TMI Blog1961 (8) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... - W.P.(C) 1 OF 1960 - - - Dated:- 8-8-1961 - P. B. GAJENDRAGADKAR, K. SUBBARAO, M. HIDAYATULLAH, J.C. SHAH AND RAGHUBAR DAYAL, JJ. JUDGMENT Controls on exports and imports imposed as an emergency measure during the last war in respect of certain commodities were kept alive after the lapse of the Defence of India Rules by the Emergency Provisions (Continuance) Ordinance, 1946 which was later replaced by the Imports and Exports (Control) Act,. 1947 ( 18 of 1947), by s.(3) of the Act, the Central Government was authorised by order published in the Official Gazette, to provide for prohibiting, restricting or otherwise controlling, in all cases or in specified classes of cases, and subject to such exceptions if any, as may be made by or under the order, inter alia the import, export, carriage xxx xxx of goods of any specified description. By sub-sec(2) of s.3., it was provided that all goods to which an order under sub-s.(1) applied shall be deemed to be goods of which the import or export has been prohibited or restricted under s.19 of the Sea Customs Act. Exercising authority under s.3 of the Imports and Exports (Control) Act, 1947, the Central Government issued notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ports under the Export Promotion Scheme for the import of permissible varieties of artsilk yarn to actual exporters upto the following percentage of the rupee equivalent of foreign exchange earned on the basis of the f. o. b. value of The artsilk goods exported, or the value assessed by customs, whichever is less. (i) 66-2/3 per cent in the case of Indian artsilk sarees, (ii) 100 per cent in the case of other Indian artsilk fabrics including Indian artsilk hosiery goods." The petitioners, M/s. Ram Chand Jagadish Chand are a firm engaged in. business as exporters and importers. In the period October 1958 to March 1959, the petitioners exported to Singapore, Bush Shirt Cloth, Glass Nylon, Art silk Piece Goods and Superior Class Nylon of the total C.I.F. value of Rs. 7,10,817/-, and relying upon cl. (2) of the Export Promotion Scheme as outlined in the Import Trade Control Policy, called upon the Controller of Imports to issue licences for artsilk yarn for Rs. 4,04,218.62 np. and Rs. 3,03,490.93 np. respectively for the months of February and March 1959. The petitioners claimed that they had, pursuant to the Export Promotion Scheme, exported artsilk goods to Singapore and had ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their fundamental right to carry on business. They also claimed that the Controller was bound to grant licence to import artsilk yarn under the Export Promotion Scheme for the full value of the goods exported by them, and in failing to do so, had practiced discrimination against the petitioners, because several other importers of artsilk yarn who were the petitioners' rivals in trade during the identical period were given licences for amounts "ranging between 85 and 100 per cent of their exports". In paragraph 22 of their petition, the petitioners submitted a table setting out the names of eight such exporters, the amount and the percentages granted to such exporters. The fundamental right of a citizen to carry on any occupation, trade or business under Art. 19 (1)(g) of the Constitution is not absolute : it is subject to reasonable restrictions which may be imposed by the state in the interests of the general public. The right of the State to impose controls in the larger interest of the general public on imports has accordingly not been denied: nor has the authority of the 'State to issue the Imports (Control) Order, 1955 in exercise of the powers conferred by the Imports and E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of the F.O.B. value of the goods exported. By that clause, the exporter is not given the option to claim an import licence for any amount not exceeding the value of the foreign exchange earned by export of goods. The clause invests the Controller with authority, it does not impose an obligation upon him enforceable at the instance of the exporter, to issue a licence for the amount (subject to the maximum prescribed. claimed by the exporter. The power is plainly discretionary. It is true that the discretion has to be exercised reasonably and not arbitrarily. The, licensing authority would normally issue an import licence for 100% of the value of the goods exported, but having regard to special considerations such as difficult foreign exchange position or other matters which have a bearing on the general interest of the State, import licences for a smaller percentage may be granted to the exporters. But by the use of the expression "upto the following percentage of the rupee equivalent" power to fix arbitrarily a percentage of the value of the goods exported for awarding an import licence is not granted. In granting a licence to the petitioners for Rs. 3,19,354/-, has th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crutiny cannot be regarded as imposing an unreasonable restriction. The State is as much concerned with earning foreign exchange as maintaining and consolidating its export trade. if a large quantity of goods be dumped at excessive prices foreign markets to meet a temporary demand in the ultimate result the export trade of the State may suffer. If taking advantage of temporary demands in the foreign market, the exporters charge excessive prices which axe not commensurate with reasonable profits on the real value of the goods and seek to invest the profits earned, in speculative commodities thereby endangering the internal economy of the country, the State may be justified in taking steps to prevent the exporters from obtaining advantage of such excessive profits by refusing to afford facilities for importing goods to the exporters who seek to rely upon the export Value of the goods at inflated rates., The affidavit of Sharma shows that in a number of cases,, the importing firm in the foreign country was only a "'sister concerns of the exporting house, and the exporters adopted the expedient of inflating the price with the object of adjusting the excess value received by them. It ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Committed have not stated-in the reasons given by them that Re.- 1. 50 nP. was the prevailing: market rate in respect of Bush Shirt Cloth at the time of the export in the Indian market. But in paragraph 22 of the respondents' affidavit, it- is stated that "the petitioner firm has behalf granted licence equal to 100% of the value which has been arrived at as reasonable value of the exports effected by the firm." The petitioners alleged that the decision of the Committee was arbitrary the licensing authority contends that the decision was made after ascertaining the reasonable value in the Indian market at the material time of the goods exported by the petitioners. The petitioners have not placed before the court any independent evidence to show that the current market rate of "bush shirt cloth" which was exported, substantially exceeded the rate of Re. 1. 50 nP. per yard of 36" width. In the circumstances, we would not be justified in assuming that the Committee made an arbitrary decision in arriving at the value of the bush shirt cloth exported for the purpose of recommending the grant of import licence. The contention that the order passed by the Controller granting a licence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tsilk goods were conversant with the current market rates of the cloth which was exported by the petitioners. Counsel for the Union has placed before us in the course of the hearing the report of the Committee in respect of seven out of the eight exporters who the petitioners claimed had been given import licence for the full value of the exports. The report of the Committee with regard to M/s. Rajasthan Exporters I and Importers, Calcutta is not placed before us on the plea that.,-it is not immediately available. On a perusal '.of the report of the Committee with regard to, the other exporters, it may be stated that the claim of the petitioners that Raghunath Rai Piyarilal were given import licence for the full value of the goods exported is not correct. It appears from the record that only 40% of 'the F.O.B. value was to be taken for "Glass, Nylon dved" exported in respect of application No. 36. Similar larly, in respect of application No. 35, 40% (if the F.O.B. value was to be taken for the purpose of granting import licences. It is true that in the cases of the other importers Premsukhdass Sitaram, Indian Exporters and Importers Corporation, M/s. Universal Watch Emporium, M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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