TMI Blog1973 (8) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... tration of contracts up to 29 February, 1972. In this background it cannot be said that the Government authorities acted mala fide in extending the date of the opening of the letter of credit from 24 January , 1972 to 31 March, 1972. The relaxation was to minimise hardships to the traders. The relaxation was to prevent dislocation of trade on a large scale. The Association gave instances of traders who could not succeed in opening letters of credit for reasons beyond their control. Appeal dismissed. - Writ Petition No. 94 of 1972. - - - Dated:- 31-8-1973 - SIKRI, S.M., PALEKAR, D.G., CHANDRACHUD Y.V, BHAGWATI P.N. AND KRISHNAIYER, V.R., JJ. R. K. Garg, S. C. Aggarwala, for the petitioner. S. T. Desai, B. D. Sharma, M. N. Shroff, B. Sen, O. C. Mathur, J. B. Dadachanji Ravinder Narain, for respondents JUDGMENT: The Judgment of the Court was delivered by RAY, C.J. This petition under Article 32 of the Constitution challenges the Trade Notice dated 29 January, 1972 referred to as the impugned notice. The import and export of goods is regulated by the Imports and Exports Act, 1947 referred to as the 1947 Act. Section 3 of the 1947 Act empowers the Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sation commitment category are to furnish particulars on or before 15 February. 1972 at the office of the Controller of Imports Exports. The particulars are first, full statement showing quantity, grade of the mica (blocks, splittings, condensor films, mica scrap and factory cuttings), delivery period, name of the buyers, contract number and date with particulars of letter of credit number and date and second, quantities already shipped tinder these contracts and balance quantities to be, shipped. Pursuant to the decision notified under the impugned Notice the Corporation issued immediately thereafter a Press Notice on export of mica prescribing the procedure to be adopted by the exporters taking recourse to the Canalisation Scheme. The Press Note states that after consideration of the prevailing trade practices and with a view to causing least dislocation in the existing arrangements between the buyers abroad and the local sellers it has been decided to consider requests from the trade on furnishing full particulars of foreign buyers and other relevant details to negotiate sales of mica on behalf of the Corporation. The Corporation will enter into a sale contract with the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties provided the shipment is made not beyond 30 June, The petitioner challenged the canalisation of export scheme on the following grounds. First, it is not a canalisation scheme. It is in fact a scheme to transfer the business of the petitioner and goodwill in favour of the Corporation which is outside the purview of the Act. Second, the scheme is an unreasonable restriction in so far as it results in loss of foreign exchange, loss of profit and enables contracting foreign buyers to avoid the contract and sue the petitioner for breach of the contract. Therefore, the scheme violates Article 19(1) (g) of the Constitution Third, after the proclamation of emergency it has to be found whether the canalisation scheme could have been made under the 1947 Act. Fourth, the scheme violates Article 14 of the Constitution. There is discrimination between the exporters of mica powder and mica. scrap and mica waste,. The exclusion of mica powder from the ambit of the scheme will lead to mica scrap and mica waste being converted into mica powder and enable individual exporters to export the same. Fifth, fixing 24 January, 1972 as the date for coming into force of the scheme with referenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Control Order was made under section 3 of the 1947 Act. Clause 6 sub-clause (h) of the 1958 Export Control Order conferred power on the Central Government to refuse to grant a licence if the licensing authority decided to canalise export through special or specialised agencies or channels. The language of clause 6(h) of the 1958 Order is in identical language with clause 6(1) of the 1968 Order. The Constitutional validity of clause 6(h) of the 1958 Order was challenged there. Licences for the import of glass chatons were issued only in favour of the State Trading Corporation. The applicants used to import considerable quantities of glass chatons up to 1957. Those merchants challenged the grant of licence in favour of the State Trading Corporation in preference over the applicants and also as a monopoly in favour of the Corporation. The order of the Central Government in terms of clause 6(h) of the Import Control Order 1955 allowing canalisation of export through the Corporation was also impeached to be in contravention of Article 19(1)(f) and (g) and Article 31 of the Constitution. This Court in Glass Chatons case (supra) held that if the scheme of canalisation of imports is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... export scheme. No preference is shown to the, Corporation. Where canalisation is decided no licence is granted in favour of any one. Therefore, there is neither any competition nor any choice in the matter of grant of licence. It is a total exclusion of citizens in order to enable all the country s exports to be made by one licencee. The impugned Notice is challenged on the ground that 24 January, 1972 is an arbitrary fixation of date. The Press Note is impeached on the ground that the procedure for export through the Corporation where no irrevocable letters of credit were opened before 24 January, 1972 is in reality not a canalisation scheme but is a device to transfer the business and goodwill of the traders in favour of the Corporation. The fallacy of the contention is in assuming that traders have a right to carry on the trade of exporting mica waste and mica scrap after coming into force of the canalisation scheme on 24 January, 1972. The Press Note made it clear that the State did not want to disturb the market but intended to save the trade and to prevent a loss to the sellers. The State did not want to dislocate the commitments made by the traders to foreign buyers. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re attracted. Counsel for the petitioner countended that the levy of service charges was not authorised by the 1947 Act which permitted only levy of fee in respect of applications for issue or renewal of licence. The Corporation is a licencee under the 1947 Act and the 1968 Order. The Corporation acts in accordance with the terms and conditions of the licence. It was said on behalf of the petitioner that section 4(a) of the 1947 Act and clause 4 of the 1968 Order excluded levy of any other fees under the Act. The Government and the licensing authority under the Act are not collecting any fee or charges from the traders. It is the Corporation which is collecting service charges from the traders who avail the services of the Corporation. The Corporation is in the nature of commercial undertaking to which a licence has been granted for the export of certain commodities. The service charges are nothing but quid pro quo for the services rendered by the Corporation. Counsel for the petitioner challenged the impugned Notice as violative of Article 14 on the ground that the canalisation scheme made a distinction between subsisting contracts with foreign buyers for which irrevocable letters ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... import or export of goods under international contracts of sale frequently requires, in modem times, the permission of a governmental authority in the form of import or export licence. Where this is the case, the parties will usually provide in the contract which of them is to apply for the necessary licences and what is to happen if the application is refused. If the contract is altogether silent about licences or is expressed to be subject to licences without providing who is to obtain them, a term is usually implied making this the duty of one party or the other. Normally, this duty will be cast upon the seller particularly in the case of F.O.B. and F.A.S. contracts. There may be cases where the circumstances may be such as to make the buyer responsible for obtaining any necessary export licence. The tendency is to cast the duty upon the party best qualified by knowledge of the necessary facts or otherwise to obtain the licence. Once it is determined from the words of the contract or by implication who is to apply for the licences, there is a separate question again depending on the circumstances of the particular case, whether the duty is an absolute one or more usually, whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheme is to develop mica power industry in our country, because this industry is developing and is practically nascent in growth. Therefore, there is intelligible differentia between mica powder on the one hand and mica scrap and waste on the other, in excluding mica powder, from the canalisation scheme. The State issued another Trade Notice on 20 April. 1972. This April 1972 Notice is also impeached. Under the April Notice which can be described as the second impugned Notice it is stated that the canalisation scheme Provided in the impugned Notice of 29 January, 1972 is modified to the extent that shipments will be allowed up to 30 June, 1972 against subsisting contracts for all grades and varieties of mica which had been executed prior to 24 January. 1972 and ill respect of which letters of credit have not been opened prior to 24 January, 1972. The petitioners contend that the relaxation of the date for opening letters of credit from 24 January 1972 to 31 March, 1972 was intended to benefit influential people. It was said that such influential people went on opening letters of credit up to 31 March, 1972, because of their previous knowledge that there was going to a relaxation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mer. If for the reason of the changed pattern of export steamers were not availed or shipment was delayed the traders would suffer loss for non-shipment of the goods and incur railway demurrage and Port Commissioners demurrage and storage charges. The Association therefore asked for relief in the matter of export in accordance with the contractual terms of existing contracts. The Andhra Pradesh Chamber of Commerce added that there were contracts prior to 24 January, 1972 stating shipment date subsequent to 24 January, 1972 for which letters of credit were to be established in due course. Certain contracts were executed in part and for the remaining part letters of credit were to be established in due, course prior to the stipulated time, of shipment. There were contracts prior to 24 January, 1972 for which letters of credit originally established had expired. Therefore, the Andhra Chamber of Commerce asked for extension of last date for registration of contracts up to 29 February, 1972. In this background it cannot be said that the Government authorities acted mala fide in extending the date of the opening of the letter of credit from 24 January , 1972 to 31 March, 1972. The r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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