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HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
MAIN CASE No.: WP.No.38951 OF 2022
PROCEEDING SHEET
S.No DATE ORDER
01 01.12.2022 DEV, J
W.P.No.38951 of 2022
Notice before admission.
Sri N. Harinath, Deputy Solicitor General
takes notice for Respondent Nos.1 & 2.
Sri Suresh Kumar Routhu, learned Senior Standing Counsel appearing for CBIC takes notice for Respondent Nos.3 and 4.
Post after four weeks for filing counter affidavit.
_______ DEV, J I.A.No.1 of 2022
Heard Sri M. Karthik Pavan Kumar learned counsel for the petitioner and the learned Deputy Solicitor General appearing for Respondents Nos.1 & 2 and Sri Suresh Kumar Routhu, learned Sr. Standing Counsel appearing for the Respondent Nos. 3 and 4 and perused the record.
It is brought to the notice of this Court by the learned counsel appearing for either side that, in identical matters, this Court passed interim order on 12.10.2022 in W.P.Nos.32049, 2
33016 & 33156 of 2022.
Learned counsel appearing for the respondents also submits that, they have no objection to pass the same order in this case.
In view of the same, this Court is inclined to pass the same order in this case also.
The Union of India, which is the 1st respondent, had initially allowed export of broken rice outside the India. Subsequently, in the year 2007 the Director General of Foreign Trade - 2nd respondent had issued a notification dated 15.10.2007 withdrawing the permission for export of non-basmati rice. This ban was challenged by way of various Writ Petitions before the erstwhile High Court of Andhra Pradesh in W.P.Nos.22444, 24230 & 24554 of 2007. The erstwhile High Court of Andhra Pradesh had, by way of interim directions, permitted the export of rice by the petitioners in those Writ Petitions. Subsequently, the notification was withdrawn and the export of rice as well as broken rice was permitted as the said commodity was shifted into the category "Free" under the export policy. The 2nd respondent has again issued a notification bearing No.31/2015- 2020, dated 08.09.2022 shifting the commodity broken rice answering the description in ITC (HS) code 1006 40 00 from the category of free 3
to prohibited. This would mean that the export of broken rice from India was prohibited with effect from 09.09.2022.
The said notification while prohibiting export of broken rice from 09.09.2022 had exempted the following consignments from the ambit of the notification for the period of 09.09.2022 till 15.09.2022 and the same was subsequently extended to 15.10.2022. The three categories are here under: -
i. where loading of broken rice on the ship has commenced before this Notification;
ii. where the shipping bill is filed and vessels have already berthed or arrived and anchored in Indian ports and their rotation number had been allocated before this Notification; The approval of loading in such vessels will be issued only after confirmation by the concerned Port Authorities regarding anchoring berthing of the ship for loading of broken rice prior to the Notification; and
iii. where broken rice consignment has been handed over to the Customs before this Notification and is registered in their system.
Aggrieved by the said notification, the petitioners in these Writ Petitions have approached this Court.
The case of the petitioners is that the abrupt change in the policy is arbitrary and highhanded, affecting the vested rights of the petitioners and as such requires to be set aside. The further case of the petitioners is that 4
the abrupt ban of export of broken rice, has affected the ongoing contracts entered by the petitioners with third parties outside India and that the prohibition of export of broken rice would cause all the petitioners to default on their contracts which could lead to further damages on account of the provision of referring such disputes and claims by third parties to arbitration proceedings outside India.
Learned Senior Counsel would also reiterate that the 2nd respondent having taken into account the effect of an abrupt change in the policy had provided for relief to persons who had already acted on the basis of the existing policy. However, the 2nd respondent, while accepting, in principle the necessity of such exemption, has not granted exemption to all the persons who are affected by the abrupt change in the policy and it is only certain categories of person who are being given the benefit of such exemption.
The learned Senior Counsel would contend that the petitioners before this Court have also undertaken various transactions due to which they have already accumulated broken rice, in various quantities, and the same have also been made ready for export. They contend that in such circumstances, the refusal to allow the petitioners to export the 5
rice procured by them would amount to an unfair discrimination between the persons exempted under the notification and the petitioners.
Learned Senior Counsel has also relied upon the judgment of the Hon'ble Supreme Court of India in the case of Director General of Foreign Trade & Anr Vs. Kanak Exports & Anr1 (in paragraphs 111 to 117 & 135) to contend that a vested right cannot be taken away by the abrupt change in policy and the judgment of the Hon'ble Supreme Court of India in case of Centre for Public Interest Litigation Vs. Union of India and ors2 (paragraphs 20 to 27) to contend that this Court exercising the jurisdiction under the Article-226 of the Constitution of India can always interfere with a policy decision, if it is found to be violative of fundamental rights of the petitioners.
The learned Deputy Solicitor General submitted that the policy was changed on account of a sudden spurt in prices and on account of danger to the food security of the country and the neighbouring countries.
He would submit that the 2nd respondent while undertaking the change in the policy had also taken into account the necessity to protect
1 2016 (2) SCC 226 2 2016 (6) SCC 408 6
the persons whose contracts are at an advanced stage and had provided for such an eventuality. He would further submit that the petitioners before this Court do not fall under those categories and in any event the prayers raised in the Writ Petitions itself would go to show that the petitioners under the guise of obtaining orders from this Court are intending to procure further material and continue the export of broken rice. He would submit that such a course of action would not be permissible for the petitioners.
He further seeks time to file a detailed counter affidavit in the matter.
The learned counsel for the petitioners would submit that the contracts entered into by them are time specific and any further delay in the matter, would cause the contracts to fall through, leaving the petitioners open to a claim of damages from third party buyers. Further the petitioners would not be able to sell the broken rice procured by them in the domestic market as there is no market for polished broken rice in the country as it is not an item of human consumption nor used for any ancillary industries such as poultry feed. The learned counsel for the petitioners would further submit that any sale by the petitioners of the broken rice procured by them would have to be at a huge loss to the petitioners 7
which would effectively wipeout the petitioners.
The erstwhile High Court of Andhra Pradesh, when faced with a similar situation due to the ban issued in 2007, had taken the view that the petitioners are to be permitted to export the rice procured by them. The present situation is similar to the situation before the erstwhile High Court of Andhra Pradesh in 2007-2008.
A perusal of the impugned proceedings dated 08.09.2022 would show that the 2nd respondent has accepted, in principle, the fact that an abrupt change in the policy would cause loss to the persons who had acted on the basis of the existing policy. After accepting this fact, the 2nd respondent also provided a protection for such persons. However, this protection was restricted to only the persons falling within the three categories mentioned above.
To the mind of this Court, the 2nd respondent having accepted, in principle, the requirement of protecting the persons who had already acted on the existing policy, could not have restricted the protection to only the three categories mentioned in the impugned notification. As can be seen in the present case, the petitioners in all the three cases, acting on the basis of the existing policy, had 8
entered into contracts with third parties outside India and had also procured the broken rice necessary to execute such contracts, even before the policy was changed.
Prima facie, a case is definitely made out for the petitioner to be allowed to export the broken rice which has already been procured by them and which is presently stored at various ware houses, even before 08.09.2022.
In the circumstances, there shall be an interim direction to the respondents to permit the petitioner to export the broken rice stored by the petitioner at the ware houses before 08.09.2022.
However, this order shall not preclude the respondents from stopping further exports by the petitioner in relation to broken rice.
Post on 28.12.2022, for counter.
_______ DEV, J
eha
