Delhi High Court
Victory Export & Import Syndicate Etc. vs Union Of India And Ors. on 22 May, 1986
Equivalent citations: AIR1986DELHI409, ILR1986DELHI320, 1986RLR472, AIR 1986 DELHI 408, (1986) RAJ LR 472
JUDGMENT Mahinder Narain, J.
(1) The petitioner No. 2, a partner of petitioner No. I, who is carrying on business in export of Walnut Stumps from India. It is stated in the petition that the Walnut Stumps which are exported by them are used for manufacturing various articles, as a result of which they have been earning foreign exchange running into crores of rupees for the country.
(2) Walnut trees grow in the State of Jammu & Kashmir. They yield fruit-Walnut kernels; and, even when they stop yielding fruit, even after they are dried up, their timber is used in various ways. When the walnut trees are dried, part of their timber is used to feed the wood-carving industry of the State, part is used for the purposes of fuel. and the stumps are used for exports.
(3) It is stated by the petitioners in the writ petition that according to the census of 1976 there are approximately 9,02,728 walnut trees in the State of Jammu & Kashmir our of which only about 1,04.476 are non-fruit bearing and capable of being felled. It is further stated by the petitioners that the walnut stumps represent only a small part of the total amount of timber which is extracted from the walnut trees.
(4) It is clear from the perusal of the Jammu & Kashmir Preservation of Specified Trees Act, 1969 (Act X of 1969) (hereinafter called the Kashmir Act), that the walnut trees are specified trees. The walnut trees are unusual trees, growing to the height of 80 to 100 ft. It bears fruit approximately 20 years after it has been planted and the life of the walnut tree is about 100 years. Once the tree ceases to yield any fruit, its wood can be used for timber purposes. The stumps of the tree is what is left after the tree has been felled, usually protrudes about 3-4 feet from the ground.
(5) It is stated before me that a lot of effort goes in the extraction of the stump from the ground, and 40 persons have to be engaged to dig around the tree stumps and they take approximately one week to extract one stump from the earth.
(6) It is stated in the petition that the walnut tree stump cannot and has not been put to any use by any industry in India and even today there is no use for it in India. This fact is not denied in the counter affidavit.
(7) The petition states that the export? of walnut stumps was continued uptil 1973 under the supervision and control of the authorities under Kashmir Act.
(8) The petition states that the year 1973, (by notification No. 290, dated 18-6-1973) the Government ofJ&K, by a notification suddenly banned the export of walnut stumps to any place outside the State of J&K. The felling of non-fruit hearing trees, however, continued under the supervision of the State. But the export of walnut stumps which cannot be used by any industry in India was inexplicably banned.
(9) Aggrieved by the banning of export of walnut trees, a representation was made to J&K Government, who after consideration of the matter, passed the order on 16th March, 1979, details as under-
".. . With a view to facilitate the export of Walnut stumps and logs of standard size to the extent indicated in the annexure to this Order to the foreign buyers with whom commitments had been made by M/s. Sheikh Mohammad Amin, M/s. Victory Import and Export Syndicate and Mis. Asian Hardwood and Co. before the ban on the export of Walnut wood imposed in the State by a notification No. 292 dated 18-6-1973, it is hereby ordered that :-
1.The three aforementioned firms will procure the requisite number of walnut logs and stump? of standard specifications directly from the open market.
2.Only such walnut trees as are dry and non-fruit bearing be felled strictly under the provision of the J&K preservation of Specified Trees Act on a permit to be granted by the competent authority.
3.The three firms shall submit to the I & C Department irrevocable letters of credit from their buyers from abroad for orders placed by them for export of walnut stumps and logs.
4.The export of the quantity to the extent indicated above and supported by the letter of credit as mentioned at item 3 above shall be exported by the Forest Department on the terms and conditions and to the destination outside the State as may be mutually agreed upon by the parties with the Forest Department.
AFTER meeting the export orders as aforesaid balance the Walnut wood will be made available for supply local wood carvers at a price to be fixed in consult with the Director Handicrafts and Handlooms. By order of the Government of Jammu & Kashmir.
SD/-
(SHEIKH Ghulam Rasool) SECRETARY to Government DATED: 16-3-1979."
(10) By this order, which was the decision of the Cabinet of the Government of J&K, the petitioners were permitted to procure the requisite number of walnut logs and stumps from the open market. They were permitted to fell dry, and not non-fruit bearing walnut trees, strictly under the provisions of the J&K Preservations of Specified Trees Act. 1969. On this permission being granted by the concerned authority, it was required by this order that irrevocable letter of credit from their buyers overseas shall be submitted to the Industrial & Commerce Department. Under this order, the petitioners were permitted to export a total number of 638 walnut stumps. The persons to whom the supply was to be made were also mentioned in the order and the quantity which could be sent out of Jammu & Kashmir was also stated. This part of the order reads: ________________________________________________________________ Name of the Name of the Importer Quantity- Exporter of stamps ________________________________________________________________ M/s Victory (a) M/s Impois Bale, 158 Export & Switzerland Import Syndicate (b) M/s Cox, Washington, 199 U. S. A. (c) M/s Laveud, France. 147 (d) M/s Taeysseer 67 (e) M/s Merard Furrier 67 Weiker, W. Germany. _______________________________________________________________ Total 638 Nos. _______________________________________________________________ (11) After this order of the J&K Government, the Department of Agriculture which is a department of Government of India stated vide Annexure 'N' that the Ministry of Agriculture had no objection to the said export of Walnut from Jammu & Kashmir by the 3 parties, mentioned in the order dated 16th March, 1979. Thereafter, an order dated 29th September, 1980 (Annexure Q) of the writ petition, the petitioners were informed that it had been decided to permit export of Walnut stumps as specified in Government of J&K Order No. 110- Doh of 1979 dated 16-3-1979 provided they to produce to the licensing authorities valid contract and duly re-validated of fresh irrevocable letter of credit covering the said exports. They were also asked to contact the Joint Chief Controller of Imports & Exports, Bombay in the matter which had been 'suitably advised'.
(12) Persuant to this order, in terms of the order of the Jammu & Kashmir Govt. dated 16th September, 1979, which had been permitted them to export 638 walnut stumps, the petitioners exported same walnut stumps. The petitioner says that they were able to export only 150 walnut stumps and that the balance quantity of 488 walnut stumps could not be exported by them.
(13) The petitioner later on received an order dated 8-8-83 from the Official Chief Controller, Imports and Exports, whereby they were informed that they had to export the walnut stumps. which they had have been permitted to export by 31-3-84, and that no further extension of time would be allowed to them for exporting the permitted quantity. Aggrieved by this, the petitioner made representations to the Authorities concerned that the petitioners total pre-ban commitment was 63S walnut stumps and that they should be permitted to export the balance of walnut stumps also. However, by letter dated 20-6-1984., Annx.-B to the writ petition, they were informed that no further extension would be granted to the petitioners.
(14) Aggrieved by these orders by which the petitioners had been prevented from complying with the pre-ban commitment with respect to export of 488 walnut stumps, they filed this writ petition on 19-7-1984.
(15) The petitioner says that they should be permitted to complete the pre-ban commitments, to export 488 walnut stumps without any limitation of time, for the reason that in the facts and circumstances of the case, no limitations of time can or ought be imposed upon them for meeting the pre-ban commitment. In view of the facts narrated above, there is no substance in the objection of the respondent that this petition suffers from laches and delay, as the final refusal of the respondents, after hearing the various representations made by the petitioners administratively was on 20-6-84, and the writ was filed on 19-7.1984.
(16) It is asserted in the writ petition that the felling season in J&K is limited to September-January each year. This is because the walnut tree is a tall tree. and if it is felled at a time when there is no snow cusion provided by the falling soft snow then the timber of the tree cracks up and therefore reduced in value. Therefore, in imposing time limit for the export of walnut stumps is unreasonable in view of the facts set out in the petition.
(17) Besides this, the trees which arc to be felled during the felling season, exist in far flung areas. There are transportation difficulties also. It is not easy to transport the tree from the place where they are felled to the place they arc stocked, and thereafter to the place of shipment for export. It is stated that in the State of J&K transportation is possible only after the snow fall is over as otherwise the trucks cannot easily move, and use the roads in the State.
(18) Vet another reason stated is that after the stumps are removed from the earth, after the earth has been dug up by the difficult procedure, as stated above, the stumps had to be stocked ill a proper place dressed and sprayed with insecticides for making them fit for export. After these procedures are over, '.hen the buyers representatives come to inspect each of the stumps, and only those stumps which are not rejected by the buyers representatives are exported out of India.
(19) The respondents do riot controvert that these difficulties exist in the walnut stumps exports. They say that the import and export policy which is made every year. This means that the export of the walnut stumps and the meeting of the pre-ban commitments are necessarily to be confined to the commitments which existed in one particular year, that there is to be a limitation on the time within which the export was to be allowed. It is noteworthy that in the original orders passed by the Government of J&K. and passed by the Central Government. there was no limitation of time imposed or considered. It appears J&K Government was fully aware of the problems that would arise in procreation and exportation of walnut stumps. for the persons who had to meet the pre-ban commitment anil. therefore, no limitation of time was placed. In my view, therefore, it is not possible, in the facts and circumstances of the case to say that a limitation of time the meeting of the preban commitments, as it is not disputed that even though trees have been earmarked for felling, a large number of them have not to date even been felled. But in order to meet the commitment to export the walnut stumps, letters of credit had been received from the purchasers abroad, on the basis of which advances have been made by the banks to the petitioners. Which advances have been utilised for making payment to the owners of these walnut trees which are yet to be felled.
(20) An interesting feature of this case is that in the writ petition a specific plea was taken in ground No. xxxiii(f) which reads as under :- "THAT the State industry in general and the petitioners business interests in particular shall suffer grievous set backs (more than 10.000 technical workers involved in this Industry) in the form or unemployment, loss of credibility and financial loss due to wastage, if these goods are not cleared immediately. That the owners of non fruit bearing trees who are farmers too will suffer great loss for these trees will eventually wither away and die and since there is no domestic market for these stumps, this shall result in gross waste oi a produce which is and has been a valuable foreign exchange earner for this country."
In ground it was stated that : "THE petitioners state that the non-fruit bearing Walnut trees arc in two parts. The lower portion is what is exported and the upper portion is used in furniture industry arid for fuel purposes. The lower part which is actually exported has no utility at all in the home market. Therefore, if they are not allowed to be exported they will be total waste and loss as far as India is concerned. The petitioners state that there is no justification or reason whatsoever to ban the export of the Walnut stumps. The petitioners state that the ban imposed on the export of walnut stump is totally unreasonable, arbitrary and without any basis whatsoever. The petitioners state that before the Central Government can decide to prohibit the export of a commodity there must be some valid and justifiable reasons for doing so. The reason could be that they are required to be used in India or that its export would harm the interest of the country. The petitioner; state that in the present case, the walnut stump cannot be used in India at all and it goes waste. The petitioner states that its user does not cause any harm to the interest of India. The petitioners state that the ban imposed on the export of walnut is totally unreasonable and unjustified. The petitioners state that nicking up walnut stump as an item banned turn the export purpose is totally unreasonable and unjustified and violates petitioners' fundamental rights guaranteed by Articles 14 and 19(1)(g) of the Constitution."
(21) The record of the Court shows that a statement was made by the counsel for the Respondents that the reply to the show cause notice, be treated as the counter-affidavit to this writ petition. The order of the court dated 7-2-85 reads :
"MR.Anand says that the reply to the show cause notice on behalf of the respondents will be treated as a return of the rule. He, however, says that he will have the original records with him at the time of hearing of this writ petition".
LET the petition be listed for hearing. CMs are disposed of."
(22) No records mentioned in the counsel's above statement had been produced by the respondents for perusal in court, so I am left with, only what is stated in their return in the respondents to ground No. Xxviii (f) and ground No. XXX.
THE reply to ground xxviii(f) is :- "THAT sub para (xxviii) of para 5 of the petition is wrong and denied. It is denied that the time limit set for export up to 31-3-84 was arbitrary. The decision was taken after careful consideration."
REPLY to the ground Xxx is : "THAT sub para (xxx) of para 5 of the petition as stated is wrong and denied. It is specifically denied that the ban imposed under the policy is anyway unreasonable or unjustified or violates in any way any right of the petitioner guaranteed under the Articles 14 & 19(1)(g) of the Constitution."
(23) It will be seen from the replies that the respondents nave nowhere asserted in the reply that there are specific uses of walnut stumps in this country. There is no denial of the assertion of the petitioners that the walnut stumps cannot be put to any use in this country.
(24) In this view of the matter, there seems to be no reason why the ban has been placed on the export of walnut stumps for they appear to be entirely useless, except for burning as fuel. As against this, the walnut stumps when' exported, as far as the record of this petition shows can earn approximately 1,000- dollars, per walnut tree stump.
(25) Mr. Parekh has relied upon the judgment of this court reported as Hazi P. V. Mohammad Baramy Sons Vs. Union of India & Others. 2nd (1979) Vol. II. Delhi 686(1) decided by Prakash Narain & Leila Seth, JJ. on 29-1-1979. That case dealt with the ban which was imposed on the export of teak wood. Some observations made in that judgment apply to this case, need to be reiterated, as that judgment is binding on me.
(26) After noticing the judgments in Shri Prithvi Cotton Mills Ltd. Vs. Broach Borough Municipality and others, , (M. Hidayatullah C.J., J.M. Shelat, V. Bhargava, K. S. Hedge and A. N. Grover, Jj (2); Chintaroan Ram Vs. The State of Madhya Pradesh (3), Ram Krishna Vs. title State of Madhya Pradesh, Scr 759, (Shri Hira Lal Kania, C.J., Mehar Chand Mahajan, Mukherjea, Dass and Chandrasekhara Arya, JJ)(4), P Mohammed Meera Lebbai, Vs. Tiliruinalava CK. Subba Rao, J. R. Mudholkar and R. S. Bachawat, JJ) (5), The Collector of Customs, Madras Vs. Nathella Sampathu Chety aria another Air 1966. Ph. 316(6), (B. P. Sinha, C.J., A. K. Sarkar. M. Hidayatullah, N. Rajagopalayyangar and J. R. Mudholkar, JJ), Chief Settlement Commissioner. Punjab Vs. Om Parkash and Others , (J. C. Shah and V. Ramaswami, JJ), and Rohtas Industries Ltd., Vs. S. D. Aggarwal and Another , (S. M. Sikri, R. S. Bachawat and K. S. Hegde. JJ). Badri Prasad Vs. Collector to Central Excise, , (S. M. Sikri, CJ., G. K. Mitter. H. S. Hedge; A. N. Grover and P. Jaganmohan Reddy, JJ).
(27) This Court while dealing with the Export Control (2.7th Amendment of 1978) Order said :- "APPLYING the above decisions to the matters before us we have no hesitation in holding that the impugned ban brought in by the Export (Control) Twenty Seventh Amendment Order, 1978, disallowing export of teak even in sawn sizes must be held to be invalid and unconstitutional. We are assuming the validity of Section 3 of the Imports and Exports (Control) Act. 1947. The total ban is arbitrary and based on no intelligible criteria. The affidavit filed on behalf of the respondents states, as noticed earlier, that the policy of the Government in respect of export depends on many factors such as domestic demand, industrial demand, need for conservation of the specie etc. It goes on to say that title restriction on the export of the teak wood has been placed keeping in view the fact that the export of leak wood in sawn sizes had to be banned in the interest of national economy the aforesaid factors and that teak wood in processed form having an added value potential in realisation of foreign exchange. But no material has been placed before us to show that there was any data available with the respondents to achieve the objectives of national economy, conservation of the specie or domestic and industrial demand. Indeed, the petitioners had moved applications during the hearing on January 9, 1979 for directions to the respondents to produce the relevant record to show the basis or the material on which the satisfaction or opinion was formed to impose a total ban. No formal orders were passed on these applications because learned counsel appearing for the respondents had assured us that the relevant record would be made available at the hearing. Unfortunately, despites repeated requisitions and our observations that it would be necessary to disclose the record, it was not shown to us. We may note that learned counsel for the respondents ultimately even apologised to this court but expressed his helplessness in producing the relevant record. In this view of the matter, we have no option but to raise an adverse presumption against the respondents. The objectives to be achieved must be distinguished from the material on which such objectives may be achieved. National economy. conservations of a specie, domestic or industrial demand are objectives to be achieved and may be called social control but these objectives can be achieved provided there is relevant data and material. This not having been disclosed to us we must hold that the opinion formed was without any basis "
Tn this case, it is not the Exports Control 27th Amendment Order 78 but Export Control 12th Amendment Order 74 which is in question.
(28) This has been set out at pages 54-55 of the Writ Petition. There is no need for me, because of the view I am taking, to strike down the Export Control 12th Amendment of the Order 74.
(29) The view I take is that, in view of the fact that the walnut tree is a protected tree under the Jammu & Kashmir Act, that there exist adequate safeguards in that Act against indiscriminate felling of such trees, that in view of the topography of Jammu & Kashmir Act it is difficult to fell the walnut tress, to extract the stumps from the earth, and store and transport the same, there can be no limitation of time to meet the preban commitment, and it is unreasonable and unjustifiable to impose such limitation on the respondents, by a later decision. In my view, in the peculiar facts and circumstances of the case, it is arbitrary and unjustified to impose a condition of limitation of time, as has been sought to be done by the impugned order in this case.
(30) The limitation of time was sought to be imposed for the first time only on 8th August, 1983, (page 105 vide an Aunexure-8 to the writ petition). There is no reason stated in this order, why there is need to limit the time within which pre-ban commitment has to be fulfillled. It has to be assumed that The Central Government had knowledge of the existence of the Jammu & Kashmir Preservation of Specified Trees Act, 1969. The Central Government would automatically be aware of the formalities which are required to be complied with in connection of the felling of each specified (walnut) tree. Sections 3, 4, 5 & 6 of the said Act are us under :-
S.3"Restriction on felling :-
NOTWITHSTANDING anything contained in any other law for the time being in force, no person shall fell any specified tree except under and in accordance with the terms and conditions of a permit granted by the prescribed authority under this Act -
PROVIDED that a permit granted under this section shall not authorise the felling of a specified tree by any person other than the owner thereof.
S.4Application for permit :-
(1)Every person desiring to obtain a permit under section 3 shall make an application in writing to the prescribed authority, in such form and containing such information, as may be prescribed.
(2)On receipt of such application, the prescribed authority shall, subject to the provision of sections 5 & 6 by order in writing, either :---
(A)grant the permit subject to such conditions, if any, as may be specified in the permit ; or (B)refuse to grant such permit.
S.5.Obligation to grant permit :-
SUBJECT to the provisions of section 6 the prescribed authority shall grant permit, if on inquiry, it is established that:-
(A)the timber of a specified tree desired to be felled is required to be used for the manufacture of finished goods of Kashmir Art ; or (C)the felling of a specified tree is necessary for the prevention of danger or abatement of nuisance to life or property or for prevention of plant disease; or (D)the specified tree desired to !;s felled is completely dried up.
S.6Obligation to refuse to grant Permit :-
(A)the application for permit relates to a specified tree which is green, healthy or if it belongs to fruit- bearing species, is fruit-bearing ; or (B)the felling of the specified tree is likely to extinguish the species of the trees in the local area in which it grows :
or (C)there is any other sufficient reason which be may record in writing to warrant refusal of permit."
(31) In view of these provisions delay in export of walnut stumps is built into any trade for export of these walnut stumps. In case of such stumps, no limitation of time can or ought be imposed on the petitioner. The impugned order dated 29th June, 1984, suffers from the same vice as does the letter dated 8th August, 1983. Both do not take into account, the peculiar conditions and the area of India in which the walnut tree grows, and specific statutory protection which it enjoys in the State of Jammu & Kashmir under the provisions of the Jammu & Kashmir Preservation of Specified Trees Act, 1969.
(32) Mr. Khemka devilling the brief for Mr. R. K. Anand who appears for the respondent, relied upon the judgment of the Supreme Court in 1980, (V. R. Krishna Iyer and R. S. Pathak, JJ) and particularly the observations contained in para 20 : "20.The thorny issue being by-passed for the while, the next question is whether the constitutionality of the Export (Control) Fifteenth Amendment Order, 1979 should be examined closely vis-a-vis pre-ban contracts. Constitutional questions should be considered by courts only when it is absolutely necessary, not otherwise. In the present case, broadly speaking, we are not inclined to stand in the way of the full operation of a policy decision by the Central Government in regard to export of silver. Prima Facie, national policy in this area should not be interfered with by courts unless compelled by glaring unconstitutionality. Shri Diwan, taking sensitive note of our approach, readily agreed that his client would be satisfied even if the silver which he had collected at great expense and trouble and on the export of which he legitimately expected a large profit, were not allowed to be exported, provided the court would give him relief against the inequitable enforcement of the indemnity clause in the contract with the STC."
(33) I am of the view that this observation of the Supreme Court, has to be read with its earlier observations in paragraph 13 & 14 which read as under :- "13.We have stated earlier that Government is in the best position to take a policy decision on total or conditional ban of exports of commodities like gold and silver. Of course, the Union of India has taken the extreme stand that there is a ban on judicial review of the administrative policy behind the ban by the Central Government. We do not agree with this tall proposition in the light of Article 19 of the Constitution. The sovereign power is in the Constitution, not the Administration and the Court is the sentinel.
14.The larger question of the vires of the ban does not. arise for our consideration. The narrow issue that we propose to examine first is as to whether Damani, the indigenous supplier, is not entitled to insulation from the indemnity clause, in the special circumstances of the case. Counsel for Damani, Shri Anil Divan, conceded that if the liability to indemnify the Stc as against any claim the foreign buyer may make is held unenforceable, his clients are willing to give up the other submission."
(34) It is clear from the earlier observations in paragraphs 13 and 14 of the judgment that the Supreme Court is clearly rejecting the contention raised by the Government, in that case that it is not open to the court to review the ban, total or conditional, which are imposed by the Government.
(35) There is another aspect to be considered. In that matter, the Supreme Court was concerned specifically with granting relief to a trader who was sought to be made liable by the Chanellising agency, for the export of trees. The Supreme Court relieved the exporter of the liability which was sought to be imposed by the Chanellising Agency. Besides this, since the case dealt with export of silver which is undoubtedly a valuable commodity not only in India, but wherever the same is found, has no application to a case like walnut stumps, which incontrovertibly has no value in India. It has value to India only when it is exported. The ban on its export does not appear to be for the benefit of anyone in India. There is no assertion in the counter affidavit in the unenforceable future, the walnut stumps can be put to any use that will generate goods of the value of 10,000.00 rupees from each walnut stump.
(36) For the aforesaid reasons, I hold that impugned orders arc arbitrary and deserve to be quashed, and they are hereby quashed.
(37) As I am following the judgment of this court, I do not think that in this case there is any need to declare the Exports Control (12th Amendment) Order, 1974 to be ultra vires.
(38) I issue a direction to the respondents, in terms of the earlier orders, to permit the respondents to meet their preban commitment turn export of walnut stumps, (39) A writ of mandamus shall go to the respondents to, issue the necessary export license to the petitioner to export the balance quantity of 488 walnut, stumps against the firm contract entered into by the petitioners which arc covered by valid letters of credit. The petitioners be given the export license in accordance with the order dated 29th September, 1980 in respect of the balance of quantity i.e 488 walnut stumps in accordance with the provisions of the Jammu & Kashmir Preservation of Specified Trees Act, 1959.
(40) NO order as to costs.