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2018 DIGILAW 743 (CAL)

Sanmarg Private Limited v. Union of India

2018-10-05

DEBANGSU BASAK

body2018
JUDGMENT : 1. The petitioner has challenged notification no. 09/2015-20 dated June 3, 2016 issued by Director General of Foreign Trade. 2. Learned Senior Advocate for the petitioner has submitted that, Director General of Foreign Trade has no jurisdiction to issue the impugned notification. By the impugned notification, a foreign trade policy is sought to be altered. Assuming that foreign trade policy can be altered, it has to be done by the Central Government. The Director General of Foreign Trade cannot be said to be the Central Government. He has drawn the attention of the Court to the provisions of the Foreign Trade (Development and Regulation) Act, 1992 and has submitted that Section 6(3) of the Act of 1992 does not permit a Director General of Foreign Trade to issue any notification in exercise of powers under Section 3 or 5 of the Act of 1992. The impugned notification states that, the same has been issued in exercise of powers conferred under Section 3 of the Act of 1992. He has referred to Section 19(3) of the Act of 1992 and has submitted that, the impugned notification has not been laid before the Parliament in terms of Section 19(3) of the Act of 1992 till date. At least, nothing has been placed on record to suggest otherwise. Therefore, even on that score, the impugned notification is non-est in the eye of law. 3. Learned Senior Advocate for the petitioner has submitted that, the petitioner is engaged in the business of publication of newspaper. Such business requires newsprint. Newsprint is imported. The petitioner does not require large quantity of newsprints for the quantum of business of the petitioner. The petitioner places orders on import houses for newsprints. Other newspaper publications not having large volume of business also places orders for newsprints on import houses, who makes the requisite supplies. The import houses imports the newsprints on behalf of such individual newspaper businesses. The impugned notification affects the right of the petitioner to carry on business of publication of newspaper. The impugned notification requires small business persons to comply with such requisitions which are onerous. By the impugned notification, the petitioner has to satisfy the customs authorities about the import requirements at the time of import of the newsprint. Compliance with such requirement will mean that, the petitioner will have to import the newsprint in its own name. The impugned notification requires small business persons to comply with such requisitions which are onerous. By the impugned notification, the petitioner has to satisfy the customs authorities about the import requirements at the time of import of the newsprint. Compliance with such requirement will mean that, the petitioner will have to import the newsprint in its own name. In doing so, the petitioner will be required to import large quantities of newsprints. Import of newsprint at such volume is not economically feasible for the petitioner. Money and space will get tied down in such process. It is not financially feasible for a small business house as that of the petitioner to do so. 4. Referring to Section 18G of the Industries (Development and Regulation) Act, 1951, learned Senior Advocate appearing for the petitioner has submitted that, the Central Government had passed the Newsprint Control Order, 2004. He has referred to the various provisions of the Control Order of 2004 and has submitted that, the petitioner was governed by such Control Order. Relying upon 1987 Volume 2 Supreme Court Cases page 602 (State of Haryana v. P.C. Wadhwa, IPS, Inspector General of Police & Anr.) and 2009 Volume 5 Supreme Court Cases page 46 (Atul Commodities Private Limited & Ors. v. Commissioner of Customs, Cochin 9) learned Senior Advocate for the petitioner has submitted that, Director General of Foreign Trade cannot amend the Foreign Trade Policy. It can, at best, issue a notification which is clarificatory in nature. The impugned notification seeks to amend the Policy, which cannot be done by the Director General of Foreign Trade. 5. Learned Additional Solicitor General appearing for the respondent has submitted that, although, the impugned notifications speaks of exercise of power under Section 3 of the Act of 1992, for all practical purposes, powers under Section 5 of the Act of 1992 were exercised. The power of the Central Government to amend the Foreign Trade Policy being there under Section 5 of the Act of 1992, the statement in the notification that, powers under Section 3 of the Act of 1992 has been invoked, is of no consequence. The impugned notification should be read to be one as an exercise of power under Section 5 of the Act of 1992. The impugned notification should be read to be one as an exercise of power under Section 5 of the Act of 1992. Reading the impugned notification as such, there is no requirement for the notification being placed before the Parliament in terms of Section 19(3) of the Act of 1992. He has submitted that, the time period prescribed in Section 19(3) of the Act of 1992 is directory in nature. He has relied upon 2011 Volume 9 Supreme Court Cases page 1 (K.T. Plantation Private Limited & Anr. v. State of Karnataka) and 2012 Volume 4 Supreme Court Cases page 578 (Accountant General, State of Madhya Pradesh v. S.K. Dubey & Anr.) in support of such contentions. 6. Learned Additional Solicitor General has submitted that, by the impugned notification, the Central Government has sought to implement a change in the policy under Section 5 of the Act of 1992. The Director General of Foreign Trade is entitled to issue such notification as powers under Section 5 have been exercised in the present case. Therefore, there is no requirement for such notification to be placed before the Parliament. Orders issued under Section 5 of the Act of 1992 need not be placed before the Parliament under Section 19(3) of the Act of 1992. 7. Learned Additional Solicitor General has submitted that, the Director General of Foreign Trade was empowered by a notification dated March 24, 1993 to issue orders on behalf of the Central Government. In the present case, the proposal to issue the notification was vetted at appropriate levels including the Minister-in-Charge. Ultimately, the impugned notification was issued. By the impinged notification, Director General of Foreign Trade has merely communicated the decision of the Central Government, which he was authorised to do. 8. In support of his contentions, learned Additional Solicitor General has relied upon 2012 Volume 11 Supreme Court Cases page 321 (Ashok Sadarangani & Anr. v. Union of India & Ors.) and 2003 Volume 6 Supreme Court Cases page 277 (Air India Cabin Crew Assn. v. Yeshaswinee Merchant & Ors.). 9. The petitioner is carrying on business of publishing and printing a Hindi newspaper by the name of Sanmarg. The petitioner is registered with the Registrar of Newspapers. The petitioner requires newsprint for his business. It was obtaining such newsprint from custom bonded warehouses in terms of the import policy, prior to the issuance of the impugned notification. 9. The petitioner is carrying on business of publishing and printing a Hindi newspaper by the name of Sanmarg. The petitioner is registered with the Registrar of Newspapers. The petitioner requires newsprint for his business. It was obtaining such newsprint from custom bonded warehouses in terms of the import policy, prior to the issuance of the impugned notification. The petitioner claims that, its daily requirement of newsprint is less than 8 metric tons. According to the petitioner, it is not economically viable for the petitioner to import large quantity of newsprint as the petitioner would be required to do, in terms of the impugned notification. The same will entail a huge expenditure on account of import of newsprint as also infrastructural requirements such as storage facilities. The petitioner does not have such capacity or facility. The policy existing prior to the impugned notification permitted the petitioner to buy the requisite quantity of newsprint required from custom bonded warehouses without the petitioner being required to incur huge expenditure on import of newsprint and mobilize large infrastructural facilities. 10. The impugned notification dated June 3, 2016 has sought to amend the import policy no. 2 under exempted code 4801 of Chapter 48 of ITC (HS) 2012 Schedule I (Import Policy). The impugned notification has been issued by the Director General of Foreign Trade. The impugned notification records that, it has been issued in exercise of powers conferred by Section 3 of the Act of 1992 read with paragraph 1.02 and 2.01 of the Foreign Trade Policy, 2015-20 as amended from time to time. 11. The relevant provisions of the Act of 1992 for the purpose of consideration of the present writ petition are as follows:- “2(h). “Order” means any Order made by the Central Government under section 3; 3. Powers to make provisions relating to imports and exports. — (1) The Central Government may, by Order published in the Official Gazette, make provision for the development and regulation of foreign trade by facilitating imports and increasing exports. “Order” means any Order made by the Central Government under section 3; 3. Powers to make provisions relating to imports and exports. — (1) The Central Government may, by Order published in the Official Gazette, make provision for the development and regulation of foreign trade by facilitating imports and increasing exports. (2) The Central Government may also, by Order published in the Official Gazette, make provision for prohibiting, restricting or otherwise regulating, in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the Order, the import or export of goods or services or technology: Provided that the provisions of this sub-section shall be applicable, in case of import or export of services or technology, only when the service or technology provider is availing benefits under the foreign trade policy or is dealing with specified services or specified technologies. (3) All goods to which any Order under sub-section (2) applies shall be deemed to be goods the import or export of which has been prohibited under section 11 of the Customs Act, 1962 (52 of 1962) and all the provisions of that Act shall have effect accordingly. (4) without prejudice to anything contained in any other law, rule, regulation, notification or order, no permit or license shall be necessary for import or export of any goods, nor any goods shall be prohibited for import or export except, as may be required under this Act, or rules or orders made thereunder. 5. Foreign Trade Policy. —The Central Government may, from time to time, formulate and announce, by notification in the Official Gazette, the foreign trade policy and may also, in like manner, amend that policy: Provided that the Central Government may direct that, in respect of the Special Economic Zones, the foreign trade policy shall apply to the goods, services and technology with such exceptions, modifications and adaptations, as may be specified by it by notification in the Official Gazette. 6. Appointment of Director General and his functions.—(1) The Central Government may appoint any person to be the Director General of Foreign Trade for the purposes of this Act. (2) The Director General shall advise the Central Government in the formulation of the foreign trade policy and shall be responsible for carrying out that policy. 6. Appointment of Director General and his functions.—(1) The Central Government may appoint any person to be the Director General of Foreign Trade for the purposes of this Act. (2) The Director General shall advise the Central Government in the formulation of the foreign trade policy and shall be responsible for carrying out that policy. (3) The Central Government may, by Order published in the Official Gazette, direct that any power exercisable by it under this Act (other than the powers under sections 3, 5, 15, 16 and 19) may also be exercised, in such cases and subject to such conditions, by the Director General or such other officer subordinate to the Director General, as may be specified in the Order. 19. Power to make rules.—(1) The Central Government may, by notification in the Official Gazette, make rules for carrying out the provisions of this Act. 19. Power to make rules.—(1) The Central Government may, by notification in the Official Gazette, make rules for carrying out the provisions of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:— (a) the manner in which and the conditions subject to which a special licence may be issued under sub-section (2) of section 8; (b) the exceptions subject to which and the person or class of persons in respect of whom fees may be levied and the manner in which a licence, certificate, scrip or any instrument bestowing financial or fiscal benefits may be granted or renewed under sub-section (1) of section 9; (c) the class or classes of goods (including the goods connected with service or technology) for which a licence, certificate, scrip or any instrument bestowing financial or fiscal benefits may be granted under sub-section (2) of section 9; (d) the form in which and the terms, conditions and restrictions subject to which licence, certificate, scrip or any instrument bestowing financial or fiscal benefits may be granted under sub-section (3) of section 9; (e) the conditions subject to which a licence, certificate, scrip or any instrument bestowing financial or fiscal benefits may be suspended or cancelled under sub-section (4) of section 9; 3 (ea) the matter in which goods the import of which shall be subject to quantitative restrictions, may be identified and the manner in which the causes of serious injury or causes of threat of serious injury in relation to such goods may be determined under sub-section (3) of section 9A; (f) the premises, goods (including the goods connected with the service or technology), documents, things and conveyances in respect of which and the requirements and conditions subject to which power of entry, search, inspection and seizure may be exercised under sub-section (1) of section 10; (g) the class or classes of cases for which and the manner in which an amount, by way of settlement, may be determined under sub-section (4) of section 11; (h) the requirements and conditions subject to which goods (including the goods connected with the service or technology) and conveyances shall be liable to confiscation under sub-section (8) of section 11; (i) the manner in which and the conditions subject to which goods (including the goods connected with the service or technology) and conveyances may be released on payment of redemption charges under sub-section (9) of section 11; (j) any other matter which is to be, or may be, prescribed, or in respect of which provision is to be, or may be, made by rules. 19(3). Every rule and every Order made by the Central Government under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or the Order or both Houses agree that the rule or the Order should not be made, the rule or the Order, as the case may be, shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or the Order.” 12. Section 2(h) of the Act of 1992 defines order to mean any order made by the Central Government under Section 3. Section 3(1) allows the Central Government to publish an Order in the Official Gazette making provision for the development and regulation of foreign trade by facilitating imports and increasing exports. Section 3(2) empowers the Central Government to make provisions relating to import and exports. It allows the Central Government to make provision for prohibiting, restricting or otherwise regulating, in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under an order, the import or export of goods or services or technology. In respect of import or export of services and technology the provisions of Section 3(2) will apply only when the service or technology provider avails benefits under the Foreign Trade Policy or deals with specified services or specified technologies. The power of the Central Government to prohibit, restrict and otherwise regulate the import or export of goods or services or technology has to read along with its powers under Section 11 of the Customs Act, 1962. This appears from Section 3(3) of the Act of 1992. Section 5 of the Act of 1992 allows the Central Government to formulate and amend the Foreign Trade Policy from time to time. This appears from Section 3(3) of the Act of 1992. Section 5 of the Act of 1992 allows the Central Government to formulate and amend the Foreign Trade Policy from time to time. Notwithstanding the Central Government formulating and assuming a Foreign Trade Policy and even amending it subsequently, it can, under Section 3 of the Act of 1992, make provision for prohibiting, restricting or otherwise regulating import or export of goods or services or technology. It can do so if it is of the opinion that, the purposes enumerated in Section 11 of the Customs Act, 1962 stands satisfied so to do. Section 6 of the Act of 1992 deals with the appointment of the Director General of Foreign Trade and its functions. Sub-section 3 of Section 6 allows the Central Government to direct that any power exercisable by it under the Act of 1992 may also be exercised by the Director General or such officer subordinate to the Director General as may be specified in the order. However, Section 6(3) states that the Central Government cannot empower the Director General or any officer sub-ordinate to the Director General to exercise any powers under Section 3, 5, 15, 16 and 19 of the Act of 1992. It is the contention of the respondents that, the Director General of Foreign Trade has been accorded sanction to authenticate orders/notifications/other instruments in the name of the Central Government under the provisions of the Act of 1992. In this regard reliance has been placed on an Order dated March 24, 1993. Such order is as follows:- ORDER 13. No. 1/93 …..7-11013/1/9.2-E.III). Sanction of the President is hereby accorded to grant the status of ex-officio Addl. Secretary to the Government of India to the Director General, Foreign Trade, so as to enable him to authenticate Orders/Notifications/Other instruments in the name of the Central Government under the provisions of the Foreign Trade (Development and Regulation) Act, 1992. 14. This issues with the concurrences of the Finance Division vide their Dy. No. 930/FD/93, dated 24.3.93. 15. The Order dated March 24, 1993 has to be read in the context of Section 6 of the Act of 1992. The Director General of Foreign Trade can be empowered by the Central Government to exercise powers under the Act of 1992 except the powers under Sections 3, 5, 15, 16 and 19. No. 930/FD/93, dated 24.3.93. 15. The Order dated March 24, 1993 has to be read in the context of Section 6 of the Act of 1992. The Director General of Foreign Trade can be empowered by the Central Government to exercise powers under the Act of 1992 except the powers under Sections 3, 5, 15, 16 and 19. The impugned notification claims to be one issued under exercise of powers under Section 3 of the Act of 1992. Therefore, under Section 6(3) of the Act of 1992, notwithstanding the Order dated March 24, 1993, the Director General of Foreign Trade has no jurisdiction to issue the same. Even if the contention of the Union of India that, the impugned notification is an exercise of powers under Section 5 of the Act of 1992 is accepted, then also, Director General of Foreign Trade has acted without jurisdiction, in view of Section 6(3). In view of Section 6(3), a Director General of Foreign Trade cannot be considered as the Central Government within the meaning of Section 3 and 5 of the Act of 1992. Furthermore Section 6(3) of the Act of 1992 requires an order passed thereunder to be published in the Official Gazette. Nothing is placed on record to suggest that, the Order dated March 24, 1993 was published in the Official Gazette. In absence of a publication in the Official Gazette, the Order dated March 24, 1993 cannot be said to be one under Section 6(3) of the Act of 1992. 16. It has been contended on behalf of the respondents that, the impugned Order although speaks of invocation of Section 3 of the Act of 1992, in effect, it is an exercise of powers under Section 5 of the Act of 1992. 17. Section 5 of the Act of 1992 allows the Central Government to formulate the foreign trade policy and to amend it. Section 3 of the Act of 1992 allows the Central Government to make provisions for prohibiting, restricting or otherwise regulating import or export of goods or services or technology. In the present case, by the impugned notification, a foreign trade policy has been sought to be amended. The Central Government could have done so in exercise of powers under Section 5 of the Act of 1992. In the present case, by the impugned notification, a foreign trade policy has been sought to be amended. The Central Government could have done so in exercise of powers under Section 5 of the Act of 1992. It has however chosen to involve the provisions of Section 3 of the Act of 1992, as appearing in the impugned notification. 18. P.C. Wadhwa (supra) has considered the provisions of All India Services (Confidential Rolls) Rules, 1970 and has held that, the period prescribed in Rule 5, 6, 6A and 7 are directory but requires to be substantially complied with. Atul Commodities Private Limited (supra) has considered the notification issued under the Export and Import Policy, 2004-09. It has held that, amendment and clarifications are two distinct concepts. Power to amend the Import and Export policy is vested exclusively with the Central Government. Director General of Foreign Trade can only issue clarifications. 19. In the present case, by the impugned notification, the Director General of Foreign Trade has sought to amend the existing policy. On the strength of Atul Commodities Private Limited (supra), it can be said that, Director General of Foreign Trade has no jurisdiction to amend the Export and Import Policy. The impugned notification herein, has not been suggested to be clarificatory in nature. 20. K.T. Plantation Private Limited & Anr. (supra) has held that, non-laying of a notification required to be laid before the State Legislature under the provisions of Karnataka Land Reforms Act, 1961, is curable. 21. There was difference of opinion in S.K. Dubey & Anr. (supra) and therefore the registry was directed to place the papers before the Hon’ble the Chief Justice for it to be assigned to an appropriate Bench. Ashok Sadarangani & Anr. (supra) has held that reference of a case to a Larger Bench for decision does not mean that the law declared need not be applied or that the other proceedings involving the same issue should remain stayed till the decision is rendered. Air India Cabin Crew Association (supra) has held that, executive action of Central Government not formally expressed to have been taken in the name of the President is not ipso facto void. 22. In view of the discussion above, the impugned notification no. 09/2015-20 dated June 3, 2016 issued by the Director General of Foreign Trade is quashed. Air India Cabin Crew Association (supra) has held that, executive action of Central Government not formally expressed to have been taken in the name of the President is not ipso facto void. 22. In view of the discussion above, the impugned notification no. 09/2015-20 dated June 3, 2016 issued by the Director General of Foreign Trade is quashed. No further order need be passed in C.A.N. No. 10268 of 2017. C.A.N. 10268 of 2017 and W.P. No. 11957(W) of 2016 are disposed of accordingly. No order as to costs. 23. Urgent certified website copies of this judgment and order, if applied for, be made available to the parties upon compliance of the requisite formalities. 24. Later :- The prayer for stay made on behalf of the respondents is considered and rejected.