Supreme Court of India
INDO AFGHAN CHAMBERS OF COMMERCE & ANR. ETC.versusUNION OF INDIA & ORS. ETC.
- Citation
- 1986 INSC 123
- Decided
- 15 May 1986
- Disposal
- Appeal(s) allowed
- Bench
- R S PATHAK
Holding
Diamond exporters holding additional licences are not entitled to import dry fruits under the Import Policy 1985‑88 because dry fruits are consumer goods listed in Appendix 2 Part‑B and are excluded from Item 1 of Appendix 6, and thus they are restrained from such import.
Summary
The Indo‑Afghan Chambers of Commerce, a dealers' association for dry fruits, challenged the grant of additional licences to two diamond exporters for importing dry fruits under Article 32 of the Constitution. The exporters argued that the licences, issued under the Import Policy 1978‑79, allowed them to import dry fruits as raw material for industrial users, relying on provisions of the Import Policy 1985‑88. The Court examined whether dry fruits were covered by the list of consumer goods in Appendix 2 Part‑B of the 1985‑88 policy and whether they could be imported under Item 1 of Appendix 6 as raw materials. It held that dry fruits are consumer goods excluded from Item 1 and that holders of additional licences are not dealers in the dry‑fruit trade, thus cannot import them. Consequently, the Court restrained the exporters from importing dry fruits for the period 1985‑88 and allowed the writ petition and the appeal.
Issues considered
- Whether the additional licences granted to diamond exporters under the Import Policy 1978‑79 permit the import of dry fruits under the Import Policy 1985‑88.
- Whether dry fruits fall within the category of consumer goods listed in Appendix 2 Part‑B and are therefore excluded from import under Item 1 of Appendix 6.
- Whether the petition under Article 32 is maintainable despite the absence of an appeal against the interim order.
- Whether the exporters suffered any damage or are liable for restitution due to the denial of additional licences.
Subjects
Import Policy 1978‑79Import Policy 1985‑88Additional licencesDry fruitsConsumer goodsArticle 32Fundamental rightsRestriction on importDealer classification
Judgment
A
INDO AFGHAN CHAMBERS OF COMMERCE & ANR.
•
ETC.
v.
B UNION OF INDIA & ORS. ETC.
MAY 15, 1986
[R.S. PATHAK AND SABYASACHI MUKHARJI, JJ.] \
I
\,
Import Policy 1985-88-Appendix 2 Part B and Item l of Ap- {
c pendix 6-Dry fruits-Import by diamond exporters-Holding addi-
tional licences-Whether permissible.
The petitioner, an associations of dealers engaged in the business _,.I.
of selling dry fruit in North India, who purchase dry fruits either locally
D or through imports from outside India, challenged the grant of addi-
tional licences to the respondents-<liamond exporters, under Article 32
of the Constitution.
On behalf of the petitioners, it was contended: (i) that the goods
sought to be imported on the Additional Licences included those which
E were prohibited by the prevalent Import Policy; (ii) that the principle
which was applied to the import of acrylic easter monomers extends
likewise to the import of all other commodities under Additional
Licences granted to diamond exporters in similar circumstances and,
therefore, the diamond exporters are not entitled to import dry fruit; and
(iii) that the import of dry fruit is covered by item 121 in Appendix 2 \
F Part-B (List of Restricted Items) of the Import Policy 1985-88 and, )
therefore, the respondents are not entitled to resort to Item I of
Appendix6.
On behalf of the respondents, it was contended: (i) that paragraph
176 of the Import Policy 1978-79 envisages the grant of Additional
G Licences for the import of raw materials which have been placed on
Open General Licence for Actual Users (Industrial); (ii) that they im-
port the dry fruits as raw material for the purpose of selling to eligible
Industrial Actual Users for processing for manufacturing into a variety
r'
of products under Item 1 of Appendix 6 of the Import Policy 1985-86;
(iii) that item 121 of Appendix 2 Part-B (List of Restricted Items) is not
H attracted because it refers to "consumer goods", and consumer goods
IN DO-AFGHAN CHAMBERS OF COMMERCE v. U.0.l. 89
r are not raw material for the purposes of item 1 of Appendix 6; and (iv) A
that the petition under Article 32 is not maintainable because the
petitioners' fundamental rights are not violated, in as much as no
appeal has been filed by the Customs Authorities or by the Import
Control Authorities against the interim order dated January 8, 1986 of
the High Court directing the Customs Authorities to permit the respon-
B
/ dents to clear the imported consignment of almonds.
Allowing the Writ Petition and the Appeal,
I HELD: 1. Respondents Nos. 10 and 11 are restrained from im-
porting dry fruits during the period 1985-88 under the Additional Li-
cences granted to them under the Import Policy 1978-79. [97F] c
2. Under the Import Policy 1978-79, dry fruits (excluding
cashewnuts) could be imported by all .persons for whatever purpose
under the Open General Licence. No Additional Licence was required.
By wrongful denial of Additional Licence to diamond exporters no dam-
age can be said to have been suffered by them and no question of restitu- D
tion could, therefore, be said to arise. The wrongful denial of the Addi-
tional Licences was wholly immaterial to the importing of dry fruits
(exluding cashewnuts). The respondents have not shown that the dry
fruits were placed on Open General Licence specifically for Actual
Users (Industrial). Under the Import Policy 1978-79 their import was
open to all persons. [94F, Cl E
3. The position in regard to the import of dry fruits (excluding
cashewnuts) is simple and suffers from no complexity. Dry fruits (exc-
luding cashewnuts) could be imported by all persons under Open Gene-
ral Licence under the Import Policy 1978-79. But under the Import
Policy 1985-88 dry fruits (excluding cashewnuts and dates) are no
longer open to import under Open General Licence. If dry fruits (exc- F
luding cashemmts and dales) are regarded as items for stock and sale,
the import is governed by paragraph 181(3) is Chapter XIII of the
Import Policy 1985-88, which declares that import of dry fruits (exclud-
ing cashewnuts and dates) will be allowed against licences issued to
dealers engaged in this trade. [94E-H[
G
4. The diamond exporters cannot be regarded as dealers engaged
(
in the trade of stocking and selling dry fruits (excluding cashewnuts and
dates). They are, therefore, not entitled to the advantage of paragraph
181(3) of the Import Policy 1985-88. [95A-B]
5. Dry fruits must be regarded as consumer goods of agricultural H
90 SUPREME COURT REPORTS [1986] 3 S.C. R.
A origin. The words "agricultural origin" are used in the broadest sense. l
Dry fruits do not appear in Appendix 3 Part-A and 5 nor can be im-
ported under Open General Licence under the Import Policy 1985-88.
In as much as they fall within item (121) of Appendix 2 Part-B they are
excluded from the scope of item I of Appendix 6, and cannot be im-
B ported as raw materials and consumables for sale to Actual Users (In-
dustrial). "Consumables" are referred to in item I of Appendix 6 as \
goods meant for Actual Users (Industrial) "Consumer goods" in item
12 I of Appendix 2 Part-B can refer to dry fruits imported for supply to
Actual Users (Industrial). [95F-H; 96A]
6. The expression "specifically banned" occurring in the order
J
c dated April 18, 1985 of this Court determines the range of the items
open to import by diamond exporters holding Additional Licences. The
items excluded from import by diamond exporters under Additional _..\,
Licences under the Import Policy 1985-88 were the items enumerated in
Appendix 3 and Appendix 2 Part-A of that Import Policy. Appendix 2
Part-A is the successor of Appendix 4 (List of Absolutely Banned Items)
D of the Import Policy 1978-79. Appendix 2 Part-B (List of Restricted
Items) was also the successor of Appendix 4 (List of Absolutely Banned
Items). Appendix 4 in the Import Policy 1978-79 was described as the
Absolntely Banned List. [96B-E]
The present Appendix 2 Part-A and Appendix 2 Part-B constitute
E together what was originally List 4 (List of Absolutely Banned Items)
under the Import Policy 1978-79. The diamond exporters holding Addi-
tional Licences were, therefore, not entitled to import goods enumera-
led in Appendix 2 Part-B of the Import Policy 1985-88. [96F-G]
7. The diamond exporters are not entitled to take advantage of
F item 121 of Appendix 2 Part-B for the purpose of importing dry fruits.
The holders of Additional Licences are entitled to import only those -'
goods which are included in Appendix 6 Part 2 List 8 of the Import
Policy 1985-88. Dry fruits are not included in that List and, therefore,
they cannot be imported under Additional Licences. They are also not en-
'titled to the benefit extended by the judgment of this Court dated
G March 5, 1'186 to those diamond exporters who had imported items
under irrevocable Letters· of Credit opened and established before
October 18, 1985. [978-C] '
8. An interim order cannot defeat the fundamental rights of the
petitioners merely because it has not been questioned by the Customs
Authorities or the Import Control Authorities. [97E]
H
INDO·AFGHAN CHAMBERS OF COMMERCE v. U.0.I. [PATHAK, J.] 91
r ORIGINAL/CIVIL APPELLATE JURISDICTION: Writ
Petition No. 199 of 1986
A
Under Article 32 of the Constitution of India.
with
B
Civil Appeal No. 664 of 1986
From the Judgment and Order dated 20th January, 1986 of the
Bombay High Court in Writ Petition No. 183 of 1986.
V.M. Tarkunde and Rajiv Datta, for the Petitioner in W.P. No.
199of 1986. c
B. Datta, Additional Solicitor General, Soli J. Sorabji and K.K.
Venugopal, A.G. Ganguli, A. Subba Rao, Miss Kutty Kumarmanga-
lam, C.V. Subba Rao, Harish Salve, K.R. Nagaraja, B.R. Agarwala,
M.M. Jayakar and Miss V. Menon, for the Respondents in W.P. No. D
199of1986
F.S. Nariman and A.B. Diwan, P.H. Parekh and Uday Lalit, for
the Appellants in C.A. No. 664of1986
B. Datta, Additional Solicitor General, K.K. Venlugopal, A.G. E
Ganguli, A. Subba Rao, Miss Kutty Kumarmangalam, C.V. Subba
Rao, B.R. Agarwala, M.M. Jayakar and Miss V. Menon, for the Res-
pondents in C.A. No. 664 of 1906.
The Judgment of the Court was delivered by
F
c PATHAK, J. The petitioners, M/s Indo-Afghan Chambers of
Commerce and its President, Sundar Lal Bhatia, are aggrieved by the
grant of additional licences to the respondents, M/s Rajnikant Brothers
and M/s Everest Gems for the import of dry fruits.
The petitioner, M/s Indo-Afghan Chambers of Commerce, is an G
association of dealers engaged in the business of selling dry fruit in
North India. The dry fruit is purchased by them either locally or
through imports from outside India. The respondents, M/s Rajnikant
Brothers and M/s Everest Gems, are diamond exporters who have
been issued additional licences pursuant to an order of the Court in the
following circumstances. H
92 SUPREME COURT REPORTS [1986] 3 S.C.R.
A The respondents diamond exporters had applied for the grant of l
Export House Certificates under the Import Policy 1978-79 and had
been denied ,the Certificates on the erroneous ground that they had
not diversified their exports. In writ petitions filed in the Bombay High
Court, they were held entitled to the Export House Certificates. Spe-
B cial leave petitions filed by the Union of India against the order of the
High Court were dismissed by this Court by its order dated April 18,
1985 which, while confirming the order of the High Court directed the
appellants to issue the necessary Export House Certificates for ·the
year 1978-79, and further that: "Save and except items which are
specificially banned under the prevalent Import Policy at the time of
import, the respondents shall be entitled to import all other items
c whether canalised or otherwise in accordance with the relevant rules."
The respondents diamond exporters and other like diamond exporters
were granted Additional Licences, and started importing goods on
those Additional Licences. It is the case of the petitioners that the
goods sought to be imported on the Additional Licences included
D those which were prohibited by the prevalent Import Policy. The
diamond exporters commenced the Import of acrylic ester mono-
mers. This was challenged by M/s Raj Prakash Chemicals Ltd., an
Indian company manufacturing acrylic ester monomers in India, by a
writ petition in me Bombay High Court seeking a clarification of the
order dated April 18, 1985 of this Court mentioned earlier. The High
E Court rejected the writ petition, and an appeal by Special Leave filed
by the Indian company was disposed of by this Court by its order dated
March 5, 1986. The Court held that it was not permissible for the
diamond exporters to import acrylic ester monomers under the Addi-
tional Licences granted to them during the period of the Import Policy
1985-88, but having regard to the circumstance that the High Courts
F had already passed orders permitting such import and further that the
Import Control Authorities had specifically allowed such import this
Court permitted such imports to be completed in respect of which
irrevocable Letters of Credit had been op~ned and established before
October 18, 1985, the date on which for the first time an order was
made by the Court imposing a restriction on the clearing of acrylic
ester monomers by the Customs authorities. The Court regarded the
G
date, October 18, 1985 as a critical date because the diamond ex-
porters could be said to have been warned on and from that date that
the Court could possibly take a different view from that prevailing
during the period before that date when, because of the orders of the
High Courts and the conduct of the Import Control Authorities, the
H diamond exporters could have legitimately believed that they were
INDO-AFGHAN CHAMBERS OF COMMERCE v. U.0.1. [PATHAK,J.[ 93
r entitled to effect such imports. It was made clear by the Court that
cases in which irrevocable Letters of Credit had been opened and
A
established after October 18, 1985 would not be entitled to the benefit
of that order. The petitioners contend that the principle which was
applied to the import of acrylic ester monomers extends likewise to the
import of all other commodities under Additional Licences granted to B
diamond exporters in similar circumstances. It is asserted that the
I respondents diamond exporters and other like diamond exporters be-
gan to import dry fruit under their Additional Licences. It is con-
tended that having regard to the terms of the order of this Court dated
April 18, 1985 as construed and clarified by its order dated March 5,
1986 the diamond exporters are not entitled to import dry fruit.
c
By order dated March 5, 1986 the Court construed its order
dated April 18, 1985 to mean that only such items could be imported
J_ by diamond exporters under the Additional Licences granted to them
as could have been imported under the lmport Policy 1978-79, the
period during which the diamond exporters had applied for Export D
House Certificates and had been wrongfully refused, and were also
importable under the lmport Policy prevailing at the time of import,
which in the present case is the lmport Policy 1985-88. These were the
items which had not been "specifically banned" under the prevalent
( Import Policy. The items had to pass through two tests. They should
have been importable under the lmport Policy 1978-79. They should E
also have been importable under the Import Policy 1985-88 in terms of
the order dated April 18, 1985.
The case of the petitioners is that under the Import Policy 1978-
79 dry fruits (excluding cashewnuts) could be imported by all persons
under the Open General Licence. Dry fruits (excluding cashewnuts), F
l
is mentioned atitem 22 of Appendix 10 of the Import Policy 1978-79 as
open to import under the Open General Licence. There was no need
to obtain an Additional Licence for importing them in the year 1978-
79, and therefore, the wrongful denial of Additional Licences to
diamond exporters in the year 1978-79, could not justify any restitu-
ti on subsequently in regard to the import of dry fruits (other than G
cashewnuts). There is substance in the contention. Under the lmport
Policy 1978-79 dry fruits (excluding cashewnuts) could be imported by
.i, all persons for whatever purpose under the Open General Licence. No
Additional Licence was required. If an Additional Licence was wrong-
fully denied to diamond exporters at time when dry frutis (excluding
cashewnuts) were importable under the Open General Licence no H
94 SUPREME COURT REPORTS [19861 3 S.C.R.
A damage can be said to have been suffered by diamond exporters who
had been refused Export House Certificates, and consequently Addi-
T
tional Licences, under the Import Policy 1978-79. In the circum-
stances, no question of restitution could be said to arise for the wrong-
ful denial of the Additional Licences. The wrongful denial of the
B Additional Licences was wholly immaterial to the importing of dry
fruits (excluding cashewnuts).
\
It is urged by the respondents diamond exporters that paragraph
176 of the Import Policy 1978-79 envisages the grant of Additional
Licences for the import of raw materials which have been placed on
(
Open General Licence for Actual Users (Industrial). It has not been
c shown to us that dry fruits were placed on Open General Licence
specificially for Actual Users (Industrial). Under the Import Policy
1978-79 their import was open to all persons.
-~
We may assume for the purpose of this case that a diamond
exporter is legitimately entitled to obtain an Additional Licence un-
D
der the Import Policy 1978-79 for an item which is different from the
item he may have intended to import had the Additional Licences
been rightly granted to him originally. In that event, the diamond
exporter can succeed only if the item could have been imported under
the Import Policy 1978-79 and also under the Import Policy 1985-88 in )
accordance with the terms of the order of this Court dated April 18,
E
1985 as construed by this Court by its judgment dated March 5, 1986.
The position in regard to the import of dry fruits (excluding
cashewnuts) is simple and suffers from no complexity. As has been
mentioned, dry fruits (excluding cashewnuts) could be imported by all \
persons under the Open General Licence under the Import Policy
F
1978-79. But under the Import Policy 1985-88, when the dry fruits
(excluding cashewnuts and dates) are now sought to be imported, dry
fruits (excluding cashewnuts and dates) are no longer open to import
under the Open General Licence. The sanction for importing them
must be found under some other provision of the Import Policy. If dry
fruits (excluding cashewnuts and dates) are regarded as items for stock
G
and sale, the import is governed by paragraph 181(3) in Chapter XIII
of the Import Policy 1985-88. Paragraph 181(3) declares that import of
dry fruits (excluding cashwenuts and dates) will be allowed against >-
licences issued to dealers engaged in this trade, the value of the import
licence in each case being equal to 20 per cent of the C.I.F. value of the
H best year's imports of the applicant in respect of dry fruits (excluding
IN DO-AFGHAN CHAMBERS OF COMMERCE v. U.0.1. [PATHAK,J.J 95
't cashewnuts and dates) during any of financial years from 1972-73 to A
the preceding Licencing year, subject to a minimum of Rs.5000. Ad-
mittedly the diamond exportes cannot be regarded as dealers engaged
in the trade of stocking and selling dry fruits (excluding cashewnuts
and dates). They are, therefore, not entitled to the advantages of
paragraph 181(3) of the Import Policy 1985-88. B
j
But the case of the respondents diamond exporters, is that they
import the dry fruits as raw material for the purpose of selling to
eligible Industrial Actual Users for processing or manufacturing into a
\ variety of products, such as almond oil, Ayurvedic drugs and medi-
cines, Unani drugs and medicines, processed and package foods,
sweets and confectionary, and we are referred to item 1 in Appendix 6 c
of the Import Policy 1985-88. Now item 1 of Appendix 6 speaks of:
"l. Raw materials, components and consumables (non-
iron and steel items) other than those included in the Ap-
pendices 2, 3 Part-A, 5 and 8." D
The petitioners point out that the item is covered in Appendix 2
Part-B of the Import Policy 1985-88 and, therefore, the respondents
diamond exporters are not entitled to resort to item 1 of Appendix 6.
'· Appendix 2 Part-B (List of Restricted Items) contains item 121 which
reads: E
"(121) All consumer goods, howsoever described, of in-
dustrial, agriculatural or animal origin, not appearing indi-
vidually in Appendices 3 Part-A and 5 or specifically listed
for import under Open General Licence."
F
There can be no dispute that dry fruits must be regarded as consumer
"' goods of agricultural origin. The words "agricultural origin" are used
in the broadest sense. It is also clear that dry fruits do not appear in
Appendix 3 Part-A and 5 nor can be imported under the Open General
Licence under the Import Policy 1985-88. Inasmuch as they fall within
item (121) of Appendix 2 Part-B they are excluded from the scope of G
item 1 of Appendix 6, and cannot be imported as raw materials and
.( consumables for sale to Actual Users (Industrial). It is urged by the
respondents diamond exporters that item 121 is not attracted because
it refers to "consumer goods", and consumer goods are not raw mate-
rial for the purposes of item 1 of Appendix 6. There is a fallacy here. It
will be noticed that "consumables" are referred to in item I of H
96 SUPREME COURT REPORTS [19861 3 S.C.R.
A Appendix 6 of goods meant for Actual Users (Industrial). We are not
satisfied that "consumer goods" in item 121 of Appendix 2 Part-B
cannot refer to dry fruits imported for supply to Actual Users
(Industrial).
B In construing the order dated April 18, 1985 ot this Court, the
judgment dated March 5, 1986 of this Court explained the singificance \
of the words "specifically banned" occurring in the former order. The
expression determines the range of the items open to import by
diamond exporters holding Additional Licences. It was declared
that the items exluded from import by diamond exporters under (
Additional Licences under the Import Policy 1985-88 were the items
c enumerated in Appendix 3 and Appendix 2 Part-A of that Import
Policy. Appendix 2 Part-A is the successor of Appendix 4 (List of
Absolutely Banned Items) of Import Policy 1978-79. A question arose
before us whether Appendix 2 Part B of Import Policy 1985-88 could
also be regarded as a successor of Appendix 4. It appears from the
D material placed before us that Appendix 2 Part B (List of Restricted
Items) was also successor of Appendix 4 (List of Absolutely Banned
Items). Appendix 4 in the Import Policy 1978-79 was described as the
Absolutely Banned List. In the Import Policy 1982-83, the same
Appendix 4 is described as List of Non-Permissible Items (Banned).
\
The same description of Appendix 4 continued in the Import Policy
1983-84. During that year Beef Tallow was added in Appendix 4. In
E
the Import Policy 1984-85, Appendix 4 became Appendix 2 Part A and
Appendix 2 Part B. Appendix 2 Part A was described as a List of
Banned Items and Appendix 2 List B was described as List of
Restricted Items. In the Contents of the Import Policy 1985-88 the list
I
of Appendices makes clear that Appendix 4 of Import Policy 1983-84
F became Appendix 2 Part A and Appendix 2 Part B of the Import
Policy 1984-85. The same description of Appendix 2 Part A and
Appendix 2 Part B was continued in the Import Policy 1985-88. There-
fore, it is apparent that the present Appendix 2 Part A and Appendix 2
Part B constitute together what was originally List 4 (List of Abso-
lutely Banned Items) under the Import Policy 1978-79. On the reason-
ing which found favour with the Court in its judgment dated March 5,
G
1986 we hold that diamond exporters holding Additional Licences
were not entitled to import goods enumerated in Appendix 2 Part B of
the Import Policy 1985-88. On that ground also the respondents
diamond exporters are not entitled to take advantage of item 121 of
Appendix 2 Part B for the purpose of importing dry fruits. As held by
H this Court in its judgment dated March 5, 1986, holders of Additional
IN DO-AFGHAN CHAMBERS OF COMMERCE v. U.0.1. [PATHAK, J.J 97
Licences are entitled to import only those goods which are included in A
Appendix 6 Part 2 List 8 of the Import Policy 1985-88. Dry fruits are
not included in that List and therefore they cannot be imported under
Additional Licences.
In our opinion the respondents diamond exporters are not en- B
titled to import dry fruits under the Import Policy 1985-88 under the
I Additional Licences possessed by them. They are also not entitled to
the benefit extended by the judgment of this Court dated March 5,
1986 to those diamond exportes who had imported items under
irrevocable Letters of Credit opened and established before Octob·er
18, 1985. It appears from the record before us that the respondents
diamond exporters opened and established the irrevocable Letters of c
Credit after that date.
One more contention of the respondents diamond exporters re-
mains to_ be noticed. It is urged that the writ petition under Article 32 is
not maintainable because the petitioners' fundamental rights are not D
violated. It is pointed out that no appeal has been filed by the Customs
authorities or by the Import Control authorities against the interim
order dated January 8, 1986 of the Bombay High Court directing the
Customs authorties to permit Mis Everest Gems to clear the imported
consignment of almonds_ We do not think that an interim order can
defeat the fundamental rights of the petitioners merely because it has E
not been questioned by the Customs authorities or the Import Control
authorities.
The writ petition is allowed and the respondents Nos_ 10 and 11,
( M/s Rajni Kant Brothers and M/s Everest Gems are restrained from
importing dry fruits during the period 1985-88 under the Additional F
Licences granted to them under the Import Policy 1978-79. In the
circumstances there is no order as to costs.
Civil Appeal No. 664 of 1986 is directed against the judgment
and order of the Bombay High Court rejecting the appellants' writ
petition challenging the import of dry fruits by the respondent, M/s G
Everest Gems under Additional Licences granted under the Import
Policy 1978-79. The questions raised in this appeal are identical with
those raised in the writ petition disposed of earlier.
In the result this appeal is allowed, the judgment and order dated
January 28, 1986 of the Bombay High Court are set aside and the writ H
98 SUPREME COURT REPORTS [1986] 3 S.C.R.
A petition filed in the High Court is allowed. The respondent, M/s
Everest Gems is restrained from importing dry fruits during the period
1985-88 under the Additional Licences granted to them under the Im-
port Policy 1978-79. There is, however, no order as to costs.
B
A.P.J. Appeal allowed.
\
f
\
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