TMI Blog2020 (2) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... was in furtherance of a policy to promote the larger public interest. Although we are not inclined to strike down the guidelines in the form of a policy as ultra vires the provisions of the Constitution of India, yet we remind the Union of India of the observations made by the Delhi High Court in DEVKI GLOBAL CAPITAL PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. [ 2019 (9) TMI 1321 - DELHI HIGH COURT] . After the decision of the Bombay High Court referred to above, the policy came to be amended with effect from 13th September 2019. We have already given a fair idea as regards the fine points of distinction between the old policy and the new policy. There has been a remarkable shift in the new policy, however, what is hurting the writ-applicant is the policy of 'first-come-first-serve'. This, according to the writ-applicant, is violative of Article 14 of the Constitution of India. Needless to mention at this stage that it is the prerogative of the respondents to frame a policy. However, such policy must be transparent, fair and reasonable. We suggest that the Union should consider framing a policy which provides for a fair chance to every applicant in procuring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Turkey to India in accordance with Public Notice No.PS-11/2019 dated 13th September 2019. (d) Any other relief as may be deemed fit in the interest of justice. (e) To provide for the cost of this petition. The writ-applicant seeks to challenge the guidelines dated 13th September 2019 for the registration of the sales contract for the import of the poppy seeds from Turkey to India issued vide Public Notice No.PS-11-2019. The challenge is substantially on the following three grounds : 1. The amended policy dated 25.6.2019 which is now substituted by the policy dated 13.9.2019 is manifestly unjust and handmade for the purpose of favouring few big players. 2. The practice 'first come first serve basis' adopted in distributing the State largesse is violative of Article 14 of the Constitution of India. 3. The conduct of the respondents itself suggest that they have devised the impugned policy with a view to favour few players and also to ensure ouster genuine first-time importers. The writ-applicant has made available in writing for the convenience of this Court the relevant dates and events, which are as under : Date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied the guidelines for Registration of sales contract in respect of any import of the poppy seeds from Turkey. That under the said notification, the country cap of the purpose of the import of the poppy seeds from Turkey was required to be approved by the Department of Revenue on the basis of the recommendation by the committee comprising of the Respondent No.2, one representative of the Directorate General of Foreign Trade and one representative of the Department of Revenue. The country cap will be based upon the stock and production of the poppy seeds as communicated by the Turkish Grain Board (TMO) or Turkish Embassy in India. The other terms and conditions are as under: Furthermore, under the revised public notice, the exporting company in Turkey shall get the sales contract registered with the TMO. Once such contract is registered with the TMO, the Indian importer may approach the Respondent No. 2 for the registration of sales contract by filing the application in the manner specified by the Respondent No.2. However, if the importer has not got registered his sales contract for the import of the poppy seeds in the last three financial years, the verificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions were filed before the Hon ble High Court of Delhi being the Writ Petition (C) No.7676 of 2019. Even in this petition the policy dated 25.06.2019 was under challenge. On the said date, the Hon ble High Court of Delhi observed that prima facie this Court concurs with the contention that if the registration of the TMO itself is exhausted on the basis of the country cap, then the guidelines would work on first come first serve basis, which is not the methodology under the said guidelines. 28.08.2019 That in the said petition, the Respondent No.2 herein referred to a communication of the TMO and confirmed that the Turkish Authority will remove the old contracts in the system and re-upload the sale contract for year 2019-20. However, the advocate for petitioner in that matter contended that the clarification was insufficient in as much as it does not specifically state that only those contracts which were executed on or after the declaration of the country cap will be uploaded by the Turkish Authorities. 06.09.2019 Thereafter, the TMO addressed a letter to the Respondent No.2 sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the changes introduced by way of a public notice dated 13th September 2019 has no nexus with the object that is sought to be achieved. In such circumstances, the changes are violative of Article 14 of the Constitution of India. Mr.Dave gave a fair idea about the old policy and the new policy as under : Old Policy New Policy Lack of Transparency The list of successful importers who were allotted quote were listed in chronology of their name featuring in draw of lots. No such list is published. Allotments are made behind the closed doors. Registration Registration required by importer Registration by importer with Respondent No.2 and by exporter before TMO Quantity enhanced Earlier a single importer can import maximum of 90 MTS (18000 MTS will be exhausted 200 applicants) Now a single importer can import maximum of 450 MTS (18000 MTS will be exhausted 40 applicants) Number of times importer can apply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a policy and this Court should be slow to interfere with such policy decision of the Government. Mr.Vyas seeks to rely upon the following submissions made in the affidavit-in-reply filed on behalf of the respondents. 2.1 The Respondent states that it is proper to say poppy seeds are not narcotic substance though they are coming out of poppy plant. This position is legally accepted, as evident from definition of poppy straw as defined in Section 2(xviii). The said definition is reproduced below : (xviii) 'poppy straw' means all parts (except the seeds) of the opium poppy after harvesting whether in their original form or cut, crushed or powdered and whether or not juice has been extracted therefrom; 2.2 The regulation of import of poppy seeds into India comes through resolution No.1999/32 dated 28.07.1999 passed by the Economic and Social Counsel of United Nations. This resolution calls upon the member states of United Nations to fight the international trade in poppy seeds from countries where no licit cultivation of opium poppy is permitted. It stipulates that poppy seeds should be imported only from countries in which opium poppy is licitly cultiva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otics Commissioner acts in accordance with these guidelines so framed to achieve the prescription contained in Para 17 of the NDPS Policy. 2.9 Hon'ble Madras High Court in their order dated 12.4.2014 in WP No.5019/2016 have inter alia held that guidelines framed by Department of Revenue to regulate import of poppy seeds into India is not backed by any statutory power, as such the guidelines cannot override import and export policy formulated by Union Government. Consequent to this decision Ministry of Commerce and Industry vide Notification No.17/2015-20 dated 29.07.2016 empowered Department of Revenue to issue guidelines which may inter-alia provide for fixing of country cap, quantitative restrictions etc. Para 3(c) of the said Notification is reproduced below: All import contracts for this item shall compulsorily be registered with the Narcotics Commissioner, Gwalior prior to import in accordance with the guidelines issued by the Department of Revenue, which may, inter alia, include fixing of country caps, imposing quantitative restriction, if any, per importer or any other relevant provisions as deemed necessary for implementation of National Policy on Narcotic Dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontract value by Indian importer to Turkish exporter or opening of irrevocable L.C. in favour of exporters | | Application for converting provisional registration to Final registration | | Final Registration by the Narcotics Commissioner With above and in terms of MOU, any sales contract which is registered by the TMO is a valid contract for Narcotics Commissioner and an Indian Importer will submit application for registration of sales contract to Narcotics Commissioner which has already be registered with TMO. Any other contract which is not registered with TMO will not be treated as valid contract. Since the petitioner has not made his contract registered with TMO as other importers did, therefore, the his sales contract cannot be registered by Narcotics Commissioner. 3.3 From the above steps, it is clear that it is the option of India importer to pay minimum 20% of amount of contract value to Turkish exporter or to open a irrevocable letter of credit in favor of such exporter in case he is desirous to obtain final registration without the stage of provisional registration. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 20% of total contract value only to convert such provisional registration into final registration. It is further submitted that till 30.09.2019 Respondent No.2 has approved 143 contracts in all of which advance payment has been made through banking channels which indicate that this provision to make advance payment is very much workable. 4.18 Contents of paragraph no.3.7 is denied. The procedure envisaged in the guidelines dated 25.06.2019 is already referred in earlier paragraphs. Therefore, the same be treated as part and parcel of the reply to this paragraph. As regards the contention that few large players have pre-booked their contracts, it is submitted that entering into the sales contract is within the domain of Turkish exporter and Indian Importer. Therefore it is clear that neither TMO nor Respondent No.1 or Respondent No.2 has any say in the matter which entirely falls within the domain of commercial matter between Turkish exporter and Indian importer. In such circumstances referred to above, Mr.Vyas prays that there being no merit in this writ-application, the same be rejected. Having heard the learned counsel appearing for the parties and having gone thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business. 3. We disagree. 4. That poppy seed import into India is regulated by the CBN is undisputed. The Petitioners are registered importers. They have the necessary licenses. They agree, further, that there is annual cap or quota on poppy seed import from various points of origin. There is a cap on the quantity that may be imported for each foreign exporter country. Until recently, import permissions were by sale of lots. 5. On 25th June 2019, the 2nd Respondent issued the impugned public notice No. 9/2019, notifying guidelines for registration of sales contract in regard to poppy seed imports from Turkey. A copy of these guidelines is at Exhibit E to the Petition, from page 32 onwards. We go to those directly. 6. The guidelines are specific to poppy seed imports from Turkey. They speak, in clause I, of a determination of a country cap. This cap is to be approved by the Department of Revenue, based on a recommendation by the Narcotics Commissioner, a representative of the Directorate General of Foreign Trade, and a representative of the Department of Revenue. The clause clearly says that the country cap will be based on stock and production of poppy seeds a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners are able to do none of this. 9. What is, however, clear is that this notification has been framed pursuant to a Memorandum of Understanding dated 23rd May 2018 between India and Turkey. By a Notification dated 29th July 2016, the government of India conferred powers on the Department of Revenue to frame guidelines (fixing country caps, imposing limits on import quantities per importer or in the aggregate and so on). These were intended to give effect to the National Policy on Narcotic Drugs and Psychotropic Substances, controlled by the Narcotic Drugs Psychotropic Substances Act, 1985 ( NDPS Act ). Obviously, this MOU, a sovereign act, is not open to challenge. What the impugned Notification does is to provide guidelines and to restrain exercise of unfettered discretion. The Notification guidelines serve to filter out all but genuine and bona fide importers and prevent cartelization, artificial blocking of country caps, and artificial raising of re-sale prices. Notably, no other importer has complained. On the contrary, one importer, represented by Mr. Setalvad, has sought to intervene to contest the petition. That application says that around 18000 MT of poppy see ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Government to impose quantitative restrictions on imports. Section 9-A says that the Central Government may, after conducting a suitable enquiry, if satisfied that any goods are imported into India in large quantities and under such conditions as injure or threaten to injure domestic industry, it may impose quantitative restriction. These restrictions can continue for a maximum of four years, extendable by a like period. 12. We have noted this precisely because the source of power under both Act is not questioned by the Petitioners before us at all. Once, therefore, we find that there is a power to regulate and a power to impose quantitative restrictions, and there is no challenge to the exercise of that power, it is difficult to see what remains in the Petition. Merely saying that a certain clause is, in the Petitioner s view, sub-optimal, or leaves something to be desired, is not enough to warrant a striking down of the notification. We cannot, equally, substitute our view for government policy framed in legitimate exercise of statutory power. Yet that is precisely what the Petitioners would have us do. Worse yet, there is no data at all in the petition to supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated public purpose of protecting the due implementation of the policy of the Government of India of not permitting import of poppy seeds from non-designated countries. It is in pursuance of that policy that the conditions of the notification require a certificate that the poppy seeds originate in a country where opium poppy is grown legally. The Import Policy is a statutory document enacted in pursuance of the Import and Export Control Act, 1947. Then there is a reference to the National Policy on Narcotic Drugs and Psychotropic Substances. 15. Once, therefore, we see that the presently impugned Guidelines are but a step towards implementing a policy that has not only been in place in some form for many years previously, but is in furtherance of a policy to promote the larger public interest, then the narrow commercial interests of the Petitioners must yield. Viewed from this perspective, we do not think the decision of learned single Judge of the Madras High Court in Sri Adinath Traders v Union of India, 2016(338) ELT 571 (Mad.) is of much assistance. That related to a challenge to a categorization of importers, and that is nowhere near the challenge before us. 16. Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to obtain information from the Government files or the files of the agency/instrumentality of the State that a particular public property or asset is likely to be disposed of or a contract is likely to be awarded or a licence or permission is likely to be given, he would immediately make an application and would become entitled to stand first in the queue at the cost of all others who may have a better claim. This Court has repeatedly held that wherever a contract is to be awarded or a licence is to be given, the public authority must adopt a transparent and fair method for making selections so that all eligible persons get a fair opportunity of competition. To put it differently, the State and its agencies/instrumentalities must always adopt a rational method for disposal of public property and no attempt should be made to scuttle the claim of worthy applicants. When it comes to alienation of scarce natural resources like spectrum etc., it is the burden of the State to ensure that a non-discriminatory method is adopted for distribution and alienation, which would necessarily result in protection of national/public interest. In our view, a duly publicised auction conducted fairly a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel for the petitioner submits that the petitioner is claiming right for renewal of lease under Rule 6-A, which provides as follows:- 6-A Application fee etc., for renewal of mining lease:(1) An application for renewal of mining lease may be made atleast six months before the date of expiry of the mining lease along with four copies of the map of lease hold area showing clearly he area applied for renewal and the provision of clause (a) and (d) of sub-rule (1) of Rule 6 shall mutatis mutandis apply. (2) The State Government may condone the delay caused in making the application for renewal of mining lease after the period specified in sub-rule (1). 10. The petitioner's right for renewal of lease under Rule 6-A could be considered under the subsisting rule, if the category, in which he had applied, was still allowed the exclusive right, for the purpose of fresh grant. He cannot claim grant of renewal, if he had taken benefit of any preference, which was no longer available at the time of renewal. 11. Since the petitioner has taken the benefit of preference, as no person of other category could apply at the relevant time when he was granted lease and the Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been commented adversely in Centre for Public Interest Litigation and others v. Union of India and others, (2012)3 SCC 1 . The Court examined inter-alia the following questions:- (i) Whether the Government has the right to alienate, transfer or distribute natural resources/national assets otherwise than by following a fair and transparent method consistent with the fundamentals of the equality clause enshrined in the Constitution? xx x xxx xxx (ii) Whether the policy of first-come-first-served followed by DoT for grant of licences is ultra-vires the provisions of Article 14 of the Constitution and whether the said policy was arbitrarily changed by the Minister of Communications and Information Technology (hereinafter referred to as 'the Minister of Communications and Information Technology'), without consulting TRAI, with a view to favour some of the applicants ? 27. The Court answered the said questions when it held to the following effect:- 94. There is a fundamental flaw in the first-come-first-served policy inasmuch as it involves an element of pure chance or accident. In matters involving award of contracts or grant of licence or p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... touchstone of Article 14 of the Constitution. The action has to be fair, reasonable, non-discriminatory, transparent, non-capricious, unbiased, without favouritism or nepotism, in pursuit of promotion of healthy competition and equitable treatment. It should conform to the norms which are rational, informed with reasons and guided by public interest, etc. The Court held :- 107. From a scrutiny of the trend of decisions it is clearly perceivable that the action of the State, whether it relates to distribution of largesse, grant of contracts or allotment of land, is to be tested on the touchstone of Article 14 of the Constitution. A law may not be struck down for being arbitrary without the pointing out of a constitutional infirmity as State of A.P. v. McDowell Co., (1996) 3 SCC 709 , has said. Therefore, a State action has to be tested for constitutional infirmities qua Article 14 of the Constitution. The action has to be fair, reasonable, non-discriminatory, transparent, non-capricious, unbiased, without favouritism or nepotism, in pursuit of promotion of healthy competition and equitable treatment. It should conform to the norms which are rational, informed with reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of natural resources. The Court cannot mandate one method to be followed in all facts and circumstances. Therefore, auction, an economic choice of disposal of natural resources, is not a constitutional mandate. We may, however, hasten to add that the Court can test the legality and constitutionality of these methods. When questioned, the courts are entitled to analyse the legal validity of different means of distribution and give a constitutional answer as to which methods are ultra vires and intra vires the provisions of the Constitution. Nevertheless, it cannot and will not compare which policy is fairer than the other, but, if a policy or law is patently unfair to the extent that it falls foul of the fairness requirement of Article 14 of the Constitution, the Court would not hesitate in striking it down. 147. Finally, market price, in economics, is an index of the value that a market prescribes to a good. However, this valuation is a function of several dynamic variables: it is a science and not a law. Auction is just one of the several price discovery mechanisms. Since multiple variables are involved in such valuations, auction or any other form of competitive bidding, ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision of rejection of the application yet the action of permitting some of the applicants to make up the deficiencies, while declining such permission to the other, is an arbitrary process of grant of licence. Since, to develop a colony is a privilege; the consideration of the same has to be fair and reasonable manner. What should be transparent and fair method of grant of licence, it is for the State Government to prescribe such policy. Whether the policy is to go for an auction the licences after determining the eligibility of the applicants or by draw of lots or any other method, it is for the State Government to frame such policy subject to the test of reasonableness, in accordance with law. 32. Since the licences have been granted on the basis of the doctrine of first come first served basis, which is not a fair, reasonable and transparent method, we find that the licences granted to the private respondents, cannot be sustained. Thus, although we are not inclined to strike down the guidelines in the form of a policy as ultra vires the provisions of the Constitution of India, yet we remind the Union of India of the observations made by the Delhi High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
