Holding

Exports made after the period prescribed in the amended cash‑assistance schemes are ineligible for assistance, and the original scheme cannot be applied concurrently, leading to dismissal of the appellant’s claim.

Summary

Testees Ltd. entered into contracts with Malaysia's National Electricity Board for transmission towers and registered them under the 1969/1970 cash‑assistance scheme. The company received assistance for some contracts but was denied for later contracts, the government arguing that exports made after the dates prescribed in the 1972 and 1973 amendments were ineligible. The High Court partially restrained the government from demanding a refund but rejected the claim for the later contracts. On appeal, the Supreme Court examined paragraph 10 of the 1970 scheme, which expressly bars cash assistance for exports after a specified date, and noted that the subsequent amendments fixed eligibility periods. Since the disputed exports occurred after July 1974, beyond the prescribed periods, the Court held the appellant was not entitled to assistance and dismissed the appeal.

Issues considered

Whether cash assistance under the 1969/1970 scheme is available for exports made after the dates prescribed in the later amended schemes.
Whether the amendment of the scheme precludes simultaneous claim under the original scheme.
Interpretation of paragraph 10 of the 1970 scheme regarding eligibility based on export date.
Whether the government is entitled to recover cash assistance already paid.

Legislation cited

Companies Act, 1956

Subjects

exportcash assistanceImport Trade Control Policycontract registrationscheme amendmenteligibilityforeign exchange earningsgovernment policy

Judgment

TESTEELS LTD.
A
v.
UNION OF INDIA

FEBRUARY 6, 1989

[G.L. OZA AND K.N. SAIKIA, JJ.)
B
...
Imports and Exports-Import Trade Control Policy 1972-197~
Export of Transmission Towers-Cash Assistance Scheme-Subse-
quent amended scheme prescribing time-bound period-making exports
ineligible for cash assistance beyond that period-Validity of ~-
c In 1969, the Govt. of India announced, through public notice a
scheme for registration of contracts involving deUveries extending over
a period of not less than 12 months for cash assistance m respecf of
certain ei<pOrts. The scoiie oftbe scheme was extended in 1970, aUowing
.
Cl!Sh assistance at the·same percentage as was prevailing on the date of
D the firm contract so registered provided the.inwice was attested by the
Banks concerned. It was also provided that even if the rate of cash
assistance is reduced by Govt. the higher rate that existed on the date of
the Firm contract would be admissible. And in case of increase in the
rate, exports made during the contract would normaUy be eUgible for ,...
the benefit of the increased rate. It was also made clear that If the rate is
E likely to affect an exporter adversely, Govt. would consider its matter
on merits.

In 1972 the cash assistance scheme on export of engineering goods
was modified aUowing additional cash assistance of 5% of the f.o.b.
value on all exports effected during 1.4.72 to 30.9.72 to certain
F countries. It was further announced that in respect of transmission -)
towers exported from 1st Oct. 1972 till 31st March, 1973 cash assistance
would be at the rate of 25% of the f.o.b. value.

The appellant company entered into contracts with the National
Electricity Board of Malaysia and in respect of some of the exports of
G transmission towers, the appellant received cash assistance and in
respect of others, it was denied on the ground that the exports made
during the extended delivery period of the contract were not covered
under the Import Trade Control Policy and as such no cash assMance
could be granted on exports made after March, 1974.

H The appeal preferred by the appellant was rejected by the Deputy
-~ :;02
TESTEELS LTD. v. U.O.l. 503

Chief Controller of Imports and Exports on the groond that the benefit A
of registration on export in execution of the supplementary contract was
additional qoantity at increased rates and could not be allowed under
Govt. policy. The second appeal was rejected by the Chief Controller of
Imports & Exports, stating that after execution of the supplementary
order there was increase in quantity of goods to be supplied as also price B
on the date of execotioo of the supplementary order and the import
policy did not provide for protection of benefits where there was
increase in the value of contract. The review petition filed by the appel·
laot was also rejected.

Thereafter the appellant moved the High Court onder Article 226
of the Constitution. The High Court partly allowed the petition rest- c
raining the respondents from enforcing the demand for the refund of
the cash assistance Biready paid and rejected the appellant's claim in
respect of contracts, entered into in the context of the offers made
subsequent to April 1972, since the cash assistance declared_ as on April
1, 1972 and thereafter was in terms made available opto a specific date. D

This appeal by special leave is against the High Court's judgment.

On behalf of the appellant, it was contended that at different
stages, the respondents gave different reasons for refusing to pay cash
assistance.
E
Dismissing the appeal,

HELD: 1.1 There could arise no question of granting cash assis-
tance to different exports under the original scheme and the prevalent
amended scheme at the same time. [508E]
F
1.2 Paragraph 10 in the 1970 scheme made it quite clear that
exports effected after the specified date would not be eligible for cash
assistance. Consistently with this paragraph, in the subsequent schemes
the periods were prescribed. The amended scheme dated 20th April,
1972 prescribed the period from 1.4.72 to 30.9. 72 and the amended G
scheme dated 16th Jone 1973 applicable to this case, prescribed the
period from 1st October 1972 npto and including 31st March 1973. Io
other words, exports of Transmission Towers made after the prescribed
period would not be eligible to assistance under the prevalent scheme.
The word 'amendment' would imply that the scheme of 1969 stood
amended. [508C-E] H
504 SUPREME COURT REPORTS [1989] 1 S.C.R.

A 1.3 In view of the unequivocal language of paragraph 10 of. the ~
1970 scheme and clear prescription of the different periods during the
subsequent amended schemes and the admitted facts that the export in
respect of these two contracts were made only alter July 1974, there is
no reason to allow the appellant's claim. Whether the Government's
policy was conducive to maximisation of exports and foreign exchange
B earning is entirely a different matter. [508F-G] ~

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3482
of1987.
)-'
From the Judgment and Order dated 10.3.1983 of the High
'
C Court of Gujarat in Special Civil Application No. 1294 of 1977

S.K. Dholakia, P.C. Kapur and R.C. Bhatia for the Appellant.

A. Sobba Rao, C.V. Sobba Rao and Mrs. Sushma Suri for the
Respondents.
D
The Judgment of the Court was delivered by

K.N. SAIKIA, J. This appeal by special leave is from the judg-
ment of the High Court of Gujarat in Special Civil Application No. •
1294 of 1977 under Article 226 of the Constitution of India.
E
The Government of India Ministry of Foreign Trade announced
through public notice No. 196-ITC(PN)/69 dated 8th December, 1969
a scheme for registration of contracts involving deliveries extending
over a period of not less than 12 months for cash assistance, herein-
after referred to as 'the scheme'. The Government decided to extend
F the scope of the scheme as was announced by letter No. 12 (22/67-
EAC) dated 4th February, 1970, hereinafter referred to as 'the 1970
scheme', stating inter-alia, in paragraph 3 that the registered exporter
of export products under a contract involving deliveries extending over
a period of not less than 12 months, registered by the banks in terms of
paragraph 3 of the public notice dated 8th December, 1969 will be
G eligible for claiming cash assistance at the same percentage as was
prevailing on the date of the Firm contract so registered provided that
the bank attested invoice which is normally produced for the purpose
of claiming cash assistance, bears a further attestation from the
negotiating bank to the effect that exports effected in this invoice is
against a contract registered with them giving the Registration number
H and date. If during the currency of the registered contract the rate of
TE~TEELS ~m:' v. u:o.I. [SAIKI~, J.J . 505
'
cash assistance is· {educed by Government, th~ higher rate of cash A
assistance existing on the date of the Firm contract would be admissi-
ble on exports under the said contract. If, on the other hand.there is an
increase in the rate of cash assistance percentage during the currency
of the registered contract, exports made during the contract would not
normally be eligible for the benefit of the increased rate; in speci'!J . B
cases where the operation of this rule is likely to affect an exporter
adversely, Government would be prepared to cousider the matter on
merits. It was also stated in paragraph 5 that the reiistered exporter
would be entitled to claim cash assistance as and when the exports are
made against the registered contracts and the application would be
submitted to the disbursing authority in accordance with the i)olicy and
procedure announced from time to time by that Ministry. By letter C
No. U(4)72-EAC dated 20th April, 1972 on the subject of.Amend-
ment No. 53 the cash assistance scheme on export of engineering
goods was modified to the effect that a~ additional cash assistance of
5% of the f.o.b. value will be allowed on all exP:<>rts made to North..
American and.South American countries and t~ New Zealand and D
these facilities of normal cash assistance and additional cash assistance
will be allowed on exports effected during the period from 1.4.1972 to
· 30.9.72, the later date being included. By letter No. 12(13)n3-EAC
dated 16th June, 1973 referring to Amendment No. 59 it was announ-
ced that cash assistance on transmission towers will be .made admissi-
ble on exports thereof made during the period from 1st October 1974 E
upto and including 31st March, 1973 at the rate of 25% of the f.o.b.
value.

The appellant is a company registered or deemed to be regis-
tered under the Companies Act, 1956 for exporting Line Towers
' Galvanised; Mild Steel Towers,· hereinafter called 'Transmission· F
Towers', (Item No. A. 27.1)° by entering into rontracts With the
National Electricity Board of the State of Malaysia, a public utility
service ot Malaysian Governm<:!nt, briefly called 'the N.E.B.' which
a
had invited global tender in October 1971 for design, fabrication and
supply of Transmission Towers, and the appellant's tender submitted
on January 29, 1972 was accepted bi them, and pursuance thereto a' G
contract was entered into on May 17, 1972. The said contract was duly:
registered witli the Central Bank 9f I11dia, Lal Darwa2a, ,\hemdabad on ·
May 30, 1972 and was allotted registration No. 50/1. Subsequently; the·
N.E.B. having needed more Transmission Towers more contracts ·
were entered .into and the- same
,.
were.registered
. .
as follows:
- .' ·..
.,
~·
H
506 SUPREME COURT REPORTS [1989] 1 S.C.R.

A S. No. Date of Offer Date of acceptance Date of registration
of the offer of the contract
with the bank.

1 2 3 4
B
1. 29.1.1972 17.5.1972 30.5.1972
2A. 29.1.1972 20.6.1972 26.7.1972
2B. 31.8.1972 27.10.1972 13.11.1972
3. 28.4.1973 5.6.1973 15.6.1973
(Tefox 31.5.1973)

c In respect of the exports made pursuant to two of the aforesaid con-
tracts, namely No. 1 and2(A), the respondents paid to the appellants a
·cash assistance of Rs.3,48,555 but refused to pay the claimed amount
of ~s.4,10,784.93p in respect of the exports made pursuant to the
other two contracts and instead demanded refund of aforesaid
D Rs.3,48,555 already received by the appellant. By let_ter datecl
10.3.1975 to the appellant the Controller of Imports and Exports in-
formed that the exports made during the extended delivery period of
the contract were not covered under the provisions of paras 56-64 of
Part B of Import Trade Control Policy Volume-II, April 1972-March
1973 and as such no cash assistance could be granted on exports made
after March, 1974. ·
E
The Deputy Chief Controller of Imports and Exports rejecting
the appellant's appeal vide his letter dated 30.6.1976 informed the
appellant that the benefit of registration on export in execution of the
supplementary contract was additional quantity at increased rates and
could not be allowed under Government Policy. The appellant's ,..,.
.A
F second appeal was also rejected by the Chief Controller of Imports and
Exports vide his letter dated 8th January, 1977 stating that after execu-
tion of the supplementary order there was increase in quantity of
goods to be supplied as well as price as on the date of execution of the
supplementary order, and the import policy did not provide for protec-
tion of benefits under the scheme for registration of contracts on the
G cases where there was increase in the value of contract. The appel-
lant's review petition was also rejected by letter dated 19th July 1977
stating that as per provision of the policy contained in the relevant
Policy Book, if there was an increase in the value of contract on
account of price escalation clause or renegotiation on the ground of
increase in prices of raw-materials, protection to registered contract
H was not available.
TESTEELS LID. v. U.O.J. ISA!KIA, J.] 507

~· The appellants thereafter moved an application under Article A
226 of the Constitution of India in the Gujarat High Court which partly
allowed the petition restraining the respondents from enforcing the
demand for the refund of the amount already paid by way of cash
assistance and rejecting the appellant's claim in so far as the contracts

. entered into in the context of the offers made subsequent to April 1972
because the cash assistance declared as on April 1, 1972 and thereafter
was in terms made available upto a specific date. The exports under
the two concerned contra€ts namely No. 2-B and 3 were admittedly
B

,-,.
made after July 1974, though in case of contract No. 2-B the date of
offer was 31.8.1972 and the date of acceptance was 27 .10.1972 and the
date of registration 13.11.1972, and in the case of contract No. 3 date
of offer was 28.4.1973 and date of acceptance of 5.6.1973 and date of
registration was 15.6.1973.
c
Learned counsel for the appellant, Mr. S.K. Dholakia, first, sub-
mits, that the appellants are entitled to cash assistance in respect of
. these two contracts also inasmuch as the scheme of registration of
contracts for cash assistance dated 8th December, 1969 as also that·of D
4th February, 1970 were not time-bound and did not prescribe any
period for export to be eligible under.the scheme; that it was only t.he
subsequent scheme that prescribed a period; and that the appellant
~ exported Transmission Towers pursuant to the contracts entered into
during the earlier period but due to increased demand subsequent
supplementary contracts had to be entere~ into, and for price escala- E
tion and other difficulties actual exports were delayed. He relies on
Section 1, Part-B of Import Control J>olicy Volume-II April 1972-
March 1973, "Import Policy for Registered Exporters, Registration of
Export Contracts," contained in paragraph 56-64 thereof. Secondly,

• the learned counsel submits that cash assistance scheme of 1969 as well
as that of February 1970 were based on the Government's policy of F
long term assistance to ,exporters and it was with that end in view that
the scheme of registration of contracts with the banks was introduced.
Relying on paragraph 3 of the 1970 scheme, he emphasises that it was
the date of the Firm contract which was to be reckoned and not the
date of export of the products. Relying on paragraph 6 of the scheme
he submits that it envisaged contracts involving deliveries extending G
-} over·z period.of not less than 12 months and contracts for export were
to be registered by the banks in the manner prescribed. As regard the
Government's policy of assisting the exports for the purpose of
augmenting foreign exchange earnings of the country he submits that
the deprivation of cash assistance to the exporter who registered their
contrac!s would defeat the very purpose of the scheme. H
508 SUPREME COURT REPORTS [1989] 1 S.C.R.

A Mr. C. V. Subba Rao learned counsel for the respondents demurs j
submitting that it could not be said that once the contracts were
registered cash assistance would be available irrespective of the date of
the exports.

We are inclined to agree with this submission. P~agraph 10 of
B -
the scheme dated 4th February, 1970 reads:
...
"Cash assistance is sometimes announced upto a specified
date. Exports effected after the specified date even though
the contract has been got registered in terms of the provi- '

~
sion of this letter will not be eligible for cash assistance."
c
This paragraph made it quite clear that exports effected after the
specified date would not be eligible for cash assistance, Consistently ~
with this paragraph in the subsequent schemes the periods were
prescribed. The amended scheme dated 20th April 1972 prescribed the
period from 1.4.1972 to 30.9.1972 and the amended scheme dated 16th
D June 1973 applicable to this case, prescribed the period from 1st
October, 1972 upto and including 31st March, 1973. In other words,
exports of Transmission Towers made after the prescribed period
would not be eligible to assistance under the prevalent scheme. The
word 'amendment' would imply that the scheme of 1969 stood
amended. If that be so, there could arise no question of granting cash
E assistance to different exports under the original scheme and the pre-
valent amended scheme at the same time.

In reply Mr. Dholakia submits that at different stages the respon-

•
dents gave different reasons for refusing to pay cash assistance to the
appellants. However, in view of the unequivocal language of para-
F graph 10 of the 1970 scheme and clear prescription of the different
periods during the subsequent amended schemes and the admitted
facts that the export in respect of these two contracts were made only
after July 1974, we see no reason to allow the appellant's claim.
Whether the Government's policy was conductive to maximisation of
exports and foreign exchange earning is entirely a different matter.
G
In the result we find no merits in this appeal and it is accordingly
4
rejected, leaving the parties to bear their own costs.

G.N. Appeal dismissed.