Delhi High Court
M/S. Aval Exports & Anr. vs Union Of India & Ors. on 8 October, 2013
Author: Manmohan
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ LPA 976-977/2006
M/S. AVAL EXPORTS & ANR. ..... Appellant
Through: Mr. G.L. Rawal, Senior
Advocate with Mr. Rajesh
Rawal and Mr. Jagjit Singh,
Advocates
versus
UNION OF INDIA & ORS. ..... Respondents
Through: Mr. Sachin Datta, CGSC with
Ms. Ritika Jhurani and Mr. Dinesh
Sharma, Advocates
Reserved on : 1st October, 2013
% Date of Decision: 8th October, 2013
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE MANMOHAN
JUDGMENT
MANMOHAN, J:
1. Present Letters Patent Appeal has been filed challenging the judgment
and order dated 13th October, 2004 passed by learned Single Judge whereby
appellants' writ petition being Civil Writ Petition No. 300/1997 was
dismissed.
2. The facts of the present case are that Appellant no. 1 is an exporter of
Mulberry raw silk garments fitted with beads. Between 29th June, 1992 and
12th August, 1993 the appellants exported readymade garments and received
foreign exchange remittance totalling to US$ 15.65 lacs. After receipt of the
export proceeds, appellants during the same period, filed twenty six
applications for issuance of value based duty free licences in accordance
with the Export and Import Policy in vogue on the date of the applications.
It is the case of the appellants that by 3rd August, 1993 all discrepancies and
queries raised by the respondent were removed and clarified.
3. On 20th August, 1993, the policy underwent a change whereby issue
of value based advance licences against silk exports was discontinued and
only quantity based licence were to be issued to exporters against their
export proceeds.
4. On 20th December, 1993, respondent advised the appellants by a letter
to furnish revised applications for quantity based licences. On 1st February,
1994, appellants replied stating that as all the requirements had been
satisfied by them long time back, they should be issued only value based
licences and not quantity based licences.
5. However, on 25th November, 1994 the respondent issued quantity
based licences to the appellants.
6. On 9th December, 1994, appellants by a letter objected to the grant of
quantity based licences on the ground that they had applied for value based
licences more than two and a half years ago in accordance with the then
prevailing policy. By this letter, appellants returned the quantity based
licences with a request to respondent to issue value based licences.
7. Thereafter as the respondent did not respond favourably to the
representation made by the appellants, they filed the aforesaid writ petition
being C.W.P. 300/1997.
8. The appellants' writ petition was dismissed by the learned Single
Judge by way of the impugned judgment. The relevant portion of the
impugned judgment is reproduced hereinbelow:-
"In the light of the aforesaid provisions of the Export and Import
Policy 1992-1997 and the judgments of the Supreme Court and
of this Court, it is clear that the petitioners had no vested right to
have import licences in terms of the policy in force at the date of
making the applications. Granting of licences depends upon the
policy prevailing on the date of the grant of licence. Therefore,
the decision of the respondents to grant quantity based licences
in terms of the policy prevailing at the time of grant of licence is
upheld."
9. Mr. G.L. Rawal, learned senior counsel for the appellants submitted
that learned Single Judge failed to appreciate the scope of para 66 of the
Export and Import Policy for the period 1992 to 1997. According to him,
the said para entitled the appellants to value based licences inasmuch as it
stipulated that licences were to be issued based on norms in force on the date
of receipt of the application by the licensing authority.
10. Mr. Rawal further submitted that the learned Single Judge failed to
appreciate the distinction between para 48 and para 66 of the Export and
Import Policy. According to him, para 48 dealt with the issue of advance
licence in anticipation of exports to be made, while para 66 dealt with cases
where partial or full exports had already been made. According to him, in
cases of advance licence covered under para 48, the licence was to be issued
in accordance with the policy in force on the date of issue of the licence,
whereas in cases of partial or full exports having already been made, para 66
was to apply and consequently, the licence was to be issued in accordance
with the policy in force on the date of receipt of the application by the
licensing authority. Paras 48 and 66 of the Export and Import Policy for the
period 1992 to 1997 relied upon by Mr. Rawal are reproduced hereinbelow:-
"a) Clause 48
Advance Licence :
An advance Licence is granted for the duty free import of inputs. Such
licence shall be issued in accordance with the policy and procedure in
force on the date of issue of the licence and shall be subject to the
fulfilment on a time-bound export obligation and value addition as may
be specified. Advance Licences may be either value based or quantity
based.
b) Clause 66
Exports in anticipation of licence :
Exports/supplies made from the date of receipt of an application under
this Scheme by the licensing authority may be accepted towards
discharge of export obligation. If application is approved, the licence
shall be issued based on the input output and value addition norms in
force on the date of receipt of application by Licensing authority in
proportion to the provisional exports already made till any amendment
in the norm is notified. For rest of the exports the Policy/Procedures in
force on the date of issue of the licence shall be applicable......."
(emphasis supplied)
11. Mr. Rawal further submitted that because of negligence and omission
on the part of the respondents in processing the applications for advance
licences, the entitlement of the appellants to receive a value based licence
could not be defeated. Mr. Rawal contended that by virtue of paras 109D
and 258 of the Handbook of Procedure of the Export and Import Policy
during the period 1992 to 1997, respondent was bound to issue licence
within five days of the application being filed, subject to the application
being correct in all parameters. Paras 109D and 258 are reproduced
hereinbelow:-
"109D An application for any Duty Free Licence shall be made
in the form prescribed in Appendix XVII of the Handbook
and all columns thereof shall be duly filled including the
quantity of each item to be imported, its broad technical
characteristics and its CIF value, based on the prevailing
international price. Similarly, each item of export with
its broad technical characteristics shall be enumerated
and the quantity and FOB value of each item shall also
be specified. An application which is not in the
prescribed form and which is not complete in all
respects shall be rejected. Where the application is
complete in all respects, the licensing authorities shall
issue the licence along with DEEC Book (Part II) for
export duly filled in all respects within five days. DEEC
Book (Part I) for import may be issued when the
applicant comes for endorsement of LUT.
258. Every endeavour shall be made by the licensing
authorities to dispose of the applications for grant of
import/export licences etc. expeditiously. However, to
ensure that there is no undue delay, the following time
schedule will normally be followed to dispose of the
applications provided the application is complete in all
respects and accompanied with the prescribed
documents;
(a) Advance Licence where Input-Output 5 days
norms are notified.
(b) Advance Licence where Input-Output 30 days
norms are not notified and EPCG licences
(c) Revalidation of licence and extension of 7 days
Export Obligation Period
(d) Acceptance/Redemption of Bank 10 days
Guarantee/Legal Undertaking
(e) Endorsement of transferability of Advance 2 days
licence, after redemption of Bank Guarantee
(f) Amendment of any category of licence 5 days
12. Mr. Rawal pointed out that after 3rd August, 1993 no discrepancy in
any of the twenty six applications filed by the appellants had been pointed
out. According to him, subsequent issuance of quantity based licence by
respondent clearly proved that there was nothing wrong in the applications
filed by the appellants and consequently, their entitlement to value based
licence could not be denied. Mr. Rawal submitted that the right to obtain
value based licence which had accrued in appellants' favour under the
earlier policy could not be taken away by a subsequent change of policy on
20th August, 1993. Consequently, according to him, the change in policy
with effect from 20th August, 1993 of issuing quantity based licence instead
of value based licence could not be given retrospective effect. In support of
his submission, Mr. Rawal relied upon the judgment of this Court in G.D.
Impex International (India) & Anr. Vs. Union of India & Ors., CWP
567/1994 decided on 12th December, 2002 wherein it has been held as
under:-
"It is trite law that the Government has right to take a policy
decision and it can rescind/alter/modify or reformulate its earlier
policy decision. However, any right which has accrued in favour
of a party under earlier policy cannot be taken away by change
in policy decision which is taken subsequently. In other words,
the decision contained in public notice dated 14th September
1993 could not have operated retrospectively so as to take away
vested right of the petitioners which had accrued to them on the
basis of exports duly made by 21st/23rd July 1993 and for which
the petitioners had acquired a right to the grant of value based
duty free licence but the licence was in fact been sanctioned and
prepared. Merely because the licence was not despatched and
thus could not reach the petitioners, would not take away their
right to enjoy the fruits of the licence. The matter cannot be left
to the whims of the person who had to undertake the despatch of
the licence."
13. On the other hand, Mr. Sachin Datta, learned standing counsel for
respondent-UOI contended that para 66 referred to and relied upon by
learned senior counsel for the appellants was inapplicable to the present case
as during the period appellants had applied for licences, the unamended para
66 was in force. Mr. Datta in Court handed over a photocopy of the Export
and Import Policy for the period 1992 to 1997 incorporating amendments
up to 31st March, 1993. Para 66 in the said Policy reads as under:-
"66. Exports/supplies made from the date of receipt of an
application under this scheme by the licensing authority
may be accepted towards discharge of export obligation. If
the application is approved, the licence shall be issued in
accordance with the policy and procedures in force on the
date of its issue. The conversion of duty free shipping bills
to drawback shipping bills may also be permitted by the
Customs authorities in case the application is rejected or
modified by the licensing authority."
(emphasis supplied)
14. Mr. Datta pointed out that para 66 relied upon by learned senior
counsel for the appellants had, in fact, been prospectively introduced only on
8th February, 1994.
15. Mr. Datta submitted that there was no distinction leave alone
contradiction between paras 48 and 66 of the Export and Import Policy
during the period appellants had applied for advance licences. He submitted
that both paras 48 and 66 during the relevant period stipulated that licence
would be issued by respondent in accordance with the policy in force on the
date of issuance of the licence.
16. Mr. Datta emphatically denied that there was any delay in dealing
with the appellants applications for grant of licences. He referred to para
13A of the counter-affidavit to contend that the delay in processing the
advance licence applications was entirely on account of the appellants
inasmuch as they had failed to furnish detail of the quantities of export and
import in their applications. Mr. Datta also submitted that paras 109D and
258 of the Handbook of Procedure of Export and Import Policy only
mandated the respondent to process the applications for advance licences as
expeditiously as possible.
17. Mr. Datta also referred to para 15 of the Export and Import Policy to
submit that no person could claim a licence as a matter of right and licensing
authority had the power to refuse licence.
18. Mr. Datta also relied upon para 16 of the Export and Import Policy to
submit that respondent was well within its right to substitute policy of grant
of value based licence with quantity based licence after issuing a public
notice.
19. In rejoinder, Mr. Rawal did not dispute that para 66 of the Export and
Import Policy referred to by learned counsel for the respondent was in vogue
during the period appellants had applied for grant of advance licences. He,
however, submitted that the policy of grant of value based licence could not
be substituted for grant of quantity based licence by following the method
for amendment prescribed in the Handbook of Procedure.
20. Having heard learned counsel for parties, the admitted factual position
that emerges is that the appellants applied for advance licences from 29 th
June, 1992 to 12th August, 1993 and during this period para 66 of the Export
and Import Policy stipulated that such licences shall be issued in accordance
with the policy and procedure in force on the date of issue of the licences. It
is pertinent to mention that on 20th August, 1993 the Export and Import
Policy underwent a change whereby only quantity based licence and not
value based licence was to be issued to exporters of silk products.
21. We are of the opinion that the argument of learned senior counsel for
appellants though attractive, is without foundation inasmuch as para 66 of
the Export and Import Policy relied upon by him was not applicable during
the period the appellants had applied for grant of advance licences.
22. In any event, the notification dated 8th February, 1994 did not have
retrospective effect. The Supreme Court in Darshan Oils Pvt. Ltd. and
Another Vs. Union of India and Others, (1995) 1 SCC 345 has held as
under:-
"6. The submission of Shri Harish Salve, learned counsel for the
appellants is that an irrevocable letter of credit having been
opened by the appellants in favour of the foreign supplier on 3-
10-1983 prior to amendment of the Policy by the public notice
dated 11-11-1983, it was not feasible for the appellants to
prevent the shipment of the goods thereafter, and, therefore, not
extending the benefit of exception to such cases also, confining
the exception only to actual shipments made prior to issue of
public notice dated 11-11-1983, is unreasonable and violative of
Article 14. Learned counsel submits that opening of an
irrevocable letter of credit prior to issue of the public notice
being lawful, its consequence could not be made unlawful by a
subsequent amendment of the Policy. Learned counsel also
submitted that amendment of the Import Policy by issue of a
public notice can be only prospective, but in this manner it has
been made retrospective. Shri Subba Rao, learned counsel for the
Central Government submitted that the exception is applicable
only to such goods which were already in transit on account of
the shipments having been made; and the only consequence of
the amendment is an increase in the tax which is not violative of
Articles 14 and 19 of the Constitution.
7. We are unable to accept the submissions of the learned
counsel for the appellants. These submissions are merely a
different facet of the doctrine of promissory estoppel which has
been held inapplicable in such a situation. In Kasinka Trading
[(1995) 1 SCC 274] which related to withdrawal of exemption
from payment of duty etc. in exercise of the statutory powers, it
was reiterated that the power to exempt includes the power to
modify or withdraw that benefit; and the liability to pay duty
under the Customs Act, 1962 arises when the taxable event
occurs being subject to payment of duty as prevalent on the date
of the entry of the goods. It was held that the doctrine of
promissory estoppel could not be invoked to question the
withdrawal of notification issued under Section 25 of the
Customs Act, 1962 when it was done in public interest. Equities
have to be balanced and public interest must outweigh individual
interest. Kasinka Trading [(1995) 1 SCC 274] clearly holds that
withdrawal of such a benefit can be made in public interest
during the period for which the benefit had earlier been intended.
In our opinion, this is sufficient to indicate the fallacy inherent in
the submissions made on behalf of the appellant.
8. In D. Navinachandra & Co. v. Union of India [(1987) 3 SCC
66 : (1987) 2 SCR 989] it was clearly held that the entitlement to
import items which were canalised or not, is governed by the
Import Policy prevalent at the time of import. In the present case,
the import of a canalised item being made after amendment of
the Policy by the public notice dated 11-11-1983 in a manner not
permitted by the amended Policy, the appellants cannot claim to
avoid the logical consequences of the import being made
contrary to the Import Policy prevailing at the time of import of
the goods. Exemption under the amended Policy being limited to
shipments already made cannot be termed unreasonable or
unduly restrictive. Obviously, the exception was made to cover
only those goods of which the shipment had been made and were
in transit, excluding all such goods of which no shipment had
been made. The classification between goods in transit and those
of which the transit had not begun, cannot be called irrational or
unreasonable in the context."
(emphasis supplied)
23. As opposed to para 66 in vogue at the relevant time, appellants had
relied upon its amended version - as amended vide notification dated 8th
February, 1994. This Court is of the view that the prospective amendment
dated 8th February, 1994 would not enure to the benefit of the appellants
since the said amendment came into effect when the policy of value based
licence had already been discontinued. The amended para 66 vide
notification dated 8th February, 1994 would apply only to issue of quantity
based licence.
24. There is also no contradiction between paras 48 and 66 of the Export
and Import Policy during the period the appellants had applied for grant of
advance licences. From a reading of paras 48 and 66 of the Export and
Import Policy, as in vogue during the period appellants had applied for
advance licences, this Court is of the view that respondent was bound to
issue advance licences only in accordance with the policy in force on the
date of issuance of licences.
25. In P.T.R. Exports (Madras) Pvt. Ltd. and Others v. Union of India
and Others, (1996) 5 SCC 268 the Supreme Court has held as under:-
"4. An applicant has no vested right to have export or import
licences in terms of the policies in force at the date of his making
application. For obvious reasons, granting of licences depends
upon the policy prevailing on the date of the grant of the licence
or permit. The authority concerned may be in a better position to
have the overall picture of diverse factors to grant permit or
refuse to grant permission to import or export goods. The
decision, therefore, would be taken from diverse economic
perspectives which the executive is in a better informed position
unless, as we have stated earlier, the refusal is mala fide or is an
abuse of the power in which event it is for the applicant to plead
and prove to the satisfaction of the court that the refusal was
vitiated by the above factors.
5. It would, therefore, be clear that grant of licence depends
upon the policy prevailing as on the date of the grant of the
licence. The court, therefore, would not bind the Government
with a policy which was existing on the date of application as per
previous policy. A prior decision would not bind the Government
for all times to come. When the Government is satisfied that
change in the policy was necessary in the public interest, it
would be entitled to revise the policy and lay down new policy.
The court, therefore, would prefer to allow free play to the
Government to evolve fiscal policy in the public interest and to
act upon the same. Equally, the Government is left free to
determine priorities in the matters of allocations or allotments or
utilisation of its finances in the public interest........"
(emphasis supplied)
26. In S.B. International Ltd. and Others Vs. Asstt. Director General of
Foreign Trade and Others, (1996) 2 SCC 439 the Supreme Court has held
as under:-
"10. We are, therefore, of the opinion that the contention that a
vested right accrues to an applicant for issuance of advance
licence on the basis of the norm obtaining on the date of
application is unacceptable. The scheme and the context militate
against the contention. The fact that the policy is statutory in
nature (delegated legislation) has no relevance on the question at
issue. It would be wrong to equate the filing of an application for
advance licence with the filing of a suit where it is held that
appeal being a substantive right, the right of appeal inhering in
the party on the date of filing of the suit cannot be taken away by
a subsequent change in law.
xxxx xxxx xxxx xxxx
12. Now, coming to the argument of the authorities taking
advantage of their own wrong, viz., delay in issuing the advance
licences, it may be noticed that there is no allegation/averment in
the writ petition that the authorities have deliberately delayed the
issuance of the advance licences. We have mentioned
hereinbefore that issuance of these licences is not a formality nor
a mere ministerial function but that it requires due verification
and formation of satisfaction as to compliance with all the
relevant provisions. In this case, the applications for advance
licences were made on 29-5-1992, 18-6-1992, 24-6-1992 (two
applications) and 15-9-1992. The application of 15-9-1992
relates to two contracts of much higher value. The change in
policy was on 25-9-1992, i.e., within a few days of the last
application. Without a doubt, these applications have to be
disposed of within a reasonable time -- indeed with due
expedition. But in the absence of any plea in this behalf, it is not
possible to hold that there has been any undue delay,
procrastination or deliberateness on the part of the authorities in
issuing the licences. There is no finding either by the learned
Single Judge or the Division Bench to this effect. In such a
situation, the mere fact that the appellant is likely to suffer some
loss or prejudice -- assuming that the said plea is factually true
-- cannot be a ground either for invoking the rule of promissory
estoppel or to otherwise bind the Government to apply and adopt
the value addition norm in force on the date of application. In
this context, the observations of this Court in Pankaj Jain
Agencies v. Union of India [(1994) 5 SCC 198] are apposite.
M.N. Venkatachaliah, C.J., speaking for the Court, held: (SCC p.
207, para 22)
"The third and the last submission is that the sudden and
sharp increase of duty steeply puts up the petitioner's liability
from Rs 1,84,341 to Rs 6,42,065 on these consignments and
constitutes an unreasonable restriction on the petitioner's
fundamental rights under Article 19(1)(g) of the Constitution. A
tax, in particular, in the nature of duties of customs is not per se
violative of Article 19(1)(g). Mere excessiveness of a tax is not,
by itself, violative of Article 19(1)(g). This question cannot be
divorced from the nature of the right to import. There is no
absolute right much less a fundamental right to import. (See:
Dy. Asstt. Iron and Steel Controller v. L. Manickchand,
Proprietor, Katrella Metal Corpn. [(1972) 3 SCC 324] ;
Andhra Industrial Works v. Chief Controller of Imports [(1974)
2 SCC 348 : (1975) 1 SCR 321] ; J. Fernandes & Co. v. Dy.
Chief Controller of Imports and Exports [(1975) 1 SCC 716] .)
That apart, no factual foundations are laid to demonstrate how
this impost has had the effect of destroying the petitioner's right
to carry on a trade or business. This contention also has no
merit."
(emphasis supplied)
27. Further, the judgment of G.D. Impex International (India) & Anr.
(supra) relied upon by learned senior counsel for the appellants is clearly
inapplicable to the present matter as in the said case the respondent had not
only processed the application of the petitioners but had even issued licences
prior to change in policy of issue of quantity based licence instead of value
based licence.
28. This Court is further of the opinion that the only purport of
effectuating the amendment in paragraph 66 was to apply the input output
and value addition norms in force on the date of receipt of application under
the scheme by the Licensing Authority. These norms are relevant both for
the purposes of value based advance licences and also quantity based
advance licences.
29. In view of the respondent's counter-affidavit that delay in processing
advance licence applications was entirely on account of appellants' laxity in
furnishing the exact quantity of export and import, this Court is of the
opinion that in the present proceedings, no conclusive finding can be
reached that the respondent was liable for the delay.
30. In any event, the time period of five days prescribed in paras 109D
and 258 of the Handbook of Procedure was only a desirable time frame. It
was directory and not mandatory as no consequence on failure to comply
with the prescribed requirement had been provided in the Handbook of
Procedure itself. The Supreme Court in Sharif-ud-Din Vs. Abdul Gani
Lone, AIR 1980 SC 303 has held as under:-
"9. The difference between a mandatory rule and a directory rule
is that while the former must be strictly observed, in the case of
the latter substantial compliance may be sufficient to achieve the
object regarding which the rule is enacted. Certain broad
propositions which can be deduced from several decisions of
courts regarding the rules of construction that should be
followed in determining whether a provision of law is directory
or mandatory may be summarised thus: The fact that the statute
uses the word "shall" while laying down a duty is not conclusive
on the question whether it is a mandatory or directory provision.
In order to find out the true character of the legislation, the court
has to ascertain the object which the provision of law in question
has to subserve and its design and the context in which it is
enacted. If the object of a law is to be defeated by non-
compliance with it, it has to be regarded as mandatory. But when
a provision of law relates to the performance of any public duty
and the invalidation of any act done in disregard of that
provision causes serious prejudice to those for whose benefit it is
enacted and at the same time who have no control over the
performance of the duty, such provision should be treated as a
directory one. Where, however, a provision of law prescribes
that a certain act has to be done in a particular manner by a
person in order to acquire a right and it is coupled with another
provision which confers an immunity on another when such act is
not done in that manner, the former has to be regarded as a
mandatory one. A procedural rule ordinarily should not be
construed as mandatory if the defect in the act done in pursuance
of it can be cured by permitting appropriate rectification to be
carried out at a subsequent stage unless by according such
permission to rectify the error later on, another rule would be
contravened. Whenever a statute prescribes that a particular act
is to be done in a particular manner and also lays down that
failure to comply with the said requirement leads to a specific
consequence, it would be difficult to hold that the requirement is
not mandatory and the specified consequence should not follow."
31. Though a feeble attempt was made by appellants' senior counsel in
rejoinder to challenge the policy of issuance of quantity based licence
instead of value based licence, we are of the opinion that the said plea
cannot be entertained in the present case as there is neither any prayer nor
any ground either in the writ petition or the present appeal to this effect.
32. Before parting with this case, we would like to emphasise that all
parties to a litigation as well as all counsel are under a duty to place on
record true, complete and correct facts. If material facts like relevant paras
of the export and import policy are suppressed, distorted, withheld or not
placed either intentionally or unintentionally, the writ courts would find it
difficult to dispense justice expeditiously. In K.D. Sharma Vs. Steel
Authority of India Limited & Ors., (2008) 12 SCC 481 the Supreme Court
has held as under:-
"38. ............As per settled law, the party who invokes the
extraordinary jurisdiction of this Court under Article 32 or of a
High Court under Article 226 of the Constitution is supposed to
be truthful, frank and open. He must disclose all material facts
without any reservation even if they are against him. He cannot
be allowed to play "hide and seek" or to "pick and choose" the
facts he likes to disclose and to suppress (keep back) or not to
disclose (conceal) other facts. The very basis of the writ
jurisdiction rests in disclosure of true and complete (correct)
facts. If material facts are suppressed or distorted, the very
functioning of writ courts and exercise would become impossible.
The petitioner must disclose all the facts having a bearing on the
relief sought without any qualification. This is because "the
court knows law but not facts".
33. We are of the view that if correct para 66 of the Export and Import
Policy during the period 1992 to 1997 had been brought to the notice of this
Court at the earliest, rather than at the stage of final hearing before the
Division Bench, the present proceedings would not have lasted for nearly
sixteen years. As 'judicial capital' in terms of manpower and resources is
extremely limited, we hope that parties and counsel in future would be more
careful and make earnest efforts to place on record correct notifications and
documents. With the aforesaid observations, present letters patent appeal
stands dismissed.
MANMOHAN, J
CHIEF JUSTICE
OCTOBER 08, 2013
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