TMI Blog2003 (9) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... tiff and everything was to the account of plaintiff. How the licence was to be utilised was totally left to the plaintiff. When this was totally in the hands of the plaintiff how could the plaintiff ask the defendant to pay for failure on the part of the plaintiff? If the plaintiff failed to utilise the licence to its full extent the plaintiff has to blame itself for this. Therefore, in our view, the question of refund of proportionate amount of the margin money did not arise in any case. Appeal dismissed. - 1877 of 1997 - - - Dated:- 4-9-2003 - Brijesh Kumar and Arun Kumar, JJ. [Judgment per : Arun Kumar, J.]. - This appeal is directed against the judgment of the High Court dated 24th January, 1996 confirming the decree passed by the trial Court in a suit for recovery of money filed by the respondent against the appellant. By the impugned judgment a decree for payment of Rs. 5,47,740/- with interest at the rate of 18% per annum from the date of suit till realisation was passed in favour of the respondent and against the appellant. 2.Briefly, the facts are : both the parties to the suit are in import-export business. The appellant obtained an import licence of the value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut of this transaction will be exclusively of JEPL and that GE will not have any right or claim any amount therefrom in excess of the fixed margin described in Clause 1 of this agreement." 3.In pursuance of the above agreement, appellant issued requisite Letter of Authority in favour of respondent. Respondent paid a sum of Rs. 7,65,135.28 (Rupees Seven Lakh Sixty Five Thousand One Hundred Thirty Five and Paise Twenty Eight only) to appellant being 4% of the licence amount mentioned in Clause (1) of the agreement. The validity period of licences was one year. Respondent was unable to utilise the licence during that period and therefore, requested the appellant to seek revalidation of the licence and to sign necessary papers in this behalf. Accordingly, appellant sought revalidation of the licence from the Licensing Authority. The validity of the licence was extended for six months. The licence ultimately expired on 1st Octrober, 1983. During the validity period of the licence respondent was able to import goods worth Rs. 54,34,897.10 (Rupees Fifty Four Lakhs Thirty Four Thousand Eight Hundred Ninety Seven and Paise Ten only). By its letter dated 25th October, 1983, respondent requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hey enclosed with their reply a copy of IPC Circular No. 14/92, dated 3rd May, 1982 issued by the Office of Chief Controller of Imports and Exports and again requested for making the application for second revalidation. The said circular only clarifies that the change in the policy regarding Letters of Authority in the Policy relating to 1982-1983 was not applicable to Letters of Authority issued prior to 5th April, 1982 in respect of licences issued prior to 1st April, 1982. The appellant claims that on 7th June, 1984 it again consulted the Joint Chief Controller of Imports and Exports, Bangalore with reference to the circular sent by respondent to the appellant. As per the said consultation the stand of the appellant is that second revalidation was not possible and, therefore, the appellant stated that it was not in a position to apply for further revalidation. However, the appellant offered to do so in case written confirmation was available in this behalf from the office of Chief Controller of Imports and Exports, New Delhi. 4.This is the substance of the correspondence which ensued between the parties on the subject. Ultimately respondent filed a suit for recovery of Rs. 8,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived by it from the respondent? Question No. 1 : 7.Whether the appellant was obliged to seek second revalidation of the licence? For deciding this question first and foremost one has to make a reference to the relevant term in the agreement between the parties, i.e. condition No. 12. The relevant portion contained in the said condition No. 12 is "GE hereby undertakes to give all necessary documents and papers for facilitating the operation of the licence…". What do these words mean? 8.Does facilitating the operation of the licence mean facilitating the extension of validity period of licence? In our view facilitating operation of the licence only means taking steps in order to see that the licence is fully exploited. It does not cast any obligation to seek extension of the operation period of the licence. Secondly, assuming that facilitating the operation of the licence includes getting validity period extended, it is to be noted that the appellant did get the validity period of the licence extended once when an extension for six months was sought which was allowed. Regarding the request for second extension of validity period of licence, reference is required to be ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormally entertained, however, after considering the request on merit, request for revalidation can be allowed for a period not exceeding six months. If a party seeks revalidation for a longer period it has to make such a request while seeking revalidation at the first instance and the request has to be considered with the approval of the Chief Controller of Imports and Exports, New Delhi subject to such conditions as may be imposed. From a careful reading of these provisions shows that normally requests for revalidation are not entertained. When a party wants to apply for revalidation it has to make up its mind whether the request is for extension for a period of six months or more. If the request for revalidation is for a longer period it can be considered only with the approval of Chief Controller of Imports and Exports, New Delhi. Normally, revalidation can be only for a period not exceeding six months. Therefore, as per the limitations prescribed in this behalf, there can be only one request for revalidation. Before making such a request a party has to decide whether revalidation is being sought for a period of six months or more and that is the end of the matter. The above pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. The plaintiff could not leave utilisation of the licence for revalidation period. 11.On this aspect the High Court observed that there was no clause in the agreement that the plaintiff should complete the import of goods within the period of validity of licence and that if it failed to do so, the defendant would not be liable to refund a portion of the margin money received by it. In our view, this approach on the part of the High Court was totally erroneous. Normally, import had to be carried out during the validity period of the licence. It is only in case of some unforeseen difficulty or for reasons beyond control of the importer that the validity of a licence can be sought to be extended. We have already referred to the provision in Para 198 of the Handbook of Import-Export Procedures as per which no request of extension of period of validity of licences is to be normally entertained. The High Court should have rather found that the agreement between the parties did not contain any provision for refund of margin money or any part of it. In the absence of such a clause in the agreement, the High Court should not have ordered refund. 12.Again, the High Court was wrong in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be dealt with differently by the department while if it is for a period longer than six months, it has to be considered with the approval of the Chief Controller of Import and Export, New Delhi. This means that a party has to make up its mind before making a request for revaluation as to period for which revalidation is required. Request can be only once. The circular relied upon by the plaintiff which it annexed with its letter dated 26th December, 1983 is on the question of issue of Letters of Authority and has nothing to do with revalidation of a licence. On the other hand, the circular dated 11th May, 1984 (Exhibit D-13) makes the position absolutely clear. It categorically says that extension of validity period of a licence can be allowed only up to a period not exceeding six months and total validity period of a licence including a grace period and extension cannot exceed 18 months from the date of issue. In the present case the licence was issued on 16th January, 1982 and it remained valid up to 1st October, 1983. The High Court went to the extent of saying that even if the second revalidation was legally not permissible the defendant should have applied for second re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties is neither an agency agreement nor a service contract. A reading of the entire agreement suggests that everything was left to the plaintiff and everything was to the account of plaintiff. How the licence was to be utilised was totally left to the plaintiff. When this was totally in the hands of the plaintiff how could the plaintiff ask the defendant to pay for failure on the part of the plaintiff? If the plaintiff failed to utilise the licence to its full extent the plaintiff has to blame itself for this. Therefore, in our view, the question of refund of proportionate amount of the margin money did not arise in any case. 15.It is to be noted at this stage that if on question No. 1 our findings would have been that the defendant committed breach of agreement, the remedy of the plaintiff would have been an action for damages for breach of agreement. Therefore, even in such an event question of seeking proportionate refund of margin money would not have arisen. A party which alleges breach of agreement on the part of the opposite party has to sue for the damages. In the present case in view of our finding that the defendant did not commit any breach of agreement such an event ..... X X X X Extracts X X X X X X X X Extracts X X X X
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