PREM CHAND SOMCHAND SHAH AND ANR. ETC. ETC. v. UNION OF INDIA AND ANR

Citation: [1991] 1 S.C.R. 232

Court: Supreme Court of India

Bench: S. RANGANATHAN, N.M. KASLIWAL, S.C. AGRAWAL

Case summary

The said order refusing the Export Certificate was challenged by the petitioners by filing writ petitions under Artide 226 of the Constitution before the Bombay High Court....

Judgment text

The Judgment of the Court was delivered by S. C. AGRAWAL, J. These petitions under Article 32 of the Constitution raise a common question as to the validity of sub-para (10) of para 218 of the Import & Export Policy for the period April, 1988 to March, 1991. The petitioners in both these writ petitions are partnership firms carrying on business of import of rough diamonds and export of cut and polished diamonds. The Import & Export Policy for the period April 1978 to March 1979, in para 174, made provision for grant of certain import facilities to Export Houses which were registered in accordance with the provisions of the said Policy. One of the said facilities wRs grant of an Additional licence in terms of para 176 of the said Policy for an amount to be calculated at one third the f. o. b. value of the exports of select products made by the Export House in the year 1977-78.

The petitioners submitted application for registration as Export Houses and for grant of Export House Certificate which would have entitled them to the grant of such Additional licence. The said applications of the petitioners were rejected by the authorities on the view that petitioners had failed to diversify their export of "Other Products" during the year 1977-78. The said order refusing the Export Certificate was challenged by the petitioners by filing writ petitions under Artide 226 of the Constitution before the Bombay High Court. . One of those writ petitions (filed by the petitioners in writ petition No. 460 of 1988 herein) was dismissed by a learned Single Judge of the' High Court and the said petitioners filed an appeal before a Division Bench of the High Court. While the said appeal and the other writ petition (filed by the petitioners viz. writ petition No. 459 of 1988 herein) were pending in the Bombay High Court, this Court decided Civil Appeal No.

1423 of 1984, Union of India v. Rajnikant Brothers, and other connected matters by order dated April 18, 1985, wherein it was observed that there was no requirement of diversification of exports as a condition for the grant of Export House Certificates in the Import Policy for the year 1978-79, and the authorities were directed to issue necessary Export Certificates for the year 1978-79. In that ~rder this Court laid down the following condition: "Save and except items which are specifically banned under the prevalent import policy at the time of import, the respondents shall be entitled to import all other items whether canalised or otherwise in accordance with the relevant rules. " The writ petition and the appeal were decided by the Bombay High Court in accordance with the aforesaid decision of this Court in the case of Union of India v.

Rajnikant-Brothers, (supra) and the High Court directed the authorities to grant Export House Certificates to the petitioners under the Import-Policy 1978-79 within three months. While giving the said direction the High Court imposed a condition in P. C. S. SHAH v. U. 0. 1. [AGRAWAL, J. ] 237 the same terms as laid down by this Court in its order dated April 18, 1985, referred to above. While construing the aforesaid direction contained in its order dated April 18, 1985, in Rajnikant Brothers case (supra) this Court has held that the grantees of the Additional licences were not only prohibited from importing items which were excluded under the Export Policy 1978-79 but also from importing items excluded under the Import Policy prevailing at the time of import and that the word "ba. med" was intended to take in terms which were banned altogether as well as items which were banned for import by the holder of an Additional licence. (See: Raj Prakash Chemicals Ltd. & Anr. v.

Union ofIndia & Ors. , [1986] 1 S. C. R. 448. In Union ofIndia v. Mis. Godrej Soaps Pvt. Ltd. & Anr. , [1986] 3 S. C. R. 771 this Court construed the words 'whether canalised or otherwise' contained in the order dated April 18, 1985, passed in Rajnikant Brothers case (supra) and it was observed that the Court would not know whether in the future certain canalised items could be imported directly by an Export House holding an Additional licence and that the possibility of a policy being framed I) in the future enabling an Export House holding an Additional licence to directly import items which are 'non-canalised' and also items which are 'canalised' could not be ruled out and it was in this light that the Court can be said to have used the words "whether canalised or otherwise" in the order dated April 18, 1985. The matter was further clarified by this Court in D. Navinchandra & Co. Bombay & Anr. Etc. ' v. Union of India & Ors. , [1987] 2 S. C. R.

989, wherein this Court has observed: "Analysing the said order, it is apparent, (1) that the importation that was permissible was of goods which were not specifically banned, (2) such banning must be under the prevalent import policy at the time of import, and (3) whether items which were canalised or un-canalised would be imported in accordance with the relevant rules. These conditions had to be fulfilled. The Court never did and could not have said that canalised items could be imported in any manner not permitted nor it could have given a go~bye to canalisation policy. " (P. 1000) -- In accordance with the directions given by the Bombay High Court the petitioners in writ petition No. 459 of 1988 herein were granted the Export House Certificate and were also granted an Additional licence dated November 16, 1987. Similarly, the petitioners in writ petition No. 460 of 1988 herein were granted the Export House. Certificate and an Additional licence dated August 31, 1987.

These licences were valid for a period of 12 months and they contained the following endorsement: "This licence in valid for import of items permissible to Export Houses under the Additional Licence category as per para 176 of Import Policy 1978·79 excluding those items which were banned in the policy for the period 1978-79 . 'r- and those which have been specifically banned in the prevailing Import Policy, 1985-88, pursuant to and subject to the decision of the Supreme Court dated S. '. 3. 1986 in M/s. Raj Prakash Chemicals case civil appeal No. 4978 of 1985; the decision dated 15. 5. 1986 in the case of M/s. Indo- -- Afghan Chamber of Commerce writ petition No. 199 of 1986, the decision dated 12. 9. 86 in the case of M/s. Godrej Soap Pvt. Ltd. civil appeal No. 3418/1986; the decision dated 12. 9. 1986 in the case of M/s. Star Diamonds Company of India in civil misc. petitions No. 20021-22 of 1986 in . civil appeal No. 2924/1984; and the decision dated 15. 4.

1987 in the writ petition No. 1483 of 1987 filed by M/s. D. Naveen Chandra & Company. xxx'; It appears that the petitioners were not able to make imports under the said Additional licences till March 31, 1988. With effect from April 1, 1988, the Government of India issued the revised Import & Export Policy for the period April, 1988 to March 1991. The Import & Export Policy 1988-1991 also contains in paras 214 and 215 provisions for grant of Additional licences to Export Houses. In para 215 of the said Policy certain additional. facilities have been given in the matter of imports by Export Houses under Additional licences issued to them. In sub-para (4) of para 215 it has been provided as under: "(4) Additional licences issued to Export Houses will also be valid for the import of the following items upto 10% (upto 15% in the case of Trading Houses) of the value of the licence for:- (i) Import of technical designs, drawings and other techni- '.

Y-cal documentation for a value not exceeding Rs. 10 lakhs in / the case ofExport Houses, and Rs. 25 lakhs in the case of Trading Houses; P. C. S. SHAH v. U. O. I. [AGRAWAL, J. ] 239 (ii) import of items appearing in Appendices 3 Part-A, 3 Part-Band 5. Part-A subject to the following conditions: (a) that the c. i. f. value of a 'single item' shall not exceed 10% of the flexibility in value terms of . F. s. 10 lakhs, whichever is less; (b) where the value for import of a 'single item' on the basis of 10% as at (a) above, works out to less than Rupees one lakh, import would be permitted upto a value of Rs. 1 lakh, provided it is within the overall flexibility allowed on the licence: and (iii) import of non-OGL capital goods (other than those appearing in Appendices 1 Part-A and 8) without indigenous clearance, subject to the same conditions as stipulated at . (ii) above,· within the overall flexibility allowed to Export/Trading Houses.

'' Paragraphs 217 and 218 of the said Policy provide for transitional arrangements. In para 217, it is prescribed that Export Trading House Certificates issued prior to Apnl 1, 1988 would continue to be valid till the date of the expiry and the Export House Trading House can apply for fresh certificates, if they fulfil the eligibility conditions laid down in the policy and in cases where these Certificates are expiring on 31st March, 1988, and the applicants a'o not fulfil the eligibility conditions for recognition laid down under the revised Policy, recognition would be granted for one year only if they fulfil conditions for renewal of these Certificates as laid down in the Import Policy, 1985-88. Para 218 of the said Policy reads as under: "218.

(1) Where the· applications from Export Houses/ Trading Houses for Additional licences have not been disposed of by 31st March of the preceding licensing year, the rate of entitlement will be the same as permissible during the licensing year to which the application pertains, but the items to be allowed will be as per the Import Policy in force on the date of isSoe of the licence. (2) Additional licences already issued prior to 1. 4. 1988 shall continue to be 'non-transferable. ' (3) The Additional licences issued prior to 1. 4. 1988