JUDGMENT : 1. Writ petitioners-respondents, hereinafter referred to as `the respondents, filed writ petitions in the High Court with a prayer for issuance of a writ, order or direction declaring the action of the appellants as arbitrary, illegal, unjust, contrary to law and violative of Fundamental Rights of the respondents under Articles 14, 20, 21 and 22 and constitutional rights under Article 300A of the Constitution of India. Consequential directions were also sought to the authorities to treat the surrender of imported raw material vide letter dated 20-6-1995 in accordance with the export and import Policy as well as in the Handbook of Procedures and also the provisions of the Foreign Trade (Development and Regulation) Act, 1992 and the Rules made thereunder. 2. Prior to this, what prompted the respondents to file the writ petitions was that the appellants started taking coercive steps against the respondents and contemplated initiating prosecution against the respondents under the Customs Act, 1962 and Foreign Trade (Development and Regulation) Act, 1992. According to the learned senior counsel appearing for the respondents, respondents were arrested and applied for bail which was granted to them whereas according to the learned senior counsel for the appellants they were only detained for interrogation. 3. To understand the background under which the writ petitioners were filed, it is necessary to refer to the following facts. Facts are taken from Civil Appeal No. 3556 of 2001. 4. Respondents herein made an application to the appellants for grant of advance licence for import of 231 metric tonnes of Polyester Filament Yarn (for short `PFY')/Partial Oriented Yarn (for short `POY'), the value of which was 4,18,318.75 US $ as on 13-12-1993. The licence was granted to the respondent on 29-12-1993. Under the Scheme there is an obligation to export value added finished goods and the licence is granted subject to the exemption of custom duty on the value of the goods to be exported. The respondent, therefore, had to export goods worth 6,09,000 US $. Since the respondent had an export order for finished goods, it applied for an advance licence. The respondent imported 197.409 metric tonnes of PFY/POY out of the licensed quantity of 231 metric tonnes on various dates during the period from 14-1-1994 to 31-3-1994. The respondent, therefore, had to export goods worth 6,09,000 US $. Since the respondent had an export order for finished goods, it applied for an advance licence. The respondent imported 197.409 metric tonnes of PFY/POY out of the licensed quantity of 231 metric tonnes on various dates during the period from 14-1-1994 to 31-3-1994. The respondents made an averment that due to sudden fall in prices of the finished goods in the international market the party who had agreed to purchase the exported fabric went back on its commitment and therefore it became impossible for reasons beyond the control of the respondents to export the finished products. Since the goods were petroleum products that lose their strength with the passing of time, the respondents filed an application on 25-4-1994 for permission to sell the same to an import licence holder or to nominate somebody to whom the raw material could be surrendered, as contemplated under the export and import policy. [According to Mr. M.M. Paikadey, the learned senior counsel appearing for the Union of India, the said application was not received by the department]. After waiting for a period of fourteen months, the respondents identified a party who was holding a transferable licence and was eligible to import raw material without any payment of customs duty without corresponding obligation to export under para 127 of the Hand Book of Procedures. The respondents surrendered the raw material to M/s. Abhinandan Exports who had become the holder in due course of the transferable licence of M/s. R.K. Exports. 5. Notice on writ petitions was issued in response to which the Assistant Director, Directorate of Revenue Intelligence, Department of Customs filed his reply. In the reply, it was asserted that respondents were allowed to import the goods without payment of customs duty in terms of Notification No. 204 of 1992, dated 19-5-1992. As per this policy, the duty free raw material imported is required to be used in the manufacture of fabric for the purpose of export and could not be sold or transferred or disposed of otherwise until and unless the export obligation stipulated in terms of the licence was fulfilled. The export obligation under the licence could not be waived and unless and until the export obligation is fulfilled the imported material could not be transferred. The export obligation under the licence could not be waived and unless and until the export obligation is fulfilled the imported material could not be transferred. That there was no provision under the scheme to transfer the imported material to another transferable licence holder. 6. It was alleged that the respondents in contravention of the above provisions of law disposed of the imported raw materials soon after it was imported, directly from the port of importation at Mumbai. A case had been registered on 16-10-1996 for fraudulent evasion of duty against the respondents under the Customs Act, 1962. The imported material was diverted to the domestic market directly without the customs duty which works out to Rs. 2.54 crores. 7. The High Court, after referring to the provisions of the Act and the Rules, export policy and the procedure prescribed thereunder, came to the conclusion that para 128 of the scheme provides for regularisation of default in export obligation provided the default in fulfilment of export obligation was bona fide. That under the scheme, no stipulated time for making the application was prescribed and, therefore, there was a lacuna in the scheme. That it was open to the respondents to approach the licensing authority under para 128 of the scheme for regularisation of the default in fulfilment of the export obligation. After recording these findings, the High Court gave three-fold directions in the following terms : "1. It follows from the above that the Customs authorities are competent to initiate the proceedings for violation of customs notification No. 204/92 and recover the duty by issuing a demand notice to the petitioners. The licensing authority is also competent to initiate proceedings under the Act and both the proceedings can be initiated simultaneously as non-fulfilment of export obligation is admitted by the petitioners. 2. We therefore direct the regular customs authorities to issue a demand notice for recovery of duty payable by the petitioners for violation of the conditions of licence coupled with the exemption notification No. 204/92. The amount of customs duty already paid shall be adjusted towards the duty payable by the petitioners. 3. The petitioners are directed to file a representation before the licensing authority under Para 128 of the policy and procedure seeking regularisation of non-fulfilment of export obligation within a period of three months from today. The amount of customs duty already paid shall be adjusted towards the duty payable by the petitioners. 3. The petitioners are directed to file a representation before the licensing authority under Para 128 of the policy and procedure seeking regularisation of non-fulfilment of export obligation within a period of three months from today. On such receipt of the application the licensing authority is directed to consider the same for regularisation in accordance with law. 4.The petitioners are also directed to make a representation before the Customs authorities seeking for regularisation of non-fulfilment of export obligations imposed under the Exemption notification No. 204 of 1992 within a period of three months from today. On receipt of the application though there is no such provisions under the Customs Act 1962 or Rules for regularisation or condonation of failure to fulfill the condition of an exemption notification the customs authorities are directed to consider the same and pass appropriate orders in accordance with law. It is open to the Customs authorities as well as the licensing authority to take action pursuant to the decision taken by them on the representations filed by the petitioners seeking a regularisation of the default committed by them. Till a decision is taken in the representation filed by the petitioners, the prosecution is stayed. The Director of Revenue Intelligence is also directed not to take any steps without specific authorisation from Customs/Licensing Authority." [Numbering by us] 8. Admittedly, the Union of India in pursuance to direction No. 2, reproduced above, has not issued a demand notice for recovery of customs duty payable by the respondents for violation of condition of licence coupled with exemption notification No. 204 of 1992. According to the respondents, they have filed a representation in pursuance to direction No. 3 issued by the High Court with the Commissioner of Customs, Mumbai which, according to the learned senior counsel for the department, on instructions, has not been received by the department. 9. Without going into the acrimonious allegations and counter allegations made and to do substantial justice between the parties, we directed Mr. Rajiv Dutta, the learned senior counsel appearing for the respondents to handover a copy of the representation to Mr. M.M. Paikadey, the learned senior counsel for the appellants, a copy of which has been delivered to Mr. M.M. Paikadey, the learned senior counsel in the Court today. Rajiv Dutta, the learned senior counsel appearing for the respondents to handover a copy of the representation to Mr. M.M. Paikadey, the learned senior counsel for the appellants, a copy of which has been delivered to Mr. M.M. Paikadey, the learned senior counsel in the Court today. The representation is deemed to have been filed in pursuance to direction No. 3 issued by the High Court. The department is directed to decide the same in accordance with law within a period of three months from today. Soon after the taking of a decision on the representation of the respondents, a copy of the same be filed in this Court. Other directions issued by the High Court remain the same. 10. Learned senior counsel appearing for the appellants, on a query put by the Court as to why the directions issued by the High Court were not compiled with, submitted that it was not done in view of the interim directions issued by the High Court on 31-10-1996. According to us, the interim order passed by the High Court came to an end with the passing of final order. In any case, it may be clarified that the interim order passed by the High Court did not mean that investigation had been stayed. The investigation may go on but till a decision is taken on the representation given by the respondents, no coercive steps against the respondents be taken under the Foreign Trade (Development & Regulation) Act, 1992 and the Customs Act, 1962 meaning thereby that neither steps for coercive recovery of customs duty nor arrest of the respondents be made. 11. To be listed in the first week of December, 2006. Interim stay granted.