in effect the impugned Notification dated 4-7-2006 seeks to do is to extend the ban period to a date prior to the date of the notification, i.e., from 22-6-2006 and this, they say is impermissible and ultra vires Section 5 of the Act. 35. The plea of the respondents on the other hand is that the fact of the ban was common knowledge on 22 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for this purpose. In Shri Vijayalakshmi Rice Mills v. State of A.P. - AIR 1976 S.C. 1471 the question was whether the price to be paid for certain supplies of rice made by the appellants in January-February, 1964, would be governed by the Price Control Order dated 23-3-1964 or by the one which was in force in 1963 when the sales in fact took place. The Hon ble Supreme Court held (at p. 1473) : It is a well recognised rule of interpretation that in the absence of express words or appropriate language from which retrospectivity may be inferred, a notification takes effect from the date of its issue and not from any prior date. The principle is also well settled that statutes should not be construed so as to create new disabilities or obligations or impose new duties in respect of transactions which we are complete at the time the Amending Act came into force. 38. Is there is an express indication in Section 5 of the Act that a notification by the central government can be given retrospective effect? A bare reading of the provision indicates contrariwise. Section 5 uses the expression announce . The word announce has been defined in Black s Law Dictionary [8th Edition 2004, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carrying Gold, stopped the aircraft and searched his person. He was found carrying 34 gold slabs. He was prosecuted and convicted of an offence under Section 8 read with Section 23(1-A) of the Act. In challenging his conviction, it was contended that even if what was prescribed by Section 8(1) of the Act was an offence, the exact point at which the person accused of the offence actually knew that it was an offence, was a relevant factor in determining whether such a person was guilty of the offence or not. The argument was that but for the subsequent notification dated 8-11-1962, George was not guilty of any offence. If on 27-11-1962, when the accused boarded the flight in Zurich, he had no means of knowing that it was an offence to be carrying gold in transit from Zurich to Manila, he could not be punished for such an offence. However, the Hon ble Supreme Court by a majority (2 : 1) negatived this contention and held that the effective date was the date of the publication of the notification in the Gazette which in that case was 24-11-1962. The Court held that that ignorance of it by the respondent who was a foreigner is, in our opinion, wholly irrelevant . The Court noticed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es case (supra) was put in doubt on account of two subsequent decisions of the Hon ble Supreme Court in Collector of Central Excise v. New Tobacco Company - 1998 (97) E.L.T. 388 (S.C.) = (1998) 8 S.C.C. 250 and Garware Ltd. v. Collector, Customs - 1998 (100) E.L.T. 321 (S.C.) = (1998) 8 S.C.C. 282. However, a Bench of three Judges of the Hon ble Supreme Court in Union of India v. Ganesh Das Bhojraj (supra) has authoritatively ruled that the decision in Pankaj Jain Agencies case (supra) is the correct exposition of law on the subject. 43. What remains to be dealt with is the contention of the respondents that the date on which the ban became effective was in fact the date on which it was announced both in the electronic and print media, i.e., on 22-6-2006. This question came up for consideration earlier in the Hon ble Supreme Court in I.T.C. v. Bhadrachalam Paper Boards v. Mandal Revenue Officer, AP - (1996) 6 S.C.C. 634. There, a certain Government Order issued in 1976 was been given wide publicity in the press in the same year. It had however not been gazetted or laid on the floor of the Legislature as required by the concerned statute. The contention of the beneficiary of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in accordance with the mandatory requirements of Section 5 of the Act. 45. This brings us to the next contention of the petitioners that the impugned Notification dated 4-7-2006 is ultra vires Section 5 of the Act. As already noticed hereinbefore Section 5 of the Act requires any amendment to the Foreign Trade Policy to be made in like manner i.e., in the same way as the earlier amendment is made. In other words an amendment of the policy will also have to be made only by way of a notification in the Officer Gazette and in no other manner. The amendment in public interest in terms of Para 1.3 of the Policy also indicates that such amendment shall be made by means of a notification published in the Gazette of India . Unless Section 5 itself is amended by the Parliament, this mode of publication of the amendment has to be strictly followed. This mode cannot be sought to be deviated from or changed by the Central Government by way of a notification issued under that Section. That is precisely what the impugned Notification dated 4-7-2006 seeks to do. A delegated legislation cannot seek to override the main section under which it is made, in this case, Section 5. On this short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to glean what is in fact intended by the Act and the Policy. The legal domain of fiscal statutes often witnesses exercises of imposition of or lifting of prohibition, granting of or withdrawal of exemptions in the form of notifications and other devices of delegated legislation. At any given point of time, when such an exercise is performed, there are bound to be persons who fall on either side of the line that gets drawn. Transactions that are at various stages of execution, are bound to be affected. However, there is also an element of public interest in getting our citizens to honour their commitments in the course of international trade. What is at stake is not merely the money involved in the trans border transactions but the reputation of our traders that they will be able to deliver as assured. That is the very purpose of the elaborate documentation that accompanies such transactions in the form of performance guarantees, LCs and so on. This has received acknowledgment in the form of para 1.5 of the Policy which seeks to permit such in progress transactions to proceed unhindered by the change. In other words, para 1.5 is a restraint on the power of the government und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Government seeks to grant a benefit and the other when it seeks to withdraw it. Government s decisions are to be expressed in a certain form. In the area of export and imports, the Act under Section 5, prescribes the specific mode by which the Government will announce Policy changes. That has to be strictly construed. It is not possible to avoid the mandate of Section 5 by resorting to a broad argument of public interest. Re : Issue 4 51. We must hasten to add that public interest would be one of the relevant factors that will weigh with the Government when it is called upon to grant, upon a case-by-case basis, the benefit of Para 1.5 of the Policy. We are not called upon to decide this at the present juncture because as of now, by virtue of the impugned Notification dated 4-7-2006, the Government has disabled itself from considering the applicability of Para 1.5 to the transactions on hand. Therefore, the stage where these transactions should ordinarily be permitted to go through in terms of Para 1.5 has not yet arisen for consideration. Dr. Singhvi is right in his submission that the transactions in the instant case satisfy the requirements of Para 1.5 given the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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