UNION OF INDIA AND OTHERS v. AGRICAS LLP AND OTHERS ETC.

Citation: [2020] 14 S.C.R. 372; 2020 INSC 508

Court: Supreme Court of India

Bench: A.M. KHANWILKAR, DINESH MAHESHWARI, SANJIV KHANNA

Judgment date: 2020-08-26

Case summary

2020 INSC 508. Supreme Court of India judgment dated 2020-08-26. UNION OF INDIA AND OTHERS v. AGRICAS LLP AND OTHERS ETC. Read the judgment and case details...

Judgment text

372 SUPREME COURT REPORTS[2020] 14 S. C. R. 372 [2020] 14 S. C. R. A UNION OF INDIA AND OTHERS v. AGRICAS LLP AND OTHERS ETC. (Transfer Petition (Civil) Nos. 496-509 of 2020) B AUGUST 26, 2020 [A. M. KHANWILKAR, DINESH MAHESHWARI AND SANJIV KHANNA, JJ. ] Foreign Trade (Development and Regulation) Act, 1992 – ss. 3(2), 9A – Statutory Scheme of – Notifications, trade notices were C issued amending the import policy for peas, pulses shifting them from free to restricted category requiring prior authorization for import – Validity of – Held: There is no violation of s. 3 in the issuance of the impugned notifications or orders, which are intra vires and not ultra vires – Further, implementation of GATT-1994, including D Article XI, is left to the Central Government by means of delegated legislation – FTDR Act does not legislate and transform Article XI of the GATT-1994 – Notwithstanding s.

9A, the Central Government continues and has authority to impose quantitative restrictions by an order u/s. 3(2) – Impugned notifications are valid as they are issued in accordance with the power conferred in the Central E Government in terms of sub-section (2) to s. 3 – International Convention/Treaties – General Agreement on Tariff and Trade (GATT), 1947; General Agreement on Tariff and Trade (GATT), 1994 – Articles XI and XIX – Constitution of India – Arts. 73, 77, 253, Part XI- Chapter I – Government of India (Transaction of Business) F Rules, 1961 – Customs Act, 1962 – s. 11 – Safeguard Measures (Quantitative Restrictions) Rules, 2012 – Foreign Trade (Regulation) Rules, 1993 – Doctrines/Principles – Principle of invocability or justiciability; Act of transformation. International Convention/Treaties – International treaty – G General Agreement on Tariff and Trade, 1994 (GATT-1994) – Effect of on domestic law; Obligations of contracting party – Discussed.

International Convention/Treaties – International customary/ treaty law Applicability in domestic law – Theories – Dualism and Monism – Discussed. H 372 UNION OF INDIA AND OTHERS v. AGRICAS LLP 373 Foreign Trade (Development and Regulation) Act, 1992 – A ss. 3(4), 18A – Held: provisions of FTDR Act 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 s. 3 and s. 18A. Foreign Trade (Development and Regulation) Act, 1992 – B ss. 3, 9A – Interpretation of – Discussed. Maxims – Lex specialis derogat legi generali – When not applicable – Discussed. Words & Expressions – ‘direct application’ – Meaning of – C Held: It 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 – International Convention/Treaties.

Disposing of the transfer petitions, the Court D HELD: 1. 1 Discussion on challenge to the role and authority of the Directorate General of Foreign Trade (DGFT) to issue the Notifications and Trade Notice and interpretation of the words “total quantity” The importers have rightly not raised the contention that E the DGFT could not have notified the impugned notifications. The notifications themselves record that they were published by the Ministry of Commerce and Industry, Department of Commerce, Directorate General of Foreign Trade. The first paragraph of the notification states that they had been issued by the Central Government in exercise of powers conferred under F Article 77 of the Constitution. Clearly, the notifications were issued by the Central Government, and not the DGFT that had performed the ministerial act of publication. The decision to amend and issue the notification was of the Central Government.

Neither Section 3(2) nor Section 6(3) of the Foreign Trade G (Development and Regulation) Act, 1992 (FTDR) Act was violated. Article 77 does not provide for delegation of any power, albeit under sub-section (3) of Article 77, the President is to make Rules for more convenient transaction of business and allocation of same H 374 SUPREME COURT REPORTS [2020] 14 S. C. R. A amongst Ministers. Under the Government of India (Transaction of Business) Rules, 1961, the government business is divided amongst Ministers and specific functions are allocated to different Ministries. The Director General of Foreign Trade is an ex officio Additional Secretary in the Government of India and is appointed by the Central Government under sub-section (1) to Section 6 of B the FTDR Act to advise the Central Government in formulation and carrying out the Foreign Trade Policy.

Wherefore, even the website of the Ministry of Commerce and Industry, Department of Commerce, states that the DGFT is an agent of the Central Government and attached office to it. Further, clause (2) of Article C 77 provides that validity of an order or instrument made or executed in the name of the President, authenticated in the manner specified in the Rules made by the President, shall not be called in question on the ground that it is not an order or an instrument made or executed by the President. Therefore, the contention of issuance of the impugned notification sans authority, D cannot be sustained. [Para 15][396-E-H; 397-A-E] Delhi International Airport Limited v. International Lease Finance Corporation and Others (2015) 8 SCC 446: [2015] 2 SCR 1040 - relied on. 1. 2 FTDR Act vide Section 3(2) authorises the Central E 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 F 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 G 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 H UNION OF INDIA AND OTHERS v. AGRICAS LLP 375 of any good.

The listed purposes are wide and range from A conservation of foreign exchange and safeguarding of balance of payments, avoiding shortage of goods, prevention of surplus of any agricultural or fisheries product, prevention of serious injury to domestic production, establishment of any industry and lastly compendiously includes “any other purpose conducive to the B interest of the general public”. Under clause (d) to Section 11 of the Customs Act goods imported or exported (or attempted to be imported or exported) contrary to any prohibition are liable to confiscation. [Para 16][397-E-H; 398-A-C] 1. 3 The contention raised by some of the importers that C the impugned notification is illegal because of vagueness or allows restricted quantity of 1/1. 5 lakh MT of Peas (Pisum Sativum) including Yellow Peas, Green Peas, Dun Peas and Kaspa Peas as against a licence, meaning thereby each licensee is allowed to import the maximum quantity specified in the notification is rejected.

In other words, the total quantity specified in the D notification is per licensee and not for the total imports of the commodity specified in the notification. The submission has no merit as the notification expressly uses the expression ‘total quantity’ of the commodity specified which could be imported. There is no ambiguity or vagueness in the notifications. Even E otherwise the expression ‘total quantity’ cannot be construed as quantity per licence issued as the number of licences issued concerning the subject goods could be numerable (as per the Union of India 2248,1016 and 2915 licences were issued in 2019- 20 for import of Tur, Moong and Urad dals against restricted quota of 4,1. 5 and 4 lakh MT, respectively). If each licence holder is F allowed to import 1/1. 5 lakh MT of Peas, the total import would well exceed the total annual consumption after accounting for the production within India.

The plea and interpretation of the importers if accepted will not only be contrary to the express language of the notification but would frustrate the intent and G object of restricting the imports of the stated goods by prescribing a quota. 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 H 376 SUPREME COURT REPORTS [2020] 14 S. C. R. A 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. Further, the EXIM Policy regulates the restricted goods under Paragraphs 2. 04, 2. 08 and 2. 10 of Policy. [Paras 17, 18][398-C-G; 399-A-C] B 1.

4 The effect of the Notifications is to bring the specified commodities from free to the restricted category and therefore the imports in question would require a prior authorisation for import. The requirement of licence is nothing but authorisation. Therefore, in terms of paragraph 2. 10, the imports of the specified C commodities would only be by the ‘actual user’, unless the ‘actual user’ condition was specifically dispensed with or diluted by the DGFT. The Directorate by specifying that the licence would be issued to the miller or refiner has, therefore, just clarified that the ‘actual user’ alone will be permitted to import the restricted D goods mentioned in the notification for which a prior authorisation or licence is required. The importers are traders and it is not the case of any of the importers 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 E User’, is neither alleged nor argued. 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 F 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. [Paras 19, 20][400-C-F; 401- A-C] 2. 1 Section 9A of the FTDR Act and it’s interpretation. G (i) General Agreement on Tariff and Trade – 1947 and 1994. Conference at Bretton Woods, New Hampshire in 1944 lead to establishment of the ‘International Monetary Fund’ and the ‘World Bank’, but the attempt to establish ‘International Trade H UNION OF INDIA AND OTHERS v.

AGRICAS LLP 377 Organisation’ to develop and coordinate international trade A faltered and was finally given up in 1950. However, multilateral trade negotiations had continued with the objective to prepare a multilateral treaty containing general principles of international trade and a schedule of tariff reductions. By the end of 1947, the work on the General Agreement on Tariff and Trade (‘GATT’), B 1947 and tariff reduction was finalised and agreed upon. On or about 8th July 1947, Government of India became a signatory and ratified GATT-1947. However, GATT-1947 is considered to be a failure or at best had a limited impact. What followed was several years of intense negotiations involving over 100 nations that finally ended in 1994 at Marrakesh, Morocco, with a C multilateral international treaty of over 400 pages of basic text with substantive rules and tariff schedules. The final act signed exceeded 26,000 pages.

This treaty popularly known as General Agreement on Tariff and Trade (GATT-1994) was signed by 128 countries including India on 1st January 1995. On the same day, D the World Trade Organisation (WTO), an institution with a secretariat and staff, replaced GATT and came into existence, as the international organisation for overseeing and regulating functioning of the multilateral trade system. GATT-1994 in nutshell is a rule-oriented package consisting of multilateral trade agreements annexed to a single document and works on the basis E of single undertaking approach whereby all agreements annexed become binding on all the members as single body of law. The main agreement consists of the preamble and XVI articles establishing the WTO, four annexures and declarations, decisions and understandings. Article XI prohibits quotas, import or export F licences and other non-tariff measures, with some exceptions.

Annexure 2 consists of the Understanding on Rules and Procedures Governing Settlement of Disputes, referred to as the Dispute Settlement Understanding, providing mechanism for resolution of trade disputes among WTO members. Annexure 3 establishes the trade policy review mechanism, with procedure G for periodic review of compliance with the WTO agreement by each member. Annexure 4 consists of plurilateral trade agreements binding only on the parties that have accepted them. GATT-1994 also has provisions that allow and permit exceptions. H 378 SUPREME COURT REPORTS [2020] 14 S. C. R. A Article XIX is an exception and sometimes referred to as the escape clause, that provides emergency action where serious injury is caused or threatens domestic industry.

The ‘Marrakesh Agreement’ enacts and incorporates rules-oriented approach regulating the conduct of the WTO members and are designed to ensure that the tariff concessions and the multilateral trade B treaty works as intended and not undermined. Articles XXII provides for sympathetic consideration and consultation and satisfactory solution with respect to any matter affecting the operation of GATT-1994. Article XXIII allows GATT contracting party to make a complaint should it consider that another C contracting party is directly or indirectly nullifying, impairing the GATT-1994 or otherwise impeding attainment of its objective: (a) by failure in carrying out its obligations; (b) by measures, even when they are not in conflict with GATT-1994; and (c) in any other situation.

These Articles XXII, XXIII emphasise on the need for consultation, withdrawal of conflicting measures and mutual D 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), the matter is to be referred to the Contracting Parties to investigate and make recommendations to the offending party or E make a ruling on the matter, as appropriate. The dispute resolution mechanism in Annexure 2 contains 27 Articles totalling about 143 paragraphs and four appendices. 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 F to carry out many functions of the Ministerial Conference.

In addition, there are Council for Trade Inputs, Council for Trade and Services, and Council for Trade Related Aspects of Intellectual Property Rights. The General Council, as per the WTO Charter, discharges the responsibility of the Dispute G Settlement Body (DSB). Thus, the WTO Charter adopts a legalistic and a rule-oriented approach for resolving issues relating to violation of the GATT agreements. The DSB establishes Panel(s) and on adoption of Panel (and the Appellate Body) reports, provides for implementation of the recommendation and H UNION OF INDIA AND OTHERS v. AGRICAS LLP 379 rulings, and can authorise action for failure to comply with the A recommendation(s) and ruling. The procedure adopted for the dispute resolution mechanism is to facilitate prompt settlement of situations with the objective and purpose that the ‘Marrakesh Agreement’ is preserved and not nullified or impaired. [Paras 21-24][401-C-F, G-H; 402-A-C, F, G-H; 403-A-C, D-E; B 404-A-C; 405-A-B, E] 2.

2 (ii) Obligations of the contracting party and effect of international treaty, namely, GATT-1994 on the domestic law. Two aspects relevant in the present case are; (i) applicability of the international treaty in domestic law and (ii) ‘invocability’ of C the treaty in municipal law and before the municipal courts. Breach of a stipulation in international law cannot be justified by the State by referring to its domestic legal position. This rule of international law is unexceptionable and prosaic, as the contra view would permit the international obligations to be evaded by D the simple method of domestic legislation, executive action or judicial decision. Contracting States are under an obligation to act in conformity with the rules of international law and bear responsibility for breaches whether committed by the legislature, executive or even judiciary. In a way, therefore, international E treaties are constraint on sovereign activity, albeit voluntarily agreed.

For the purpose of GATT-1994, municipal laws are evidences of fact, including evidence of conduct in violation of the norms and objective of the treaty. At the same time, failure to enact an internal domestic law in conformity with the international obligation is not a breach of international law, unless there is F such requirement and obligation created by the international treaty. In the absence of any such binding clause, breach arises only when the State concerned fails to observe its obligation on a specific occasion. Various theories have been put forward to explain applicability of international customary and treaty law in G domestic law. The dualist position is that the international municipal law operates separately and before any rule or principle of international law can have effect within the domestic jurisdiction, it must be expressly or specifically transformed into municipal law by use of appropriate constitutional machinery.

Dualism stresses that international law and municipal law exist H 380 SUPREME COURT REPORTS [2020] 14 S. C. R. A separately and cannot have effect on or overrule the other. Consequently, the municipal laws and international laws can operate simultaneously as they regulate different subject matters. International law is between sovereign States, while the municipal law applies within the State and regulates legal relationship between the citizens/subjects inter se and the citizen/subject and B the State. Monistic legal systems include international treaties in domestic law. Monism takes the form of assertion of the supremacy of the international law even within the national sphere, with the understanding and belief that an individual is a subject of international law. International norms provide the basic C norms for the national legal order, and both are a part of the same systems of norms.

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 D 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 E limited to situations in which private parties can sue on the basis of the treaty norms. 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 word of wide F amplitude and does not refer to mere implementation as it includes the right of the country to adopt, amend or modify the treaty language into domestic jurisprudence. The ‘act of transformation’ is different from ‘direct application’ as in the former the treaty is not received and treated as part of domestic jurisprudence until G it is published and made part of the domestic jurisdiction in the same manner as other law. There is great diversity of national constitutional systems regarding international treaty application. [Paras 25, 27-30, 32][406-A, D-G; 407-A-H] H UNION OF INDIA AND OTHERS v. AGRICAS LLP 381 2. 3 It would be now appropriate to refer to the principle of A ‘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 B 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 C 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 case of ‘act of transformation’, even in direct application cases, some jurisdictions accept the principle of partial direct D application and, therefore, the treaty is directly applicable for some purposes and not others.

[Para 33][410-D-G] Status of Treaties in Domestic Legal System; A Policy Analysis Essay by Professor John H. Jackson – referred to. E In re. Berubari Union (I) AIR 1960 SC 845:[1960] 3 SCR 250; Rai Sahib Ram Jawaya Kapur and Others v. State of Pubjab AIR 1955 SC 549:[1955] 2 SCR 225; Ram Kishore Sen and Others v. Union of India and Others AIR 1966 SC 644: [1966] 1 SCR 430 – referred F to. 3. Legal position in India. The law in India is not very different from other Commonwealth Countries. Article 253 of the Constitution states that notwithstanding anything in the foregoing provisions of this G 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 H 382 SUPREME COURT REPORTS [2020] 14 S. C. R. A decisions made at any international conference, association or body. [Para 34][411-C, E-F] Maganbhai Ishwarbhai Patel Etc. v.

Union of India (1970) 3 SCC 400:[1969] 3 SCR 254 – followed. 4. Articles XI and XIX of GATT-1994 and the statutory B scheme vide Sections 3 and 9A of FTDR Act and the Safeguard Measures (Quantitative Restriction) Rules, 2012. 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 C 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 Foreign Trade (Development and Regulation) Ordinance, 1992 with the stipulation that anything done or any action taken under the Ordinance shall be deemed to have been done or taken under the corresponding provisions D of the FTDR Act.

The Statement of Objects and Reasons for enacting the FTDR Act, as recorded, are to acknowledge that foreign trade is the driving force of economic activity as this spurs economic growth and there is increasing interdependence and that the goals of the new policy were to increase productivity and E competitiveness by ensuring that the trade policies serve as an instrument to create an environment that will provide a strong impetus to exports, facilitate imports and render export activity more profitable. Section 9A of the FTDR Act is the only section in Chapter IIIA with the heading ‘Quantitative Restrictions and this section was inserted by Amendment Act 25 of 2010 with effect F from 27th August 2010.

Subsequently, in exercise of powers conferred by sub-section (3) to Section 9A of the FTDR Act, the Central Government had published and notified the Safeguard Measures (Quantitative Restrictions) Rules, 2012, which became applicable on the date of their publication in the Gazette of India G dated 24th May 2012. [Paras 48, 50][424-D-G; 427-A-C] Report of WTO Dispute Settlement Body’s panel on “India-Quantitative Restrictions on Imports of Agricultural, Textile and Industrial Products” – referred to. H UNION OF INDIA AND OTHERS v. AGRICAS LLP 383 5. 1 Discussion and interpretation of Sections 3 and 9A of A the FTDR Act. Section 3 of the FTDR Act, as enacted, had undergone amendments by addition of proviso to sub-section (2) and by insertion of sub-section (4) vide Act 25 of 2010 with effect from 25th August 2010.

Sub-section (1) of Section 3 states that the B Central Government may, by an Order published in the Official Gazette, make provision for the development and regulation of foreign trade by facilitating imports and increasing exports. It is a general provision which has no reference to GATT-1994. It authorises the Central Government to publish an order in the C Official Gazette for development and regulation of foreign trade, i. e. imports and exports. Sub-section (2) states that the Central Government can, by an order in the Official Gazette, make a provision for prohibiting or restricting or otherwise regulating, in all or specified cases and subject to such exceptions, if any, the import or export of goods and after the amendment vide Act D 25 of 2010, services or technology. Sub-section (2) to Section 3, therefore, authorises the Central Government to, by an Order published in the Official Gazette, make provisions restricting the imports or exports.

Imposition of quantitative restrictions on imports or exports would clearly fall within sub-section (2) to E Section 3 of the FTDR Act. Sub-section (3) to Section 3 states that where an order is passed under sub-section (2) whereby the import or export of goods is prohibited, restricted or otherwise regulated, the goods in question would be deemed to be prohibited goods under Section 11 of the Customs Act, 1962 and accordingly the provisions of the latter Act would apply. [Para 54][438-E-H; F 439-A-B] 5. 2 Sub-section (4) to Section 9A of the FTDR Act introduced by Act 25 of 2010 with effect from 27th August 2010, requires some elucidation. The sub-section on one hand states that no permit or licence shall be necessary for imports or exports G of goods, nor any goods shall be prohibited from import or export, except as may be required under the FTDR Act, or the rules or orders made thereunder.

At the same time, by using the phrase ‘without prejudice to anything contained in any other law, rule, H 384 SUPREME COURT REPORTS [2020] 14 S. C. R. A regulation, notification or order’, it protects the operation of 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 B 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 C 18A of the FTDR Act which was also enacted and inserted by Act 25 of 2010 with effect from 27th August 2010.

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 Section 18A of the FTDR Act. Sub- D section (4) to Section 3 of the FTDR Act, therefore, in the context of import and exports or prohibition of imports or exports of goods states that no permit or licence shall be necessary or required except as may be required under the FTDR Act, rules or orders made thereunder. The expression ‘order’, as per clause (h) to E Section (2) of the FTA means any Order made by the Central Government under Section 3. It is therefore, clear that there is no violation of Section 3 of the FTDR Act in the issuance of the impugned notifications or orders, which are intra vires and not ultra vires. [Para 55][439-B-E, F-G; 440-A-B] F 5.

3 Article XI of the GATT-1994 has not been statutorily made a subject of ‘act of transformation’ and incorporated in the domestic legislation, i. e. the FTDR Act. The FTDR Act does not legislate and transform Article XI of the GATT-1994. Section 3 of the FTDR Act empowers and authorises the Central Government, i. e. the Union of India to frame policy, rules or G regulations for import or export of goods. The policy is made under Section 5 of the Act. Thus, the Central Government i. e. the Union of India has been given the necessary discretion and election with regard to framing of policies for import and export H UNION OF INDIA AND OTHERS v. AGRICAS LLP 385 of goods, services and technology. Therefore, implementation of A GATT-1994, including Article XI, is left to the Central Government by means of delegated legislation.

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 B 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 C value of merchandise permitted to be imported, subject to the provisions of paragraphs of that Article. 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 D to be satisfied for a contracting party to be GATT-1994 compliant.

Reference to this position is necessary and required when Section 9A of the FTDR Act is interpreted which incorporates into the domestic law Article XIX of GATT-1994, but neither Article XI and nor all exceptions by implication. Consequently, Section 9A for the FTDR Act, is to be understood an enabling provision E empowering imposition of ‘quantitative restrictions’ after following the procedure in the situations referred to therein. However it does not limit and restrict the expans and power of the Central Government to prohibit, regulate or restrict imports of goods in terms of Section 3(2) of the FTDR Act. As a sequitur, it has to be F held that notwithstanding Section 9A, the Central Government continues and has authority to impose quantitative restrictions by an order under Section 3(2) of the FTDR Act. Principle of Lex specialis derogat legi generali, therefore, is not applicable to the case in hand. [Paras 56-58][440-C-D, G-H; 441-A-F] G 5.

4 Section 9A of the FTA was enacted by Act 25 of 2010 pursuant to the recommendations of the Standing Committee. Section 9A substantially incorporates, with some modifications, provisions of Article XIX of GATT-1994. Rules made in 2012 are H 386 SUPREME COURT REPORTS [2020] 14 S. C. R. A also in conformity with the provisions of the WTO Agreement on Safeguards made in terms of Article XIX of GATT-1994. Sub-rule (3) to Rule 5 of the Safeguard Measures (Quantitative Restrictions) Rules, 2012 states and sets out the conditions for applicability of Rule 9A, which are: (i) increased imports; (ii) serious injury or threat of serious injury; and (iii) a causal link B 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 C 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 D 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 E country or producer of goods or directly competitive goods in India or a trade or business association.

The need to enact Section 9A arose from the obligations flowing from Article XIX, as restriction in form of ‘quantitative restriction’, require a procedure to be followed. Affected parties including exporters, importers have to be heard. Consequently, ‘act of transformation’ F was required. Article XIX of GATT-1994 is an escape provision, i. e. a provision which entitles a contracting state to escape from the rigours of paragraph (1) of Article XI of GATT-1994. Similar ‘acts of transformation’ have been undertaken by enacting Custom Valuation Rules, provision of antidumping, countervailing duty G etc. but the entire GATT-1994 does not stand transposed and enacted by way of statutory law or delegated legislation. This being the position, Section 9A has to be interpreted as an escape provision when the Central Government i. e. the Union of India may escape the rigours of paragraph (1) of Article XIX of GATT- H UNION OF INDIA AND OTHERS v. AGRICAS LLP 387 1994.

Section 9A is not a provision which incorporates or A transposes paragraph (1) of Article XI into the domestic law either expressly or by necessary implication. To hold to the contrary, it would be holding that the Central Government has no right and power to impose ‘quantitative restrictions’ except under Section 9A of the FTDR Act. This would be contrary to the legislative B intent and objective. Section 9A of the FTDR Act does not elide or negate the power of the Central Government to impose restrictions on imports under sub-section (2) to Section 3 of the FTDR Act. [Paras 59-61][441-F; 442-B-G; 443-A-C] 5. 5 The impugned notifications would be valid as they have C been issued in accordance with the power conferred in the Central Government in terms of sub-section (2) to Section 3 of the FTDR Act. The powers of the Central Government by an order imposing restriction on imports under sub-section (2) to Section 3 is, therefore, not entirely curtailed by Section 9A of the FTDR Act.

[Para 62][443-D-E] D 6. Conclusion The impugned notifications and the trade notices are upheld and the challenge made by the importers is rejected. The imports, if any, made relying on interim order(s) would be held to be E contrary to the notifications and the trades notices issued under the FTDR Act and would be so dealt with under the provisions of the Customs Act 1962. The Writ Petitions subject matter of the Transfer Petitions, subject to E in the judgment (What is not decided) are dismissed. Writ Petitions filed by the intervenors before the respective High Courts shall stand dismissed in terms F of this decision. [Para 67][444-F-G] Raj Prakash Chemical v. Union of India (1986) 2 SCC 297: [1986] 1 SCR 448 – distinguished. Gramophone Company of India Ltd. v. Birendra Bahadur Pandey and Others (1984) 2 SCC 534: [1984] G 2 SCR 664; Jolly George Varghese and Another v. The Bank of Cochin (1980) 2 SCC 360 : [1980] 2 SCR 913; Director General of Foreign Trade and Another v.

Kanak Exports and Another (2016) 2 SCC 226: [2015] H 388 SUPREME COURT REPORTS [2020] 14 S. C. R. A 15 SCR 287; Associated Cement Companies Ltd. v. Commissioner of Customs (2001) 4 SCC 593: [2001] 1 SCR 608; State of Punjab and Another v. Devans Modern Breweries Ltd. and Another (2004) 11 SCC 26: [2003] 5 Suppl. SCR 930; S&S Enterprise v. Designated Authority and Others (2005) 3 SCC 337: [2005] 2 B SCR 255; Commissioner of Customs, Bangalore v. G. M. Exports and Others (2016) 1 SCC 91: [2015] 14 SCR 848 ; Entertainment Network (India) limited and Anr. v. Super Cassette Industries Ltd. and Ors (2008) 13 SCC 30: [2008] 9 SCR 165; His Holiness C Kesavananda Bharati Sripadagalvaru v. State of Kerala and Another (1973) 4 SCC 225: [1973] Suppl. SCR 1; Pratap Singh v. State of Jharkhand and Anr. (2005) 3 SCC 551:[2005] 1 SCR 1019 – referred to. Karan Dileep Nevatia v. Union of India (2010) 1 Bom D CR 588 – referred to. Maclaine Watson& Co. Ltd. v. Department of Trade and Industry & Anr.

(1989) 3 All ER 523; Lonrho Exports v. ECGD [1983] 3 W. L. R. 394; The Eschersheim Anr v. The Jade Erkowit And Anr. (1976) 1 All ER 920 (HL) – referred to. E The World Trade Organization, law, practice and policy Mitsuo Matsushita, Thomas J. Schoenbaum, Petros C. Mavroidis, and Michael Hahn, 3rd Edition 2015 at page Nos. 2 – 3, page No. 3 and page Nos. 33-40; Status of Treaties in Domestic Legal Systems; a policy F analysis- Essay by Prof. John. H. Jackson – referred to. Case Law Reference [2015] 15 SCR 287 referred to Para 11 (c) G [2015] 2 SCR 1040 relied on Para 15 [1969] 3 SCR 254 followed Para 35 [1960] 3 SCR 250 referred to Para 35 H UNION OF INDIA AND OTHERS v. AGRICAS LLP 389 [1955] 2 SCR 225 referred to Para 35 A [1966] 1 SCR 430 referred to Para 35 [1984] 2 SCR 664 referred to Para 38 [1980] 2 SCR 913 referred to Para 39 [2001] 1 SCR 608 referred to Para 41 B [2003] 5 Suppl.

SCR 930 referred to Para 42 [2005] 2 SCR 255 referred to Para 43 [2015] 14 SCR 848 referred to Para 44 [2008] 9 SCR 165 referred to Para 45 C [1973] Suppl. SCR 1 referred to Para 45 [2005] 1 SCR 1019 referred to Para 45 [1986] 1 SCR 448 distinguished Para 65 CIVIL ORIGINAL JURISDICTION: Transfer Petition (Civil) D Nos. 496-509 of 2020 (Petitions filed under Article 139A (1) with rule XL of Supreme Court Rules, 2013) With T. P. (Civil) D. No. 8823 of 2020. E Tushar Mehta, SG, Aman Lekhi, ASG, Harish Salve, Arvind Datar, Shyam Divan, Ravindra Shrivastava, Sr. Advs. , Rajat Nair, Ms. Swati Ghildiyal, Ms. Sunita Sharma, Mrs. Anil Katiyar, K. R. Sasiprabhu, Aashish Chauhan, Aditya Shandilya, Kailash Pandey, Ranjeet Singh, Gaichangpou Gangmei, Udayditya Bannerjee, K. Raghavachryulu, B. F Ramana Murthy, Udit Malik, Anshuman Shrivastava, Abhijeet Shrivastava, Ms. Garima Tiwari, Karan Khanna, Mrs.

Swarupama Chaturvedi, Hitesh Jain, Aman Jha, Ashutosh Mohan, Atishay Jain, Somiran Sharma, Aashish Chauhan, Ms. Swagoti Batchas, Saransh Saini, Vivek Jain, Ms. Anshul Sharma, Bhrigu Sharma, Ms. Suchitra Kumbhat, G Nirvikar Singh, Ms. Anisha Upadhyay, Puneet Parihar, Bhrigu Sharma, Ms. Vrinda Bhandari, Pranav Jain, Siddhant Buxy, Pradeep Aggarwal, Ankit Sethi, Lal Pratap Singh, Umesh Pratap Singh, Arjun Aggarwal, Ms. Ruchi Kohli, Nitin Mishra, Ms. Mitali Gupta, Advs. for the appearing parties. H 390 SUPREME COURT REPORTS [2020] 14 S. C. R. A The Judgment of the Court was delivered by 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 B 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 Trade Notice dated 16th April 2019 issued C by the Directorate General of Foreign Trade on the ground of excessive delegation as not being in accord with sub-section (2) to Section 3 read with the bar under sub-section (3) to Section 6 of the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as ‘FTDR Act’). D 3. Accordingly, we had heard arguments and by this common judgment would be disposing of the respective Writ Petitions, subject matter of these Transfer Petitions. This decision would also apply to the Writ Petitions filed by the intervening applicants. 4. For the sake of convenience, we would be referring the Central Government and the authorities collectively as ‘the Union of India’ and E the Writ Petitioners synchronously as ‘importers’.

For clarity and wherever necessary we have referred to the Directorate General of Foreign Trade, as the ‘DGFT’. DGFT is an authority constituted under the FTDR Act and appointed by the Central Government to advise them on foreign trade policy and is responsible for carrying out that policy. F A. Factual background and legal issues. 5. The Union of India, vide Notification dated 29th March 2019, had exercised the powers conferred to it under Section 3 of the FTDR Act, read with paragraphs 1. 02 and 2. 01 of the Foreign Trade Policy, 2015-2020 and amended the import policy conditions of items of Chapter G 7 of the Indian Trade Classificatio‘n (Harmonized System), 2017, Schedule-I (Import Policy) as under: “S. O. 1478(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 H Policy, 2015-2020, as amended from time to time, the Central UNION OF INDIA AND OTHERS v.

AGRICAS LLP 391 [SANJIV KHANNA, J. ] government hereby amends the Import Policy Conditions of items A of Chapter 7 of the Indian Trade Classification (Harmonized System), 2017, Schedule-I (Import Policy), as under: Exim Item Description Existing Revised Policy Code Policy Condition 0713 Beans of the SPP Restricted Import of Moong shall be subject 3110 Vigna Mungo (L. ) an annual (fiscal year) quota of B Hepper. 1. 5 lakh MT per procedure to be 0713 Split notified by Directorate General of 90 10 Foreign Trade: - 0713 Other Provided that this restriction shall 90 90 not apply to Government’s import commitments under any bilateral or Regional Agreement or C Memorandum of Understanding. 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 D 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 E System), 2017, Schedule-I (Import Policy), as under: Exim Item Description Existing Existing Policy Revised Policy Code Policy Condition Condition 0713 Peas (Pisum Sativum) Restricted Restricted for During the period st 1000 including Yellow peas, the period from from 1 April, 2019 to st st Green peas, Dun peas 1 January, 31 March, 2020, st and Kaspa peas 2019 to 31 total quantity of 1. 5 F 0713 Split March, 2019 Lakh MT of Peas 90 10 shall be allowed 0713 Other against licence as per 90 90 the procedure to be notified by Directorate General of Foreign Trade G 2. This notification shall come into force with effect from 1st April, 2019. xx xx xx S. O. 1480(E).

- In exercise of powers conferred by section 3 of the Foreign Trade (Development and Regulation) Act, 1992 (22 H 392 SUPREME COURT REPORTS [2020] 14 S. C. R. A 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 Item Description Existing Revised Policy condition B Code Policy Condition 0713 Beans of the SPP Restricted. Import of Urad shall be subject 31 90 Vigna Radiata to an annual (fiscal year) quota (L. ) Wilezek of 1. 5 lakh MT as per procedure 0713 Split to be notified by Directorate C 90 10 General of Foreign Trade: 0713 Other 90 90 Provided that this restriction shall not apply to Government’s import commitments under any Bilateral or Regional Agreement or Memorandum of D Understanding. 2.

This notification shall come into force from the date of its publication in the official Gazette. xx xx xx S. O. 1481(E). - In exercise of powers conferred by section 3 of E 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 F System), 2017, Schedule-I (Import Policy), as under: E x im Ite m D e s c rip t io n E x is tin g R e v ise d P o lic y c o n d itio n C o d e P o lic y C o n d itio n 0 7 1 3 P ig e o n P e a s (C aja n u s R e str ic te d .

Im p o rt o f P ig e o n P e a s 6 0 0 0 C aj a n ) / T o o r D al (C a j a n u s C a j a n )/T o o r D a l 0 7 1 3 S p lit sh a ll b e su b je c t to a n a n n u a l 9 0 1 0 (f isc a l Y e a r) q u o ta o f 0 2 la k h 0 7 1 3 O th e r M T as p e r p r o c e d ur e to b e G 9 0 9 0 n o tif ie d b y D ir e cto r a te G e n e ra l o f F o r e ig n T r ad e : P r o v id e d th a t th is re stric tio n sh a ll n o t a p p ly to G o v e r n m e n t’ s im p o r t c o m m itm e n ts u n d e r a n y B i late r a l o r R e g io n a l A g r e e m e n t o r M e m o r a n d u m o f U n d e r sta n d in g . H UNION OF INDIA AND OTHERS v. AGRICAS LLP 393 [SANJIV KHANNA, J. ] 2. This notification shall come into force from 1st April, 2019. ” A 6. The Trade Notice dated 16th April 2019 issued by the DGFT had laid down the modalities for making applications for import of Peas, beans of Moong and Urad and Pigeon Peas and had inter alia stipulated as under: B “a.

Applications are invited online from the intending millers/refiners (having own refining / processing capacity) of pulses for its import as per ANF-2M of FTP 2015-20 to DGFT, at policy2-dgft@nic. in besides the concerned jurisdictional Regional Authorities. ” 7. Earlier, the Union of India had issued a notification dated 25th C 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 D 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. E 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 the intervening period between 25th April 2018 to 15th May 2018 and awaiting F clearance at customs or consignment of Peas with Bill of Lading prior to 16th May 2018 were permitted freely. By the third Trade Notice dated 17th August 2018, import of maximum 125 MT of Peas per contract, irrespective of the advance payment, made before 25th April 2018, was allowed. G 9.

The Union of India had even earlier issued notifications dated 5th August 2017 and 21st August 2017 revising import of beans of Urad/ Moong and Pigeon Peas/Toor dal from ‘free’ to ‘restricted’ with stipulations as to annual (fiscal year) quota and requirement of a prior licence from the DGFT. By notifications dated 24th April 2018 import of H 394 SUPREME COURT REPORTS [2020] 14 S. C. R. A beans of Urad/Moong and Pigeon Peas/Toor dal was to remain restricted requiring a prior licence with stipulation as to annual quota for the fiscal year 2018-19. 10. M/s. Hira Traders had filed Writ Petition Nos. 15921-15924 of 2018 before the High Court of Judicature at Madras challenging B Notification No. 4/2015-20 dated 25th April 2018 and Trade Notices No. 05/2018 dated 9th May 2018, No. 10/2018-19 dated 16th May 2018 and No. 12/2018 dated 18th May 2018 respectively. It had also prayed for permission by way of an interim order to import Peas as per the contracts.

By interim order dated 28th June 2018, the operation of Notification dated 25th April 2018 was stayed by the Madras High Court, C thereby permitting imports without an import licence. 11. Several traders had thereafter filed Writ Petitions before different High Courts challenging imposition of restrictions on import of Peas and pulses and interim orders were passed staying the notifications which had the effect of permitting imports without any restriction as to D quota or licence. The primary grounds raised in the Writ Petitions before the High Courts were: (a) The impugned notifications issued by the DGFT had the effect of modifying or amending the EXIM policy as the specified items were withdrawn from the free category and moved to E restricted category.

But, the DGFT, a statutory authority under the provisions of FTDR Act, was not authorised to authenticate/issue an order amending or modifying the EXIM policy as this power vests with the Central Government in terms of sub-section (2) to Section 3, read-with sub-section (3) to Section 6 of the FTDR Act, which states that powers F exercisable under Section 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, G 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 H and defects mentioned by this Court in Director General of UNION OF INDIA AND OTHERS v. AGRICAS LLP 395 [SANJIV KHANNA, J.

] Foreign Trade and Another v. Kanak Exports and A 1 Another. (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 B 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 including the petition filed by M/s. C Siddhi Vinayak and another, vide judgment dated 25th October 2018. Judgment of the Gujarat High Court was challenged before this Court in Special Leave Petition (Civil) No. 1922 of 2019 by M/s. Kusum Agency and the same was dismissed vide order dated 28th January 2019.

Subject matter of these Writ Petitions were the Notifications dated 5th August D 2017, 21st August 2017 and 25th April 2018 and the corresponding trade notices issued by the DGFT. 13. Notwithstanding the aforesaid dismissals, as many as 90 Writ Petitions were filed before the Rajasthan High Court at Jaipur challenging the Notifications dated 29th March 2019 and the Trade Notice dated E 16th April 2019. Similarly, Writ Petitions were filed before the High Courts of Delhi, Punjab and Haryana, Andhra Pradesh, Bombay and Calcutta. In several cases interim orders were passed permitting the importers to import Peas/pulses notwithstanding the fact that they had not been issued authorisation/import licences or the total imports would exceed the maximum or total quantity fixed in the impugned notifications. F 14.

Before us, the importers had urged a new legal issue/point which was not specifically raised in the Writ Petitions; the impugned notifications were in the nature of ‘quantitative restrictions’ under Section 9A of the FTDR Act, which could be only imposed by the Central Government after conducting such enquiry, as is deemed fit, and on G being satisfied that the “goods are imported into India in such quantities and under such conditions as to cause or threatens to cause serious injury to domestic industry. ” Further, in exercise of power under sub-section (3) to Section 9A the Central Government has framed the 1 (2016) 2 SCC 226. H 396 SUPREME COURT REPORTS [2020] 14 S. C. R. A Safeguard Measures (Quantitative Restrictions) Rules, 2012, that prescribe mandatory and detailed procedure for initiation, investigation, hearing to parties and adjudication by the Authorised Officer, which statutory mandate has not been followed.

Under sub-rule (4) to the above Rule, the Authorised Officer has power to initiate suo moto action if he is satisfied with the information received from any source that sufficient B evidence exits regarding increased imports; serious injury or threat of serious injury to the domestic industry; and causal link between increased imports and serious injury or threat of serious injury to the domestic industry. Taking note of the submission, we had directed the parties to file brief written submissions and the propositions which they propose to C 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 D 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. E 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 F have notified the impugned notifications. The notifications themselves record that they were published by the Ministry of Commerce and Industry, Department of Commerce, Directorate General of Foreign Trade.

The first paragraph of the notification states that they had been issued by the Central Government in exercise of powers conferred under Article 77 of the Constitution. Clearly, the notifications were issued by G the Central Government, and not the DGFT that had performed the ministerial act of publication. The decision to amend and issue the notification was of the Central Government. Neither Section 3(2) nor Section 6(3) of the FTDR Act was violated. This Court in Delhi International Airport Limited v. International Lease Finance H UNION OF INDIA AND OTHERS v. AGRICAS LLP 397 [SANJIV KHANNA, J. ] 2 Corporation and others , had referred to Articles 77 and 166 of the A Constitution and held that the Constitution stipulates that whenever executive action is taken by way of an order or instrument it shall be expressed to be taken in the name of the President and Governor in whose name the executive power of the Union and the States, respectively, are vested.

Article 77 does not provide for delegation of B any power, albeit under sub-section (3) of Article 77, the President is to make Rules for more convenient transaction of business and allocation of same amongst Ministers. Under the Government of India (Transaction of Business) Rules, 1961, the government business is divided amongst Ministers and specific functions are allocated to different Ministries. The Director General of Foreign Trade is an ex officio Additional C Secretary in the Government of India and is appointed by the Central Government under sub-section (1) to Section 6 of the FTDR Act to advise the Central Government in formulation and carrying out the Foreign Trade Policy. Wherefore, even the website of the Ministry of Commerce and Industry, Department of Commerce, states that the DGFT is an D agent of the Central Government and attached office to it.

Further, clause (2) of Article 77 provides that validity of an order or instrument made or executed in the name of the President, authenticated in the manner specified in the Rules made by the President, shall not be called in question on the ground that it is not an order or an instrument made or executed by the President. Therefore, the contention of issuance of the impugned E notification sans authority, cannot be sustained. 16. FTDR Act vide Section 3(2), 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 F 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 G 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 2 (2015) 8 SCC 446 H 398 SUPREME COURT REPORTS [2020] 14 S. C. R. A 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 any agricultural or fisheries product, prevention of serious injury to domestic production, establishment of any B industry and lastly compendiously includes “any other purpose conducive to the interest of the general public”. Under clause (d) to Section 11 of the Customs Act goods imported or exported (or attempted to be imported or exported) contrary to any prohibition are liable to confiscation. 17. We would also without any hesitation reject the contention C raised by some of the importers that the impugned notification is illegal because of vagueness or allows restricted quantity of 1/1. 5 lakh MT of Peas (Pisum Sativum) including Yellow Peas, Green Peas, Dun Peas and Kaspa Peas as against a licence, meaning thereby each licensee is allowed to import the maximum quantity specified in the notification.

In D other words, the total quantity specified in the notification is per licensee and not for the total imports of the commodity specified in the notification. The submission has no merit as the notification expressly uses the expression ‘total quantity’ of the commodity specified which could be imported. There is no ambiguity or vagueness in the notifications, relevant portions of which have been quoted above. Even otherwise the expression E ‘total quantity’ cannot be construed as quantity per licence issued as the number of licences issued concerning the subject goods could be numerable (as per the Union of India 2248,1016 and 2915 licences were issued in 2019-20 for import of Tur, Moong and Urad dals against restricted quota of 4,1. 5 and 4 lakh MT, respectively). If each licence F holder is allowed to import 1/1. 5 lakh MT of Peas, the total import would well exceed the total annual consumption after we account for the production within India.

In our opinion, the plea and interpretation of the importers if accepted will not only be contrary to the express language of the notification but would frustrate the intent and object of restricting the imports of the stated goods by prescribing a quota. We decline and G would not accept this farfetched and somewhat drivel interpretation of simple and straight forward words. 18. We would also reject the contention raised by the importers that the Trade Notices issued by the DGFT violate Sections 3 and 5 read with sub-section (3) of Section 6 of the FTDR Act as they had the H effect of superseding the Notifications or imposing a new criterion and UNION OF INDIA AND OTHERS v. AGRICAS LLP 399 [SANJIV KHANNA, J. ] eligibility condition not envisaged by the notifications. The legal effect of A 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 B 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. ” C 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 D 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 by means of a Public Notice. xx xx xx E 2.

08 Export/Import of Restricted goods/Services Any goods/service, the export or import of which is ‘Restricted’ may be exported or imported only in accordance with an Authorisation/Permission or in accordance with the procedure F prescribed in a Notification/Public Notice issued in this regard. xx xx xx 2. 10 Actual User Condition Goods which are importable freely without any ‘Restriction’ may G be imported by any person. However, if such imports require an Authorisation, actual user alone may import such good(s) unless actual user condition is specifically dispensed with by DGFT. ” Paragraph 2. 08 states that any goods or services, import or export of which is restricted, can be exported or imported only in accordance with the authorisation/permission or in accordance with the procedure H 400 SUPREME COURT REPORTS [2020] 14 S. C. R. A prescribed in the notification/public notice in this regard. Paragraph 2.

04 states that the DGFT may specify procedures to be followed by an exporter or an importer or by a licencing/regional authority, etc. for the purpose of implementing provisions of the FTDR Act, the rules and orders made thereunder. Such procedures or amendments, if any, shall be published by means of a public notice. Paragraph 2. 10 sets the matter B beyond controversy as it states that the goods which are freely importable without a restriction may be imported by any person. However, if goods 3 require authorisation, ‘actual user’ alone may import such goods. However, the DGFT can dilute and dispense with the ‘actual user’ condition. C 19. The effect of the Notifications, as noticed and beyond doubt, is to bring the specified commodities from free to the restricted category and therefore the imports in question would require a prior authorisation for import. The requirement of licence is nothing but authorisation. Therefore, in terms of paragraph 2.

10, the imports of the specified D commodities would only be by the ‘actual user’, unless the ‘actual user’ condition was specifically dispensed with or diluted by the DGFT. The Directorate by specifying that the licence would be issued to the miller or refiner has, therefore, just clarified that the ‘actual user’ alone will be permitted to import the restricted goods mentioned in the notification for which a prior authorisation or licence is required. The importers are E traders and it is not the case of any of the importers 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. F 3 9. 03 “Actual User” is a person (either natural or legal) who is authorized to use imported goods in his/its own premise which has a definitive postal address.

(a) “Actual User (Industrial)” is a person (either natural & legal) who utilizes imported goods for manufacturing in his own industrial unit or manufacturing for his own use in another unit including a jobbing unit which has a definitive postal address. (b) “Actual User (Non-Industrial)” is a person (either natural & legal) who utilizes the G imported goods for his own use in: (i) any commercial establishment, carrying on any business, trade or profession, which has a definitive postal address; or (ii) any laboratory, Scientific or Research and Development (R&D) institution, university or other educational institution or hospital which has a definitive postal address; or (iii) any service industry which has a definitive postal address. H UNION OF INDIA AND OTHERS v. AGRICAS LLP 401 [SANJIV KHANNA, J. ] 20. The importers have raised the contention that the expression A ‘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 B 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 C. Section 9A of the FTDR Act and it’s interpretation. (i) General Agreement on Tariff and Trade – 1947 and 1994. 21. Conference at Bretton Woods, New Hampshire in 1944 lead to establishment of the ‘International Monetary Fund’ and the ‘World Bank’, but the attempt to establish ‘International Trade Organisation’ to D develop and coordinate international trade faltered and was finally given up in 1950.

However, multilateral trade negotiations had continued with the objective to prepare a multilateral treaty containing general principles of international trade and a schedule of tariff reductions. By the end of 1947, the work on the General Agreement on Tariff and Trade (‘GATT’), E 1947 and tariff reduction was finalised and agreed upon. Interim commission of the ‘International Trade Organisation’ became the GATT Secretariat based in Geneva, Switzerland. On or about 8th July 1947, Government of India became a signatory and ratified GATT-1947. However, GATT-1947 is considered to be a failure or at best had a limited impact.

Most jurists and economists hold that the GATT-1947 F suffered from ‘birth defects’ as it did not have a legal personality, lacked established procedures and organizational structure in the absence of a charter; had ‘provisional application’ as it had provisions permitting contracting parties to maintain legislations in-force inconsistent with the ‘grandfathering rights’ and there was ambiguity and confusion about the 4 G GATT’s authority and decision making ability . 22. What followed was several years of intense negotiations involving over 100 nations that finally ended in 1994 at Marrakesh, 4 The World Trade Organization, law, practice and policy Mitsuo Matsushita, Thomas J. Schoenbaum, Petros C. Mavroidis, and Michael Hahn, 3rd Edition 2015 at page H Nos. 2 – 3. 402 SUPREME COURT REPORTS [2020] 14 S. C. R. A Morocco, with a multilateral international treaty of over 400 pages of basic text with substantive rules and tariff schedules. The final act signed exceeded 26,000 pages.

This treaty popularly known as GATT-1994 was signed by 128 countries including India on 1st January 1995. On the same day, the World Trade Organisation (WTO), an institution with a secretariat and staff, replaced GATT and came into existence, as the B international organisation for overseeing and regulating functioning of the multilateral trade system. GATT-1994 in nutshell is a rule-oriented package consisting of multilateral trade agreements annexed to a single document and works on the basis of single undertaking approach whereby all agreements annexed become binding on all the members as single C body of law. The main agreement consists of the preamble and XVI articles establishing the WTO, four annexures and declarations, decisions and understandings. Annexure I to the multilateral agreement 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 D 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- E 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 F 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 between provisions of GATT- 1994 and another Annexure A-1 agreement, the provisions of latter would control. Annexure 1B consists of the General Agreement on Trade in G Services. Annexure 1C consists of the Agreement on Trade Related Aspects of Intellectual Property Rights. Annexure 2 consists of the Understanding on Rules and Procedures Governing Settlement of Disputes, referred to as the Dispute Settlement Understanding, providing mechanism for resolution of trade disputes among WTO members. Annexure 3 establishes the trade policy review mechanism, with H UNION OF INDIA AND OTHERS v. AGRICAS LLP 403 [SANJIV KHANNA, J.

] procedure for periodic review of compliance with the WTO agreement A by each member. Annexure 4 consists of plurilateral trade agreements binding only on the parties that have accepted them. 23. GATT-1994 also has provisions that allow and permit exceptions. There are exceptions to quotas for balance-of-payments purposes in Article XII, XIII, XV and XVII, Section B, exceptions for B developing countries vide Article XVIII and Part IV and exception for health, safety, protection of natural resources and other matters in Article XX. Article XIX, which we would again refer to, is an exception and sometimes referred to as the escape clause, that provides emergency action where serious injury is caused or threatens domestic industry.

C There are exceptions for national security vide Article XXI, customs unions and free trade areas vide Article XXIV, waivers by the contracting parties vide Article XXV and ‘opt out’ option on ‘one-time basis’ when 5 a new member joins GATT vide Article XXXV . 24. The ‘Marrakesh Agreement’ enacts and incorporates rules- D oriented approach regulating the conduct of the WTO members and are designed to ensure that the tariff concessions and the multilateral trade 6 treaty works as intended and not undermined. Articles XXII provides for sympathetic consideration and consultation and satisfactory solution with respect to any matter affecting the operation of GATT-1994. Article 7 XXIII allows a GATT contracting party to make a complaint should it E 5 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. 6 XXII. Consultation 1.

Each contracting party shall accord sympathetic consideration to, and shall afford F 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. 7 G XXIII. Nullification or Impairment 1.

If any contracting party should consider that any benefit accruing to it directly or indirectly under this 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) the application by another contracting party of any measure, whether or not it conflicts with the provisions of this Agreement, or (c) the existence of any other situation, the H 404 SUPREME COURT REPORTS [2020] 14 S. C. R. A consider that another contracting party is directly or indirectly nullifying, impairing the GATT-1994 or otherwise impeding attainment of its objective: (a) by failure in carrying out its obligations; (b) by measures, even when they are not in conflict with GATT-1994; and (c) in any other situation.

These Articles emphasise on the need for consultation, withdrawal of conflicting measures and mutual satisfactory solution of the matter by B 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 C 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 D 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 contracting party may, with a view to the satisfactory adjustment of the matter, make written representations or proposals to the other contracting party or parties which it E considers to be concerned. Any contracting party thus approached shall give sympathetic consideration to the representations or proposals made to it. 2. If no satisfactory adjustment is effected between the contracting parties concerned within a reasonable time, or if the difficulty is of the type described in paragraph 1 (c) of this Article, the matter may be referred to the CONTRACTING PARTIES.

The CONTRACTING PARTIES shall promptly investigate any matter so referred to them and shall make appropriate recommendations to the contracting parties which they F consider to be concerned, or give a ruling on the matter, as appropriate. The CONTRACTING PARTIES may consult with contracting parties, with the Economic and Social Council of the United Nations and with any appropriate inter-governmental organization in cases where they consider such consultation necessary. If the CONTRACTING PARTIES consider that the circumstances are serious enough to justify such action, they may authorize a contracting party or parties to suspend the application to any other contracting party or parties of such concessions or other G obligations under this Agreement as they determine to be appropriate in the circumstances.

If the application to any contracting party of any concession or other obligation is in fact suspended, that contracting party shall then be free, not later than sixty days after such action is taken, to give written notice to the Executive Secretary¹ to the CONTRACTING PARTIES of its intention to withdraw from this Agreement and such withdrawal shall take effect upon the sixtieth day following the day on which H such notice is received by him. UNION OF INDIA AND OTHERS v. AGRICAS LLP 405 [SANJIV KHANNA, J. ] Trade and Services, and Council for Trade Related Aspects of Intellectual A Property Rights. The General Council, as per the WTO Charter, discharges the responsibility of the Dispute Settlement Body (DSB). Thus, the WTO Charter adopts a legalistic and a rule-oriented approach for resolving issues relating to violation of the GATT agreements.

The DSB establishes Panel(s) and on adoption of Panel (and the Appellate B Body) reports, provides for implementation of the recommendation and rulings, and can authorise action for failure to comply with the recommendation(s) and ruling. The DSB, though a part of the General Council, has its own Chairman and follows separate procedures. The Panels are normally composed of three persons, and in exceptional cases five, who are well qualified government or non-government individuals C selected from a roaster of persons suggested by WTO members. The panel members serve in their individual capacities and not as representatives of WTO members. The Appellate Body reviews Panel decisions. The Appellate Body is a standing institution composed of seven persons appointed by DSB for four-year term. Members of the D Appellate Body must be persons with recognised authority with demonstrated expertise in law and international trade who are not affiliated with any government.

Membership of the Appellate Body is broadly representative of the membership of the WTO. The procedure adopted for the dispute resolution mechanism is to facilitate prompt settlement of situations with the objective and purpose that the ‘Marrakesh E Agreement’ is preserved and not nullified or impaired. (ii) Obligations of the contracting party and

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