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1989 DIGILAW 466 (CAL)

INDO-SOLEX LIMITED v. UNION OF INDIA

1989-09-18

SUSANTA CHATTERJI

body1989
SUSANTA CHATTERJI, J. ( 1 ) THE present Rule was issued on 22. 5. 81 at the instance of the petitioner Indo-Solex Limited, a Company and by a shareholder being petitioner No. 2 prayed inter alia for a Writ of Mandamus commanding and directing the Respondent Nos. 1, 2 and 3 not to demand and/or realize customs duty on the edible oils to be imported by the petitioner Company under the contract referred to in paragraph 4 of the writ petition on the ground that there were no materials before the Central Government on which it could have been satisfied that it was necessary in the public interest to grant the exemption for payment of custom duty by the said impugned notifications only in case of imports into India of edible oils by the National Dairy Development Board. It is alleged that in or about February 1981, the petitioner No. 1 Company entered into a contract with Messrs Edible Products Limited of Singapore for purchase and import of 500 Metric Tons of Cordon Oil Crude on the terms and conditions in the sales confirmation note. It is alleged that the notification dated 1st April, 1980 as amended on 24th October, 1980 discriminates between the National Dairy Development Board on the one hand and an importer like the petitioner Company on the other. It is further alleged that such a classification is without any rational basis or reasonable criteria. Such classification, according to petitioners, is arbitrary and whimsical. The grievance of the petitioners is that while they are subjected to a hostile and discriminatory treatment in the matter of import of edible oils, whereas National Dairy Development Board is exempted from payment of any duty. ( 2 ) MR. Bhaskar Gupta appearing with Dr. Samir Chakraborty argued that the impugned notification offends the fundamental rights of the petitioners as guaranteed under Article 19 (1) (g) of the Constitution. They have laid much emphasis to the fact that the Government is bound to act fairly and uniformly in its dealings and the Government is bound to extend the petitioner Company all its fair dealings and the Government is bound to extend benefit to the petitioner Company to save it from customs duty as it is extended to National Dairy Development Board. Mr. Mr. Gupta submitted further that the Respondent No. 4 National Dairy Development Board is a Society registered under the Societies' Registration Act and it cannot enjoy any special privilege and there is clear discrimination and the rights of the petitioners have been affected and Article 14 of the Constitution has been offended. A Rule was issued on 25. 8. 1981 and an interim order was made in terms of prayer (viii) of the writ petition which includes the prayer to restrain the respondents from assessing, realizing or demanding any custom duty on edible oils imported or to be imported by the petitioner Company under the contract as referred to in paragraph 4 of the writ petition or any other similar contract or contracts upon the petitioners upon furnishing bank guarantee for the amount of 50% of the duty in respect of the consignment to the satisfaction of the Collector of Customs. The said order further provided that the Collector will approve the form within 3 (three) days from the date of submission of the said form for furnishing bank guarantee as aforesaid. Subsequently, an application was made for modifying the interim order and upon the hearing the learned lawyers of the respective parties, the interim order was modified by order dated August 11, 1981 to the extent that in addition to the bank guarantee already required to be furnished by the petitioner to cover 50% of the duty payable on the imported goods, the petitioners shall furnish for the balance 50% of the duty payable on the said goods, a Bond to the satisfaction of the Collector of Customs with one surety of the like amount. The Collector will be at liberty to accept any surety offered by the petitioner Company. From the application for vacating the interim order, it transpires that the Government of India under Notification No. 65-CUS/80 dated 1st April, 1980 and Notification No. 208-CUS/80 dated 24. 10. 80 has allowed import by the National Dairy Development Board in respect of certain quantity of edible oil as duty free. The said notifications were issued granting exemption of duty to the National Dairy Development Board only for those edible oils which are imported in terms of the specified agreement the Board, the Respondent No. 4 and the Co-operative Units of Canada and Co-operative League of USA. The said notifications were issued granting exemption of duty to the National Dairy Development Board only for those edible oils which are imported in terms of the specified agreement the Board, the Respondent No. 4 and the Co-operative Units of Canada and Co-operative League of USA. For this edible oils specific permission for importation was given to the Respondent No. 4. The Board was to import only against the specific agreement. It is further placed on record that in fact, the petitioners are desirous to import Cordon Oil Crude, the raw materials for the manufacture of edible oils and Vanaspati and not edible oils as being imported by National Dairy Development Board. ( 3 ) AT the time of final hearing of the Rule no further affidavit has been filed on behalf of the respondents. Be that as it may, the only question has been raised before this Court as to whether there can be discrimination to except customs duty in case of importing edible oil. A specific allegation made that while the Respondent No. 4 National Dairy Development Board is given certain privileges the petitioner No. 1 Company is denied and there is unfair competition and discriminatory treatment. The attention of the Court has been drawn to the language of Article 19 (1) (g) which indicates inter alia that all Citizens shall have the right to practise any profession or to carryon any occupation, trade or business. It is also seen from Article 19 (6) that nothing in sub-clause (g) of the said Clause shall affect the operation of any existing law in so far as it imposes or prevent the State from making any law, imposing in the interest of the general public, with reasonable restrictions on the exercise of the right conferred by the said sub-clause, and, in particular, nothing in the said sub-clause shall affect the operation of any existing law in so far as it to, or prevent the State from making any law relating to- (i) the professional or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business ; or (ii) the carrying on by the State, or by a Corporation owned and controlled by the State or any trade, business, industry or service whether to the exclusion, complete or partial of citizens or otherwise. An emphasis is laid down upon the fact but in the instant case the Respondent No. 4 is not an of the State or it is not a Corporation owned or controlled by the State and as such Article 19 (6) does not come to the picture to promote the State to issue any notification or to make law to grant benefit to the Respondent No. 4 by making out a discriminating treatment towards the petitioners. This is alleged to be offending the guarantee provided under Article 19 (1) (g) of the Constitution. ( 4 ) HAVING heard the learned Lawyers of the respective parties, it appears that when a law is impugned as having imposed restriction upon a fundamental right what the Court has to examine, is the substance of the legislation, without being beguiled by the mere appearance of the legislation. The expressions "reasonable restrictions" seeks to strike a balance between the freedom guaranteed by any of the sub-clauses of Clause (1) of Article 19 and social control permitted by any Act of the Clauses (2) to (6 ). It connotes that limitations imposed in a person in the enjoyment of a right should not be arbitrary or of an excessive nature, beyond what is required in the interest of the public. In order to be reasonable, the restriction must have a reasonable related to the object which the legislation seeks to achieve, and must not go in excess of that. The standard reasonableness must also vary from age to age and be related to the adjustment necessary to solve the problems which communities face from time to time. Reference may be made to the case of Jyoti Prosad vs. Union Territory of Delhi reported in AIR 1961 SC Page 1602 and at Page 1613. In judging the reasonableness of a law the Court will necessarily seek the purpose of legislation to promote the social interest and the situation which pursuaded the authority to impose the impugned law. The Court can take judicial notice as to the restriction from the substantive as well as procedural stand point. It has always been found that it is not possible to formulate an effective State policy which would enable the Court to pronounce in particular restrictions to be reasonable or unreasonable per se. The Court can take judicial notice as to the restriction from the substantive as well as procedural stand point. It has always been found that it is not possible to formulate an effective State policy which would enable the Court to pronounce in particular restrictions to be reasonable or unreasonable per se. All the attended circumstances must be taken into consideration and one cannot dissociate the actual contents of the restrictions from the manner of the imposition or the mode of putting them into practice. ( 5 ) THE attention of the Court has been drawn to the recent judgement of the Hon'ble Supreme Court reported in 1989 (2) SCC at Page 465 = (1989) 42 ELT at Page 344 (N. Jahangir Bhatusha etc. etc. vs. Union of India and Ors. etc. etc. ). There section 25 (2)--edible oil imports can levy of custom duty and special exemption order favouring STC providing for levy of duty at concessional rate of 5% only-duty payable by the private importers was 25% , basic duties + 25% auxilary duty-whether there was justification for differential treatment? Subjective satisfaction of the Government-reasons for passing special exemption-notifications has to be found relevant and reasonable-Article 14 of the Constitution of India-were considered in the proper perspective. It was clearly found that the requirement is intended by the Statute to ensure that the satisfaction of the Central Government concerning the necessity of the order is not reached arbitrarily but flows from material relevant to the object for which the power has been conferred. The circumstances recited in the exemption orders have been quoted : -". . . . In view of high international prices of vegetable oils and in order to keep the domestic prices of Vanaspati at reasonable levels, it has been felt that certain specified vegetable non-essential oils imported by the S. T. C. would need to be exempted from part of the customs duty". ( 6 ) A serious attempt has been made to distinguish the aforesaid decision of the Hon'ble Supreme Court by drawing the attention of the Court that the position of National Dairy Development Board cannot be equated to State Trading Corporation and the ratio of the said decision is not applicable, the facts and circumstances of the present case. This Court has anxiously considered this aspect of the matter. This Court has anxiously considered this aspect of the matter. It will appear from the said judgement that the Hon'ble Supreme Court observed that it is true that the State dons the robes of a trader where it enters the field of commercial activity, and ordinarily it can claim no favourable treatment. But there may be clear and good reasons for making a departure. Viewed in the background of the reason for granting a monopoly to the State Trading Corporation, acting as an agent or nominee of the Central Government in importing the specified oils, it will be evident that policy considerations rendered it necessary to make consummation of that policy effective by imposing a concessional levy on the imports. No such concession is called for in the case of private importers, who in any event, are merely working out contracts entered into by them with foreign sellers. The case of striking down the notifications and/or exemption orders was dismissed. Considering all the aspects of the matter, this Court finds that the principle formed from the aforesaid decision can well be extended to a little further step holding inter alia that the situation may be considered for the benefit of the public at large and for social interest. Benefits may be given to a particular organisation for a specific purpose while by importing certain special items, the public interest is satisfied. ( 7 ) THIS Court is convinced that the exemptions provided to the Respondent No. 4 are not applicable to the items being imported by the petitioners and the petitioners cannot challenge the impugned notifications on the ground of irregularity and illegality. The challenges as made by the petitioners are not permitted in law and the Court does not fu1d any merit in the writ petition. ( 8 ) FOR the foregoing reasons, the writ petition is dismissed. The Rule is discharged. The interim orders are vacated. The respondents are free to encash the bank guarantee and enforce the Bond to realise the arrear dues in accordance with law. There will be stay of operation of this order for a period of one week after the long vacation. Rule discharged.