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2018 DIGILAW 240 (JK)

Akshay Trader Poonch v. State of J&K

2018-04-19

ALOK ARADHE

body2018
JUDGMENT : 1. In this writ petition, the petitioners inter alia seek quashment of order bearing No. 121-IND of 2017, dated 31.05.2017 and impugned circular bearing No. TFC/CDB/P/Trade/595-600, dated 09.06.2017 to the extent it requires the existing registered Traders to deposit Rs.5.00 Lac in the form of fixed deposit/guarantee. The petitioners also seek direction to the respondents to allow the petitioners to undertake the trading activity across LOC. 2. The facts giving rise to filing of this bunch of writ petitions briefly stated infra. For the facility of reference, facts from OWP No. 1119/2017 are being referred to. The petitioners are traders and are registered with Industries and Commerce Department for the purposes of carrying out the Cross LoC trade at Traders Location in Chakkan-da-Bagh, Poonch. By government Order bearing No. 121-IND of 2017 dated 31.05.2017 sanction was granted for streamlining the process / procedure relating to cross LoC Trade at Chakkan-Da-Bagh Poonch and at Salamabad Uri (Kashmir) as per Para-A of the aforesaid Government order and all the existing and new traders/firms intending to engage in Cross LoC trade have been asked to get themselves registered with the respondent No. 2 by filing an application on Form-1 and Clause-(d) of Para-A, requires security deposit of Rs. 5.00 Lac in the form of fixed deposit/Bank Guarantee. The aforesaid requirement has been provided even for the existing traders like petitioners. The petitioners are aggrieved of Clause-(d) of Para (a) of the Govt. Order dated 31.05.2017. In the aforesaid factual backdrop, the petitioners have approached this Court. 3. Learned counsel for the petitioners submitted that the petitioners are registered with the Custodian some time in the year 2007 and are engaged in cross LoC trade since then. It is submitted that the Government order dated 31.05.2017 shall have prospective effect and the petitioners who are already registered with the Custodian cannot be asked to furnish the security deposit in the form of bank guarantee. It is further submitted that as per the stand taken by the respondents, a decision has been taken to amend the existing policy and such an amendment can only be prospective in nature and cannot be retrospective in nature. It is further submitted that the petitioners are ready and willing to comply with all the remaining formalities to enable them to conduct the cross LOC trade as prescribed in the Government Order dated 31.05.2017. 4. It is further submitted that the petitioners are ready and willing to comply with all the remaining formalities to enable them to conduct the cross LOC trade as prescribed in the Government Order dated 31.05.2017. 4. On the other hand, learned Government Advocate for the respondents submitted that Cross LoC trade was started in the year 2008 as a confidence building measure and the Cross LoC trade is carried out as per Standard Operating Procedure. It is further submitted that reports were received by the Industries and Commerce Department from various quarters regarding commission of mal practices in Cross LoC trade. The reports were examined by the Industries and Commerce Department and it was decided that Standard Operating Procedure (SOP) regulating Cross LoC trade be made to amend and incorporate some corrective measures and suggestions put forth by Cross LoC Trade Union Association be incorporated to ensure transparency and smooth conduct of Cross LoC trade. Accordingly, the Industries and Commerce Department submitted a memo to the State Government, which was considered by the Cabinet on 09.12.2016 and thereafter the group of Ministers met on 15.12.2016 under the chairmanship of Minister for Finance, Culture, Labour and Employment and after detailed deliberations, recommendations were made for changes in Standard Operating Procedure for effecting of monitoring of Cross LOC trade by taking into consideration the suggestions made by the department from Traders Association and other quarters. It is also submitted that the group of Ministers also suggested, some measures to streamline the Cross LOC trade. Accordingly, a memorandum of procedure was prepared and was placed before the State Cabinet to authorize the Industries and Commerce Department to take up the proposed amendment. In accordance with recommendations made, Government order dated 31.05.2017 has been issued to ensure the streamlining of the cross LoC trade. It is further submitted that the object of furnishing security deposit/bank guarantee by the traders engaged in the Cross LoC trade is to have financial commitment from them given the volume of Cross LoC trade which has crossed Rs. 5,000 crore annually as per the reports obtained from the Trade Facilitation Centres. 5. I have considered the submissions made by the learned counsel for the parties and have perused the record. 5,000 crore annually as per the reports obtained from the Trade Facilitation Centres. 5. I have considered the submissions made by the learned counsel for the parties and have perused the record. From the perusal of the record, it is evident that Cross LoC trade at Srinagar-Muzafarabad and Poonch-Rawalakot routes was commenced from 21.10.2008 and as per the agreed modalities, the cargo has to be received at Kaman Post and Chakan-da-Bagh passing points and clearance shall be allowed from TFC, Salamabad and TFC, Chakan-da-Bagh respectively. The truck movement on the above routes is allowed every Tuesday and Wednesday between 0900 hours to 1600 hours. In the Standard Operating Procedure various measures have been provided to streamline the Cross LoC trade. Thereafter, the State Government has issued a Government order No. 121-IND of 2017, dated 31.05.2017, by which sanction is accorded to the matters specified therein with regard to streamlining of the process relating to Cross LoC trade at Trade Facilitation Centres, Salamabad, Uri and Chakan-da-Bagh, Poonch. Clause A(d) of the aforesaid order provides that all the existing and new traders intending to engage in Cross LoC trade shall have to get themselves registered with the respective Custodian and shall have to deposit security deposit of Rs. 5.00 Lac in the form of fixed deposit/bank guarantee. 6. The petitioners are already registered with the Custodian, however, in the light of Government order dated 31.05.2017 the petitioners are ready and willing to again register themselves with the Custodian and to comply with the formalities prescribed therein except the formality which prescribes furnishing of security deposits of Rs. 5.00 Lac by way of fixed deposits/bank guarantee, as stated by the learned counsel for the petitioners. For the facility of reference, the aforesaid order is reproduced below:- “Subject:- Streamlining of Cross LoC Trade. Reference: Cabinet Decision No. 05.02.2017 Dated 13.02.2017. Government Order : 121-IND of 2017 Dated 31.05.2017 Sanction is accorded to the following with respect to streamlining of the process/procedures related to Cross-LoC Trade at Facilitation Centres, Salamabad, Uri and Chakan-Da-Bagh, Poonch:- A. Registration All the existing and new traders/firms intending to engage in the Cross LoC Trade shall have to get themselves registered with the respective Custodian, Trade Facilitation Centre by filing an application on Form-I annexed to this order. Submission of following details/documents along with the application shall be mandatory for registration: a. Permanent Resident Certificate (PRC) of the Proprietor/Partners of the firm. b. Personal Account Number (PAN) of the Firm/Proprietor/Partner. c. Tax Payer Identification Number (TIN). d. Security Deposit of Rs. 5 Lakh in the form of Fixed Deposit/Bank Guarantee. e. Character/Antecedent Verification Report in favour of the Proprietor/Partners of the firm from CID. f. Address Proof of residence (Passport/Aadhar/Voter I-Card/Driving License). g. Address Proof of business establishment with photographs (Ownership Document/Site Plan/Rent Deed attested by Competent Authority). h. Bank Details of the trader/firm (Account Number and latest Bank Statement of last six months). B. Operation and Renewal In order to carry out and continue the Cross LoC Trade, the registered trader/firm shall be required to do the following: a. Registration of traders/firms for Cross LoC Trade shall be valid for a period of two (02) years after which it will have to be renewed. The application for renewal of registration shall also be filed on form-I for which word ‘renewal’ on the said form shall have to be ticked and shall be subject to verification of PRC, PAN, TIN, Address Proof of Residence and Business Unit, Proof of Business Establishment, Audited Accounts, Antecedent Verification etc. However, after two consecutive renewals, traders/firms shall be rated as ‘A’ category and will not be required to provide additional documents detailed at above para A(a) to (h). b. As the LoC Trade takes place for four (04) days in a week and only 35 trucks are allowed to cross over, in case of excess number of registrations, roaster would work from one to last registered trading firm, starting from the first. After receiving registration forms, list of valid registrations would be published. Numbering thereafter would be done through draw of lots in presence of the stakeholders. It is further ordered that the competent authority may suspend/cancel the registration of any trader/firm due to administrative and security reasons. By order of the Government of Jammu and Kashmir. Sd/- (Shailendra Kumar) IAS Commissioner/Secretary to Government Industries & Commerce Department” 7. From perusal of the pleadings of respondents, it is evident that a policy decision has been taken to amend existing policy with regard to cross LoC trade and on the basis of such amendment in the policy, the Government Order dated 31.05.2017 has been issued. Sd/- (Shailendra Kumar) IAS Commissioner/Secretary to Government Industries & Commerce Department” 7. From perusal of the pleadings of respondents, it is evident that a policy decision has been taken to amend existing policy with regard to cross LoC trade and on the basis of such amendment in the policy, the Government Order dated 31.05.2017 has been issued. From the perusal of the aforesaid order, it is evident that it requires all the existing and new traders to furnish security deposit of Rs. 5.00 Lac in the form of fixed deposit/bank guarantee. The scope of judicial review with regard to interference with the policy matters is well delineated by a catena of decisions. In Kuchchh Lal Sankat Nivaran Samiti and ors. V. State of Gujarat and ors, (2013) 12 SC 226, the Supreme Court has held the Court shall step in only when it finds that the policy is inconsistent with the constitutional laws or is arbitrary and irrational. Similarly, in the case of Kerala Bar Hotels Association v. State of Kerala, AIR 2016 SC 163 , it has been held that judicial review is justified only if the policy is arbitrary, unfair or violative of fundamental rights. 8. In the backdrop of aforesaid well settled legal position, facts of the case may be examined. In the instant case, the Government order dated 31.05.2017 provides for compulsory production of documents like Permanent Residence Certificate, Personal Account Number, Trade Identification Number and antecedent verification of the traders in order to strengthen the mechanism and to obviate the possibility of distorting the trade process. The traders are also required to furnish address proof of residence as well as business establishment, bank statements, audited accounts of LoC business and proof of business establishments. In order to check the under valuation of goods, suitable mechanism is proposed to be worked out in consultation with the State Government. However, it is pertinent to mention here that in the entire objections in paragraph 8, the object of furnishing security/ bank guarantee by the traders existing in cross LoC trade is stated to take a financial commitment from them given the volume of Cross LoC trade. From perusal of the Government order it is evident that various safeguards have been incorporated in the order in order to prevent any mal-practice. From perusal of the Government order it is evident that various safeguards have been incorporated in the order in order to prevent any mal-practice. However, there appears to be no rational behind the object of demanding the security deposit of Rs.5.00 Lac from the existing registered traders with the custodian, as the existing traders are already carrying on cross-LoC business. Thus, they have shown their financial commitment to carry on the cross-LoC business. Therefore, the justification offered that demand for furnishing the security/bank guarantee from the existing traders registered with the custodian to ascertain their financial commitment, as no logical basis and is, therefore, arbitrary and irrational. No logical explanation has been put forth on behalf of respondents for incorporating such a requirement in respect of traders who are registered with the Custodian and are carrying on the trade for the past several years. The aforesaid requirement is based on amendment in the policy and in amendment in the policy by the State Government until and unless expressly provided therein cannot have retrospective effect and has to be prospective in nature. Thus, no cogent reasons have been assigned by the respondents for demanding Rs.5.00 Lac by way of fixed deposit/ bank guarantee from the existing traders. The existing traders have already been subjected to sufficient security measures to ensure that they do not indulge in any sort of malpractice. In the absence of any justification or cogent explanation in this regard, the requirement of furnishing the security deposit of Rs. 5.00 Lac in the form of fixed deposit/ bank guarantee cannot but to be held to be arbitrary or irrational. 9. Accordingly, clause A(d) of Government order dated 31.05.2017, in so far as, it pertains to the traders who are already registered with the Custodian, which provides for furnishing of security deposit of Rs. 5.00 Lac in the form of fixed deposit/bank guarantee as well as consequent circular dated 09.06.2017 issued by Custodian, TFC, Chakan-da-Bagh, Poonch to the extent of furnishing of bank guarantee from the already registered traders, qua the petitioners, is hereby quashed. Needless to state that the petitioners shall comply with regard to all the remaining modalities/formalities prescribed in the Government order dated 31.05.2017. 10. With the aforesaid directions, the writ petitions are disposed of alongwith connected MPs.