Telangana High Court
M/S. Zitan Trading Corporation vs Union Of India And 3 Others on 3 December, 2020
Author: M.S. Ramachandra Rao
Bench: M.S.Ramachandra Rao, K.Lakshman
HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO
AND
HONOURABLE SRI JUSTICE K. LAKSHMAN
I.A.Nos.2 of 2019 and 1 of 2020
in/and
WRIT PETITION No.27474 of 2019
ORDER:(Per Hon'ble Sri Justice M.S. Ramachandra Rao) In this Writ Petition, the petitioner assails proceedings No.16795/2019/Prod.1 dt.06.12.2019 of the Principal Chief Conservator of Forests (Head of Forest Force) (FAC) of the State of Telangana and also Principal Chief Conservator of Forests (Head of Forest Force) (FAC) of the State of Andhra Pradesh refusing to issue Certificate of Origin to the petitioner in respect of Red Sanders wood stock of 1067.751 M.T. sold to the petitioner on 18.03.2013 by the then A.P. Forest Development Corporation Limited (of the composite State of Andhra Pradesh) to enable the petitioner to export the same after obtaining permission/export licence for such export from the Directorate General of Foreign Trade, Ministry of Commerce and Industry, Union of India (for short 'DGFT'/2nd respondent). The background facts
2. The petitioner is a partnership firm based in Hyderabad. It is engaged in the business of purchasing Red Sanders wood in the auctions and exporting the same outside India. It also possesses a licence for storing Red Sanders wood issued under the Telangana Red Sanders Wood Possession Rules, 1989 and has its licenced godown at ::2:: MSR,J & KL,J W.P.No.27474 of 2019 Plot No.6 and 7, Thoopranpet Village, Yadadri Bhuvanagiri District in the State of Telangana.
3. The then composite State of Andhra Pradesh, through its Forest Department, had invited global tenders vide Rc.No.35039/2008/V2 dt.02.08.2008 for sale of 2110.192 M.T of non-graded and graded Red Sanders wood both in round log form and value added form with a specific clause in the tender conditions that export of Red Sanders wood in round log form shall be permitted subject to approval by Government of India.
4. Petitioner submitted its tender/quotation for the purchase of Red Sanders wood and the then State of Andhra Pradesh agreed to allot 1067.786 M.T. of 'C' grade and non-grade Red Sanders wood vide G.O.Rt.No.102 EFS& T (For.III) dt.17.03.2011 for conversion into value added products and export/local sale. The consideration fixed was Rs.2.2 lakhs per M.T. for non-graded Red Sanders wood and Rs.2.574 lakhs per M.T. for 'C' grade Red Sanders wood. The agreement dt.18.3.2013 between the petitioner and the A.P.Forest Development Corporation
5. An agreement Ex.P-4 dt.18.03.2013 was executed in the petitioner's favour by the Andhra Pradesh Forest Development Corporation Limited of the composite State of Andhra Pradesh that the said quantity of Red Sanders wood would be supplied in logs form to petitioner, who had agreed to convert it into value added product form.
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6. Thereafter, on receipt of consideration, the Red Sanders wood in log form was delivered to the petitioner.
7. After securing transport permits (part of Ex.P-10) from the Forest Department, the petitioner transported the purchased quantity from Tirupathi, Bhakarapet, Kadapa, Rajampet (falling within the geographical area of the residuary State of Andhra Pradesh - post bifurcation of the composite State of Andhra Pradesh w.e.f.2.6.2014) to its godown referred to above in Thoopranpet village, presently in the Yadadri Bhuvanagiri District of the new State of Telangana.
8. The petitioner had secured purchase contract/export orders on 02.06.2013 (Ex.P-5) for export of a portion of the same in three Tranches of 293 M.T., 400 M.T. and 374 M.T. to two Singapore based Companies M/s.Sunday Sun Pet Limited and M/s.Istanbul Trading.
9. The petitioner then applied for issuance of Certificate of Origin for export of Red Sanders wood [as per the provisions of the Convention on International Trade in Endangered Species of Wild Fauna and Flaura (for short 'CITES'), an International Body which controls the trade in Red Sanders wood through out the world] to the CITES Management Authority of India for sale to its Singapore buyers by enclosing the relevant documents.
::4:: MSR,J & KL,J W.P.No.27474 of 2019 The bifurcation of the composite State of Andhra Pradesh into the new State of Telangana and the residuary State of Andhra Pradesh w.e.f.2.6.2014:
10. In the meantime, the composite State of Andhra Pradesh was divided into the new State of Telangana (3rd respondent) and the residuary State of Andhra Pradesh (4th respondent) pursuant to the A.P. Reorganisation Act, 2014 w.e.f. 02.06.2014. W.P.No.21397 of 2019 and the order dt.30.9.2019 passed therein
11. Since the petitioner's application for issuance of Certificate of Origin of the Red Sanders wood had not been disposed of by the respective Principal Chief Conservator of Forests of both these States, petitioner filed W.P.No.21397 of 2019 in this Court impleading only the State of Telangana, the Union of India and the Director General Foreign Trade, Ministry of Commerce and Industry, Government of India.
12. During the hearing of the said Writ Petition, the State of Telangana informed that it had addressed a letter dt.25.09.2019 to the Principal Chief Conservator of Forests (HoFF), Andhra Pradesh to verify the genuineness of the Red Sanders wood logs and its transportation through transit permits issued by the Andhra Pradesh Forest Department, and also the other details, and that the State of Telangana can act only if such verification is done.
13. The said Writ Petition was disposed of on 30.09.2019 by the High Court for the State of Telangana directing the State of Telangana ::5:: MSR,J & KL,J W.P.No.27474 of 2019 to complete the process of verification and communicate the decision to the petitioner within four weeks.
The order dt.26.10.2019 of the Principal Chief Conservator of Forests (HoFF), State of Telangana
14. Thereafter the Principal Chief Conservator of Forests (HoFF), State of Telangana passed order in reference No.5317/2014/Prod-1 dt.26.10.2019 stating that she was asked by her counterpart in the State of Andhra Pradesh to inform petitioner to keep the material proposed to be inspected properly stacked in manageable lots, permit- wise, so as to conduct easy and prompt inspection; that the allotment order had stipulated that no permit shall be issued outside the State for logs, and after conversion they may approach the A.P. Forest Development Corporation for licence; and that the firm can export the Red Sanders wood in value added product form only. She therefore directed the petitioner to :
(a) to furnish the information in the prescribed proforma (Proforma C) along with details of Red Sanders wood lots converted, furniture sizes, planks and other value added products obtained from each Red Sanders wood lot and photographs of the materials so obtained.
(b) Arrange the RS wood logs in Lot wise and T.P. wise, enabling for inspection by the officials of Andhra Pradesh in ease manner.
(c) Furnish copies of the transit permits through which he has transported the above RS logs from various depots of AP to his RS storage depot located at Yadadri District, date on which said RS logs were received in the said depot, after its receipt in the ::6:: MSR,J & KL,J W.P.No.27474 of 2019 depot, whether he has entered the same in the register and got verified by the concerned DFO, Yadadri-Bhuvanagiri."
15. The petitioner was requested by the 3rd respondent to furnish the said information in 15 days.
W.P.No.24532 of 2019 and the order dt.28.11.2019 passed therein
16. Challenging the same, the petitioner filed W.P.No.24532 of 2019 in this Court. In this Writ Petition, he impleaded the Principal Chief Conservator of Forests (HoFF) of the State of Telangana and also the Principal Chief Conservator of Forests (HoFF) of the State of Andhra Pradesh.
17. Petitioner pointed out that it was facing a deadline of 31.12.2019 for exporting the stock lying with him, that permission had not been given to the team of the State of Andhra Pradesh Forest Department by the State of Telangana to inspect the stock lying with the petitioner; and unless such inspection is done, Certificate of Origin would not be issued by the Telangana Forest Department. He also contended that Certificate of Origin has to be given by the State Forest Department under whose jurisdiction the stock is presently kept; and it is not for the Forest Departments of either State to decide whether the Red Sanders wood can be exported in the form of logs or value added product form, which decision has to be taken by the Union of India/DGFT.
18. Taking account of this plea of the petitioner, a Division Bench of this Court disposed of on 28.11.2019 (Ex.P-21), W.P.No.24532 of ::7:: MSR,J & KL,J W.P.No.27474 of 2019 2019 directing the Principal Chief Conservator of Forests, State of Andhra Pradesh to send his team of Officers for inspection to the State of Telangana on 02.12.2019; the State of Telangana was directed to ensure that the concerned Field Officers are ready to receive the team from the State of Andhra Pradesh; the petitioner was directed to ensure that his stock was kept in such a way that it would be easy for the inspecting team to identify and verify it; after completion of inspection, the Principal Chief Conservator of Forests (HoFF) of both States were directed to give an opportunity of hearing to the petitioner before deciding whether Certificate of Origin should be given to the petitioner or not; and in case petitioner is found eligible for such certificate, the same was directed to be issued to him immediately. It directed this exercise to be completed by 06.12.2019.
19. Petitioner then made Ex.P-22 representation dt.04.12.2019 to the Principal Chief Conservator of Forests (HoFF), State of Telangana and also to Principal Chief Conservator of Forests (HoFF) in the State of Andhra Pradesh.
The impugned order dt.6.12.2019
20. Thereafter vide proceedings No.16795/2019/Prod.1 dt.06.12.2019, the Principal Chief Conservator of Forests (HoFF) of both States passed the impugned order stating that a key prerequisite of conversion of Red Sander wood logs into value added product form for obtaining Certificate of Origin, had not been met by the petitioner; that there is no quota for export of Red Sanders wood in the ::8:: MSR,J & KL,J W.P.No.27474 of 2019 possession of the petitioner in log form; since Certificate of Origin is issued based on the quota available for export in a particular form which is the value added product form in the instant case, the request of the petitioner for issue of Certificate of Origin in log form cannot be considered. However, liberty was given to the petitioner to submit application for Certificate of Origin in the prescribed format after converting the Red Sander wood in his possession into value added product form duly providing the details in the application form. The important finding at para 18 in the impugned order of the genuineness of stock in custody of petitioner and it's legal transporting to the State of Telangana
21. However, in para-18 of the said order, it was recorded that as per report dt.04.12.2019 of the Principal Chief Conservator of Forests (HoFF), Andhra Pradesh State:
"(i)The permits through which the said logs were transported by the petitioner to his depot are genuine.
(ii) The Red Sander wood stacked in the depot is genuine.
(iii) The dimensions and weight of the logs are tallying with the one recorded in the permits with minor variations which can be attributed to dryage breakage during transport etc.
(iv) The entire Red Sander wood is tacked in the depot in log form only as no conversion of the said wood of Value Added Product Form has been done by the petitioner so far."
The instant Writ Petition
22. Assailing the validity of the proceedings No.16795/2019/Prod.I dt.06.12.2019 passed by the Principal Chief Conservator of Forests ::9:: MSR,J & KL,J W.P.No.27474 of 2019 (HoFF) of the States of Telangana and Andhra Pradesh, the present Writ Petition is filed.
Events after filing of the Writ Petition The interim order dt.27.12.2019
23. Initially, in view of shortage of time in view of submission that the Government of India, through a Notification No.12/2015-2020 dt.29.07.2019, had fixed the last date for export of Red Sander wood as 31.12.2019, i.e., the impending deadline of 31.12.2019 for export of the stock fixed at that time, this Bench had passed an interim order on 27.12.2019 directing the Principal Chief Conservator of Forests (HoFF) of the States of Telangana and Andhra Pradesh to issue Certificate of Origin to the Writ Petition in respect of the stock of Red Sander wood available with the petitioner forthwith, so that petitioner would be able to export it in log form and earn valuable foreign exchange for the Country.
I.A.No.2 of 2019 and I.A.No.1 of 2020 - applications to review the interim order dt.27.12.2019
24. To review the said order, I.A.No.2 of 2019 was filed by the State of Telangana and I.A.No.1 of 2020 was filed by the State of Andhra Pradesh.
Contempt Case No.398 of 2020
25. The petitioner had also filed a Contempt Case No.398 of 2020 for willful disobedience by both the States of the order passed on 27.12.2019 in W.P.No.27474 of 2019.
::10:: MSR,J & KL,J W.P.No.27474 of 2019 SLP(C) No.8835 of 2020
26. The State of Telangana filed SLP(C) No.8835 of 2020 in the Supreme Court challenging the order dt.27.12.2019 in W.P.No.27474 of 2019.
The order dt.1.10.2020 in the SLP(C) No.8835 of 2020
27. On 01.10.2020, the Supreme Court requested this Court to take up Review petitions or the main Writ petition itself, as per it's choice, while adjourning the SLP by 3 weeks. It also directed that no coercive steps shall be taken against the petitioners in the SLP till the next date of hearing. The matter was adjourned to 26.10.2020. The docket order dt.14.10.2020
28. When this Writ Petition was listed on 14.10.2020, we had taken note of the order passed on 01.10.2020 by the Supreme Court in the SLP and directed the Union of India and the Director General of Foreign Trade, Ministry of Commerce and Industry, Union of India (DGFT) to file counter-affidavits in the Writ Petition observing that the arguments in the Review applications and the Writ Petition would be one and the same and that we would decide the Writ Petition itself. Matter was adjourned to 11.11.2020.
29. Thereafter the Union of India, Ministry of Environment and Forests filed counter-affidavit on 16.11.2020 and the Director General of Foreign Trade (DGFT) filed counter-affidavit on 11.11.2020.
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30. The Principal Chief Conservator of Forests (HoFF), State of Telangana had filed one counter-affidavit in December, 2019 and an additional counter-affidavit on 12.10.2020. The Principal Chief Conservator of Forests (HoFF), State of Andhra Pradesh had filed counter-affidavit on 20.12.2019.
31. The petitioner filed additional material documents on 11.12.2019 and a memo on 16.11.2020 enclosing three documents.
32. Oral submissions of Sri V.Srinivas, the learned counsel for petitioner, learned Assistant Solicitor General for the Union of India and the Director General of Foreign Trade (respondent Nos.1 and 2), the learned Government Pleader for Forests, State of Telangana and learned Special Government Pleader for State of Andhra Pradesh in the High Court for the State of Telangana were heard on 20.11.2020.
33. To avoid repetition, we shall refer to the respective contentions of the parties and also consider the same simultaneously. Consideration by the Court
34. We shall first begin by stating that we are disposing of the Writ Petition itself on merits and we do not intend to pass any orders in I.A.No.2 of 2019 and I.A.No.1 of 2020, the Review applications filed by the State of Telangana and the State of Andhra Pradesh to review our interim order dt.27.12.2019, and the order passed in the Writ Petition shall be treated as the order in those applications as well.
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35. Admittedly, vide G.O.Ms.No.544 EFS & T (FOR.III) Department dt.17.11.2007, the Government of Andhra Pradesh had issued orders permitting the Principal Chief Conservator Of Forests, Andhra Pradesh to call for global tender for disposal of 2022 M.T. of graded and non-graded Red Sanders Wood both in round log form and value added product form, with a specific clause in the tender conditions that export of Red Sanders in round log form shall be permitted subject to Government of India clearance.
36. But the Government of India initially did not agree for export of wood in log form vide proceedings F.No.5-2/2001-SU(Vol.3) dt.14.07.2009.
37. The allotments made to highest bidders by the State of Andhra Pradesh were then cancelled and a decision was taken to allot the Red Sanders Wood in value added products form.
38. Fresh tenders were called vide G.O.Rt.No.480 EFS & T (FOR.III) Department dt.01.10.2009 by canceling the earlier orders making allotments of Red Sanders Wood to highest bidders in round log form.
WP.No.21351 and 21416 of 2009
39. This was challenged by the petitioner and another company in this Court by filing WP.No.21351 and 21416 of 2009 and an interim stay was granted by this Court initially.
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40. Thereafter, petitioner and the other company were called for negotiations and a rate was agreed upon for sale of C-Grade and non- grade Red Sanders Wood.
41. Thereafter, the Writ Petitions were withdrawn on 09.06.2011 by the respective petitioners.
42. Pursuant to the said negotiations, the agreement dt.18.03.2013 (Ex.P4) came to be executed in favour of the petitioner by the A.P. Forest Development Corporation, as agent of the State of Andhra Pradesh for sale of 1067.786 M.T. of Red Sanders Wood.
43. As per the terms of the agreement dt.18.03.2013 (Ex.P-4) executed by the A.P. Forest Development Corporation Limited with the petitioner, 1067.786 M.T. of Red Sanders wood logs were sold to the petitioner by the then State of Andhra Pradesh.
44. There is no dispute that petitioner paid the agreed full consideration, that the stock was delivered to the petitioner which the petitioner had transported to its godown in Thoopranpet village, Yadadri Bhuvanagiri District in the present State of Telangana from the State of Andhra Pradesh.
45. In the preamble of the agreement, it is mentioned that the petitioner is aware that the requests of the Government of Andhra Pradesh to the Government of India to permit export of Red Sanders wood in log form was refused.
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46. That was why Clause (1) of the agreement dt.18.3.2013 mentioned that the petitioner agreed to convert into value added product form, the Red Sanders wood sold to it in log form. Even clause 8(i) of the Agreement mentioned that export process of value added product form of Red Sanders wood materials would begin only after obtaining the necessary permission /clearance from the Government of India; and clause-8(ii) permitted the petitioner to prepare the export application along with all documents for the Red Sanders wood in value added product form for issue of export licence by Government of India, Ministry of Commerce; that the A.P. Forest Development Corporation Limited would then forward it to the Government of India and the petitioner should approach the Director General of Foreign Trade, New Delhi (DGFT) to secure export licence etc. Re: plea of the Union of India (1st respondent)
47. In the counter-affidavit filed by the Ministry of Environment and Forests, Union of India (1st respondent), it is stated that it deals with issues relating to export and import of wood and wood products including the Red Sanders wood and the State Governments and Union Territory Administrations are required to take appropriate action as per the existing Acts and Rules to protect Red Sanders wood.
It states in para-6 that as per the existing Export Policy published by the Directorate General of Foreign Trade, Ministry of ::15:: MSR,J & KL,J W.P.No.27474 of 2019 Commerce and Industries (2nd respondent), though the export of Red Sanders wood in any form, except value added products is prohibited, a one time relaxation had been granted to the Government of Andhra Pradesh and certain other Governments for export of Red Sanders wood in log form obtained out of confiscated/seized stock, either by itself or through any entity/entities so authorized by them w.e.f. 24.10.2013; and that the quota fixed for the State of Andhra Pradesh is 8498.095 M.T. It stated that it receives applications for export of Red Sanders wood through the Director General of Foreign Trade along with the relevant documents including Certificate of Origin issued by the concerned State Forest Departments; that it would examine the applications in consultation with the CITES Management Authority and sends its comments to the Director General of Foreign Trade; and that basing on its comments, the Director General of Foreign Trade takes decision regarding grant of export licence to the applicant.
It also stated that vide DGFT Notification No.56/2015-2020 dt.30.03.2020 issued in exercise of the powers conferred on the Union of India by Section 3 of the Foreign Trade (Development and Regulation) Act, 1992 r/w para-1.02 of the Foreign Trade Policy (2015-20), time has been allowed upto 31.12.2020 to the Government of Andhra Pradesh to complete the process of export of the allocated quantity. Copy of the said notification is annexed to this counter- affidavit.
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W.P.No.27474 of 2019
Re: Stand of the DGFT
48. The Director General of Foreign Trade (2nd respondent) filed a counter-affidavit stating in para-4 that the Government of Andhra Pradesh had sold 1067.786 M.T. of Red Sanders wood to the petitioner in 2011 subject to the condition that it will convert the same into value added product form if it wishes to export the same; and the export of confiscated Red Sanders wood in log form was not allowed by the DGFT/Central Government when the petitioner was allocated the quantity. (It thus explained the reason why the agreement dt.18.3.2013 mentioned that petitioner would export in value added products form) It is stated that subsequently on 24.10.2013, the DGFT notified relaxation in export of Red Sanders wood in log form through notification No.47(RE-2013)/2009-2014 dt.24.10.2013 which was filed as Annexure-II to its counter. (This shows that there was a change in policy by the Union of India/DGFT to also permit export of Red Sanders wood in log form subsequently w.e.f. 24.10.2013, shortly after the agreement dt.18.3.2013 was executed in favor of the petitioner) It further stated that on specific request of the Government of Andhra Pradesh, the DGFT also issued public notice No.42 dt.03.12.2013 notifying quantity for export of 1998.5917 M.T. of Red Sanders wood in value added product form. This was filed as Annexure-III to its counter-affidavit.
::17:: MSR,J & KL,J W.P.No.27474 of 2019 It went on to say that in 2016, this quota was revised to 8498.095 M.T. subsuming the earlier quantities of Red Sanders wood notified for Andhra Pradesh in both log form and value added product form with extended deadlines.
49. The above stand of the Union of India and DGFT in their counter affidavits thus explains why the condition that petitioner has to convert the log form Red Sanders wood purchased by it into value added product form was imposed in the agreement dt.18.03.2013 entered into by the petitioner with the A.P. Forest Development Corporation Limited i.e. that at that time, export of confiscated red Sanders wood in log form was not allowed by the DGFT/Central Government.
But admittedly, from 24.10.2013, the DGFT had granted relaxation to the State of Andhra Pradesh vide Notification No.47 (RE-2013)/2009-14 dt.24.10.2013. Clause 2.1 of the said Notification states 'Government of Andhra Pradesh is hereby permitted to export 8587.1363 M.T. of Red Sanders wood in log form, either by itself or through any entity/entities so authorized by them for the purpose'. Re: the various other notifications issued by the DGFT between 2013-2020 Though this notification fixed time upto 31.10.2014 to complete the export, vide Notification No.6/2015-2020 dt.06.05.2015 issued by the DGFT, time was extended upto 30.04.2016 by modifying Notification No.47 dt.24.10.2013.
::18:: MSR,J & KL,J W.P.No.27474 of 2019 Vide Notification No.24/2015-20 dt.29.08.2016, the DGFT permitted Government of Andhra Pradesh to export Red Sanders wood in any form, bulk or value added upto 8498.095 M.T. by 30.04.2017. Therefore till 30.04.2017 also export in log form was permitted by the DGFT.
Another Notification No.08/2015-20 dt.23.05.2017 was issued extending time for completing process of export upto 30.04.2019 to the State of Andhra Pradesh of the allocated quantity of Red Sanders wood.
Thereafter Notification No.12/2015-2020 dt.29-07-2019 was issued extending time upto 31.12.2019 for export by the State of Andhra Pradesh.
Lastly, Notification No.56/2015-2020 dt.30.03.2020 had extended time upto 31.12.2020 for export by Government of Andhra Pradesh of its allocated quantity.
These notifications are filed by the petitioner by way of additional documents on 11.12.2019.
Our consideration of above facts/events
50. Once the Government of India/DGFT had changed its policy of prohibiting export of Red Sanders wood in log form after 24.10.2013 when Notification No.47(RE-2013)/2019-2014 dt.24.10.2013 was issued permitting export of Red Sanders Wood in log form, and that policy continued even thereafter for considerable length of time even ::19:: MSR,J & KL,J W.P.No.27474 of 2019 upto 31.12.2019, the Principal Chief Conservator of Forests of both States cannot continue to insist that that petitioner should convert the Red Sanders Wood into value added product form as agreed by the petitioner in the Agreement Ex.P4 dt.18.03.2013, and that unless he does so, they will not grant him a Certificate of Origin with regard to the Red Sanders Wood purchased by it.
51. We may also point out that essentially the sale of the Red Sanders Wood to the petitioner is governed by the provisions of the Sale of Goods Act, 1930.
52. The said statute contemplates "conditions" and "warranties" in Sec.12 of the said Act, which states:
"12. Condition and warranty:
(1) A stipulation in a contract of sale with reference to goods which are the subject thereof may be a condition or a warranty.
(2) A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated.
(3) A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but to a right to reject the goods and treat the contract as repudiated.
(4) Whether a stipulation in a contract of sale is a condition or a warranty depends in each case on the construction of the contract. A stipulation may be a condition, though called a warranty in the contract."
53. Section 13 (1) speaks of a contract of sale which is subject to any condition to be fulfilled by the seller and enables the buyer to ::20:: MSR,J & KL,J W.P.No.27474 of 2019 waive the condition or elect to treat the breach of the condition as a breach of warranty and not as a ground for treating the contract as repudiated.
54. The Sale of Goods Act, 1930 does not contemplate any condition which can be imposed by a seller akin to a condition, like in the instant case, requiring the buyer to convert the goods into a particular form to enable the buyer to resell/export the same.
55. Thus as parties to the agreement dt.18.3.2013, the successor State Governments of State of Telangana or the residuary State of Andhra Pradesh through their respective Principal Chief Conservator of Forests cannot seek to enforce the condition in the agreement that petitioner shall export only in value added product form and not in log form.
If the buyer of the goods, like the petitioner in the instant case, refuses to abide by a term of the sale imposed by the seller, which mandates him to convert the goods into another form (value added product form) than the one in which he has purchased the same (log form), the sellers (the then State of Andhra Pradesh or its successors), cannot cause obstacles to the petitioner/buyer by refusing to permit the petitioner to even seek a Certificate of Origin from them for the export of his stock unless it modifies the goods from log form to value added product form.
::21:: MSR,J & KL,J W.P.No.27474 of 2019 This is because by then, the property in the goods had passed to the petitioner absolutely and delivery of the goods had also been completed in 2013 itself.
56. We may point out that in proceedings F.No.05-03/2012-SU dt.11.10.2018, the Ministry of Environment, Forests and Climate Change of the Union of India had stated the following in respect of export of Red Sanders wood from a State other than the State of Andhra Pradesh:
"the Certificate of Origin of the material, whether it is of confiscated origin' or 'artificially propagated', must be issued by the Principal Chief Conservator of Forests from where the export is to take place based on the documents of procurements and custody of stocks available with the applicant."
57. In the instant case, the Principal Chief Conservator of Forests of both States had certified in para-18 of the impugned order dt.06.12.2019 itself that the Red Sanders wood stacked in the Depot of the petitioner is genuine and the permits through which the said logs were transported by the petitioner to his Depot are also genuine.
58. There is no dispute thus about how the petitioner procured the stock in its custody and its genuineness. So they cannot now create new grounds, not within their purview, for refusing to issue the Certificate of Origin.
59. In our opinion, it is not within the jurisdiction of the Principal Chief Conservator of Forests of both States to decide whether or not ::22:: MSR,J & KL,J W.P.No.27474 of 2019 petitioner, who seeks such Certificate of Origin, when the stock is in log form, would get an export licence from the DGFT/Union of India.
60. After all any sale by the petitioner of the Red Sanders Wood stock which it had purchased from the State of A.P. through its agent, the A.P. Forest Development Corporation on 18.03.2013, would undoubtedly earn foreign exchange to the nation.
61. That is a very important consideration which this Court cannot ignore and it is not for both the States to create impediments and prevent the Union of India from earning such valuable foreign exchange, if it chooses to permit the export of the Red Sanders wood by the petitioners in log form.
62. Issues of Foreign Trade Policy fall under entry 41 of List 1 of Schedule VII to the Constitution of India and are in the exclusive purview of the Union of India and its agency the Director General of Foreign Trade (DGFT).
63. Neither the State of Telangana nor the State of Andhra Pradesh have any business to intrude into the field occupied by the Union of India in relation to foreign trade and interfere with exercise of discretionary power by the Union of India and the Director General of Foreign Trade in matters of export policy.
64. No doubt in para-5 of the counter-affidavit filed by the Director General of Foreign Trade, it is stated that the State of Andhra Pradesh had informed the petitioner vide letter dt.24.10.2019 that there is no ::23:: MSR,J & KL,J W.P.No.27474 of 2019 quota for export by it in log form, but in para-9, the DGFT had stated as under:-
"9. It may be informed to this Hon'ble High Court that in case the petitioner is issued COO for export in either log form or VAP by the PCCF, Government of Telangana, the petitioner will have to file an online application with DGFT along with the required documentation, which will be forwarded to MoEF&CC for seeking their NOC. On receipt of NOC from MoEF&CC, export license can be issued to the petitioner. Also, we may categorically specify that DGFT notified quota for RSW in log form on the basis of approval by CITES and MoEF& CC and has no direct role in any agreement between the State Government and the exporter. The quantity allowed is to be within the limit. Thus, quantity already approved will have to be deducted from the total quantity for which extension has been done till 30.12.2020."
65. A reading of the above paragraph suggests that if a Certificate of Origin for export in either log form or value added product form is issued by the Principal Chief Conservator of Forests, Government of Telangana, and the petitioner files an online application with the DGFT along with required documentation which can be forwarded to the 1st respondent for seeking NOC, and if such NOC is issued by the 1st respondent, export licence can be issued to the petitioner.
66. Thus the DGFT does not rule out grant of export licence to the petitioner for export even in log form, if a Certificate of Origin is issued by the Principal Chief Conservator of Forests, State of Telangana.
::24:: MSR,J & KL,J W.P.No.27474 of 2019 The issuance of Certificate of Origin to another business entity by the Principal Chief Conservator of Forests of State of Telangana, who also, like the petitioner,wanted to export in log form after allotment on condition of export in value added form - the discriminatory treatment given to petitioner
67. In this regard, the petitioner had relied upon the Certificate of Origin issued to a sister concern of the petitioner by name M/s.Rocky Red Sandalwood Musical Instruments Exports vide Certificate No.RS/TS/0002/2020 dt.13.11.2020 issued by the Principal Chief Conservator of Forests, State of Telangana for export in log form of 90 M.T.
68. This was issued pursuant to proceedings Rc.No.63/2020/Prod.1 dt.13.11.2020 issued by the Principal Chief Conservator of Forests, State of Telangana wherein she took note that the applicant wanted to export Red Sanders wood in log form to Singapore and China, that Red Sanders wood had been allotted to it vide G.O.Rt.No.90 EFS&T (For.III) Department dt.09.03.2011 only for export in value added product form; that she had sought clarification from the DGFT whether the request of the firm for issuance of Certificate of Origin is to be considered in log form or value added product form since the firm is intending to export the Red Sanders wood in log form; that the DGFT vide letter dt.15.09.2020 informed that they have not yet received any application for export of 90 M.T. from the applicant and it is not possible to comment whether the request of the firm for issuance of Certificate of Origin is to be considered in log or value added product form; and it implies that the export of the Red Sanders wood whether as value added product form or log form ::25:: MSR,J & KL,J W.P.No.27474 of 2019 shall be decided by the DGFT while issuing the export permission. After obtaining a report from the Additional Principal Chief Conservator of Forests about the genuineness of the stocks, Certificate of Origin was issued to the said applicant on 13.11.2020.
69. What is significant in the above proceeding is the understanding of the Principal Chief Conservator of Forests, Government of Telangana also that the question of grant of export licence whether in log form or value added product form to be granted to an applicant for such licence, is within the exclusive purview of the DGFT and not within her jurisdiction.
70. Thus notwithstanding that the applicant M/s.Rocky Red Sanders Wood Musical Instruments Exports Limited had also been allotted Red Sanders for export in value added products form, its application for Certificate of Origin of stock in log form was approved and was issued by the Principal Chief Conservator of Forests, State of Telangana.
71. We are unable to understand why the Principal Chief Conservator of Forests of the States of Telangana and the State of Andhra Pradesh have applied a different standard when it comes to the request of the petitioner for issuance of a Certificate of Origin by insisting that they will consider such request only after the petitioner agrees to convert the logs into value added product form. They cannot discriminate against the petitioner and apply a different rule to ::26:: MSR,J & KL,J W.P.No.27474 of 2019 the petitioner, which was not applied by them to M/s.Rocky Red Sanders Wood Musical Instruments Exports Limited.
72. We are of the opinion that both of them have to confine themselves to their jurisdiction of issuing Certificate of Origin after verifying the procurement document and the custody document alone (which have been certified to be genuine at para-18 of the impugned order dt.06.12.2019 by both of them).
73. They cannot transgress into the jurisdiction of the DGFT and take into consideration whether export licence in log form would be issued by the DGFT to the petitioner or not, while deciding whether or not to issue a Certificate of Origin to the petitioner, which they cannot otherwise deny to the petitioner.
74. We may here refer to the decision in Indian Rly. Construction Co. Ltd. v. Ajay Kumar1, where the Supreme Court had pithily explained the parameters of judicial review of administrative decisions. According to it, a discretion must be exercised only by the authority to which it is committed. That authority must genuinely address itself to the matter before it; it must not act under the dictates of another body or disable itself from exercising discretion in each individual case. In the purported exercise of its discretion, it must not do what it has been forbidden to do, nor must it do what it has not been authorized to do. It must act in good faith, must have regard to all relevant considerations and must not be influenced by irrelevant 1 (2003) 4 SCC 579 ::27:: MSR,J & KL,J W.P.No.27474 of 2019 considerations, must not seek to promote purposes alien to the letter or to the spirit of the legislation that gives it power to act, and must not act arbitrarily or capriciously. It declared:
"13. One of the points that falls for determination is the scope for judicial interference in matters of administrative decisions. Administrative action is stated to be referable to the broad area of governmental activities in which the repositories of power may exercise every class of statutory function of executive, quasi-legislative and quasi-judicial nature. It is trite law that exercise of power, whether legislative or administrative, will be set aside if there is manifest error in the exercise of such power or the exercise of the power is manifestly arbitrary. (See State of U.P. v. Renusagar Power Co.2) At one time, the traditional view in England was that the executive was not answerable where its action was attributable to the exercise of prerogative power. Professor de Smith in his classical work Judicial Review of Administrative Action, 4th Edn., at pp. 285-87 states the legal position in his own terse language that the relevant principles formulated by the courts may be broadly summarized as follows. The authority in which a discretion is vested can be compelled to exercise that discretion, but not to exercise it in any particular manner. In general, a discretion must be exercised only by the authority to which it is committed. That authority must genuinely address itself to the matter before it; it must not act under the dictates of another body or disable itself from exercising a discretion in each individual case. In the purported exercise of its discretion, it must not do what it has been forbidden to do, nor must it do what it has not been authorized to do. It must act in good faith, must have regard to all relevant considerations and must not be influenced by irrelevant considerations, must not seek to promote purposes alien to the letter or to the spirit of the legislation that gives it power to act, and must not act arbitrarily or capriciously. These several principles can conveniently be grouped in two main categories: (i) failure to 2 AIR 1988 SC 1737 ::28:: MSR,J & KL,J W.P.No.27474 of 2019 exercise a discretion, and (ii) excess or abuse of discretionary power. The two classes are not, however, mutually exclusive. Thus, discretion may be improperly fettered because irrelevant considerations have been taken into account, and where an authority hands over its discretion to another body it acts ultra vires.
14. The present trend of judicial opinion is to restrict the doctrine of immunity from judicial review to those class of cases which relate to deployment of troops, entering into international treaties etc. The distinctive features of some of these recent cases signify the willingness of the courts to assert their power to scrutinize the factual basis upon which discretionary powers have been exercised. One can conveniently classify under three heads the grounds on which administrative action is subject to control by judicial review. The first ground is "illegality", the second "irrationality", and the third "procedural impropriety". These principles were highlighted by Lord Diplock in Council of Civil Service Unions v. Minister for the Civil Service3 (commonly known as CCSU case). If the power has been exercised on a non- consideration or non-application of mind to relevant factors, the exercise of power will be regarded as manifestly erroneous...."
75. The contention of the Principal Chief Conservator of Forest (HOFF), Andhra Pradesh that the petitioner cannot request for Certificate of Origin in log form is therefore rejected.
76. We also reject the plea of the Principal Chief Conservators of Forest (HOFF), Andhra Pradesh and the State of Telangana that:
(i) petitioner cannot be allowed to take advantage of the change in policy of the Government of India/DGFT permitting export of Red Sanders Wood in log form after 2013;
3 (1984) 3 All.E.R. 935 ::29:: MSR,J & KL,J W.P.No.27474 of 2019
(ii) they had not usurped the jurisdiction of the DGFT, that they did not act in an arbitrary manner and that they have not taken into account irrelevant material and had come to a wrong conclusion.
77. As regards the plea of the Principal Chief Conservator of Forests, Andhra Pradesh that the petitioner purchased the Red Sanders Wood for export in value added products form at much lower rate than that in log form is concerned, no material is placed by the said party before this Court, except his ipsi dixit. His plea that the said State of A.P. was compelled to sell the Red Sanders Wood for export in value added product form to the petitioner cannot be accepted because the sale was of logs of Red Sanders Wood and not in value added product form (though because of the ban on export imposed by the Government of India in 2013 for export in log form, petitioner was made to agree for export in value added product form). Nobody had compelled the State of Andhra Pradesh to sell the Red Sanders seized by it to the petitioner or anybody else, and it had chosen to do so of its own. Having sold logs of Red Sanders Wood, that too after a tender process and consequent negotiations, the State of Andhra Pradesh cannot now plead that it had incurred heavy loss by complying with the then guidelines of the Government of India.
78. We reiterate that the petitioner is entitled to the benefit of any change in policy of the Government of India/DGFT and cannot be prevented from taking advantage of the same by exporting in log form ::30:: MSR,J & KL,J W.P.No.27474 of 2019 if the Government of India/DGFT grant permission to the petitioner to do so; and the State of Andhra Pradesh or the State of Telangana cannot refuse to issue Certificate of Origin to the petitioner by taking such untenable pleas.
79. Coming to the stand taken by the State of Telangana and its Principal Chief Conservator of Forests, Telangana at Hyderabad is concerned, the said State has been carved out of the erstwhile composite State of Andhra Pradesh w.e.f. 02.06.2014 under the A.P. Re-organization Act, 2014.
80. The Red Sanders stock sold to the petitioner was confiscated in the area which now falls in the residuary State of Andhra Pradesh, and the only reason why the State of Telangana and its Principal Chief Conservator of Forests, Telangana at Hyderabad has been involved in the process of issuance of Certificate of Origin to the petitioner is on account of the letter F.No.05-03/2012-SU issued by the Ministry of Environment, Forests and Climate Change, Government of India, on 11.10.2018 that if Red Sanders is exported from a State other than Andhra Pradesh, the Certificate of Origin of the material, whether it is of "confiscated origin" or "artificially propagated", must be issued by the Principal Chief Conservator of Forest of the State from where the export is to take place based on the documents of procurements and custody of stocks available with the applicant.
The stock of Red Sanders Wood sold to the petitioner had been transferred by the petitioner and stored at Toopranpet Village, Yadadri ::31:: MSR,J & KL,J W.P.No.27474 of 2019 Bhuvanagiri District of the State of Telangana, in the godown owned by the petitioner after obtaining valid transit permits from the respective forest departments of State of Andhra Pradesh in 2013, long before the bifurcation of the composite State of Andhra Pradesh and the creation of the new State of Telangana.
Since the export is to take place from the State of Telangana, where the stock of Red Sanders purchased by the petitioner is stored, it has to issue the Certificate of Origin.
Other than that, when the stock is genuine, its transport to the State of Telangana is validly made (as is admitted in para 18 of the impugned order dt.06.12.2019 by the Principal Chief Conservator of Forests of both States), the State of Telangana has no choice but to issue the Certificate of Origin.
It cannot raise irrelevant objections about conversion into value added product form because the stock was not purchased from the said State at all.
81. Unnecessarily a counter and an additional counter affidavit raising several untenable pleas similar to those raised by the State of Andhra Pradesh have been filed. We therefore do not find the need to deal with each one of them.
82. We find the attitude of the Principal Chief Conservator of Forests, Telangana at Hyderabad to be wholly vexatious considering the above background and arbitrary too having regard to her decision ::32:: MSR,J & KL,J W.P.No.27474 of 2019 to grant Certificate of Origin to M/s. Rocky Red Sandal Wood Musical Instruments Exports vide Proceedings R.C.No.63/2020/PROD.1 dt.13.11.2020, who had also purchased Red Sanders Wood for export in value added product form and had retained it in log form and had applied for the said Certificate of Origin without changing the same into value added product form, mentioned above. No valid explanation is offered by the Government Pleader for Forest, State of Telangana for the above conduct while showing discrimination to the petitioner, who is also similarly placed.
83. In Urban Improvement Trust, Bikaner V.Mohanlal4 the Supreme Court has held that statutory authorities have to discharge functions in public interest, that they should act as responsible litigants; and that they cannot raise frivolous and unjust objections by behaving like private litigants. It criticized the attitude of Government officials in deliberately delaying taking crucial decisions affecting citizens and then contesting the same on technical pleas without justification. It declared:
"5. ... ... Statutory authorities exist to discharge statutory functions in public interest. They should be responsible litigants. They cannot raise frivolous and unjust objections, nor act in a callous and high- handed manner. They can not behave like some private litigants with profiteering motives. Nor can they resort to unjust enrichment. They are expected to show remorse or regret when their officers act negligently or in an overbearing manner. When glaring wrong acts by their officers are brought to their notice, for which there is no explanation or excuse, the least that is expected is restitution/restoration to the extent possible with appropriate compensation. Their harsh attitude in regard to 4 (2010) 1 SCC 512 ::33:: MSR,J & KL,J W.P.No.27474 of 2019 genuine grievances of the public and their indulgence in unwarranted litigation requires to be corrected.
6. This Court has repeatedly expressed the view that Governments and statutory authorities should be model or ideal litigants and should not put forth false, frivolous, vexatious, technical (but unjust) contentions to obstruct the path of justice. We may refer to some of the decisions in this behalf.
7. In Dilbagh Rai Jarry v. Union of India5 this Court extracted with approval the following statement [from an earlier decision of the Kerala High Court (P.P. Abubacker case6):
"25. ... '5. ... The State, under our Constitution, undertakes economic activities in a vast and widening public sector and inevitably gets involved in disputes with private individuals. But it must be remembered that the State is no ordinary party trying to win a case against one of its own citizens by hook or by crook; for the State's interest is to meet honest claims, vindicate a substantial defence and never to score a technical point or overreach a weaker party to avoid a just liability or secure an unfair advantage, simply because legal devices provide such an opportunity. The State is a virtuous litigant and looks with unconcern on immoral forensic successes so that if on the merits the case is weak, Government shows a willingness to settle the dispute regardless of prestige and other lesser motivations which move private parties to fight in court. The layout on litigation costs and executive time by the State and its agencies is so staggering these days because of the large amount of litigation in which it is involved that a positive and wholesome policy of cutting back on the volume of law suits by the twin methods of not being tempted into forensic showdowns where a reasonable adjustment is feasible and ever offering to extinguish a pending proceeding on just terms, giving the legal mentors of Government some initiative and authority in this behalf. I am not indulging in any judicial homily but only echoing the dynamic national policy on State litigation evolved at a Conference of Law Ministers of India way back in 1957.' "
8. In Madras Port Trust v. Hymanshu International7 this Court held: (SCC p. 177, para 2) "2. ... It is high time that Governments and public authorities adopt the practice of not relying upon technical pleas for the purpose of 5 (1974) 3 SCC 554 6 AIR 1972 KERALA 103 7 1979 (4) SCC 176 ::34:: MSR,J & KL,J W.P.No.27474 of 2019 defeating legitimate claims of citizens and do what is fair and just to the citizens. Of course, if a Government or a public authority takes up a technical plea, the Court has to decide it and if the plea is well founded, it has to be upheld by the court, but what we feel is that such a plea should not ordinarily be taken up by a Government or a public authority, unless of course the claim is not well founded and by reason of delay in filing it, the evidence for the purpose of resisting such a claim has become unavailable."
9. In a three-Judge Bench judgment of Bhag Singh v. UT of Chandigarh8 this Court held: (SCC p. 741, para 3) "3. ... The State Government must do what is fair and just to the citizen and should not, as far as possible, except in cases where tax or revenue is received or recovered without protest or where the State Government would otherwise be irretrievably be prejudiced, take up a technical plea to defeat the legitimate and just claim of the citizen."
10. Unwarranted litigation by Governments and statutory authorities basically stems from the two general baseless assumptions by their officers. They are:
(i) All claims against the Government/statutory authorities should be viewed as illegal and should be resisted and fought up to the highest court of the land.
(ii) If taking a decision on an issue could be avoided, then it is prudent not to decide the issue and let the aggrieved party approach the court and secure a decision.
The reluctance to take decisions, or tendency to challenge all orders against them, is not the policy of Governments or statutory authorities, but is attributable to some officers who are responsible for taking decisions and/or officers in charge of litigation. Their reluctance arises from an instinctive tendency to protect themselves against any future accusations of wrong decision-making, or worse, of improper motives for any decision-making. Unless their insecurity and fear is addressed, officers will continue to pass on the responsibility of decision-making to courts and tribunals."(emphasis supplied)
84. These observations aptly get attracted to the instant case and we deprecate the conduct of the respondents 3 & 4.
8 1985 (3) SCC 737 ::35:: MSR,J & KL,J W.P.No.27474 of 2019 Conclusion :
85. For the aforesaid reasons, the Writ Petition is allowed with costs of Rs.10,000/- each to be paid to the petitioner by respondent nos.3 and 4; proceedings in Ref.No.16795 / 2019 / PROD - 1 dt.06.12.2019 jointly issued by respondent nos.3 and 4 is declared as arbitrary and violative of Article 14 of the Constitution of India; and a consequential direction is issued to respondent nos.3 and 4 to forthwith issue Certificate of Origin to the petitioner in respect of stock of Red Sanders Wood of 1067.751 M.T. stored in the licensed godown at Plot No.6 and 7, Toopranpet Village, Choutuppal Mandal, Yadadri Bhuvanagiri District of State of Telangana without insisting for conversion of the said stock from log form into Value Added Product form.
86. Having regard to this order, no orders are necessary in I.A.No.2 of 2019 and in I.A.No.1 of 2020 and the same are closed.
87. Consequently, miscellaneous petitions, pending if any, shall stand closed.
____________________________ M.S. RAMACHANDRA RAO, J ________________ K. LAKSHMAN, J Date: 03-12-2020 Vsv/Ndr