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TMI Blog2020 (8) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... Adv. Mr. Atishay Jain, Adv. M/s. Om Trading Company Mr. Somiran Sharma, AOR M/s. Rahul Agro Industries Mr. Saransh Saini, Adv. Mr. Vivek Jain, AOR Ms. Anshul Sharma, Adv. Mr. Bhrigu Sharma, Adv. Ms. Suchitra Kumbhat, Adv. Mr. Nirvikar Singh, Adv. M/s. H.S. Trading Co. Ms. Anshul Sharma, Adv. Mr. Bhrigu Sharma, Adv. Ms. Anisha Upadhyay, AOR M/s. Sunrise Marketing Ms. Vrinda Bhandari, Adv. Mr. Pranav Jain, Adv. Mr. Siddhant Buxy, AOR M/s. Alvarita Edu Solutions Mr. Pradeep Aggarwal, Adv. Mr. Ankit Sethi, Adv. Mr. Lal Pratap Singh, Adv. Ms. Ruchi Kohli, AOR Sunil Agrawal (Intervenor) Mr. Nitin Mishra, AOR Ms. Mitali Gupta, Adv. JUDGMENT SANJIV KHANNA, J. Applications seeking intervention/impleadment are allowed. 2. Considering the nature of controversy involved, this Court, with the consent of the counsels for the parties, vide order dated 29th June 2020 had deemed it appropriate to hear and decide challenge to the validity of the notifications dated 29th March 2019 bearing S.O. Numbers. 1478-E,1479-E, 1480-E and 1481-E pending in several Writ Petitions filed before different High Courts. We have also examined and decided the connected challenge to the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13 90 90 Other 2. This notification shall come into force from the date of its publication in the official Gazette. xx xx xx S.O. 1479(E).- In exercise of powers conferred by section 3 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1922), read with paragraphs 1.02 and 2.01 of the Foreign Trade Policy, 2015-2020, as amended from time to time, the Central government hereby amends the Import Policy Conditions of items of Chapter 7 of the Indian Trade Classification (Harmonized System), 2017, Schedule-I (Import Policy), as under: Exim Code Item Description Existing Policy Existing Policy Condition Revised Policy Condition 0713 1000 Peas (Pisum Sativum) including Yellow peas, Green peas, Dun peas and Kaspa peas Restricted Restricted for the period from 1st January, 2019 to 31st March, 2019 During the period from 1st April, 2019 to 31st March, 2020, total quantity of 1.5 Lakh MT of Peas shall be allowed against licence as per the procedure to be notified by Directorate General of Foreign Trade 0713 90 10 Split 0713 90 90 Other 2. This notification shall come into force with effect from 1st April, 2019. xx xx xx S.O. 1480(E).- In ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [email protected] besides the concerned jurisdictional Regional Authorities." 7. Earlier, the Union of India had issued a notification dated 25th April, 2018 under Section 3 of FTDR Act read with the paragraphs 1.02 and 2.01 of the Export - Import (EXIM) policy 2015-2020 by which peas were revised from 'free' to 'restricted' category for a period of three months, with a stipulation that during the period 1st April, 2018 to 30th June, 2018 total quantity of 1 lakh MT of Yellow Peas minus the quantity already imported from 1st April, 2018 would be allowed against licence as per the procedure to be notified by the DGFT. The words 'already imported' were defined to include shipment already arrived from 1st April,2018 to 25th April, 2018 and those shipments backed by irrevocable letter of credit or advance payments made through banking channel before 25th April, 2018. 8. Considering the hardships faced by the traders who had made advance payments, the DGFT vide Trade Notice No. 19 dated 5th July 2018 had allowed the import of Peas proportionate to the advance payments made before 25th April 2018. By another Trade Notice dated 6th July 2018, Peas, other than Yellow Peas, imported during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, 5,15,16 and 19 of the FTDR Act cannot be delegated to the DGFT or any other officer subordinate to the Director General. (b) Section 19(3) of the FTDR Act provides that every rule or every order passed by the Central Government shall be laid, as soon as may be after it is made, before each House of the Parliament while it is in session or thereafter. The impugned notifications had not been laid before the Houses of the Parliament. (c) The Notifications and trade notices suffer from the vires and defects mentioned by this Court in Director General of Foreign Trade and Another v. Kanak Exports and Another (2016) 2 SCC 226. (d) The notifications and the trade notices offend the right to equality and violate Article 14 of the Constitution. 12. The Writ Petitions filed by M/s. Hira Traders were dismissed by the Madras High Court on 4th April 2019. The Bombay High Court dismissed akin Writ Petitions filed by M/s. Taj Agro Commodities Pvt. Ltd. and others on 3rd July 2018. Similarly, Writ Petitions filed by M/s. Premium Pulses Products and others were dismissed by the Gujarat High Court on 19th December 2018. The Madhya Pradesh High Court had also dismissed similar petitions in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the submission, we had directed the parties to file brief written submissions and the propositions which they propose to canvass in the context of the issues to be dealt with by this Court. The Union of India was also asked to file a Statement/Note disclosing number of registered licences dealing with import of goods and quantity of average annual consumption of the concerned goods in the country. By another order dated 2nd July, 2020 the Union of India was directed to file an affidavit clearly stating whether the impugned notifications are in the nature of 'quantitative restrictions' and if so whether the procedure under Section 9A of the FTDR Act read with Safeguard Measures (Quantitative Restrictions) Rules, 2012 had been followed and to produce the relevant record thereof. We shall elaborate and decide the argument subsequently. B. Discussion on the challenge to the role and authority of the DGFT to issue the Notifications and Trade Notice and interpretation of the words "total quantity". 15. At the outset, we must record that the importers, and in our opinion rightly, have not raised the contention that the DGFT could not have notified the impugned notifications. The noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), as elucidated and examined below, authorises the Central Government to prohibit, restrict or otherwise regulate the import or export of goods, by an order published in the Official Gazette. FTDR Act vide Section 11(1) prohibits imports or exports of goods in contravention of the FTDR Act, the rules and orders made thereunder and the EXIM Policy. Section 5 of the FTDR Act authorizes the Central Government to formulate and announce the EXIM Policy by notification in the Official Gazette. Under Section 11(2) of the FTDR Act, when a person makes or abets or attempts to make any import or export in contravention of the FTDR Act, any rule or order made thereunder or the EXIM policy, he is liable to pay penalty upto Rs. 10,000/- or five times the value of the goods, services or technology, whichever is greater. Section 11 of the Customs Act,1962 provides that the Central Government may by a notification in the Official Gazette prohibit, absolutely or subject to conditions as specified, import or export of any good. The listed purposes are wide and range from conservation of foreign exchange and safeguarding of balance of payments, avoiding shortage of goods, prevention of surplus of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new criterion and eligibility condition not envisaged by the notifications. The legal effect of the notifications was to amend the EXIM policy whereby the specified commodities would henceforth not be 'free' (importable without restriction) but would fall in the restricted category. Once the commodities were shifted to the restricted category, the requirement of licence would flow from the mandate of Section 3 of the FTDR Act read with Rule 4 of the Foreign Trade (Regulation) Rules, 1993. Rule 4 reads as under: "4. Application for grant of licences- A person may make an application for the grant of a licence to import or export goods in accordance with the provisions of the Policy or an Order made under section 3." Further, the EXIM Policy regulates the restricted goods under Paragraphs 2.04, 2.08 and 2.10 of Policy, which read as under: "2.04 Authority to specify Procedures DGFT may specify procedure to be followed by an exporter or importer or by any licensing/Regional Authority (RA) or by any other authority for purposes of implementing provisions of FT (D&R) Act, the Rules and the Orders made there under and FTP. Such procedure, or amendments, if any, shall be published ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ters that they are the 'actual users'. Further, none of the importers have applied for a licence or authorisation for import of the restricted commodities. Violation of clause 9.03 of the EXIM Policy defining the expression 'Actual User', is neither alleged nor argued before us. 20. The importers have raised the contention that the expression 'if such imports' used in the second sentence of paragraph 2.10 only qualifies the first sentence of paragraph 2.10. We do not accept the contention, for paragraph 2.10 consists of two parts. The first part relates to goods which are freely importable without any licence and states that such goods that can be imported by any person. The second part refers to such imports which require authorisation and not the imports which are freely importable without any restriction. 'Actual user' condition, therefore, applies by default when imports require an authorisation. However, the DGFT can specifically dispense with or dilute the 'actual user' condition. C. Section 9A of the FTDR Act and it's interpretation. (i) General Agreement on Tariff and Trade - 1947 and 1994. 2. Conference at Bretton Woods, New Hampshire in 1944 lead to establishment of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement is divided into three parts. Annexure 1A consists of the GATT-1994 and twelve other agreements on agriculture; application of sanitary and phytosanitary measures; textiles and clothing; technical barriers to trade; trade related investment measures; anti-dumping duty; rules of customs valuation; rules of pre-shipment valuation; rules of origin; import licensing procedures; subsidies and countervailing measures; and safeguards. Article II of GATT-1994 limits tariff charges to those agreed in the Schedules of Concessions, while Article I lay down the principle of Most Favoured-Nation giving benefit of the concessions to all WTO members. Article III mandates requirement of national treatment of import with respect to taxes and regulations. Articles VI and XVI relate to subsidies, antidumping and countervailing duties. Article VII incorporates rules on valuation for customs purposes. Article XI, which we shall subsequently examine, prohibits quotas, import or export licences and other non-tariff measures, with some exceptions. Annexure 1A includes schedule of concessions from each major trading country and a general interpretative note that provides that in case of a conflict be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... withdrawal of conflicting measures and mutual satisfactory solution of the matter by the contracting parties concerned, consistent with the GATT-1994. Albeit on failure to reach a satisfactory adjustment within reasonable time or in case of (c) (supra), the matter is to be referred to the Contracting Parties to investigate and make recommendations to the offending party or make a ruling on the matter, as appropriate. As the question of invocation and jurisdiction of the national or domestic court arises for consideration in the present case, we would like to slightly elaborate on the dispute resolution mechanism in Annexure 2. It contains 27 Articles totalling about 143 paragraphs and four appendices. For the present case, it would be suffice to record that the WTO, at the top, consists of Ministerial Conference which meets not less than every two years. Next there are four councils, including the General Council which has an overall supervising authority and to carry out many functions of the Ministerial Conference. In addition, we have Council for Trade Inputs, Council for Trade and Services, and Council for Trade Related Aspects of Intellectual Property Rights. The General Coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c law. There is no uniformity in approach on these aspects as there are different national systems of treaty applications6. Two aspects relevant in the present case are; (i) applicability of the international treaty in domestic law and (ii) 'invocability' of the treaty in municipal law and before the municipal courts. 7. In spite of there being different constitutional and statutory approaches on applicability, the States as signatories to the international treaty are under an obligation to act in conformity and bear responsibility for breaches, be it as a consequence of legislative enactment, executive action or even judicial decisions. The State cannot plead and rely upon internal law including judicial decisions as a defence to a claim for breach of an international obligation. Acts of legislation, executive measures and judicial decision making are not treated as third party acts for which the State is not responsible. The national law, executive mandate and action and the decisions of the domestic courts are facts which express the will and constitutes activities of the State. In international law, municipal laws cannot prevail upon the treaties as internal actions must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dual is a subject of international law. International norms provide the basic norms for the national legal order, and both are a part of the same systems of norms. 11. Most jurists draw distinction between 'direct application' of treaties in domestic law, and national legal systems that mandate and require 'act of transformation' for an international treaty to apply and be a part of domestic law. 'Direct application' means and mandates that the treaty norms, either wholly or to some extent, are directly treated as norms of domestic law and enjoy the statutory law status by default in the domestic legal system. The term 'direct application' will also cover situations in which government or different levels of government utilise treaty norms as part of domestic jurisprudence and is not limited to situations in which private parties can sue on the basis of the treaty norms. As explained below, there is distinction between direct application and 'invocability'. 'Act of transformation' principle means and implies that an international treaty is not directly applicable in the domestic law system and requires provision in the domestic rules before it is applied. 'Transformation' is a wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gislation, which principle applies to GATT-1994. On this basis it has been held that the European Union law is to be interpreted in light of the WTO obligation to ensure GATT-1994 consistent interpretation of the European Union legislation. At the same time, authors and jurists have observed that individuals and member States challenge for GATT-1994 incompatibility secondary legislation have received different answers as in some cases it has been held that international agreement will only be granted direct effect if the provisions are capable of conferring rights on citizens of the community which they can invoke before the court8. (Aspect of 'invocability' has been separately examined below.) 13. United Kingdom, being a parliamentary democracy, the treaties generally do not have direct statute like application, though they may have other internal effects. United Kingdom and other parliamentary democracies, like Canada and Australian systems, are generally considered as prime example of a dualist system. In United Kingdom, the Crown is the constitutional authority to enter into treaties and this prerogative power cannot be infringed by the courts. Further, treaties cannot operate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... norms into domestic law. Variation of this approach is to be found in other countries like Germany and Italy. Thus, there is great diversity of national constitutional systems regarding international treaty application. 14. It would be now appropriate to refer to the principle of 'invocation'. Invocability in simple terms refers to justiciability; admissibility of a claim before the national courts. It is not connected with the defence or merits of the defence. In case where an 'act of transformation' is required, treaties may partially or entirely become part of the domestic law. Where the treaty or portion thereof become a part of the domestic law by 'act of transformation', it is obvious that only the part incorporated or transformed into domestic law is invocable and justiciable and not the parts that are not codified into domestic law. However, invocability can embrace several ideas which are intertwined and is of specific concern in cases of constitutions allowing direct application. Here 'invocability' is a generic term which means to embrace a small inventory of means of judicial control over the use in a particular law suit of the direct applicability of the treaty. As in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithstanding anything in the foregoing provisions of this Chapter, the Parliament has the power to make laws for the whole or any part of the territory of India for implementing any treaty, agreement or convention with any other country or countries or decisions made at any international conference, association or body. 16. Constitutional Bench of this Court in Maganbhai Ishwarbhai Patel Etc. v. Union of India (1970) 3 SCC 400 had examined the question whether the Government of India should be restrained from ceding without approval of the Parliament the 'undemarcated area' in the Runn of Kutch to Pakistan as awarded in the award dated 19th February 1968. In the judgment authored by Hidayatullah, C.J., on behalf of himself and three other Judges, he referred to the earlier decisions of this Court in In re. Berubari Union (I) AIR 1960 SC 845, Rai Sahib Ram Jawaya Kapur and Others v. State of Pubjab AIR 1955 SC 549 and Ram Kishore Sen and Others v. Union of India and Others and AIR 1966 SC 644 noticed the distinction between (i) formation of the treaty; and (ii) performance of the treaty obligation. The first is an executive act and the second a legal act if domestic law is required. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Parliament to make laws in terms of Article 253, Shah, J. had further observed: "80...By Article 73, subject to the provisions of the Constitution, the executive power of the Union extends to the matters with respect to which the Parliament has power to make laws. Our Constitution makes no provision making legislation a condition of the entry into an international treaty in times either of war or peace. The executive power of the Union is vested in the President and is exercisable in accordance with the Constitution. The Executive is qua the State competent to represent the State in all matters international and may by agreement, convention or treaties incur obligations which in international law are binding upon the State. But the obligations arising under the agreement or treaties are not by their own force binding upon Indian nationals. The power to legislate in respect of treaties lies with the Parliament under Entries 10 and 14 of List I of the Seventh Schedule. But making of law under that authority is necessary when the treaty or agreement operates to restrict the rights of citizens or others or modifies the laws of the State. If the rights of the citizens or others ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court had held as under: "5. There can be no question that nations must march with the international community and the Municipal law must respect rules of International law even as nations respect international opinion. The comity of Nations requires that Rules of International law may be accommodated in the Municipal Law even without express legislative sanction provided they do not run into conflict with Acts of Parliament. But when they do run into such conflict, the sovereignty and the integrity of the Republic and the supremacy of the constituted legislatures in making the laws may not be subjected to external rules except to the extent legitimately accepted by the constituted legislatures themselves. The doctrine of incorporation also recognises the position that the rules of international law are incorporated into national law and considered to be part of the national law, unless they are in conflict with Act of Parliament. Comity of Nations or no, Municipal Law must prevail in case of conflict. National Courts cannot say yes if Parliament has said no to a principle of international law. National Courts will endorse international law but not if it conflicts with nati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act of transformation' consequent to which portions of GATT-1994 stand enacted thereby conferring right of invocability to parties. The decisions referred to in paragraphs 41 to 44 and relied upon by the importers fall in the second category. 22. This Court had the occasion to examine and interpret Customs Valuation Rules, 1988 that were framed keeping in view the GATT protocol and WTO agreement in Associated Cement Companies Ltd. v. Commissioner of Customs (2001) 4 SCC 593 and it was observed: "45. It will be appropriate to note that the Customs Valuation Rules, 1988 are framed keeping in view the GATT protocol and the WTO agreement. In fact our rules appear to be an exact copy of GATT and WTO. For the purpose of valuation under the 1988 Rules the concept of "transaction value" which was introduced was based on the aforesaid GATT protocol and WTO agreement. The shift from the concept of price of goods, as was classically understood, is clearly discernible in the new principles. Transaction value may be entirely different from the classic concept of price of goods. Full meaning has to be given to the rules and the transaction value may include many items which may not classicall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the domestic markets. Thus the factors to constitute "dumping" are (i) an import at prices which are lower than the normal value of the goods in the exporting country; (ii) the exports must be sufficient to cause injury to the domestic industry." 25. In Commissioner of Customs, Bangalore v. G.M. Exports and Others (2016) 1 SCC 91, again while examining the question of levy of antidumping duty, this Court had emphasised that the correct approach to the construction of a statute made in response to international treaty obligation is to give effect to the obligations in international law. If there be a difference in the language of the statutory provision and that of the corresponding provision of the convention, then the statutory language should be construed in the same sense as that of the convention if the words of the statute are reasonably capable of bearing that meaning. The Eschersheim Anr v. The Jade Erkowit And Anr. (1976) 1 All ER 920 (HL). It was emphasised that the municipal law should not only carry out the treaty obligation but should be construed in a way not to be inconsistent with the terms of the treaty. This principle of interpretation is embodied in the princip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nse as that of the treaty. This is for the reason that in such cases what is sought to be achieved by the international treaty is a uniform international code of law which is to be applied by the courts of all the signatory nations in a manner that leads to the same result in all the signatory nations." This Court also referred to clause (c) of Article 51 of the Directive Principles of State Policy, which states that the State shall endeavour to foster respect for international law and treaty obligations. 26. We would also refer to Entertainment Network (India) limited and Anr. v. Super Cassette Industries Ltd and Ors. (2008) 13 SCC 30, wherein this Court dealt with the application of international conventions in India and observed that while interpreting the domestic/municipal laws, conventions/norms can be relied for the following purposes: (i) as a means of interpretation; (ii) justification or fortification of a stance taken; (iii) to fulfil spirit of international obligation which India has entered into, when they are not in conflict with the existing domestic law; (iv) to reflect international changes and reflect the wider civilisation; (v) to provide a relief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al convention framed after great deliberation and exercise, to develop and promote international trade. 27. While interpreting the domestic law enshrining Human Rights (and sometimes environment issues) this Court on some occasions has relied on international conventions and treaties where the terms of any legislation are absent, not clear or are reasonably capable of more than one meaning. In such cases, where there are statutes, rules etc. the meaning which in consonance with the treaties can be relied upon, for there is a prima facie presumption that the Parliament did not intend to act in breach of international law, including State treaty obligations. Part-III of the Indian Constitution a-priori incorporates and recognises the Human Rights, consequently recourse to international conventions can be made to interpret and borrow explicit terminologies and nuances to bailiwick Human Right jurisprudence. However, in the present case we are examining an economic and fiscal legislation or rather economic policy decision taken by the Union of India. These decisions on human rights therefore would not be of much assistance. (iv) Text of Articles XI and XIX of GATT-1994 and the statut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this paragraph shall give public notice of the total quantity or value of the product permitted to be imported during a specified future period and of any change in such quantity or value. Moreover, any restrictions applied under (i) above shall not be such as will reduce the total of imports relative to the total of domestic production, as compared with the proportion which might reasonably be expected to rule between the two in the absence of restrictions. In determining this proportion, the contracting party shall pay due regard to the proportion prevailing during a previous representative period and to any special factors* which may have affected or may be affecting the trade in the product concerned. xx xx xx Article XIX Emergency Action on Imports of Particular Products 1. (a) If, as a result of unforeseen developments and of the effect of the obligations incurred by a contracting party under this Agreement, including tariff concessions, any product is being imported into the territory of that contracting party in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers in that territory of like or directly competi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action, or, in the case envisaged in paragraph 1 (b) of this Article, to the trade of the contracting party requesting such action, of such substantially equivalent concessions or other obligations under this Agreement the suspension of which the CONTRACTING PARTIES do not disapprove. (b) Notwithstanding the provisions of sub-paragraph (a) of this paragraph, where action is taken under paragraph 2 of this Article without prior consultation and causes or threatens serious injury in the territory of a contracting party to the domestic producers of products affected by the action, that contracting party shall, where delay would cause damage difficult to repair, be free to suspend, upon the taking of the action and throughout the period of consultation, such concessions or other obligations as may be necessary to prevent or remedy the injury. 29. Indian Parliament, two years prior to the signing of GATT-1994, had enacted the FTDR Act which was enforced with effect from 7th August 1992. Sections 11 to 14 of the FTDR Act came into force immediately and other provisions came into force on 19th June 1992. The FTDR Act had repealed the Imports and Exports (Control) Act, 1947 and the Fore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titative restrictions.- (1) If the Central Government, after conducting such enquiry as it deems fit, is satisfied that any goods are imported into India in such increased quantities and under such conditions as to cause or threaten to cause serious injury to domestic industry, it may, by notification in the Official Gazette, impose such quantitative restrictions on the import of such goods as it may deem fit: Provided that no such quantitative restrictions shall be imposed on any goods originating from a developing country so long as the share of imports of such goods from that country does not exceed three per cent. or where such goods originate from more than one developing country, then, so long as the aggregate of the imports from all such countries taken together does not exceed nine per cent. of the total imports of such goods into India. (2) The quantitative restrictions imposed under this section shall, unless revoked earlier, cease to have effect on the expiry of four years from the date of such imposition: Provided that if the Central Government is of the opinion that the domestic industry has taken measures to adjust to such injury or threat thereof and it is nece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restrictions) or a trade or business association, majority of the members of which are producers, exporters or importers of such goods; (ii) the Government of the exporting country; and (iii) a producer of the like goods or directly competitive goods in India or a trade or business association, a majority of members of which produce or trade the like goods or directly competitive goods in India; (e) "like goods" means goods which is identical or a like in all respects to the goods under investigation, or in the absence of such goods, other goods which has characteristics closely resembling those of the goods under investigation; (f) "quantitative restrictions" means any specific limit on quantity of goods imposed as a safeguard measure under the Act; (g) "specified country" means a country or territory which is a member of the World Trade Organization and includes the country or territory with which the Government of India has an agreement for giving it the most favoured nation treatment; 3. Responsibility of Authorised Officer for making enquiry in respect to safeguard quantitative restrictions- (1) The Central Government shall, by notification in the Official Gazet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the alleged serious injury or threat of serious injury; (b) a statement on the efforts being taken, or planned to be taken, or both, to make a positive adjustment to increase in competition due to imports; and (c) a statement mentioning whether an application for the initiation of a safeguard action on the goods under investigation has also been submitted to the Director General of Safeguards, Department of Revenue. (3) The Authorised Officer shall not initiate an investigation pursuant to an application made under sub-rule (1), unless, it examines the accuracy and adequacy of the evidence provided in the application and satisfies himself that there is sufficient evidence regarding-- (a) increased imports; (b) serious injury or threat of serious injury; and (c) a causal link between increased imports and alleged serious injury or threat of serious Injury. (4) Notwithstanding anything contained in sub-rule (1), the Authorised Officer may initiate an investigation suo moto, if, it is satisfied with the information received from any source that sufficient evidence exists as referred to in clause (a), clause (b) or clause (c) of subrule (3). 6. Principles governing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive consumer organisations in cases where the goods is commonly sold at retail level to furnish information which is relevant to the investigation including inter alia, their views if imposition of safeguard quantitative restrictions is in public interest or not. (6) The Authorised Officer may allow an interested party or its representative to present the information relevant to investigation orally but such oral information shall be taken into consideration by the Authorised Officer only when it is subsequently submitted in writing. (7) The Authorised Officer shall make available the evidence presented to it by one interested party to all other interested parties, participating in the investigation. (8) In case where an interested party refuses access to or otherwise does not provide necessary information within a reasonable period or significantly impedes the investigation, the Authorised Officer may record its findings on the basis of the facts available and make such recommendations to the Central Government as it deems fit under such circumstances. xx xx xx 8. Determination of serious injury or threat of serious injury.- The Authorised Officer shall determine seriou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ong the supplying countries, and the allocation of shares in the quota for such specified countries which have a substantial interest in supplying the goods; (iv) the duration of imposition of quantitative restrictions and where the duration of imposition of quantitative restrictions is more than one year, the progressive liberalisation adequate to facilitate positive adjustment. (2) The final findings if affirmative shall contain all information on the matter of facts and law and reasons which have led to the conclusion. (3) The Authorised Officer shall issue a public notice recording his final findings. (4) The Authorised Officer shall send a copy of the public notice regarding his final findings to the Central Government in the Ministry of Commerce and Industry and a copy thereof to the interested parties. 10. Imposition of safeguard quantitative restrictions.- The Central Government may based on the recommendation of the Authorised Officer, by a notification in the Official Gazette, under sub-section (I) of section 9A of the Act, impose upon importation into India of the goods covered under the final determination, a safeguard quantitative restrictions not exceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive in conformity with GATT-1994 obligations. Section 3 of the FTDR Act reflects the said position and incorporates Article XI of the GATT-1994 which stipulates that there shall not be any provision or restrictions other than duty, taxes and other charges by any contracting party. Section 9A is almost a replica of Article XIX of the GATT-1994 and this is the only provision which confers power on the Central Government to impose 'quantitative restrictions' on imports. It, therefore, follows that unless the conditions of Section 9A of the FTDR Act are satisfied and the procedure prescribed under the Rules is followed, no 'quantitative restrictions' could have been imposed by the Union of India through the medium of the impugned notifications. Section 9A is a special provision dealing with 'quantitative restrictions', whereas Section 3 is a general provision. The Union of India cannot take recourse to Section 3 when conditions of Section 9A are not satisfied and impose 'quantitative restrictions', otherwise, Section 9A would become redundant for the reason that Union of India could always impose 'quantitative restrictions' under the general power. This would be in conformity with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n savouries. As per industry estimates, about 70% of the Gram produced is used in manufacture of Besan. It is informed that Yellow Peas are a near perfect substitute for Gram in the making of Besan. As the price of imported Yellow Peas in India is cheaper than the domestic market price of Gram, a huge shift in industry usage from Gram to Yellow Peas had happened. Increased supply of Yellow Peas had taken away Gram demand, the resulting in fall in prices of Gram. Thus, despite large scale procurement of Gram under the PSS scheme in Rabi 2018 and 2019, prices of Gram continued to be below the MSP announced by the government." Thus, the Union of India themselves have accepted that the conditions of Section 9A had impelled then to issue the impugned notifications but they did not follow the procedure prescribed by the applicable Rules. 34. The Union of India, in their affidavit filed on 26th June 2020, have pleaded that they were required to strike a balance between the farmers and the importers as largescale imports would adversely impact the interests of the farmers due to fall in prices in the local market. Reference was made to the Minimum Support Price (MSP) for Moong, Urad and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Article II of the WTO Agreement on Safeguards vide the Amendment Act, 2010. The notifications under challenge have been issued within the express terms of Section 3 of the FTDR Act which permits the Central Government to impose restrictions without any qualification of the nature specified in Section 9A. Power of the Central Government to restrict imports to limited quantities under Section 3 and quantitative restrictions under Section 9A of the FTDR Act are completely distinct and have no connection or interplay. The power under Section 3(2) of the FTDR Act is of a wide amplitude. Reference is also made to Rule 5(2) to assert that there is necessity of evidence that the imports had increased as a result of 'unforeseen developments' in addition to the necessity for evidence disclosing serious injury or threat of serious injury to domestic industry and a causal link between imports and serious injury. The restrictions have been imposed not due to increased quantities of imports but to prevent panic disposal by farmers as the prices of Gram would come down. It is submitted that special provisions like 9A of the FTDR Act would be limited to areas within its scope leaving the gene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other law, rule, regulation, notification or order to the extent that they do not directly or indirectly deal with the permit or licence necessary for import or export of goods or prohibit import or export of goods. Operation of such law, rule, regulation, notification or order not dealing with the permit or licence necessary for import or export on a prohibition of import of goods is, therefore, protected and not overridden. Sub-section (4) to Section 3 therefore gives limited primacy to the FTDR Act, restricting it to the scope and subject matter of the FTDR Act, and not to override other laws. This is also clear from Section 18A of the FTDR Act which was also enacted and inserted by Act 25 of 2010 with effect from 27th August 2010 and reads as under: "18A. Application of other laws not barred.- The provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force." The provisions of FTDR Act, therefore, are in addition to, and not in derogation of, the provisions of any other law for the time being in force. This would be the correct way to harmoniously read and interpret sub-section (4) to Section 3 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of GATT-1994, including Article XI, is left to the Central Government by means of delegated legislation. 38. Clause (2) of Article XI of GATT-1994 states that provisions of paragraph (1) shall not extend to three specified situations as stated in sub-clauses (a), (b) or (c). Clause (c) deals with import restrictions on any agricultural or fisheries product, imported in any form necessary for enforcement of governmental measures specified therein. Similarly, Article XII of GATT-1994 states that notwithstanding the provisions of paragraph (1) of Article XI, any contracting party, in order to safeguard its external financial position and its balance of payments, may restrict the quantity or value of merchandise permitted to be imported, subject to the provisions of paragraphs of that Article. Paragraph 23 (supra) lists a number of other provisions, which allow and permit exceptions. We have referred to these provisions to highlight that paragraph (1) to Article XI is not an absolute rule. It is subject to exceptions in the form of paragraph (2) to Article XI, Article XII and other provisions. Of course, the conditions specified the respective Articles have to be satisfied for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) serious injury or threat of serious injury; and (iii) a causal link between increased imports and alleged serious injury or threat of serious injury. The expression 'increased imports' has been defined in terms of increased quantity to mean increase in imports in absolute terms or relative to domestic production. The expressions 'serious injury' and 'threat of serious injury' have been defined in clauses (c) and (d) of sub-clause (4) to Section 9A to mean injury causing significant overall impairment in the position of a domestic industry and a clear and imminent danger of serious injury respectively. The expression 'domestic industry' has also been defined in clause (b) to sub-section (4) to Section 9A. Similarly, the expression 'interested party' has been defined in sub-rule (d) to Rule 2 of the Safeguard Measures (Quantitative Restriction) Rules, 2012 and includes exporter or foreign producer or the importer of goods for the purposes of imposition of safeguard quantitative restrictions on trade or business association. It also includes the government of the exporting country or producer of goods or directly competitive goods in India or a trade or business association ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tio are confined and restricted to interpretation of Section 3 and 9A of the FTDR Act and in that context we have referred to GATT-1994. D. Contention of the importers of bona fide imports under interim orders and prayer for partial relief. 46. Learned counsel for some of the importers had placed reliance on Raj Prakash Chemical v. Union of India (1986) 2 SCC 297, which judgment, in our opinion, has no application. In Raj Prakash Chemical (supra), the petitioner had acted under a bona fide belief in view of judgments and orders of High Courts and the interpretation placed by the authorities. In this background, observations were made to giving benefit to the importers, despite the contrary legal interpretation. In the instant case, the importers rely upon the interim orders passed by the High Court's whereas on the date when they filed the Writ Petitions and had obtained interim orders, the Madras High Court had dismissed the Writ Petition upholding the notification. Similarly, the High Court of adjudicature at Bombay, High Court of Gujarat and the High Court of Madhya Pradesh had dismissed the Writ Petitions filed before them and upheld the notifications and the trade notices. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thomas J. Schoenbaum, Petros C. Mavroidis, and Michael Hahn, 3rd Edition 2015 at page Nos. 2 - 3. 3. The World Trade Organization, law, practice and policy Mitsuo Matsushita, Thomas J. Schoenbaum, Petros C. Mavroidis, and Michael Hahn, 3rd Edition 2015 at page No. 3. 4. XXII. Consultation 1. Each contracting party shall accord sympathetic consideration to, and shall afford adequate opportunity for consultation regarding, such representations as may be made by another contracting party with respect to any matter affecting the operation of this Agreement. 2. The CONTRACTING PARTIES may, at the request of a contracting party, consult with any contracting party or parties in respect of any matter for which it has not been possible to find a satisfactory solution through consultation under paragraph 1. 5. XXIII. Nullification or Impairment 1. If any contracting party should consider that any benefit accruing to it directly or indirectly underthis Agreement is being nullified or impaired or that the attainment of any objective of the Agreement is being impeded as the result of (a) the failure of another contracting party to carry out its obligations under this Agreement, or (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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