Full Judgment Text
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PETITIONER:
INDO AFGHAN CHAMBERS OF COMMERCE & ANR. ETC.
Vs.
RESPONDENT:
UNION OF INDIA & ORS. ETC.
DATE OF JUDGMENT15/05/1986
BENCH:
PATHAK, R.S.
BENCH:
PATHAK, R.S.
MUKHARJI, SABYASACHI (J)
CITATION:
1986 AIR 1567 1986 SCR (3) 79
1986 SCC (3) 352 1986 SCALE (1)1290
CITATOR INFO :
E&D 1987 SC 175 (2,7,9,13,16)
F 1987 SC 179 (1,2)
RF 1987 SC1794 (5,12,15,21)
RF 1989 SC 690 (6)
RF 1992 SC 696 (11,12)
ACT:
Import Policy 1985-88-Appendix 2 Part B and Item 1 of
Appendix 6-Dry fruits-Import by diamond exporters-Holding
additional licences-Whether permissible.
HEADNOTE:
The petitioner, an associations of dealers engaged in
the business of selling dry fruit in North India, who
purchase dry fruits either locally or through imports from
outside India, challenged the grant of additional licences
to the respondents-diamond exporters, under Article 32 of
the Constitution.
On behalf of the petitioners, it was contended: (i)
that the goods sought to be imported on the Additional
Licences included those which were prohibited by the
prevalent Import Policy; (ii) that the principle which was
applied to the import of acrylic easter monomers extends
likewise to the import of all other commodities under
Additional Licences granted to diamond exporters in similar
circumstances and, therefore, the diamond exporters are not
entitled to import dry fruit; and (iii) that the import of
dry fruit is covered by item 121 in Appendix 2 Part-B (List
of Restricted Items) of the Import Policy 1985-88 and,
therefore, the respondents are not entitled to resort to
Item 1 of Appendix 6.
On behalf of the respondents, it was contended: (i)
that paragraph 176 of the Import Policy 1978-79 envisages
the grant of Additional Licences for the import of raw
materials which have been placed on Open General Licence for
Actual Users (Industrial); (ii) that they import the dry
fruits as raw material for the purpose of selling to
eligible Industrial Actual Users for processing for
manufacturing into a variety of products under Item 1 of
Appendix 6 of the Import Policy 1985-86; (iii) that item 121
of Appendix 2 Part-B (List of Restricted Items) is not
attracted because it refers to "consumer goods", and
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consumer goods
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are not raw material for the purposes of item 1 of Appendix
6; and (iv) that the petition under Article 32 is not
maintainable because the petitioners’ fundamental rights are
not violated, in as much as no appeal has been filed by the
Customs Authorities or by the Import Control Authorities
against the interim order dated January 8, 1986 of the High
Court directing the Customs Authorities to permit the
respondents to clear the imported consignment of almonds.
Allowing the Writ Petition and the Appeal,
^
HELD: 1. Respondents Nos. 10 and 11 are restrained from
importing dry fruits during the period 1985-88 under the
Additional Licences granted to them under the Import Policy
1978-79. [97F]
2. Under the Import Policy 1978-79, dry fruits
(excluding cashewnuts) could be imported by all persons for
whatever purpose under the Open General Licence. No
Additional Licence was required. By wrongful denial of
Additional Licence to diamond exporters no damage can be
said to have been suffered by them and no question of
restitution could, therefore, be said to arise. The wrongful
denial of the Additional Licences was wholly immaterial to
the importing of dry fruits (exluding cashewnuts). The
respondents have not shown that the dry fruits were placed
on Open General Licence specifically for Actual Users
(Industrial). Under the Import Policy 1978-79 their import
was open to all persons.[94F,C]
3. The position in regard to the import of dry fruits
(excluding cashewnuts) is simple and suffers from no
complexity. Dry fruits (excluding cashewnuts) could be
imported by all persons under Open General Licence under the
Import Policy 1978-79. But under the Import Policy 1985-88
dry fruits (excluding cashewnuts and dates) are no longer
open to import under Open General Licence. If dry fruits
(excluding cashewnuts and dates) are regarded as items for
stock and sale, the import is governed by paragraph 181(3)
is Chapter XIII of the Import Policy 1985-88, which declares
that import of dry fruits (excluding cashewnuts and dates)
will be allowed against licences issued to dealers engaged
in this trade. [94E-H]
4. The diamond exporters cannot be regarded as dealers
engaged in the trade of stocking and selling dry fruits
(excluding cashewnuts and dates). They are, therefore, not
entitled to the advantage of paragraph 181(3) of the Import
Policy 1985-88. [95A-B]
5. Dry fruits must be regarded as consumer goods of
agricultural
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origin. The words "agricultural origin" are used in the
broadest sense. Dry fruits do not appear in Appendix 3 Part-
A and 5 nor can be imported under Open General Licence under
the Import Policy 1985-88. In as much as they fall within
item (121) of Appendix 2 Part-B they are excluded from the
scope of item 1 of Appendix 6, and cannot be imported as raw
materials and consumables for sale to Actual Users
(Industrial). "Consumables" are referred to in item 1 of
Appendix 6 as goods meant for Actual Users (Industrial)
"Consumer goods" in item 121 of Appendix 2 Part-B can refer
to dry fruits imported for supply to Actual Users
(Industrial).[95F-H; 96A]
6. The expression "specifically banned" occurring in
the order dated April 18, 1985 of this Court determines the
range of the items open to import by diamond exporters
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holding Additional Licences. The items excluded from import
by diamond exporters under Additional Licences under the
Import Policy 1985-88 were the items enumerated in Appendix
3 and Appendix 2 Part-A of that Import Policy. Appendix 2
Part-A is the successor of Appendix 4 (List of Absolutely
Banned Items) of the Import Policy 1978-79. Appendix 2 Part-
B (List of Restricted Items) was also the successor of
Appendix 4 (List of Absolutely Banned Items). Appendix 4 in
the Import Policy 1978-79 was described as the Absolutely
Banned List. [96B-E]
The present Appendix 2 Part-A and Appendix 2 Part-B
constitute together what was originally List 4 (List of
Absolutely Banned Items) under the Import Policy 1978-79.
The diamond exporters holding Additional Licences were,
therefore, not entitled to import goods enumerated in
Appendix 2 Part-B of the Import Policy 1985-88.[96F-G]
7. The diamond exporters are not entitled to take
advantage of item 121 of Appendix 2 Part-B for the purpose
of importing dry fruits. The holders of Additional Licences
are entitled to import only those goods which are included
in Appendix 6 Part 2 List 8 of the Import Policy 1985-88.
Dry fruits are not included in that List and, therefore,
they cannot be imported under Additional Licences. They are
also not entitled to the benefit extended by the judgment of
this Court dated March 5, 1986 to those diamond exporters
who had imported items under irrevocable Letters of Credit
opened and established before October 18, 1985. [97B-C]
8. An interim order cannot defeat the fundamental
rights of the petitioners merely because it has not been
questioned by the Customs Authorities or the Import Control
Authorities. [97E]
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JUDGMENT:
ORIGINAL/CIVIL APPELLATE JURISDICTION: Writ Petition
No. 199 of 1986
Under Article 32 of the Constitution of India.
with
Civil Appeal No. 664 of 1986
From the Judgment and Order dated 20th January, 1986 of
the Bombay High Court in Writ Petition No. 183 of 1986.
V.M. Tarkunde and Rajiv Datta, for the Petitioner in
W.P. No. 199 of 1986.
B. Datta, Additional Solicitor General, Soli J. Sorabji
and K.K. Venugopal, A.G. Ganguli, A. Subba Rao, Miss Kutty
Kumarmangalam, C.V. Subba Rao, Harish Salve, K.R. Nagaraja,
B.R. Agarwala, M.M. Jayakar and Miss V. Menon, for the
Respondents in W.P. No. 199 of 1986
F.S. Nariman and A.B. Diwan, P.H. Parekh and Uday
Lalit, for the Appellants in C.A. No. 664 of 1986
B. Datta, Additional Solicitor General, K.K.
Venlugopal, A.G. Ganguli, A. Subba Rao, Miss Kutty
Kumarmangalam, C.V. Subba Rao, B.R. Agarwala, M.M. Jayakar
and Miss V. Menon, for the Respondents in C.A. No. 664 of
1906.
The Judgment of the Court was delivered by
PATHAK, J. The petitioners, M/s Indo-Afghan Chambers of
Commerce and its President, Sundar Lal Bhatia, are aggrieved
by the grant of additional licences to the respondents, M/s
Rajnikant Brothers and M/s Everest Gems for the import of
dry fruits.
The petitioner, M/s Indo-Afghan Chambers of Commerce,
is an association of dealers engaged in the business of
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selling dry fruit in North India. The dry fruit is purchased
by them either locally or through imports from outside
India. The respondents, M/s Rajnikant Brothers and M/s
Everest Gems, are diamond exporters who have been issued
additional licences pursuant to an order of the Court in the
following circumstances.
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The respondents diamond exporters had applied for the
grant of Export House Certificates under the Import Policy
1978-79 and had been denied the Certificates on the
erroneous ground that they had not diversified their
exports. In writ petitions filed in the Bombay High Court,
they were held entitled to the Export House Certificates.
Special leave petitions filed by the Union of India against
the order of the High Court were dismissed by this Court by
its order dated April 18, 1985 which, while confirming the
order of the High Court directed the appellants to issue the
necessary Export House Certificates for the year 1978-79,
and further that: "Save and except items which are
specificially 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 respondents diamond
exporters and other like diamond exporters were granted
Additional Licences, and started importing goods on those
Additional Licences. It is the case of the petitioners that
the goods sought to be imported on the Additional Licences
included those which were prohibited by the prevalent Import
Policy. The diamond exporters commenced the Import of
acrylic ester monomers. This was challenged by M/s Raj
Prakash Chemicals Ltd., an Indian company manufacturing
acrylic ester monomers in India, by a writ petition in the
Bombay High Court seeking a clarification of the order dated
April 18, 1985 of this Court mentioned earlier. The High
Court rejected the writ petition, and an appeal by Special
Leave filed by the Indian company was disposed of by this
Court by its order dated March 5, 1986. The Court held that
it was not permissible for the diamond exporters to import
acrylic ester monomers under the Additional Licences granted
to them during the period of the Import Policy 1985-88, but
having regard to the circumstance that the High Courts had
already passed orders permitting such import and further
that the Import Control Authorities had specifically allowed
such import this Court permitted such imports to be
completed in respect of which irrevocable Letters of Credit
had been opened and established before October 18, 1985, the
date on which for the first time an order was made by the
Court imposing a restriction on the clearing of acrylic
ester monomers by the Customs authorities. The Court
regarded the date, October 18, 1985 as a critical date
because the diamond exporters could be said to have been
warned on and from that date that the Court could possibly
take a different view from that prevailing during the period
before that date when, because of the orders of the High
Courts and the conduct of the Import Control Authorities,
the diamond exporters could have legitimately believed that
they were
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entitled to effect such imports. It was made clear by the
Court that cases in which irrevocable Letters of Credit had
been opened and established after October 18, 1985 would not
be entitled to the benefit of that order. The petitioners
contend that the principle which was applied to the import
of acrylic ester monomers extends likewise to the import of
all other commodities under Additional Licences granted to
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diamond exporters in similar circumstances. It is asserted
that the respondents diamond exporters and other like
diamond exporters began to import dry fruit under their
Additional Licences. It is contended that having regard to
the terms of the order of this Court dated April 18, 1985 as
construed and clarified by its order dated March 5, 1986 the
diamond exporters are not entitled to import dry fruit.
By order dated March 5, 1986 the Court construed its
order dated April 18, 1985 to mean that only such items
could be imported by diamond exporters under the Additional
Licences granted to them as could have been imported under
the Import Policy 1978-79, the period during which the
diamond exporters had applied for Export House Certificates
and had been wrongfully refused, and were also importable
under the Import Policy prevailing at the time of import,
which in the present case is the Import Policy 1985-88.
These were the items which had not been "specifically
banned" under the prevalent Import Policy. The items had to
pass through two tests. They should have been importable
under the Import Policy 1978-79. They should also have been
importable under the Import Policy 1985-88 in terms of the
order dated April 18, 1985.
The case of the petitioners is that under the Import
Policy 1978-79 dry fruits (excluding cashewnuts) could be
imported by all persons under the Open General Licence. Dry
fruits (excluding cashewnuts), is mentioned at item 22 of
Appendix 10 of the Import Policy 1978-79 as open to import
under the Open General Licence. There was no need to obtain
an Additional Licence for importing them in the year 1978-
79, and therefore, the wrongful denial of Additional
Licences to diamond exporters in the year 1978-79, could not
justify any restitution subsequently in regard to the import
of dry fruits (other than cashewnuts). There is substance in
the contention. Under the Import Policy 1978-79 dry fruits
(excluding cashewnuts) could be imported by all persons for
whatever purpose under the Open General Licence. No
Additional Licence was required. If an Additional Licence
was wrongfully denied to diamond exporters at time when dry
fruits (excluding cashewnuts) were importable under the Open
General Licence no
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damage can be said to have been suffered by diamond
exporters who had been refused Export House Certificates,
and consequently Additional Licences, under the Import
Policy 1978-79. In the circumstances, no question of
restitution could be said to arise for the wrongful denial
of the Additional Licences. The wrongful denial of the
Additional Licences was wholly immaterial to the importing
of dry fruits (excluding cashewnuts).
It is urged by the respondents diamond exporters that
paragraph 176 of the Import Policy 1978-79 envisages the
grant of Additional Licences for the import of raw materials
which have been placed on Open General Licence for Actual
Users (Industrial). It has not been shown to us that dry
fruits were placed on Open General Licence specificially for
Actual Users (Industrial). Under the Import Policy 1978-79
their import was open to all persons.
We may assume for the purpose of this case that a
diamond exporter is legitimately entitled to obtain an
Additional Licence under the Import Policy 1978-79 for an
item which is different from the item he may have intended
to import had the Additional Licences been rightly granted
to him originally. In that event, the diamond exporter can
succeed only if the item could have been imported under the
Import Policy 1978-79 and also under the Import Policy 1985-
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88 in accordance with the terms of the order of this Court
dated April 18, 1985 as construed by this Court by its
judgment dated March 5, 1986.
The position in regard to the import of dry fruits
(excluding cashewnuts) is simple and suffers from no
complexity. As has been mentioned, dry fruits (excluding
cashewnuts) could be imported by all persons under the Open
General Licence under the Import Policy 1978-79. But under
the Import Policy 1985-88, when the dry fruits (excluding
cashewnuts and dates) are now sought to be imported, dry
fruits (excluding cashewnuts and dates) are no longer open
to import under the Open General Licence. The sanction for
importing them must be found under some other provision of
the Import Policy. If dry fruits (excluding cashewnuts and
dates) are regarded as items for stock and sale, the import
is governed by paragraph 181(3) in Chapter XIII of the
Import Policy 1985-88. Paragraph 181(3) declares that import
of dry fruits (excluding cashwenuts and dates) will be
allowed against licences issued to dealers engaged in this
trade, the value of the import licence in each case being
equal to 20 per cent of the C.I.F. value of the best year’s
imports of the applicant in respect of dry fruits (excluding
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cashewnuts and dates) during any of financial years from
1972-73 to the preceding Licencing year, subject to a
minimum of Rs.5000. Admittedly the diamond exportes cannot
be regarded as dealers engaged in the trade of stocking and
selling dry fruits (excluding cashewnuts and dates). They
are, therefore, not entitled to the advantages of paragraph
181(3) of the Import Policy 1985-88.
But the case of the respondents diamond exporters, is
that they import the dry fruits as raw material for the
purpose of selling to eligible Industrial Actual Users for
processing or manufacturing into a variety of products, such
as almond oil, Ayurvedic drugs and medicines, Unani drugs
and medicines, processed and package foods, sweets and
confectionary, and we are referred to item 1 in Appendix 6
of the Import Policy 1985-88. Now item 1 of Appendix 6
speaks of:
"1. Raw materials, components and consumables (non
iron and steel items) other than those included in
the Appendices 2, 3 Part-A, 5 and 8."
The petitioners point out that the item is covered in
Appendix 2 Part-B of the Import Policy 1985-88 and,
therefore, the respondents diamond exporters are not
entitled to resort to item 1 of Appendix 6. Appendix 2 Part-
B (List of Restricted Items) contains item 121 which reads:
"(121) All consumer goods, howsoever described, of
industrial, agriculatural or animal origin, not
appearing individually in Appendices 3 Part-A and
5 or specifically listed for import under Open
General Licence."
There can be no dispute that dry fruits must be regarded as
consumer goods of agricultural origin. The words
"agricultural origin" are used in the broadest sense. It is
also clear that dry fruits do not appear in Appendix 3 Part-
A and 5 nor can be imported under the Open General Licence
under the Import Policy 1985-88. Inasmuch as they fall
within item (121) of Appendix 2 Part-B they are excluded
from the scope of item 1 of Appendix 6, and cannot be
imported as raw materials and consumables for sale to Actual
Users (Industrial). It is urged by the respondents diamond
exporters that item 121 is not attracted because it refers
to "consumer goods", and consumer goods are not raw material
for the purposes of item 1 of Appendix 6. There is a fallacy
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here. It will be noticed that "consumables" are referred to
in item 1 of
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Appendix 6 of goods meant for Actual Users (Industrial). We
are not satisfied that "consumer goods" in item 121 of
Appendix 2 Part-B cannot refer to dry fruits imported for
supply to Actual Users (Industrial).
In construing the order dated April 18, 1985 of this
Court, the judgment dated March 5, 1986 of this Court
explained the singificance of the words "specifically
banned" occurring in the former order. The expression
determines the range of the items open to import by diamond
exporters holding Additional Licences. It was declared that
the items exluded from import by diamond exporters under
Additional Licences under the Import Policy 1985-88 were the
items enumerated in Appendix 3 and Appendix 2 Part-A of that
Import Policy. Appendix 2 Part-A is the successor of
Appendix 4 (List of Absolutely Banned Items) of Import
Policy 1978-79. A question arose before us whether Appendix
2 Part B of Import Policy 1985-88 could also be regarded as
a successor of Appendix 4. It appears from the material
placed before us that Appendix 2 Part B (List of Restricted
Items) was also successor of Appendix 4 (List of Absolutely
Banned Items). Appendix 4 in the Import Policy 1978-79 was
described as the Absolutely Banned List. In the Import
Policy 1982-83, the same Appendix 4 is described as List of
Non-Permissible Items (Banned). The same description of
Appendix 4 continued in the Import Policy 1983-84. During
that year Beef Tallow was added in Appendix 4. In the Import
Policy 1984-85, Appendix 4 became Appendix 2 Part A and
Appendix 2 Part B. Appendix 2 Part A was described as a List
of Banned Items and Appendix 2 List B was described as List
of Restricted Items. In the Contents of the Import Policy
1985-88 the list of Appendices makes clear that Appendix 4
of Import Policy 1983-84 became Appendix 2 Part A and
Appendix 2 Part B of the Import Policy 1984-85. The same
description of Appendix 2 Part A and Appendix 2 Part B was
continued in the Import Policy 1985-88. Therefore, it is
apparent that the present Appendix 2 Part A and Appendix 2
Part B constitute together what was originally List 4 (List
of Absolutely Banned Items) under the Import Policy 1978-79.
On the reasoning which found favour with the Court in its
judgment dated March 5, 1986 we hold that diamond exporters
holding Additional Licences were not entitled to import
goods enumerated in Appendix 2 Part B of the Import Policy
1985-88. On that ground also the respondents diamond
exporters are not entitled to take advantage of item 121 of
Appendix 2 Part B for the purpose of importing dry fruits.
As held by this Court in its judgment dated March 5, 1986,
holders of Additional
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Licences are entitled to import only those goods which are
included in Appendix 6 Part 2 List 8 of the Import Policy
1985-88. Dry fruits are not included in that List and
therefore they cannot be imported under Additional Licences.
In our opinion the respondents diamond exporters are
not entitled to import dry fruits under the Import Policy
1985-88 under the Additional Licences possessed by them.
They are also not entitled to the benefit extended by the
judgment of this Court dated March 5, 1986 to those diamond
exportes who had imported items under irrevocable Letters of
Credit opened and established before October 18, 1985. It
appears from the record before us that the respondents
diamond exporters opened and established the irrevocable
Letters of Credit after that date.
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One more contention of the respondents diamond
exporters remains to be noticed. It is urged that the writ
petition under Article 32 is not maintainable because the
petitioners’ fundamental rights are not violated. It is
pointed out that no appeal has been filed by the Customs
authorities or by the Import Control authorities against the
interim order dated January 8, 1986 of the Bombay High Court
directing the Customs authorties to permit M/s Everest Gems
to clear the imported consignment of almonds. We do not
think that an interim order can defeat the fundamental
rights of the petitioners merely because it has not been
questioned by the Customs authorities or the Import Control
authorities.
The writ petition is allowed and the respondents Nos.
10 and 11, M/s Rajni Kant Brothers and M/s Everest Gems are
restrained from importing dry fruits during the period 1985-
88 under the Additional Licences granted to them under the
Import Policy 1978-79. In the circumstances there is no
order as to costs.
Civil Appeal No. 664 of 1986 is directed against the
judgment and order of the Bombay High Court rejecting the
appellants’ writ petition challenging the import of dry
fruits by the respondent, M/s Everest Gems under Additional
Licences granted under the Import Policy 1978-79. The
questions raised in this appeal are identical with those
raised in the writ petition disposed of earlier.
In the result this appeal is allowed, the judgment and
order dated January 28, 1986 of the Bombay High Court are
set aside and the writ
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petition filed in the High Court is allowed. The respondent,
M/s Everest Gems is restrained from importing dry fruits
during the period 1985-88 under the Additional Licences
granted to them under the Import Policy 1978-79. There is,
however, no order as to costs.
A.P.J. Appeal allowed.
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