Karnataka HC Sends Exporter’s MEIS Scrip Revalidation Plea Back, Says Policy Panel Must Reconsider With Reasons

In brief

The question

1. Whether the Policy Relaxation Committee was justified in rejecting the petitioner’s request for revalidation without adequately explaining why the circumstances pleaded did not establish grounds for relaxation under paragraph 2.58 of the Foreign Trade Policy (FTP).

The court held

The Court allowed the petition and set aside the Committee’s decision dated 24 January 2025.

It also directed

It remitted the revalidation request to the Committee for reconsideration, after affording the petitioner an opportunity to be heard, and directed it to pass a reasoned order in accordance with paragraph 2.58 of the FTP and the law within eight weeks.

The Court left all contentions open; it did not itself order revalidation of the DCS.

01Facts

M/s. Ess Kay Exports received a Duty Credit Scrip (DCS) under the Merchandise Exports from India Scheme (MEIS), valid until 17 October 2022.

¶ 3

After successive transfers, the scrip came to the petitioner on 28 April 2022.

¶ 3

The petitioner used ₹9,10,894 but left ₹7,69,402 unutilized.

¶ 3

It attributed the non-utilization to pandemic-related business disruption and an employee’s failure to inform management of the remaining balance.

¶ 3

The petitioner sought revalidation, but the Policy Relaxation Committee rejected the request on 5 January 2023 and again on review on 24 January 2025, finding no cogent justification for genuine hardship.

¶ 3–5

The petitioner challenged the review decision under Articles 226 and 227 of the Constitution.

¶ 3–5

02Issues

i.1. Whether the Policy Relaxation Committee was justified in rejecting the petitioner’s request for revalidation without adequately explaining why the circumstances pleaded did not establish grounds for relaxation under paragraph 2.58 of the Foreign Trade Policy (FTP).

¶ 9

ii.2. Whether the petitioner was entitled to revalidation of the DCS as a matter of right.

¶ 11, 14

03Law Applied

Paragraph 2.58 of the FTP empowers the Director General of Foreign Trade to grant exemption, relaxation, or relief from the FTP or its procedures in the public interest, on grounds of genuine hardship and adverse impact on trade, and to impose appropriate conditions.

¶ 10

This discretionary power does not give an applicant an automatic right to relief; however, the authority must consider the circumstances presented and give reasons for accepting or rejecting the request.

¶ 11, 13–14

04Reasoning

The Committee rejected the petitioner’s application by stating only that no cogent reason or justification for genuine hardship had been furnished.

¶ 12

It did not explain why the specific circumstances advanced—business disruption and the failure to identify the unutilized balance before expiry—were insufficient for consideration under paragraph 2.58.

¶ 12–14

The Court held that this unexplained conclusion did not demonstrate due consideration of the request.

¶ 12–14

Although revalidation was not a matter of right, the discretion had to be exercised consistently with the purpose of the policy and through a reasoned decision.

¶ 12–14