Karnataka High Court
Smt Kempamma @ Bhagya vs Kempegowda @ Karigowda on 19 March, 2008
Author: H.G.Ramesh
Bench: H.G.Ramesh
III THE HIGH OOURT or KARNATAKA,
DATED THIS THE 201* on or much I C ~ _
BEF'0l?.E~ é " V % V
THE. I-!0N'llI..E MR. Juswlclt;
LEEEH
M/S GEMINI DYEING AND pE1NTI.!s1OwLLs LTD
A Ct'.'rM'r"t"1':'1'Y 'iIfiCGRFu')R.E'i'E'f) EEEEEEIVTHE
COMPANIES' Ac:r,HA-,v1naO.«ITE -REQGIVSTERED
OFFICE AT: .N(}[j'1E_§B, FEE-NYA..ENDUS'I"RiAL AREA
PHASE I'. EEEOALOE'E;sE, REPVB'!-AUTHORISED
'SIGNATORY"-AIID PUBLHT OFFICER
JAGADISH I' . .. PETITION ER
("F vi' 9 s'O.E€.=I WDENYA. A E &
I-J' U)-'Ill 1' I ' J
:5
NA. PAJL-'1' I4-I, ADV'
an --....-'
- EMINI'-3'FRY OF TEXTILES. NEW UDYOG
'BHAV!ixN, NEW DELHI, REP BY SEC
. 'III'_".\PI§AII§}LLATE COMMITTEE
3" V. APPAREL EXPORT PROMOTION COUN 'IL
. OOEEE.E.=~.4E.wr OF INDIA
IVM"iNIS'1'RY OF TEXTILES
" _ _7iID'!'0G BI-IAVAIVI, NEW DELHI
NO 10, RAHEJA CHAMBERS, 12
MUSEUM ROAD, BANGALORE
REP BY ITS ADDITIONAL
DIRECTOR. PESDQNDENTS
(BY SRL B P PUTTASIDDAIAH, cast; FOR R:=.jj-2) ft '
(By Sri I I"-E:'I'v'v':"aL, sr.ceUIIs-AL I .9 I
K SACHINDRA KARANTH,-Al3*v'-- RQR Ra I
THIS WRIT PETITION IS FIALEIRAUi§D'ERA'A3R'I'It§f§ES';t:Q26 00
AND 227 01:' THE CONS'lT£'.UTION._OF INDIA .PRAYI;NG TO
DECLARE BY AN APPROPRIATE ' WRIT. 'ORIIRR GR
DIREIITIQN THAT IMPQSITIIQN cm PENALTY BY WAY OF
RGRREITLIRR BY EXPORT
POLICY' 1996-1999, is ILLELIAL .A"I~I_D ULTRA VIRES IN
RELATIGR To SEC.'Fi'0IT»i LGR--..,fI*II'~ FOR» GR TRADE
REGULATION ACT '-1992' I (FTDAQ _ M31'). FURTHER
DECLARING jTHAT AD-J'1J_i)ICAI7'i'C)N PRUGERUINGR
ADOPTED ;B'Y*R_1~ AND To BE"ILLEgfAL AND ULTRA VIRES
IN TER_IvIR uG1?_'v__-SECTIGN 131; OFYTHE FOREIGN TRADE
RRGULILTIQRIUAc:I*TgF*:I)RAI.--1992I DECLARING THAT THE
COLLECT!Q'i'T~:.;<)F 1L!I_EGP.L___ PENALTY BY RESPDNDENTS
F :'J'I"v'£ RRTI'TIeRERs T<.rTII.r-I CQNSDLIDATED Fl_.JN_!_3
oR1INI:IIA Tc:-RI»: 'ILLEGAL AND ULTRA VIRES.
0' THIS RR'rITIǤtRIIV"doMING 0N FOR PRELIMINARY
HEARING III B', cIR_oUI=, THIS DAY CUURT MADE
_E'OLLOWIN'G;__VV' V
9.8.91.3
'The petitioner. a manui'actu"'i'~i "----:rrri1t ""*"*r'""'
I T wlzzent' allotted an export entitlement under the First Cmne
0 * Serve (FC-FS). quota. in county category US-341-O,
US[341-Y, US] 359 85 US/641 during the year 2000 in terms'
of the notification dated 12-1 1-1999 (for short 'Polic:y'),
eifected 51.81% of the entitlement, resulting in the Appaxel
UK
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forfeiting Rs.1s,44,32si- by older 12-i}e9-sees
Annexure-"B" which when ''
Appellate Committee, was' by
2002 Annexuiwewc," and or" a. appeal by
order dated 27-0952004 er "lithe Second
Appellate Comn1ittee.AVVHen¢;el,lil1is
2.5. is byifnliliiifiiétatement of objections
"$'.@_iespondent and Statement of
obj:é4etionsV.Vcliiie§l of Respondents 1 and 2.
"indthe Satetenieiit of objections of Respondents 1 and ~.oo11tended~ "that export of textiles and clothing from V on bilateral agreements entered into between of India and Governments of developed under the aegis of the erstwhile Multi Fibre x 'll"_.,rnn_g,n1e11t(MFA) governing international textile trade from evfile I m 11' gr on ntries are referred 1*:
S i I '1 1 i a annual levels prescribed in the bilateral agneenientwentl th m1'.=:11g mm force 1' has norm Trade Qzvganaeaigon, {-.'!'!L I I\l'l 'all' 111 1395, quaniitaizive resiricizionég last l in the bilateral agreements. _werel'ol1langed tlie relating to Agreement on Teitrtllee 'andl The quotas also known allocated amongst individual a system of allocation of is! as to optimize the export. of the county. It is of "the aim, the Government of I .1" cw. v1 ' T '» " " ' - «I ." '-3 "W" W? 'hr--"s farom one to 9...."-e ....'*-am-=.'n ae Emu-1.
Eniifleme11tvviQuoto}_ lPolicies'°' and *"fion-.2'; of q"ot"s are glone' ""u11dcE' the following categories in case 'of' A V' 'ga_1me11ts:
3
bl: I3l1.l"' l"h'I"I "av" U': uni' run nwlnnnnaa gf 1415 In) In ll'!-I .l\IJ I-II5IuIL'\.4'\r '§ exporter under the Past Performance entitlement (PPE);
e ' 1 under the New 7*, _Vd ,,,, _ _e_ _.._is:ation of m Investors Entitlement. (NIE), to enoourage investlllellts in industly; 6} Wk U \ U1
0) 5% under Non-quota expert encourage dive1'sificatio11»w-Jf' i-to uougquotee. ' countries;
(1) 10% on First Cojzue'--- .19 equal opporulliitiesiife _e Lam-.;§s 'en basis of High Value Realia-3a.l_:io11.ewAi""" * ' The framing of poficiee; of power conferred unti'e;f:e1"3eciio11 L5."ef Trade (Development andiiimizofi: the Export anti import It is _f'urt11ei*.. stated, ti1.et.":;:i older to implement. the policy, an Ex1ii)'1'tv-...-P1bmotio11 Council (AEPC3) headed by ' :v"vf_?:'fe21e1'al is designated as Quota Administiering behalf of the Government, responsible for of quota in terms of the The availability of ii 'quotxvaii. it is said. vastly over strips the demand and in View of ieumwrters ef te"t'.iE" '"ai'"'"'ifi 13' I11 q eta eeuiifies, it is esseniiafl to ensure quotas are fuliy and are not LA U\ t7\ alloww w go wa...m :11... to spee1dative'""'t:5adiiIg:_. by unscrupulous eleini" ts ant': theiefore, utilisation of the quota 'by 3*'? Septe1nBe1'" .of--.ti1evv._iei¢?V7é''t '* year and failure to do the"
stmender the quota and quota allocated i11:_'t"l1e liuannei' and pmoedure as laid of quota beyond December of the ael-.=:v..nt'. .,,,,_.i" A .,fief'.'fo1'_-[lief ':1 Bank guarantee or a fixed «:'rr"""t ieeeipt 'flemaiad w.1i.e L1- Ix:-.i...,, i.- wge11a_t.i_11 the year. 2:'(3"'0., ,_t':3§TpOT"i'"' C'"v"'I' the asiount of EMD by a 1ei;ter' 'undertzil1ing or post dated cheques. The for forfeiture is that an exporter who e,x1)oi'ts:Vi1ot!ess than 90% of the export entitlement, its EMD .' . i in full. In Case of utilisation upto 75% of items and upto 50% in case of slow moving At 'T EMD is forfeited in proportion to the shortfall of ut:llizaL1'...1L If gm exporter is aggzieved by any order of 4, The Statement of objections of alums. ide--tic..1. cont..- 'astaxe 7. Respondents 1 "ii 2 in their ~_.,;
addition, it is contended the benefit of the gai'inenteAent:itleinen't'V§ policy by furnishing a bank failed to export garments provided, cannot. be pennittedl It is stated that the peti'fio11¢_~; 'oo:2ts:§ndi11g that no amount could be eontention of the 3"' nespondent is tlrt. t}ie._4ex*po19te:"did,i1ot "lace 1..l_.vant material in support the U1 5 E F:
E
-'-E Eu.2
H 5 C '3 2 <3 :6 s:
SE 2 32 E?
l be.-3.rnest ..3...ney deposit, in its entirety. for exports less than 75% and proportzionate forfeiture for exports between 75% and 90% under the First Come First Serve (FCFS), is irrational and unreasonable. n____________.
#3
b) the appellate authority fell or considering the documentary evidence 'the' a. ll petitioner in support of the clailn {oi-'.. vihfle ' directing forfeiture of the EMT}.
c} that the ;;»:lV_AgaIn1e11ta upto 51.81% of the export.eiititlenient;-..thenon--fulfilhnent of the obligation was not due 'to on the part of the petitioner butiwas for heyoiid control.
")5 p." appeals involving identical iesues"evand5 it of--.faets, the authorities having aeeeptecl .elaintotT_l'oree-'n1ajeme, cannot refuse to accept the forte-majeure, in the fact situation of this "
I 6;" Per eontra. learned Senior counsel Sri. G. L. Rawal __-t"o:r No.3 contends that the challenge to the "i1..av-fl_..hle to the petitioner as the garments fell short of me qI.i-ta -iLtI_:ed to it within the period it stipulated. :'xccoi""-'g tr th" learned Senior eon...-heel, in terms of the policy, the petitioner was fully a""are "f the oonsequences of proportionate forfeiture of Bank guarantee on failure to export garments upto 90% but not less than M;
N\ '?5%. ar forf""1n'e, in fail. if has than e__.t_i.;-_,1i..r having accepted the said 'terms, it is }"f**"t..'. to contend that the policy in aapit relates. i' is either irrational or umeaaonable; further contends that 'over the Validity of the "the case of GOKALDAS IMAGES 'Ai--i§l_;¥vvi$_I'!0N or mom, a of of Delhi, rejected the plea in 2907 (7) STE 347 (one).
Le£m1ed"oo_nn:§el, if Wadd"ti"n, eontuenda that th- A_'J.__ petitioner Ielevant material oona Luring snhstani:i.a1"'1ega] of a claim of' force-majeuxe. the V-iiianthoiities iiglitk,-="oonaide1ed and rejected the said plea. V LaStl}:fit'tV eontended that the petitioner having exported 51.81% of the export entitlement, the authorities were justified in directing forfeiture of the At 'T from out of the bank guarantee, in full.
7. Sri. Devadaaa, learned Senior counsel. for Reamndeat. 1 a..- 2 contends that the petitioner having E S gt I c:'' E;
:5.
hi 93 £3 =5.
5:
E gl :3 '£3 E ii I ii 13 10 the policy, without questioning the terms forfeiture. cannot be permitted to
-f g._rm nts. Aeooniing to the for errmrt of ganients once "sllo..tmu_ it is piesuineci that the ex1:}or'te1§ iéiiseha1igie"its-obligafion to export garments to and in order to ensune such to the extent of fo1feitt111€r.=;"oi' the bank guarantee as as either irrational or unieastnnahlex "Senior counsel hastens to add that gaimentfli exportis .-- in its nature since quotas ;i.rL.._ed_ _o'_' '.1;-_V_V__.__ oountxy, under the policy is to maximise V f.-...... I-"1. Th rlrnrnrn-run-hi' Dl'\l"\l'\'I'l'1';'I'I I. 1.11» LJ\II'\rl J.l.a.|.I\r.I..l. F' Ia!'-1"'-.114'-I-I-I-Q.l«lg us.-v nu-u-«gov ' ...'I..
oounsei, is well Within its 1-" It so pa.-uue m Jforfeituw ' of the Bank guarantee, so as to ensure full and .q utilisation of the quota and that is precisely what V' -553 been done.
L, by calling in question the policyithata 1'. .2, A. 5': .
perused the pieadings. then: can be no i'r1_efi:.-- <that'.n terms of the "Policy", the petitioner i an export entitlement quota' under in and having failed to do so i' in ite entirety, the AEPC. the petitioner to show causees to :Ys}1*f)1ivI(i'i.:Iit)f;~be taken to forfeit the moiiiee i ~. ._.gitaiantee, which was 1 The AEPC, not being ' effere-:1, foifeited Rs.1z'5,{i4,328i[ of the amounts the bank guamnee, V%by_ou1Aex dated 24-09-2001 Ann' exuie-"B". This when in appeal before the First Appellate ' ifp stood confirmed by order dated 9-7-2002 while the further appeal to the Second it ' '2004 Annex! Committee was dismissed by order dated 27-09-
1re--"D".
9. In the admitted facts noticed supra, the questions for decision making me. 3 VJ\ K, \ g...n IO
3.} 'V-..'}:-.et.}:-.er the challenge to the as"
relates to forfeiture, for obligation within the ti1:1ie"stiptIl£iutecl4lis*lsustIai1:ali;1e'PV'5 'oi "'h*f"'r- the AErD'\..'- ~*d'tlte,_Apfilla'te'vCon1t.I1ittees
1.n.r..__. }1_,t_1'_iiec1 in Vlejveoting the "peVtitioi1e*'s~»olaim of force-Inajeule, while__tfis;11issing the Appeals?
10. Illdisputablrt quota allotted was on the it to export garments; furnished a bank guataliteeé that in case of failure to ful.fiJ.l_ the in its entirety. would be subject
11.. _L___er consciously in. I" +I'I'Ihn 'Dl"__il.I"'.'U" 1__ __ ll} J."L)l.l.€1h>!'.I1C,v.|u) . ......J a - agreed to the . of the forfeiture that 5.. ' ex',.verted A " -» garnnentsitzeyond 76% upto 90% of the export entit.'Leirr"t, it * :l.l.woulcllll_i:e for proportionate forfeiture and if less then .fort'e:':ture would be in full, fie-In out of the amount in 'A s guarantee. The consent of the petitioner to be V' subjected to the terms of the policy, relating to forfeiture in the event of failure to fulfill the export entitlement. in -the mlzeumstsnoes; cannot be permitted to appmbate and lufialfi nus afiluuunu u.u..-u-...u.> mu... 1.....- V .. u_= \' u (l
5.;
C») ' pads of coznsicieraizion. i say so 'neeanse, the "":}i'x:-r'i allotting quotas is with of exchange, which is for and as a consequence, of' the quota allocated is imperative it object of maximising the provides a clause for entitled to formulate a new ' 'l'_',"'-i'-'flvnvrn "ggisc Li___'__g and manner of L__L impiementa~tion-oi"tiie« HT! t* a'*~h""ve a p'*"t'.1'*'alar obieotive, V_"n3aso1e'app1opriate1y.in the matters of biiaterai trade, in my "DpiniO1l;'..ti€i1ig peculiar in its natuie, the Government was rights to provide for forfeiture and therefore, iioaiiiiothiie termed as either inational or unconstitutional. It i ' * nniust be home in mind that there must be fiee play with the Government' in matters of economic policies which an: not sn -'est t- ''3 review, unless demonstrated to be Weii settied iaw "st C.' int", '*1 """i"'i""' "f their "ar1sdic..ion, V \ will not transgzess iato t__.,. fi...d -f po_|ioy' de_x,!ioi¢_;-, and thy 11 -4.
are iii equippad to ad*"o - u':': or: a .. T12:
court, no-doubt has a duty to size thati:n'4'tj1ié.j11adc1'etaaddog.'of a decision, no law is ..
rights are not tralzsglessed' the extent pennisaible under co:1j*sfitufEio1V1_£ .,
12. 1;; djgndst a learned Single Judge GOKALDAS IMAGES LIMITED ft'J2gu0r~zdt't»o:1=§ fi!I~«'o!A"§Vi11 w.P.No.s539/2003 and it: "thy mder dated 12-03-2003.
1.,pI.-;1l.,u;id o"_j¢;L-- t._h_o policy pzovi-.d_i1__1g for forfeiture _.i_ v_':._.____ ' -. ....l.'... ....... .. .1.-in gun" 'I --an ' ' .u;11('1 nupumu mu: pf. ":'._'y fun uuu-'fu'ufi}1un.1'it Gf '£318 Gul3"EuG'.1 .,;;nde1x.t;I1e quota could be ohaiienged by an exporter ._ l'1V~daig_.1'ciV..tl1e benefit of a policy. following the decision of Vuihe in the case of PTR Exports (Madras) Pvt. Ltd.
do ,_.and"C.tthers, Vs. Union of India and Others reported in AIR dd SC. 3461, in the matter of interference by writ courts with policy matters, by observing thus: 5 'xi U \ I '5 "4. An applicant has no vested riglitlto have export or import licences in terms of_ policies in force at the date of his .4 a-trplicaiionl For obvious reasons, gaiifing tofu ;_ ' licences depends upon the policy presailingVV'on'l A "
the date of the graunt of the licence..or"= The authority concerned .:ma;r, 'be in , 'af, better. _, position to have the oveijali of viiiverse A' factors to grant permit "=or¥__iefuse-- to grant permission to import. or export " "The "
decision, therefore, wouhl be taken _from'~divezoe economic perspectives "whiten the execntive is in a better ir-.forI__ued position mile," as we: have stated earlier, toe teflisat is fldeor 'is an abuse of the portal' 'ia'l1icize_'e::'eat it is for the applicant to plead and'pIove_Vto'jthe_. satisfaction of the Court refusal Was" tiitiated the above facials. :
75 5. misses, orgies-gt, be clear that grant ot'_upon the policy prevailing as on the date of l'tlie._. grant. of the licence. Th Court, therefore,' would not bind the Government'wit'n' a policy which was existing on i ' the ciatelof application as per previous policy. A prior decision would not bind the Government iorall times to come. When the Government are 'satisfied that change in the policy was necessaiy tZ;*;e..~~1,_.~.ul'.-lie interest, it would be entitled to revise the policy and lay down new policy. The ~ ~x',}o'ii1t, therefore, would prefer us allow fies play a to the Government to evolve fiscal policy in the V public interest and to act upon -the same.
Equally, the Government. is left free to determine priorities in the matters of allocations or allotments or utilisation of its finances in the public interest It is equally entitled, therefore, to issue or withdiaw or the export or WK '\_/ \
13. In yet another '«.J'__l1l1lci_ge:'of the High Court. of Delhi snprfi 2007(7) STR 347'(OEC) til: we export being peculiar in l ouotas being provided for each was well within ~ fun and maximum fitilisafiaisr-. sf ti.-e*lnch'v.:c._sannot he interfered with. _v jadment, E Land ne mrfls...
reason to ~fro3n"ihe--~1easons, findin" and con'-ii.i'"*"*n"
arrived hat by the noma Judge.
V' " _ There is considerable force in the submission of 'l A "V for the petitioner that the order dated Annexure-'D' of the Second Appellate Committee n l 'is do. to violation of principles of natural justice by 'rt. %r'v'iz1g notice fi ..ee-.ring .1-. t..e petitlloner, Althoug the "*'* ""= AFP"'- ' ''''"'*-=* that 9. mp); of the notice was delivered to the petitioner tinder \Q«3\t\ acknowlwgement, I are not Lnp..,eeed. ._y fl1_t_ je".;h:niaeie_n."« I say so because. a 'ban: perusai of the _copjy5fof Iiefiee I-IL Annexu1e--"R 1" to the Statement of:.:{oject;ione'--of his r:2?'C= * does not disclose seIvice.e'cf_ noticeihon pe:titio1§g.ei"t hot» contains a signature which icaziipiotpbe though a specific ground is the has seivice of notice gecond Appellate Committee;_"in'e:;ita failed to traverse the e..mN.€ g1..,:o.1xdVh to establish that notice I-sh
-vs fE'ic:ain1g.of ti"-e "'=§'pea'. was .9.-ct eerv... ,1. .11..- In the em -- piece., is ID or: 'siren Secondikkppellate Colnznittee and that iegai ohiigation having coniph-eat with, it cannot be said that the petitioner V notice of hearing of the second appeal on 27-09- .' A it to state that the contention of the petitioner desewes acceptance.
15. The last contention that the benefits extended by the authorities in identical circumstances in pie-decided cases, wele not applied in the present case, is also without any merit. I say so because, claim of force-majeuiie is ....;..e1-Je. If tee dm-m..e:en to extend the benefit of the elainz of .. .. .... .. 1:..1. 1... ...-..:.. ........ 'ICU catuu u '|'.uc'c)uafi'::.u-uc petitioner has not been abie to show; iii~V.VicieI1i;_ieai, circumstances. the authority I"4."l1=e.: : 'f7.'*:V.v*.*:,$e- ' majeure. If the decision to eeI§tend t;h_e "bene.fifz;f.':t1_1.e force-majeure being noon T the ivgfiaets and circumstances and ' "in a case, it goes without saying in that case, would not, faictsi and are shown to be in 'jcsti1't;'-tins petition is allowed in part The inlpugoefls gins: 27-09-2004 Annexuze-"D" of the Appeliew--Qommit.tee is quashed and the proceeding V consideration afresh after extending reasonable .' . of hearing to the petitioner and to pass orders aoeoldanoe with law. 1 Hi rm... .......o4+:..........« 4:. Aimntmi in 1:91:11 in ~«i_'i1.£,t "?;1a;:l_g LLIC yhuuvuux : uuuuuuu vv any-II: -.-- -_. .. , guarantee fllmisileci to the r'xE"'r'u.3 uuu: 1 ._;?:-xv lu AV Second Appellate Committee.
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in