Supreme Court of India
RAJ PRAKASH CHEMICALS LTD. & ANR.versusUNION OF INDIA & ORS.
- Citation
- 1986 INSC 27
- Decided
- 5 March 1986
- Disposal
- Dismissed
- Bench
- V D TULZAPURKAR
Holding
The phrase "specifically banned" means items listed as either "banned" or "absolutely banned" in the applicable Appendices of the Import Policy in force at the time of import, and Additional Licences cannot be used to import such items, except for shipments covered by irrevocable Letters of Credit opened before 18 October 1985.
Summary
Raj Prakash Chemicals Ltd., the sole Indian manufacturer of acrylic ester monomers, challenged the grant of Additional Licences to diamond exporters that allowed import of those monomers despite their being placed in the "Limited Permissible" list under the Import Policy 1985‑88. The core issue was the meaning of "specifically banned" in the Supreme Court's order of 18 April 1985, which had affirmed High Court orders granting Export House Certificates under the Import Policy 1978‑79 but excluded items "specifically banned" at the time of import. The Court held that "specifically banned" includes both items listed as "banned" and "absolutely banned" in the relevant Appendices of the prevailing Import Policy, and therefore the Additional Licences could not be used to import such items, except where irrevocable Letters of Credit had been opened before 18 October 1985. The Court dismissed the appeal, confirming the earlier construction and ordering no costs.
Issues considered
- The proper construction of the phrase "specifically banned" in the Supreme Court order of 18 April 1985.
- Whether the rights granted under the Import Policy 1978‑79 can be curtailed by the later Import Policy 1985‑88.
- Whether diamond exporters holding Additional Licences may import acrylic ester monomers now listed in Appendix 3 (Limited Permissible Items) of the 1985‑88 policy.
- Whether imports effected under irrevocable Letters of Credit opened before 18 Oct 1985 are protected from the Court's construction.
Legislation cited
Subjects
Import PolicyAdditional LicenceExport House Certificateacrylic ester monomersspecifically bannedrestitutionforeign exchangeprotection of indigenous industryinterpretation of statutory lists
Judgment
448
A
RAJ PRAKASH CHl!MICALS LTD. & ANR,
v.
UNION OF INDIA & ORS,
MARCH 5, 1986
B
[V,D. TULZAPURKAR; R.S. PATHAK AND SABYASACHI MUKHARJI, JJ,]
Practice &Procedure
Order of Court - Construction of - To be consistent with
c principle that Court IJllJSt be presumed to have given effect to
the law.
The first appellant, a public limited company, engaged
in the manufacture of acrylic ester monOlll!rs (Butyl Acrylate,
Bthyl Acrylate, 2-Ethyl Hexyl Acrylate and Methyl Acrylate)
D under an industrial licence granted in February 197 5.,,
cOlllllellCed ll&nllfacture in December 1980 and was until then the
only manufacturer in India. In the year 1981 a public sector
.
organisation also began to manufacture acrylic ester mo-ra •
In the period before 1980 in the absence ·of indigenous
E manufacture of acrylic ester monomers, the Govenment of India
permitted the import of those iteus on Open General Licence.
Thereafter, in the Import Policy 1981-82, with a view to
protect indigenous industry and to conserve foreign exchange·
the Government of India placed acrylic ester monomers in
Appendix 5 (List of Restricted lte11S), and in July, 1981 Ethyl~
F Acrylate wss taken from Appendix 5 to Appendix 3 (List of
Banned lteus). A public notice dated July 7, 1981 announced
that Export Houses which were eligible to import Ethyl
Acrylate would be allowed to import it only to the extent of
irrevocable Letters of Credit opened before the dste of the
notice.
G
Under Import Policy 1982-83, the tl01ll!llclature of the
headings of the Appendices wss altered, and the heading "Li&~
of Banned Items" of Appendix 3 was changed to "List of Limited
Permissible Items". Likewise, the heading "Absolutely Banned
List" of Appendix 4 was altered to "List of Non-permissible
H
RAJ PRAKASH v. u.o.I. 449
A
~tems (Banned)". And the heading "List of Restricted Ite1111" of
Appendix 5 became the "List of Automatic Permissible Ite1111".,
Ethyl Acrylate remained in Appendix 3 and all other acrylic
ester monomers remained in Appendix 5.
B
Under Import Policy 1983-84, the headings of Appendices
3, 4 and 5 remained as they were, and all four acrylic ester
monomers were placed in Appendix 3 (List of Limited
"Permissible Items).
'Under Import Policy 1984-85 Appendix 2 Part A became the
"List of Banned Items" and Appendix 2 Part B became the "List C
of Restricted Items". Appendix 3 continued to be the "List of
Limited Permissible Items". Appendix 5 was the "List of
Canalised Items". Appendix 6 mentioned the import of ite1111
under Open General Licence.
That nomenclature and arrangement was reflected again D
-,.under Import Policy 1985-88, except that Appendix 4 was
deleted and the new Appendix 6 (the "Open General Licence"
List) contained Part II which listed items open to import
under Export House Additional Licence. Under both Import
Policies, 1984-85 and 1985-88 the four acrylic ester monomers
appeared at item 9 of Appendix 3 (List of Limited Permissible E
Items). ,
Changes in the nomenclature of the headings of the
Appendices in the Import Policy 1982-83 and thereafter were
considered necessary to bridge the gap in India's balance of
-ipayment. The change in the nomenclature did not alter the F
principle underlying the grouping of items under the various
heads. Each grouping was determined in acco.rdance with two
major objectives of import policy, the conserving of foreign
exchange and protecting the development of indigenous
industries. by limiting the import of corresponding
manufactured products. The items in Appendix 3 (List of G
Limited Permissible Imports) were those whose import was not
'fp_ermissible ordinarily but could be permitted by the
'Government if their import was necessary and justified, while
the import of ite1111 absolutely banned (and later simply
described as "Banned") was not permissible at all.
H
The Import Policy 1978-79 incorporated a scheme under
which Registered Exporters were eligible for the grant of
450 SUPREME COURT REPORTS [1986] 1 S.C.R.
A
Export House Certificates on the basis of the exports actuall~
made in the three-year base period 1975-76, 1976-77 and .1977-
78. Export Houses were entitled to the following facilities:-
(i) Import replenishment licences'eligible to them
as registered Exporters,
B
(ii) Import replenishment licences transferred to
them by others. .•
(Hi) Import of items placed on Open General
Licence, and
c
(iv) Additional Licences.
Several diamond exporters applied for Export House
Certificates and consequent Additional Licenc:es, which were
refused on the ground that they had not di11ersified · their
D exports. A number of writ petitions were filed by these,,
diamond exporters in the High Court of Bombay and the High
Court of Delhi. The High Courts held that. the ground on which
the Export House Certificates had been refused was wholly
untenable and directed the issue of Export House Certificates
as well as the consequent Additional Licences, but while
E defining the right of the diamond exporters to import items
under the Additional Licences they also took into account the
Import Policy prevailing at the time of import in regard to
the items which could not be imported. Appeals against the
orders of the High Courts were disposed of by this Court by
its order dated April 18, 1985. The authorities were directed~
F to issue the necessary.Export House Certificates for the year
1978-79. It was further directed that "save and except items
which are specifically banned under the p1~evalent illport
policy at the time of illlpOrt, the diamond exporters shall be
entitled to inport all other items whetheir canalised · or
otherwise in accordance with the relevant rules". Pursuant to
G this order of the Court, the dismnd exporters were issued
Additional Licences which permit them to illlpOrt acrylic est~~
mono•rs.
Feeling aggrieved by the grant of such Additional
Licences, the appellants filed a writ petitio11 under Art. 32
H complaining that the order dated April 18, l 98S of this Court
RAJ PRAKASH v. u.o.I. 451
.A
..Vas misinterpreted and, in consequence thereof the import of
acrylic ester monoaers was being allowed. This Court dismissed
the writ petition with liberty to move the High Court of
Bombay. The appellants then filed a writ petition in the High
Court of Bombay which was dismissed by a Single Judge, and B
this order was confirmed in· Appeal by the Division Bench on
the ground that withdrawal or cancellation of the additional
endorsement made on the"Additional Licences would conflict
'11th this Court's Order and would amount to modifying or
mlllifying it.
On the question as to what is the true meaning and scope c
of the order dated April 18, 1985 made by this Court,
dismissing the appeal and writ petition,
llELD : 1. The meaning and scope of this Court's order
dated April 18, 1985 llllSt be discovered from the terms of the
High Court orders, because the language in which the order of D
.this Court is couched bears close comparison with one or other
of the High Court orders. (471 F-G)
2. The Additional Licences to be issued to diamond
exporters entitled them to import ite1111 permissible to Export
Houses under such Licence under the Import Policy 1978-79 E
excluding those ite1111 which fell within Appendices 3 and 4 of
the Import Policy 1978-79 and also excluding items which fell
in Appendix 3 and Appendix 2 Part A of the Import Policy
1984-85. That is the meaning which lllUSt also be given to the
terms of the order dated April 18, 1985 of this Court. Where
~the Import Policy prevailing at the time of the import is the F
Import Policy 1985-88, the ite1111 excluded are those enumerated
in the corresponding Appendix 3 and Appendix 2 Part A of that
Import Policy. That conclusion follows irresistibly on the
analysis attempted by this Court and in the context in which
the order was made. (473 A-C)
G
3. When the word "banned" was used, it was intended to
>t...ake in ite1111 which were banned altogether as well as ite1111
)which were banned for import by the holder of an Additional
Licence. The Court was concerned with the right· to import of
the holder of an Additional Licence. The holder of an
Additions! Licence was prohibited from importing ite1111 which H
452 SUPREME COURT REPORTS [1986] 1 S.C.R.
A
were banned altogether and also ite!M which he, as the holder'-
of an Additional Licence, was banned from import:ing. [473 E-F)
4. This Court would be enlarging the sc.ope of relief
granted by the High Court if the more liberal interpretation
was given to the words "specifically banned" and such a
B construction is clearly impermissible when no di8110nd exporter
had appealed against that order before this Court. When this
Court made the orders dated April 18, 1985, w'tien the lmpore•
Policy 1985-88 was in force, there were only two ite.. which
were absolutely banned, and they were anillal tallow and aninial
rennet. Thst was also substantially the posit:ion under the
c Import Policy 1984-85. (473 G-H; 474 A]
5. The right of a di8110nd exporter to an Additional
Licence does not issue from paragraph 265 of the Import Policy,
1985-88. Paragraph 265 enables the grant of Additional'
Licences to other Export Houses, and diamond exporters "are not
D entitled to Additional Licences under that Import Policy. The'><
Export House Certificates granted to the diai10nd exporters
pursuant to the orders of the High Courta and of this Court
are those envisaged under the Import Policy 1978-79. But for
the purpose of granting relief in their favour the Courts took
into account the conditions prevailing at the time of import
E and, therefore, the provisions of the Import Policy 1985-88
become relevant. They are relevant for the purpose of
construing the ter!M in which relief has been granted by the
Courts. They do not constitute the source of those rights,
(474 D-F]
F 6. The di8110nd exporters on the construction placed by
this Court on its order dated April 18, 1985, cannot be
regarded as denying restitution. But the restitution available
to them has been reduced by the express direction of the Court
that they are not entitled to import itellil excluded under the
Import Policy prevailing at the time of import in addition to
G those excluded under the Import Policy 1978-79. (474 H; 475 A]
7. The construction placed by this Court on the orde.d
dated April 18, 1985 is consistent with the priJ:Lciple that the·
Court 1111St be presumed to have given effect to t.he law. That.
presumption can be rebutted only upon evidence showing a clear
intention to the contrary, either expressly or by necessary
lI implication. There is no such evidence before the Court.
(475 D-E]
RAJ PRAKASH v. u.o.I. 453
A
8. Those di8110nd exporters who were granted Additional
Licences under the Import Policy 1978-79 and had opened and
established irrevocable Letters of Credit before October 18,
1985 should be pemitted, notwithstanding the construction
placed on the order dated April 18, 1985 of this Court, to
clear. the goods imported, or to be imported, by them pursuant
B
to such irrevocable Letters of Credit. (477 E-F)
' .. 9. All imports effected pursuant of such Letters of
Credit should be deemed to have been legally and properly
made, and should entail no adverse consequences whatsoever on
the basis of principles of justice, equity and fair play and
by the need to avoid undeserved hardship ignoring the legal
technicalities. (477 F-G)
c
10. The diamond exporters who pursuant to the issue of
Additional Licences under the lllpOrt Policy 1978-79 have
opened and established irrevocable Letters of Credit on or
.., after October 18, 1985 will not be entitled to the benefit of
D
' this order. (478 B-C)
Deputy .Autt. Iron • Steel Controller • Anr. v. L.
Jfanfctcti...,,, Proprietor, latrella lletal Corpa. Wra, (1972)
2 s.c.R. 1, relied upon.
E
Joint Qiief Controller of lqiorts & Eirporta, Madra v.
K/s. wM...,, "1tha etc., [1966) l s.c.R. 262, Union of Iadia
• Ora. v. K/s. lndo-Afgan Ageacies ~ •• (1968) 2 s.c.R. 366
and .JapnMth .Aggarw1 v. B.R. Datta, (Civil Appeal No.801 of
"'" 1.964 decided on January 10, 1967), referred to.
F
CIVIL APPELLATE JURISDICTION Civil Appeal No. 4978 of
1985.
From the Judgment and Order dated 16.8.1985 of the
Bombay High Court in Appeal No. 726 of 1985.
G
V.M. Tarkunde and Rajiv Datta for the Appellants.
B. Datta, Additional Solicitor General, K.K. Venugopal,
Ashok H. Desai, A.K. Ganguli, R.N. Poddar, s. Ganesh, Anand
Bhatt, Harish Salve, Raian Karanjawala, Mrs. Manik
H
454 SUPREME COURT REPORTS [1986] 1 S.C,R.
A
Karanjawala, G.E. Vahanvati, B.R. Agarwala, M.M. Jayakara and ~·
Miss V. Menon for the Respondents.
The Judgment of the Court was delivered by
B
PAl'llAK, J. This ~ppeal is directed against the judgment
and order dated August 16, 1985 of a Division Bench of the
High Court of Bombay summarily rejecting an app<!al filed by
the appellants against the dismissal of their writ petition by ,•
a learned Single Judge of that High Court.
The first appellant, Raj Parkash Chemicals Limited, is a
c public limited company with its registered office at Bombay.
It is engaged in the manufacture of acrylic ester monomers
(Butyl Acrylate, Ethyl Acrylate, 2- Ethyl Hexyl Acrylate and
Methyl Acrylate) at its factory in Tarapur, Maharashtra. These
items are used by various industries engaged in the
manufacture of Binders required in textiles, leather paint and
D
paper industries. The second appellant is the Managing .,
Director and a shareholder of the appellant company. In
February 1975, the appellants were granted an industrial
licence for manufacturing acrylic ester monomers in a total
quantity of 3,000 tonnes per annum. The installed capacity of
the factory ~s, however, 1,000 tonnes per month. It commenced
E
manufacture in December 1980, and was until then the only
manufacturer in India of acrylic ester monomers. In the year
1981 the Indian Petrochemicals Corporation Limited, a public
sector organisation, also entered the market and began to
manufacture acrylic ester monomers at its factory at Baroda,
which possesses a capacity of 10,000 tonnes per y1!ar. ,.<
F
In the period before 1980 in the abs1mce of any
indigenous manufacture of acrylic ester monomers, the
Government of India permitted the import of those items on
Open General Licence. Thereafter in the Import Policy 1981-82,
with a view to protect indigenous industry and to conserve
G
foreign exchange the Government of India placed acrylic ester
monomers in Appendix 5 (List of Restricted Items), and in Juiy -f
1981 Ethyl Acrylate was taken from Appendix 5 t.o Appendix y' ,
(List of Banned Items). A public notice dated July 7, 1981
announced that Export Houses which were eligible to import
Ethyl Acrylate would be allowed to import it only to the
H
extent of irrevocable Letters of Credit opened before the date
RAJ PRAKASH v. u.o.r. [PATHAK, J.] 455
A
. ..., of the notice. Under Import Policy 1982-83, the nomenclature
of the headings of the Appendices was altered, and the heading
"List of Banned Item of Appendix 3 was changed to "List of
Limited Permissible Items". Likewise, the heading " Absolutely
Banned List" of Appendix 4 was altered to "List of Non-
permissible Items (Banned)". And the heading "List of Res- B
tricted Items" of App~ix 5 became the " List of Automatic
Permissible Items." Ethyl Acrylate remained in Appendix 3,
~ and all other acrylic ester monomers remained in Appendix 5.
Under Import Policy 1983-84, the headings of Appendices 3, 4
and 5 remained as they wer:e, and all four acrylic ester
monomers were placed in Appendix 3 (List of Limited
Permissible Items). Under Import Policy 1984-85, there was c
another change in the nomenclature of the headings of the
Appendices. Appendix 2 Part A became the "List of Banned
Items" and Appendix 2 Part B became the "List of Restricted
Items". Appendix 3 continued to be the "List of Limited Per-
missible Items."· Appendix 5 was the "List of Canalised Items."
" Appendix 6 mentioned the import of items under Open General D
Licence. That nomenclature and arrangement was reflected again
under Import Policy 1985-88, except that Appendix 4 was delet-
ed and the new Appendix 6 (the "Open General Licence" List)
contained Part II now which listed items open to import under
Export House Additional Licence. Under both Import Policies,
1984-85 and 1985-88 the four acrylic ester monomers appeared E
at item 9 of Appendix 3 (List of Limited Permissible Items).
Changes in the nomenclature of the headings of the Appendices
in the Import Policy 1982-83 and thereafter were considered
necessary in the context of loans and financial assistance
,. received from international agencies to bridge the gap in
India's balance of payment, and because the Import Policy of F
India is considered a vital document by foreign countries in
the for1111lation of their fiscal policies. The change in the
nomenclature did not alter the principle underlying the group-
ing of items under the various heads. Each grouping was deter-
mined and continued to be so determined in accordance with two
major objectives of import policy, the conserving of foreign G
\ exchange by limiting the total imports to a level ensuring
r 'that payment for them could be met by the available foreign
exchange resources or by maintaining a minimum deficit in the
balance of trade, and the further objective of giving i8'>etus
to, and protecting, the development of indigenous industries
by limiting the import of corresponding manufactured products. H
456 SUPREME COURT REPORTS [1986 J 1 S.C.R.
A
The items in Appendix 3 (List of Limited Permissible Imports) ).. ,
were those whose import was not permissible ordinarily but
could be permitted by the Government if their import was
necessary and justified on the merits of the relevant consi-
deration mentioned in the Import Policy, while the import of
items Absolutely Banned (and later simply described as
B "Banned") was not permissible at all.
The Import Policy 1978-79 incorporated a scheme under -
which Registered Exporters were registered as EKport Houses
and granted special facilities to strengthen their negotiat-
ing capacity in foreign trade and to build up a more enduring
c relationship between them and their supporting manufacturers.
They were eligible for the grant of Export House Certificates
on the basis of the exports actually made in the three year
base period 1975-76, 1976-77 and 1977-78. Export Houses were ,,..
entitled to the following facilities :-
D (i) Import replenishment licences elig;ible• to them ,.
as Registered Exporters,
(ii) Import replenishment licences transferred to
them by others,
E (iii) Import of items placed on Open General
Licence , and
(iv) Additional Licences.
Replenishment Licences issued in the names of Export Houses, ,.._
F or transferred to them by others, entitled th<!m to import
capital goods placed on Open General Licence subj<!ct to Actual
Users condition, and raw materials, components, and spares
placed on Open General Licence for Actual Users (Industrial).
The Additional Licence granted for 1978-79 would be valid for
the import of items appearing in Appendix 5 (List of Restrict-
G ed Items) and Appendix 7 (Restricted List - Iron and Steel
Items) excluding, however, the items appearing in Appendix 26'.--i'
An Additional Licence would also be valid for import of rlN '
materials, components and spares placed on Open General
Licence for Actual Users (Industrial), the Export House being
obliged to dispose of the items so imported to eligible Actual
H Users only.
RAJ PRAKASH v. U.0.1. [PATHAK, J.] 457
A
Several diamond exporters including the fourth respon-
dent, N. Nayan Kumar and Company, and the fifth respondent,
,
Rajnikant Brothers, applied for Export House Certificates and
consequent Additional Licences. Their applications were refus-
ed on the ground that they had not diversified their exports.
B
A number of writ petitions were filed in the High Court of
Bombay and in the High Court of Delhi, and in each case the
High Court held that the ground for rejecting the application
~ was invalid and directed the grant of an Export House Certifi-
cate and an Additional Licence to the applicant. As those
orders became the subject of corresponding appeals by the
Union of India in this Court which were disposed of by this
Court by its order dated April 18, 1985, the construction of
c
which is central to the controversy in this appeal, it would
be appropriate to refer to those orders at this point.
Taking the orders seriatim passed by the High Court of
Bombay there is first the order dated November 26, 1982 by
D
.., Pendse, J, in Writ Petition No. 1458 of 1979 filed by
Natendra Mafatlal Mehta, whereby the learned Judge directed
the grant o.f an Export House Certificate under Import Policy
1978-79 to the petitio.ner, but while extending the time for
making application for an Additional Licence he held the pet~
tioner entitled to those facilities only which were provided
E
by paragraph 174 of that Import Policy. Thereafter the same
learned Judge passed an order dated November 11, 1983 in Writ
Petition No. 1293 of 1979 filed by D. Navinchandra & Co. in
which, while directing the grant of an Export House Certifi-
cate under the Import Policy 1978-79 to the petitioner,
,;. Pendse, J. noted the objection on behalf of the Government
F
that some of the items which could have been imported under
the Import Policy 1978-79 could have been banned under the
Import Policy 1983·54, and the learned Judge observed that if
any item was banned \li:tder the Import Policy 1983-84 the peti-
tioner would not be entitled to import that item even though
it was not banned under the Import Policy 1978-79. Another
G
objection by the Government that the petitioner should not be
., permitted to import items which were canalised items under .the
!''Import Policy 1983-84 was rejected by Pendse, J., and he ob-
served that canalised items were not banned items·· and the
petitioner, should not be compelled to approach the canalising
agency for the import of items which were not canalised items
H
under the Import Policy 1978-79. He directed that the peti-
458 SUPREME COURT REPORTS (1986] l S.C.R.
A
tioner would not be entitled to import only those' items which ,
were specifically banned under the Import Pol.icy 1983-84
prevalent at the time of import. On December 23, 1983, Pendse,
J, passed an order in Writ Petition No. 761 of 1983 filed by
Messrs. N. Nayankumar and Company where he directed the issue
of an Export House Certificate to the petitioners under the
B Import Policy 1978-79 and held the petitioners entitled to an
Additional Licence for the import of items in the same terms
as was set forth in the order dated November 11, 1983 in the •
earlier case. The foruth order in the series Wa!1 passed on
January 25, 1984 by Bharucha, J. in Writ Petition No. 1048 of
1983 filed by Messrs. Mehta Gems., and that lea med Judge
c taking note of the orders passed earlier by Pendse, J. in
similar cases, also directed the issue of an Export House
Certificate to the petitioners and while granting time to the
petitioners for applying for an Additional Licence he
directed:-
"Save and except items which are specifically
D banned under the prevalent import policy at the ,.
time of import, the Petitioners shall be entitled .
to import all other items whether canalised or
otherwise."
Then followed the order dated January 30, 1985 passed by
E Sawant, J. In Notice of Motion No. 1194 of 1984 in Writ
Petition No. 761 of 1983 filed by N. Nayankumar .~ Co. and the
order directed :-
1. The Respondents should make the following '
endorsement on the licence in question :- ~
F
"This licence is valid for import of items
permissible to export houses under additional
licence category as per paragraph 176 of the Import
and Export Policy for the period 1978·-79 excluding
those items which are banned for the period 1978-79
G and which have been banned during the import policy
for the period · 1984-85. The additi.onal licenc~4
category import allowed to be imported subject to ·
the provisions of paragraph 176 of the Import and
Export Policy for the Period 1978-79.
H 2. The banned items referred to abo"e mean items
which are "banned" and "absolutely banned".
RAJ PRAKASH v. U.O.I. [PATHAK, J.] 459
A
3. 'Ille Petitioners will take out a separate Motion
for Import Replenishment (REP) Licence transferred
to them by others , if any. ·
4. No other order on the present Motion and the B
Motion stands disposed of as above with no order as
to costs.
• Adverting to the orders passed by the High Court of Delhi
in the several Writ Petitions filed before it, we find that
the High Court by its order dated July 15, 1980 in Writ
Petition No. 250 of 1979 filed lTJ Jayantilal Mangalji Mehta c
held the petitioner entitled to an Export House Certificate
under the Import Policy 1978-79, and observed that the Certi-
ficate would operate with effect· from the "original entitle-
ment keeping in view the date of the application and the year
for which it was applied". On September 3, 1982 the High Court
directed in Civil Writ Petition No. 251 of 1979 filed by Vijay D
Trading Company that an Export House Certificate for the year
.. 1978-79 should be issued to the petitioner and declared him
entitled to all the consequential Replenishment and Additional
Licences, and further directed, on a concession made by the
petitioner that he would be satisfied if he was permitted to
import those items only which were not banned in the year E
1980-81, (as the case had originally come up for hearing on
July 15, 1980), that the Replenishment and Additional Licences
be issued in those terms. Tilereafter, on April 7, 1983 the
High Court, while disposing of Writ Petition No. 1501 of 1981
filed by Raj nikant Brothers, ordered the renewal of their
._ Export House Certificate for the Year 1978-79 and directed F
that as they had filed the Writ Petition on May 11, 1981 they
would be entitled to the consequent licences for the import of
those items only which were open to import under the Import
Policy 1981-82. 'Ille High Court went on to observe :-
"It may be that some of the items, which were G
permitted to be imported in the year 1981-82 may
now have been absolutely banned under the Policy
for the current year, i.e. 1983-84. In such a case
the petitioner, of course, cannot be permitted to
import those items. If, for example, an item which
could be freely imported under the Policy for the H
year 1981-82 is now only canalised, then the
460 SUPREME COURT REPORTS [1986 l 1 s.c.R.
A
petitioner may still be entitled to import that . .
item because merely canalising an it.em cannot be "11111
regarded as import of that item being absolutely
banned."
It has been .mentioned earlier that the Un.ion of India
B appealed against the orders of the High Court cif Bombay and
the High Court of Delhi, the appeals being Civil Appeal No.
1423 of 1984 (Union of India v. Rajnikant Brothers) and Civil •
Appeals Nos. 3232,3233 and 29020 to 29027 of 1984. A number
of Special Leave Petitions, being S.L.Ps. Nos. 13826 to 13829
of 1983,9161,9174,10868, 952 to 971, 7190,2892 to 2899, 8224
c of 1984, 14471 of 1982 and 9338 of 1983 were also disposed of
along with the appeals. The order dated April 18, 1985
disposing of those cases reads as follows :-
''We have heard counsel for the parti.es and have
gone through the judgments of the High Courts of
D Bombay and Delhi. We are unable to find, in the
facts and circumstances of the case, any require- "'
ment of diversification of exports as a condition
for the grant of Export House Certificates in the
Import Policy for the year 1978-79. While confirm-
ing the High Court's Judgment quashing the order
E impugned in the Writ Petitions in the High Court we
direct the appellants to issue the nec.essary Export
House Certificates for the year 1978-79. The Export
House Certificates shall be granted wl.thin 3 ioonths
from this date. Save and except items which are·
specifically banned under the prevalent import _.
F policy at the time of import, the respondents shall
be entitled to import all other items whether cana-
lised or otherwise in accordance with the relevant
rules. The appeals are disposed of accordingly with
no order as to costs."
G Pursuant to the orders of this Court and of the High
Court of Bombay and the High Court of Delhi, th.e diaioond ex-
porters have been issued Additional Licences which permit them4
to import item such as acrylic ester monomers.
The appellants are aggrieved by the g1'.ant of such
H Additional Licences and see in the import of items under those
RAJ PRAKASH v. U.O.I. [PATHAK, J,] 461
A
~Licences grave danger to their indigenous industry. Moreover,
they say, valuable foreign exchange will unnecessarily go out
of the country. In the circumstances, the appeJ.,lants filed
Writ Petition No. 11676 of 1985 in this Court complaining
that the order dated April 18, 1985 of this Court was being
misinterpreted and, in consequence, the impor~ of acrylic B
ester monomers was being allowed. On August 1, 1985, this
Court dismissed the Writ Petition with liberty to the
;, appellants to move the High Court of Bombay. The appellants
then filed Writ Petition No. 1549 of 1985 in the High Court
of Bo!llbay, but the writ petition was rejected in limine by
Pendse, J. on August 12, 1985. An appeal from that order,
being Appeal No. 726 of 1985, was dismissed by a Division C
Bench on August 16, 1985. The appeal was dismissed on the
ground, inter alia, that the withdrawal or cancellation of the
additional endorsement made on the Additional Licences would
conflict with the order of this Court and would amount to
modifying or nullifying it. Thereafter, the appellant filed a
*special.leave petition in this Court, and on special leave D
being granted, this appeal is now before us.
It is admit~ed between the parties in this appeal that
the fundamental question for consideration is the true meaning
and scope of the order dated April 18, 1985 made by this
Court. There is no dispute that'the diamond exporters enjoying E
the benefit of the order are entitled to the issue of Export
House Certificates under Import Policy 1978-79 and to the
facilities flowing from such grant. There can also be no dis-
pute that the consideration whether the items sought to be
~ imported by such diamond exporters are canalised cannot act as
an impediment to the import directly by them. The order F
declares further that such diamond exporters shall be entitled
to import all items "save and except items which are speci-
fically banned under the prevalent import policy at the time
of import." The controversy between the parties centres around
the meaning of the expression "specifically banned", specially
r in the context of an Additional Licence granted to such
~iamond exporter.
G
Shri V.M. Tarkunde, counsel for the appellant company,
contends that under the aforesaid order dated April 18, 1985
Export Houses holding Additional Licences are prohibited under
the Import Policy 1985-88 fro]jl importing items other than H
462 SUPREME COURT REPORTS [19861 1 s.c.R.
A
those appearing in Part II they are taken into account the~
result would be the same. He points out that under the Import
Policy 1978-79 an Additional Licence was valid for the import
of raw materials placed on Open General Licence for Actual
Users (Industrial) and the relevant item 1 of Appendix 10
(List of Items on Open General Licence) excluded from import
B the items under Appendix 3 (Banned List). As acrylic ester
monomers did not appear in that list nor were e~cluded by the
other terms of item 1 of Appendix 10 they could, under the,.
Import Policy 1978-79, be imported under Open General Licence
by the holder of an Additional Licence, who was under
paragraph 176 of the Import Policy, obliged to dispose them
c off to Actual Users (Industrial) only. But now under the
Import Policy 1985-88, prevalent at the time of import, the
holder of an Additional Licence is no longer entitled to
import acrylic ester monomers because that item is now insert-
ed in Appendix 3 Part A, which by a change of nomenclature, is
currently described as the List of Limited Permlssible Items•
D Further, learned counsel contends, inasmuch as the purpose of~
issuing Additional Licences is to satisfy the ne1~ds of small
scale manufacturers who are unable to import directly the
small quantities of raw materials required by them, and there-
fore the holder of an Additional Licence is obl:lged to supply
the imported item to Actual Users (Industrial), regard must be
E had to the circumstances that under the Import Policy 1985-88
even Actual Users are debarred from importing acrylic ester
monomers because this item has been placed in Appendix 3 Part
A. Item 1 of Appendix 6 of the Import Policy 1985-88, which
lists the items to be imported under Open General Licence,
excludes the items appearing in Appendix 3 Part A from import >
F by Actual Users (Industrial). Learned counsel urges that if
Actual Users (Industrial) are themselves barred from
importing that item the holder of an Additional Licence is
also barred from doing so because in the final analysis he
imports only to supply the item to Actual Users (Industrial).
The ban. has been imposed, it is pointed out, as part of a
G policy to protect indigenous industry. Learned counsel urges
that when the orders of the High Courts and of this Cour.~-j
directed the grant of an Export House Certificate under the ·
Import Policy 1978-79 to diamond exporters for use during the
operation of a subsequent Import Policy, it must be regarded
as the grant of an exceptional right to them, beocause in all
H the years after 1978-79 diamond exporters were not entitled to
RAJ PRAKASH v. u.o.I. [PATHAK, J,] 463
any Additional Licence. In the circwnstances, it is said, when A
-1, construing the scope of those orders, regard must be had to
the observations of this Court in Deputy Asst. Iron & Steel
Controller & Anr. v. L. Man:lckclumd, Proprietor, Katrella
Metal Corpn. Madras, [1972] 3 s.c.R. 1.
The Union of India has made common cause with the B
appellant company, and Shri B. Datta, the learned Additional
i, Solicitor General of India, who appears on its behalf urges
that the Export House entitlement under the Import Policy
1978-79 has to be reconciled with the entitlement and
facilities available under the Import Policy 1985-88, He urges
that the expression "specifically banned" in the order dated
April 18, 1985 of this Court must be given a meaning c
consistent with the changed Import Policy now prevailing at
the time of import, and that what is impermissible for import
against Additional Licences under the current Import Policy
cannot be allowed to be imported now. In the first place
learned counsel points out that the High Courts and this Court
>'have already permitted a departure from the current Import D
Policy in holding the diamond exporters entitled to Export
House Certificates. Under paragraph 173 of the Import Policy
1978-79 an Export House Certificate is normally valid for
three years only. It would no longer be valid now. In the year
1978-79 due to the need for protecting export trade and
providing incentives to diamond exporters they became eligible E
for a total import licence to the extent of Rs. 108 against an
export valued at Rs. 100. The Replenishment Licence entitled
them to import on an average of 75% of the F .O.B. value of
exports while Additional Licences entitled them to another
"- 33%. With the development of the national economy and the
availability of indigenous products the policy was changed F
from the year 1979-80 onwards, and for the prupose of calcula-
ting the entitlement fot an Additional Licence .the value of
exports of select products carrying an import replenishment
rate of more than 50% in Appendix 17 of the Import Policy
1979-80 was not to be taken into account, and the value of
such exports was not to be included by an Export House while G
}-applying for an Additional Licences. In the result, the year
1978-79 was the only year for which diamond exporters could be
granted Additional Licences. Learned counsel emphasises the
need, in the circwnstances, to ensure that further departure
from the current Import Policy should not be permitted. He
H
464 SUPREME COURT REPORTS [1986] 1 s.c.R.
A
invites our attention to paragraph 35(1) of the Import Policy~
1985-88 which provides that Replenishment Licences and
Additional Licences held by Export Houses would cease to be f
valid for the import of any item which could have been
imported under Open General Licence during the preceding
financial year or earlier but was no longer so under the
B Import Policy l985-88.
Shri K.K. Venugopal appearing for the fourth respondent, '
N. Nayankumar & Company, opposes the confined construction
sought to be put by Shri V.M. Tarkunde, learned counsel for
the appellant company and Shri B. Datta, Additional Solicitor
C General of India on the order dated April 18, l985 of this
Court, and urges that diamond exporters, who were entitled
under the orders of the High Courts to the issue of ExpoL c
Houses Certificates and consequently Additional Licences were
entitled under the terms of those orders to import all items
which could be imported under Open General Licence under the
D Import Policy l 978-79 as well as all items w'1ich could be f..
imported under the Import Policy 1985-88, including items in
Appendix 3 Part A (List of Limited Permissible I~ems), but not
items absolutely banned under the Import Policy 1985-88. He
contends that the rights of such diamond exporters must be
considered in the context of the Import Policy l978-79 and not
E of the Import Policy 1985-88. The applications for Export
House Certificates were made under the Import Policy 1978-79
and were denied by the Chief Controller of Imports on a wholly
untenable ground and consequently the intent of the orders of
the Courts was to entitle such diamond exporters to restitu-
tion. Such restitution could be effected only if the diamond~
F exporters could, notwithstanding the passage of time occasion-
ed by the pendency of the proceeding in Court for releif
against the wrongful order, be placed back in the position
which they would have occupied had Export Hous·e Certificates
being granted. As regards the items which such diamond expor-
ters were entitled to import, he has referred to material on
G the record indicating how respondent 1 to 3 themselves under-
stood the orders of the Court. Our attention has been invit<;sl~
to paragraph 5 of the counter affidavit of Dr. R.K. Dhawan, '
Deputy Chief Controller of Imports and Exports, filed on
behalf of respondents Nos. 1 to 3 which states :-
H "5. In terms of the Court order the parties can
RAJ PRAKASH v. U,O,I. [PATHAK, J,] 465
A
import all the items which were under O.G.L. during
1978-79 except animal tallow and animal rennet
which were now banned under Appendix 2-A."
In this connection, reference may also be made to the
affidavit of Kanayalal J. Chellani, Deputy Chief Controller of B
Imports and Exports, filed before the High Court of Bombay in
Writ Petition No. 1686 of 1985 (Reliance Industries Limited
J. v. Union of India), a copy of which has been included as
Exhibit 19 to the affidavit of N. Nayankumar and Company in
reply to Civil Miscellaneous Petition 43000 and 43001 of 1985
in Civil Appeal No. 3233 of 1985 (Union of India &Ors. v. N.
Nayanlnnnar & Ors.). Paragraph 9 states :- C
"9. I say that it is significant to note that the
subject item has not been banned or restricted
(Appendix 2 of 1985-88 Policy. It has. only been
shifted from 0,G,L. to L.P.L. The petitioners after
receiving a licence for import of the said item D
can very well still import the item."
Shri Venugopal has attempted to demonstrate that there is need
for importing acrylic ester monomers and that in fact the
Government of India envisages such import notwithstanding that
the item is no longer on the O.G.L. list but finds place now E
in Appendix 3 of the Import Policy 1985-88. He invites our
attention to the counter affidavit of Nikhal Premchand Shah
filed on behalf of N. Nayankumar &Company to the effect that
because of the inability of the Indian Petrochemicals Corpora-
..0 tion Limited to run its ·plant at full capacity the commodity
which was being sold to Actual Users at Rs.30 per kilogram was F
now being sold at Rs. 150 per kilogram. There is reference to
a news item in the Indian Express dated April 18, 1985 stating
that although the official price was about Rs. 67 per kilo-
gram, a premium of over 155 per cent was being charged in the
open market, and the purchaser was compelled to pay a total
of Rs. 152 per kilogram. There are several provisions of the G
Import Policy 1985-88 under which import of acrylic ester
} tbonomers is permitted. They can be imported by Actual Users as
specified in paragraphs 82 (1) and 82(3) of that Import Policy
read with Appendix V-D of the Hand Book of Import and Export
procedures 1985-88. A Registered Exporter holding Replenish-
ment Licences is entitled to import the item under paragraph H
466 SUPREME COURT REPORTS (1986 J 1 s.c.R.
A
195(1) of the Import Policy inasmuch as Ethyl Acrylate Monomer)...
and Butyl Acrylate Monomer appear as item B. 36 :ln Appendix 17
of the Import Policy. Under paragraph 204(1) of the Import
Policy, a special facility has been given' to a manufacturer-
exporter holding a valid Replenishment Licence issued in his
name against exports of select products manufactured by'him to
B import the item specified in Appendix 3. It is contended by
Shri Venugopal that the Word "Banned" in the order dated April
18, 1985 of this Court should be interpreted in a manner con-•
sistent with Joint Qiief Controller of hpon:s & Exports,
Madras v. M/s. Aminchand Mutha etc., (1966] l S.C.R. 262 and
Union of India & Ors. v. M/s. Indo-Afghan Agencies Ltd.,
C (1968] 2 S.C.R. 366 and it should, therefore, bE! construed as
ref erring to the import of goods into the country and not in
relation to the bar placed ·on an individual to import goods
which can otherwise be imported into the country. Even if the
goods covered by the Licences issued under the Import Policy
1978-79 were found to be canalised under the Import Policy
D 1985-88 and, therefore, excluded from import directly by i<
private importers, the licences would still operate in regard
to such goods. Learned counsel urges that the word "in accor-
dance with such rules" in the order of the Court would govern
only the manner and method of import and the procedure for
application, the fees to be paid, the duties to be paid and
E other particulars and does not govern the entitlement to
import the goods.
Shri S.J. Sorabjee, appearing for N. Nayankumar and
Company, a respondent in Civil Appeal No. 3233 of 1984 filed
by the Union of India against the order of the High Court of •
F Bombay, urges that there is a fundamental qualitative
difference between the goods the import of which is prohibited
and goods the import of which is restricted or controlled. The
goods of which import is prohibited cannot lawfully cross the
customs frontiers of India and enter the stream. of trade and
co111Derce in the country. The expression "banned goods" or
G "banned items", he says, as understood in the diBcourse of the
import and export trade, means prohibited goods. Restricted or I
controlled goods whose import is permitted into the country i
subject to the fulfilment of certain conditions, learned
counsel submits, cannot be described as bannE!d goods. The
feature of non-importability is a characteristic or an attri-
H
RAJ PRAKASH v. u.o.I. [PATHAK, J,] 467
A
<I( buteof the goods themselves and does not depend upon the
person who imports the goods. Our attention is drawn to the
distinction between the prohibition of prescription of certain
goods, for example, narcotics, counterfeit coins, obscene and
seditious literature on the one hand and goods the import of
which is qualified by the category of the person entitled to B
import the goods. Carralised goods are goods of which import is
subject to restriction, in that they cannot be imported
•directly by the private importers and such goods are not
considered "banned" goods. It is urged that the import of
goods can be validly prohibited only by an order under s.3 of
the Imports and Exports Act, 1947, and learned counsel refers
to Aorlnchand Mutba's case (supra) and Jagan,nath Aggarwal v. C
B.N. Dutta (Civil Appeal No. 801 of 1964 decided on January
10, 1967). According to the learned counsel, it is the import
of only the items mentioned in Appendix 2-A of the Import
Policy 1985-88 which is covered by a notified order under the
Act. No such notified order has been made in respect· of
"'acrylic ester monomers. Learned counsel points out that the D
ban on the import of goods into India is to be found not only
under the Imports and Exports Act, but under other enactments,
such as the Customs Act, the Foreign Exchange Regulation Act,
the Drugs and Cosmetics Act, and the Insecticides Act. Learned
counsel contends that the objective of the orders of the High
Courts and of this Court was to effect restitution to E
aggrieved diamond exporters, who were victims of an unlawful
denial of their applications for Export House Certificates.
It is urged that they are entitled to full and complete
restitution, and they have suffered already a diminution of
~their rights in the additional fetter imposed by the Courts in
excluding items which were banned under the prevalent Import F
Policy at the time of import. There is no justification,
learned counsel contends, in further reducing the scope of the
restitution to which the diamond exporters were entitled and
the orders of the Courts sould be construed against any
further reduction of their entitlement. It is asserted that
the entitleioont of the diamond exporter flows from the Import G
\Policy, 1978-79 and not from the Import Policy 1985-88. There
rare several items which can be imported under the Additional
Licences issued under Import Policy 1985-88 but the import of
which was not permissible to Additional Licences holders under
the Import Policy 1978-79 and, it is said, if the construction
sought by the appellant company and the Government of India H
468 SUPREME COURT REPORTS [1986] l s.c.R.
A
were accepted the diaroond exporters would suffer the worst ~
under both Import Policies and even partial restitution
accorded by the order dated April 18, 1985 of this Court would
be nullified. Finally, learned counsel contends that assuming
there is an ambiguity in the matter we should choose such a
construction as would not subject the party to pains and
B
penalties under various statutes besides the loss and hardship
which would be inevitable. 'That two views are possible, it is
pointed out, is evident from the fact that the Import Control•
authorities have taken the view that the expression "speci-
fically banned" in the orders of the Courts does not include
items placed on the Limited Permissible List of the Import
c Policy 1985-88.
Shri Ashok Desai, appearing for Rajnikant Brothers,
Respondent No. 5, relies on considerations somewhat parallel
to those placed before us'by Shri Sorabjee and urges in parti-
cular that the right of the importer to-an Export House Certi-
D ficate and to a consequential licence does not alter with,.
variations affected in the Import Policy during the passing of
time when litigation was pending and is not dei?endent on the
exact point of.time at which the benefits were made available.
In construing the order dated April 18, 1985 of this Court,
learned counsel states that the central objective of effecting
E restitution should be borne in mind and that the entitlement
to the Additional Licence is founded in the Import Policy
1978-79 and not in the Import Policy 1985-88 and, it is said,
paragraph 265 of the Import Policy 1985-88 cannot be invoked
for construing the rights of the holders of Additional Licen-
ces issued under the Import Policy 1978-79. The successive.~
F screening of the rights through the two Import Policies, of
1978-79 and 1985-88, would result in a construction so severe
as to deny the diamond exporter~ any restitution at all.
Learned counsel cites, as an example of the scope which this
Court intended in its order dated April 18, 1985, the direc-
tion in that order that the canalisation of items under the
G Import Policy 1985-88, which were open to direct import under
the Import Policy 1978-79, cannot. operate as a restrittion.• 4
It is said that the ban against direct import by private · ·
importers imposed by canalisation as thus removed, and the
invention of the court always was that only the items "speci-
fically banned" fell within the exception to the. rights of the
H diamond exporter, "specifically banned" items .being those
•
RAJ PRAKASH v. U.O.I. [PATHAK, J.] 469
A
.~ absolutelybanned and appearing in Appendix 2-A of the Import
Policy 1985-88.
Shri Anil Dewan, who appears for Messrs Hiralal
Chaganlal and Shrijee Sales Corporation, lntervenors in this B
civil appeal, has also been heard by us. He contends that the
expressions used by the courts in their orders must be under-
stood in the sense in which those involved in the import of
~ goods and in import licensing understand such expressions, and
that if the construction suggested by the appellant Company
and the Union of India is accepted the diamond exporters would
be wholly prohibited from obtaining an Additional Licence C
under the Import Policy 1985-88. The expression "specifically
banned" must, according to learned counsel, refer to items the
import of which is banned not by reference to the person im-
porting, but because they are prohibited from any import what-
soever. Reference was made to the change in the headings of
the Appendices in successive Import Policies and, it is urged, D
i. the change of the heading "List of Banned Items" in Appendix 3
to the heading "List of Limited Permissible Items" llllst be
given due significance. In other words, items which were
banned are now regarded as open to restricted import. Besides
this, learned counsel has adverted to the particular facts of
his case, and asserts that while his case was not one of those E
in appeal before this Court and therefore not directly covered
by its order dated April 18, 1985, no appeal had been filed by
the Government against the grant of licence in the case of
these two diamond exporters, and that the said diamond
exporters had opened irrevocable Letters of Credit before the
J writ petition filed by the appellant company, full payment had F
been made and foreign exchange had left the country, and ship-
ments had been effected in June, 1985, and the Customs autho-
rities had interpreted the order in their case to mean that
the goods imported were not "banned". It is pointed out that
only a small quantity of 32 tonnes had been detained at the
port, that the insurance cover of the shipper or seller no G
longer covered the goods, that the goods were of hazardous
~.pature and were lying uninsured, and he prayed that the goods
should be allowed to be cleared.
We think it necessary to keep in the forefront the
limits of the enquiry before us. We are not concerend with the H
question of what order should be made on the controversy
•
470 SUPREME COURT REPORTS [1986] 1 s.c.R.
A
arising between the parties in the appeals, The Appeals have )..
already been disposed of. They were disposed of by the order
dated April 18, 1985. It is not our function to redetermine
the issues arising in those appeals, and this is not a re-
hearing of those appeals. We are charged with a more limited
B and pedestrain task. And that is merely to construe the
meaning and scope of the order dated April 18, 1985. The sub-
missions of learned counsel have been thoughtful and elabo-
rate, and having regard to the range covered by them they •
would have done justice to a full hearing of the appeals them-
selves. We can take assistance from them,. but only for the
c purpose of discovering what has been said by the Court in its
order of April 18, 1985. That defines the scope of ·the present
proceeding.
The terms in which the order has been made appear simple ~
on the surface, and yet as the range and depth of the conten-
D tions at the Bar have demonstrated, they embody a certain
complexity. At the outset, it is necessary to examine the ,.
context in which the order was made. Diamond exporters, who
had been denied Export House Certificate under the Import
Policy 1978-79, filed writ petitions in the High Court of
Bombay and the High Court of Delhi. The High Courts ruled that
E the ground on which the Export House Certificates had been
refused was wholly untenable. They directed the issue of such
Certificates as well as the consequent Additio:1al Licences,
but while defining the right of the diamond exporters to
import items under the Additional Licences they also took into
account the Import Policy prevailing at the time of import in
F regard to the items which could not be imported. The pendency .~
of the litigation had inevitably occupied time, and meanwhile
events had not remained stationary. The ccmtext~al framework
determining the import structure had altered. Considerations
pertaining to current economic and fiscal needs had led to the
periodic reorientation of the country's Import Policy. In-
G digenous industry had put in appearance over the years, and it
was necessary to protect its growth and encourage its develop-
ment. Many items which could formerly be imported with. j
comparative freedom under Open General Licence w''re no longer l
so permissible. And, therefore, items W\!re moved from one
List to another. There was a change in the nomenclature of
H the Headings of different Lists, but that change was effected
merely by way of clarification in order to promote a clearer
comprehension among foreigen countries of India's import
RAJ PRAKASH v. u.o.r. [PATHAK, J.] 471
A
~policy. it was a change essentially in nomenclature, and for
the ioost part effected no alteration in the basis governing
the classification reflected in the Lists. The basis of the
classification was supplied by the· principle which determined
the constitution of each group. That principle bound the group B
together. It was a principel which along with others formed
the network of principles constituting the current Import
Policy. It is in this light that we nnist understand the order
.. dated April 18, 1985. The Courts were confronted with the
problem that items which were open to import under Open
General Licence to an Export House holding an Additional
Licence were no longer included in that List and had meanwhile c
been transferred to a List not accessible to the holders of
Additional Licences. The dictates of reality rendered it
necessary for the Courts to take into account the altered
situation, and this they attempted to do by framing their
respective orders_ in appropriate terms. They took into account
not only the rights of the diamond exporters under the Import D
•Policy 1978-79 but also the effect and impact on those rights
of the Import Policy operating at the time of the import.
It is desirable at this point to keep in mind that the
appeals filed in this Court against the orders of the High
Courts were appeals filed by the Union of India. There were no E
appeals by the diamond exporters. The complaint by the Union
of India before this Court was that the High Courts had
granted too nnich to the diamond exporters or even that no
grant was called for at all. There was no complaint by the
diamond exporters before the Court that the grant was insuffi-
~ cient and that more should have been granted. This Court was F
required to consider only whether the relief granted by the
High Courts should have been granted at all, not whether it
should be enhanced. In other words, the terms of the High
Court orders determined the outer limit of the rights of the
diamond exporters. As this Court dismissed the appeals and
affirmed those orders, the meaning and scope of this Court's G
order dated April 18, 1985 nust be discovered from the terms
l of the High Court orders. And that would plainly be so because
rthe language in which the order of this Court is couched bears
close comparison with one or other of the High Court orders.
In construing the order dated April 18, 1985 of this H
Court, it is necessary to note that the real controversy
472 SUPREME COURT REPORTS [1986 l 1 s.c.R.
A
between the parties centres on the meaning of the words~
"specifically banned". They are the key weirds, and indeed the
principal submissions 'made by the array of learned counsel
before us have been devoted to ascertaining the significance
of those words. They are words which were used by Pendse, J.
B and Bharucha, J. in the orders made by them, and our task is
to find out what they were intended to mean. Now, all the
appeals before this Court were disposed of by the order dated
April 18, 1985. It was a single -or4er in respect of the•
different appeals, and what it intended to say in one appeal
it did in another. The Court proceeded on the assumption that
c the Judges of the High Court of Bombay should be considered to
have spoken with one voice and meaning although in different
language. And that Pendse, J. , Bharu_cha, J. and Sawant, J.
were all in agreement as to the extent of relief to be granted
to the diamond exporters. To appreciate then what is intended
by the words "specifically banned" it is necessary to have
D
recourse also to the order made by Sawant. J. He directed
that the Additional Licences were valid for the import of A
items permissible to Export Houses under such Licence accord-
ing to paragraph 176 of the Import Policy 1978--79 "excluding
those items which are banned for the period 1978-79 and which
have been banned during the Import Policy for the period
E 1984-85," and then explained that "banned items referred to
above mean items which are 'banned' and 'absolutely banned'.
The word "banned" in that order has been used for the period
1978-79 , and it has also been used in relation to the period
1984-85. It is obvious that in the light of the explanation
appended by the learned Judge when he spoke of items which
F
were banned for the_ period 1978-79, he had in mind items which 1'
were "banned" and items which were "absolutely banned", and he
was clearly referring to Appendix 3 (List of Banned Items) and
Appendix 4 (List of Absolutely Banned Items). Appendix 3, it
will be recalled, ' ; the list of items which could not be
imported by an Export ·,:ouse on an Additional Lic~ence. It was
a ban with reference to the category of importer. Appendix 4
G
is , the list of items which could not be imported by anyone
whosoever. When regard is had to the Import Policy 1984-85, _J
reference must necessarily be made to the corresponding 1
Appendix 3, formerly described as the List of Banned Items ,
and now described as the List of Limited Permissible Items,
and Appendix 2 Part A which is now the List of Banned Items
H
replacing Appendix 4 (List of Absolutely Banned Items). In
RAJ PRAKASH v. U.O.I. [PATHAK, J,] 473
A
-' other words, the Additional Licences to be issued to diamond
exporters entitled them to import items permissible to Export
Houses under such Licence under the Import Policy 1978-79
excluding those items which'fell within Appendices 3 and 4 of
the Import Policy 1978-79 and also excluding items which fell
in Appendix 3 and Appendix 2 Part A. of the Import Policy B
· 1984-85. Upon what we have said earlier, that is the meaning
which we think must also be given to the terms of the order
_\ dnted April 18, 1985 of this Court. Where the Import Policy
prevailing at the time of import is the Import Policy 1985-88,
the items excluded are those enumerated in the corresponding
Appendix 3 and Appendix 2 Part A of that Import Policy. That
conclusion follows irresistibly on the analysis attempted by C
us and in the context in which the order was made.
We are mindful of the submissions made before us by
learned counsel for the different diamond exporters that the
word "banned" in the import trade should mean item which are
x absolutely banned and cannot be imported under any circum- D
stance whatever, and that an import of ite~ subject to
restrictions respecting the category of il!'Porter should not
fall within the expression "banned". Reliance has been placed
on Awfnchlll!d "1tha's case (supra) as well as lndo-Afgban
Agencies Ltd.'s case (supra). Goods can be banned it is urged,
only by an order under s. 3 of the Imports and Exports Act, E
1947, and we are referred to Jagannath Aggarwal v. B.N. Dutta
(supra) (Civil Appeal No. 801 of 1964 decided on January 10,
1967). It seem> to us that when the word "banned" was used, it
was intended to take in items· which were banned altogether as
~ well as items which were banned for import by the holder of an
Additional Licence. The Court was concrened with the right to F
import of the holder of an Additional Licence. The holder of
·an Additional Licence was prohibited from importing items
which were banned al together and also items which he, as the
holder of an Additional Licence, was banned from importing. If
the more liberal interpretation suggested by learned counsel
for the diamond exporters was given to the words "specifically G
, ~anned" we would be enlarging the scope of relief granted by
Sawant, J., and such a construction is clearly impermissible
when no diamond exporter had appealed against that order
before this Court. It may be of some relevance to note that
when this Court made the order dated April 18, 1985 when the
Import Policy 1985-88 was in force, there were only two items H
474 SUPREME COURT REPORTS (19861 l s.c.R.
A
which were absolutely banned, and they were animal tallow and
animal rennet. That was also substantially the position under""
the Import Policy 1984-85.
It has been urged on behalf of the respondent diamond
exporters that if the order dated April 18, 1985 is constured
B in the manner suggested by the appellants it will result in
nullifying the relief envisaged by the Court in making the
order. We are unable to subscribe to that view. In the Import
Policies of 1984-85 and 1985-88 the items open to import under '-
Open General Licence are now set forth in Appendix 6, A
perusal of Part 11 of List 8 in Appendix 6 shows that it
C enumerates in fairly long detail the items allowed to be
imported by Export Houses holding Additional Licences for the
sale of those items to eligible Actual Users (Industrial)
subject to Actual User Condition. That is the "ntitlement of
the holder of an Additional Licence under paragraph 265( 4) of
the Import Policy 1985-88,
D
We are conscious that the right of a diamond exporter to ~
an Additional Licence does not issue from paragraph 265- of
the Import Policy 1985-88. Paragraph 265 enables the grant of
Additional Licences to other Export Houses, and diamond
exporters are not entitled to Additional Licences under that
E Import Policy. There can be no dispute that the Export House
Certificates granted to the diamond exporters pursuant to the
orders of the High Courts and of this Court are those
envisaged under the Import Policy 1978-79. But for the purpose
of granting relief in their favour the Courts took into
account the conditions prevailing at the time of import, and
F therefore the provisions of the Import Policy l 985-88 become >-
relevant. They are relevant for the purpose of c:onstruing the
terms in which relief has been granted by the Courts. They do
not constitute the source of those rights.
Great emphasis has been laid by learned c.ounsel on the
G overriding consideration that the intent of the High Courts
and of this Court was to effect restitution to the diamond
exporters, who had been denied Export House Certificates to 4
which they were clearly entitled, and there is no
justification, it is said, for so ·construing the order dated
April 18, 1985 that the extent of restitution stands
H attenuated. We think it necessary to point out that the
diamond exporters cannot, 11pon our construction <>f the order,
RAJ PRAKASH v. u.o.I. [PATHAK, J.] 475
~be
IP" regarded as denied restitution. But the. restitution
available to them has been reduced by the express direction of
A
· the Court that they are not entitled to import items excluded
under the Import Policy prevailing at the time of import in
addition to those excluded under the Import Policy 1978-79. We
may, in this connection, refer to the observations of ·this B
Court in Manickchand's case (supra) where it was pointed out:
"In granting licences for imports, the authority
concerned has to keep in view various factors which
may have impact on imports of other items of
relatively greater priority in the larger interest
of the over-all economy of the country which has C
to be the supreme consideration ; and ail applicant
has no absolute vested right to an import licence
in terms of the policy in force at the time of his
application."
)i It seems to us that the construction placed by us on . D
order dated April 18, 1985 is consistent with the principle
that the Court must be presumed to have given effect to the
law. That presumption can be rebutted only upon evidence
showing a clear intention to the contrary, either expressly
or by necessary implication. We see no such evidence before
us. En passant, we may refer to paragraph 35(1) of the Import E
Policy 1985-88, which declares :
"35. (l). REP licences and Additional licences held
by Export Houses/Trading Houses will cease to be
valid for ·import of any item which could be
imported under Open General Licence during the F
preceding licencing year or earlier but is no
longer so in this Import-Export Policy."
But while the construction suggested by the appellant
company and the Union of India of the order dated April 18,
1985 of this Court has found favour with us , the scope of G
~t~e relief to be granted remains to be considered. The
interim orders passed by the Court in this appeal were made on
the basis that they operate in respect of all diamond
exporters seeking to import acrylic ester monomers pursuant to
the Additional Licences issued to them and this case has been
heard on th!' assumption that the orders made on the appeal H
476 SUPREME COURT REPORTS [1986 J 1 s.c.R.
~
A
men-~
will govern all such diamond exporters. In drawing up those
orders, a few facts need to be carefully considered. As
tioned earlier, consequent upon the rejection of their appli-
cations for Export House Certificates under the Import Policy
1978-79 a number of diamond exporters approached the High
Court of Bombay and the High Court of Delhi and were granted
B relief. The directions made by the High Courts issued in a
steady and continuous stream from the year 1980 onwards, and
the High Court of Bombay in particular detailed the facilities ~
to which the petitioner diaioond exporter would be entitled on
the issue of an Export House Certificate. The orders continued
all the way upto January, 1985. Appeals filed by the Union of
c India in the High Court of Bombay against the orders of the
respective learned Single Judges were dismissed by a Division
Bench of the High Court and those orders were affirmed. In
the writ petition filed by Messrs. Vijay Tradi.ng Company in
the High Court of Delhi, the High Court had directed that
although the petitioner was entitled to an Export House Certi-
D ficate for the year 1978-79 it would be entitled to import:<
those items only which were not banned in the year 1980-81,
the writ petition having been taken up for hearing during that
year. A Special Leave Petition by the union of India against
that order was dismissed by this Court on April 18, 1983. An
application by the Union of India for review of that order was
E dismissed by this Court on May 4, 1984. Meanwhile, the Union
of India appealed to this Court against the orders of the High
Court of Bombay and of the High Court of Delhi made in favour
of the diaioond exporters in the writ petitions filed by them
and it has not been shown that any stay order was granted by
this Court in thoae appeals. The appeals were heard along with~
F several special leave petitions by this Court, and were dis-
missed by the order dated April 18, 1985 in terms which, as
has been mentioned earlier, affirmed the High Court orders.
The appellant company in this case filed a writ petition in
the High Court of Bombay and that writ petition was dismissed
on August 12, 1985. Meanwhile, Additional Lfoences had been
G issued to some of the diamond exporters by the Import Control
Authorities, and it appears clearly from the affidavit of Dr~
R.K. Dhawan, Deputy Chief Controller of Imports and Exports
and the affidavit of Shri Kanayalal J. Chellan1l, Deputy Chief
Controller of ·Imports and Exports that the Import Control
Authorities themelves considered that the diamond exporters
H holding Additional Licences were entitled to import all the
RAJ PRAKASH v. u.o.I. [PATHAK, J.] 477
A
~tems accessible to them under Open General Licence under the
Import Policy 1978-79 except those placed in Appendix 2 Part A
of the Banned List under the Import Policy 1985-88. It also
appears that some of those diruoond exporters who had been
granted Additional Licences pursuant to the orders of the High
B
Courts have already fully utilised those Licences and in some
cases ·have partly utilised them. Throughout this period: any
diamond exporter granted an Additional Licence under the
Import Policy 1978-79 could bona fide believe having regard to
the ccnsistent orders made by the Courts and the equally.con-
sistent manner - in which the Import Control Authorities had
construed those orders, that he was entitled to effect imports_
accordingly. · Many of them opened irrevocable Letter of Credit
c
on o~ders placed with foreign suppliers ·convinced that they.
·._.-e fully entitled to import the items ordered by them. This
I, popular impression continued. unabted until October 18, 1985,
i· when for the first time since it all began this Court made an
order, on the Special Leave Petition giving rise to the D
nresent appeal (Special Leave was granted on November 5,
1985), imposing a restraint on the clearing of acrylic ester
monomers by the customs authorities. The date, October 18,
1985, is a critical date, because for the first time diamond
exporters can be said·to have been warned that the Court.could
possibly take a different view from that prevailing hitherto.
E
Meanwhile, as we have said, some of. the diamond exporters had
already irretrievably committed tbemelves' by opening and
establishing irrevocable Letters of Credit. We think it appro-
priate that those diamond exporters who were granted Addi-
tional Licences under the Import Policy_l978-79 and had opened
and established irrevocable Letters of Credit before October
F
18, 1985 should be permitted, notwithstanding the construction
we have placed on the order dated April 18, 1985 of this
Court, to clear the goods imported, or to be iniported, by them
pursuant to such irrevocable Letters of Credit. In· other
words, all imports effected pursuant to such Letters of Credit
should be deemed to have been legally and properly made, and
G
should entail no adverse consequences whatsoever. In taking
~h!s view we are. impressed by the broad principles of justice,
equity and·fairplay and by the need to avoid undeserved hard-
ship, and we are not persuaded to the contrary ·by legal
technicalities. We may point out that the validity of this
principle has been recognised in paragraph 35(3) of the Import
H
Policy 1985-88 itself,.where while declaring that Additional
Licences issued to Export Houses in the Preceding licencing
478 SUPREME COURT REPORTS (1986) l s.c.a.
A
year or earlier shall cease to be valid for the import of'-
items of spares appearing in certain Appendices, including
Appendix 3, of the Import Policy for the licencing year an
· exception has been carved out insofar that "these restrictions
.will not apply ·to the extent the licence holders have made
firm commitments' by irrevocable Letters of Credit opened and
B established •••••••••• before 1st· April 1985'', the date when the
Import Policy 1985-88 came into force.
•
At the same time we make it clear that diamond exporters
who pursuant to the issue· of Additional Licences under the
Import Policy 1978-79 have opened and established irrevocable
C Letters of Credit on or after October 18, 1985 will not be
entitled to the benefit of this order.
The appeal, and therefore the writ petition filed by the
appellants, are disposed of accordingly. Th~re is no order as
to costs.
D
A.P.J.
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