M/S Karle Exports vs Union Of India Ministry Of Textiles on 12 March, 2008

[Cites 3, Cited by 0]

Karnataka High Court

M/S Karle Exports vs Union Of India Ministry Of Textiles on 12 March, 2008

Bench: Ram Mohan Reddy

in-I

'1'!-IE Honmw ma. Jl£3.'L_'lCE '1R lhM   ,

wnrr PETITION 

1 M/S KARLE EXPGRFS' : L  _ 
NO 151; INDiJﬁ1'RE£gi. SUfB'uR'.~:'s._ 
YES£iWA1$¥TH}?UR, BAN.G'n:;0REi
RE.PaBYi;1TS AUTHQRISED SIGNATORY

2 H mKARLr.1':siTE3NA*r!eNL}__\L 
 QFFICEATVLN(), 2D3--73, NAGASANDRA
 VELLAGE;"'5?E.H'siK{}EV._.RG:'\B

'BAN GALORE N DRTH,

REP BY AU'T::HczRisEr) Si 'N 'TORY
  L  PETITIONERS

n  _AL.}_i"'LI?;OUNDlNYA A s 85 VINAY PAUL, ADVS.)

mien e
"-'J:'%i0r€ OF ENDEA lN}S'}'R';' FTEXTILES

H  VlDY& BHAVAN. NEW DELHI
V _. " REP BY SEC

"   11 APPELLATE COMMPITEE

QQVERNMEHT OF INDIA
MINISTRY OF' TEXTILES

UDYQG BHAVAN.  DEL!-1!

:'='sP?AREL EXr"GR'i' PRGMGTI H CO NEIL

NO 10, RAHEJA CHAMBERS h D

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12. M"-'*EL'M R #1

I'I\-I' I-I IIVJ ll-I

BANGALORE

(By Sri: N DEVTiAﬁASS, ASG RL:IR R185  "I I  " '

(BY SR1. K SAGHINDRA KARAN'i'H,"ADV RG12' R3}   _

THIS WRIT PETITIon--IIsI?ILED UNDER ARTICLES 226
AND 227 OF THE GGNSTITUTIGN GIHHHIA PRAYING To-
DEGI.-ARR THAT IMPGSITIGII   I3? WAY QF
FORFEITURE BY vREsPGND_EHTs, "UNDER THE EXPORT
RGLIGT 1§%-G9 :"xIiiIﬁ--fu"'_'u'G?~.€'»='r  ILLEGAL AND ULTRA
VIRES IN RELATION To SEC':'l'l(}N'-1f_1__DF THE FOREIGN
TRADE REC;-ULATI(3N""I=§(}*T"1992{FTDRA Arm, FURTHER
DECLARE;"'TE;1AT *THEADJUD!Q_A'fi'ION PROCEEDINGS
ADOPTED'-».l3'i1jVR'_1~AND__R2_«-TC} as ILLEGAL AND ULTRA
  TERMS"-QF'SjEwQ'F!(;N -.1301? THE FOREIGN TRADE
REGU_LATIO'N:_;.ACI'.,('FI'DRA) 1992 DECLARING THAT THE
cr.2I.I.R;«.:'I+It.::-II  !LL¥EG.#.L-""PENA!.-'!'Y BY RESPQNDENTS
FRDM._THE'--"PETiTIGNE§§9; To THE CONSOLIDATED FUND
OF IHI:-IA TG men ULTRA 'v'}R'ES.

'i'HIS" RE.TIT'%IGH;}T COB/HNG cm FOR PRE'_iivii"A"'f
11l:}*ARlNG IN '13' GROUP, THIS DAY '1' I E COURT MADE THE

T.'j%1FGLLGwING§*' « TTTTT 14 I

ennmn

 I   1st petitioner. is manuthcturerl garment exporter

AA ' *-I_{IrlII aI1 allotted export entitlement under the PP/PI' quota in

 :§_n.nm.:_:,,v category US,I334, 335 3.  C.A_liA, E018 during

hr year 1995, in t-a.-1-*..s of the neﬁﬁwﬁen d9.*..ed 4-9-1....

'I 1 HAII ___._. ____L _..J_'.A.'I .._..

(for short 'Fo'ncy' "I, eﬁectea '.'I"'9._".§"'".¢:'ro Gvfemu

F
5
EE



-..su1*..ir-.g i... t___. nnam  Promotion 

r:e.1,21,9:».0i- by order dated} -.. 

which when carried in appd   , wae   ollief
31-07-2000 Annexu1e~"G" ef  eommittee
and the dismissal ofithe  by eiaer dated 3-03-

2004 Almexuxe-"J" of  epﬁnete Committee.-

2._      garment
:__ iierdtitlement under the NIE
queta jet  eatego_13r us; 341 85 342 during the year

1996,-.._ii1-Atemie'~lj-"efe'teed*ﬁouﬁeauon dated 2-2-12-1995 (for

ehort   85.68% overall export entitlement.

 0  theﬁapaml  Promotion Council ('AEPC3

 .€*Jrv=.s}~,er-t}V;e~-.Be=.r.galere;. after 9. smhow c 1 ea

 fmfeiting

iv-".44 -I' 'L__ __._:I..

 A',ﬁ§.'9()["' Dy _U_  T'   .lI1.|.I..|uouau" 1.: g

 when  in appeal, was continued 'by on u T' dawn

_ ___-| _ 'A.__'|

ll * ii'-4-06-2000 Annexure-'H' of the First Appellate éommittee

and the dismissal of the further appeal, by order dated 3-08-

2004 Annexuxe-"K" of the Second Appe  te Comngittlee.

Hence, this writ petition. W



«P-

objections tiatecl 28-10-'Z00-f'! of Reaponvjiaentéei aiie  in La '

Statement of objections  Reeprn'1dentsV   is
contended that export of   India
based on   between
Government er Ineje-t   of developed
countries  the gaeﬁe'-.Aef.i_"the__V:VVfei;st\avhile Multi Fibre

_Arran_e   inteznaﬁonal textile trad. e ﬁom

of specaheclt .' '  rrategoﬁee 'Quota items' within the

.v_levelAa"1:z:.eec:3'ibed in the bilateral agreement and tl1a_t_

n  t the into force of the World Trade Olganisation (wm)

"    egnanﬁtaﬁve restrictions known as "Import quotas"

 the  agzeenlents were changed under the 'WTO -

' * xeleﬁng to Agreement on Textiles and Clothing (ATO). The

 ¥.i,i_1_ts.t.:_I else  as export entitlements are allocated

an-.cn"et 1'"-"4"? uni expveﬁemz tin' which 1; eyatem of

nIvII\vIIVuF-I ICU-GI an I-VG I-I

 cf qiietas is funerf'

..J....1 ..
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U1

exports  *4 reverre in the u--=o~n6'mi* intereﬂt cfthe. #ec*u.;*"t.&3r.__"  '

' 0%
4k'

stated that in furtherance ofthe  a:i1n,~_ 'ﬁie.  I

India ﬂamed policies from  to:_- K

Entitlement (Quota) Polic1Ises'1___ "  
Inam1'_ y done under the  '_g  case of

Ieadymadc.ga11nent.:;v.;._""M«. 

a)   xlperfolmanee of the
1,   Past ,i5'erfonnanoe entitlement

 -h} 5 on new investments made for
i' _ 4'  'bf machinery __ under _ the New'
_.;,;vestors=, Entitlernent (NIE), to enooumge

investments

 under Non-quota export (NQE) entitlement 
 eneourage diversiﬁcation of exports to non-quota
' . §7'oountties;

V " s d) 10% on First Come First Serve (FCF-S) to provide
equal  to all exporters on basis of High
Value Realisation.

The  _-f_p¢.2.iei-s; it i,  is__in_  of power

,cs....¢.'..... 5 ..-..l-' +1.... Damian Trade lhmmlmwggnt

U]. I.|.Ic. rvr;,|¢_._;'.|,.|. ;.IqI.\qI. 1.';-l!la_vV\raI_-4-'.-

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Ch

22 «#19901 

Mn
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f--.
III

Appenciix-i Sen' etiuie-'2 of i''i'(?: ('

   

and Import published under the=.AExpoiftivaittc1 :i:1jipert.V It"

is further stated that in rattler   
Appaxel Export Promotioni" - {fiiézﬁcfgheaded by
Director Cieneral  Administering
Authority, on behalf ii  responsible for

allocation iifigiksta in naiiiis  The availability of

quet..., 1-.. 1..  -aet1y.Qver .et.r1ge me ¢.L._..s_=I.1_1_d. 9...- 1.. ,.ever Qf
thf 'feen~ie"e.-i   a mmi1u.."_". Peleipr

 of  being the quota countries, it is

es_sentiei.. to cn;sn1~e'qnotae are   and 'me not-. .

 to Z  ---- -waste due to speculative trading by

'  " utnsefupuinue elements and theretbre. the policy envisages

" . n  the quote by 30"' September of the relevant

 failure to do so, the exporter is required to

AA "'suu1'me' nder the quota and seek Ievalidation of unutilised

_,.. .. .,..... .. _._ ___ , ,_
pi-eceuure as laid dew" iii the W-hey. Rwalidane-n at "new.

L'

beyond 30*' September and upto 31"' December of me
J I
P-I



7

relevant year is in the form of a Bank   

demeit receipt .1' D_r_n@¢i Dxait while 

exports not less  entiﬂexnent. its EM!)
shall be released in in upto 75% of
fast movingitems  V"  of slow moving
items,    fiiepozﬁon to the shortfall of
 an aggrieved by any order of

fer!' _itu3e,' it  an anneal to the First Appellate"

""3-"

 'Thejil  rejected the petit'iene1*'s plea cf

,, ./ _Vfomgeu1;najen1e in the absence of relevant materiai

x.."--e*onsnt;iﬁia§V..subs1anﬁal legal evidence of the fact that failure

to the export obligation was due to acts beyond the

it " I aconttol of the exporter.

3. The Statement of objections of the 3"' respondent

raises almost identical contentions as are advanced by Respondents 1 and 2 in their Statement of objections. In IN» CID add"'rrn, it is "_n'"t'aed that th* '"*"'1*'¢r hang-i-.13-* ='.'_e-*1 beneﬁt of the garment export entitIement"po1iey,"'9Vought for extension of time by furnishing '' failed to export gaIments»ii1__.te11neV_'of cannot be permitted to approhate It is stated that the petitioner' est-opped :« oontentiing that no amount could be forfeited_, jfaontention of the 3"' teepondent' the " not place relevant %ter-.al in zsupwat am. of .o:*ee-mm--we . 4. 1.- __n.a_:! cs:-I.i.1a.s.ae1 _-r t..- 1.ret1...-r-.-1*s_t advances tl;_ f' 11"w'ing. cxmtenﬁons: .

"a) t'I1at~ _"r"oiicy' pmviding for ibrfeitlife of the VA e.~2..**:iest nsefney demeit, in its entimty. tbr expo-rte lees !:!I.an ptnpolﬁonate forfeiture for exports between 75% ". nittler Past Performance Entitlement (PPE) and New "inveeters'"Enut1emeut (me) is irrational and unreasonable.

hi the appeiiatc authority feii in no 111 t hv the 'II 4- Iain u-u.-r-9 .--_' " I I I ccneﬂetang the d~*...:I....."ne:1.t...="',-,r evu' ...e.."'*.~ p peﬁtionelfs in support of the claim of force-majeure, directing rmeituxe of the EMD; )) A U t u.u."'.' peﬁtiouc; ha~v*ing e'.-:por*.r..". V 5.68%: nearmcﬁvel us: an v'-'------ ___ __ Y. '#5' of the the non performance, was notidiieto reasons beyond its control.

d) The earlier "in identical issues and irientical set if lasts'.-._ the ai:tl1c2*J'i'uies having ...,.,..nr-r-=p*.....+-ﬂ the e1......m'm e. ii."-rI--',2._-m*..j_:.=.1',i-t.e"."_;',v~ cannot to accent the petitioners' clain1H_ot' fo the fact situation of this case.

5. ._;;.+,§ --m~ counsel sn. 0.1.. Rawai tor'; Restglonzlenti.No.=§l'..contends that the challenge to the is um we Petitioners as the garments exp-ortecli fallen 'short of the quota allotted to it within . ~. _ AV " voluntarily sought for Ievalidation of beyond the period, by filing an application tue p....o....a X1! t. t..- and a Bank ue

---z--___ .. 1.... ......_£'.-..-..-...--.. ' _ ' c ru 'lint; ynuiusnaa r\.I.I.I.|I|..n.u.u..=v: In: my ,~..w"""_,. guéui.-iii it "Fgccortling to the learned Senior counsel. in teﬁns of the policy, the petitioners were fully aware of the consequences of proportionate forfeiture of Bank guarantee on failure to export garments upto _ 90% but not less than 75%,] and I $11':-.i.a:e I'... Jail it' 'gas than 75%. the tennis of Ievaiidation. it is; 'a1'gIj:e1i."'*car!nct4 he heard to contend that the pohey in = to tinfeiture is either inat:iona_l__ Senior counsel further that contention over the validity of the case of GOKALDAS IMAGES ore' INDIA, a learned Singie"£J'Jdge._ of: er Delhi, rejected the e1ee. in 2967 47; 34:7 (.T.lE.m; '--We-"w %.7'...'erVe -mu.-"heel. an addimn, wnueuus u.|-nu. I.u petitzioner mievant matzenalf ' constituting snbstanti9]"}e;ta1 of a claim of force-mqieuxe. the «eeneieezee and rejected the said plea. ' that the petitioners having expormd u " 79.22% 85 85.68% respectively of the export- eegitiengents. the authorities were justiﬁed in directing A' ' cfcrteiture of the amounts from out of the bank guarantee. in "pieportion, tn the of quote.

6. Sri. Devadass, learned Senior counsel Ibr- ..-Le turn'. an allonomt ht' a "--'-*n to --*"W-'* éérﬁieiits "m""i.-I the policy. without questioning the terms' of revalidation. cannot be to 're_1V3«r=:.j-Maine by calling in question thespolicy too, of garments. According to quota for export of eirporter. it is presumed the its obligation to export and in order to at --. _o1oviLllng_ lb: forieiture of .....-....'-\.-. 4 .-hf giant-antes an gtafnﬂ therein .connoii as either or unreasonab'le.V Senior counsel hastens to acid that .... is peculiar in its nature since quotas ' country. under the policy is to maximise " The Govermnent. according to the learned counsel. is well within its right to provide for it ' of the Bank guarantee, so a to ensure full and uimum utilisatin f the quota and that is precisely what w-.--.----.-.--.__...-- .___....._._.._1 Mi --f-.. M 12

7. Having heard the learned counsel perused the pleadings, there can he no more terms of the "Policy", the peﬁtionefss AV allotment of quotas to export to do so within the time vo1e,L=:_ arid obtained revalidntin -i'_t11.e_queL~.s,"--~dAes"ite 'w1"'.':ii the qiiotas

-.-mainw of the export ohiig-'ri'n, enﬁretgﬂ extended period of time, .._revatidstion. the AEPC issued notziee to show cause as to why action to ibrfeit the monies from out of bankldégoéinnteer responded to by the petitioners. - measpe; nqtsbenig -gm-ma with the explanation offered- ' raga;-it.-1 ,Rs.1;2"1t,é20;- 3. Rs.74,e5e,:- :e..m.;-.-ex'-,,», en, ' VVin_jproporhn_ ._'_r-. to t.!:.e_ p-.j.r_'-.....ntage of non-ex'poﬁeo' "

£'._!_L£.*L5?.,. out of the '""o1inte in the bank guarantee. by orderarsidated 30- 1e-1:;-"6 35 27-05- 1997 Annexunes "C" and V' , respectively. These orders when carried in appeal betbre the First Appellate Committee, were conﬁrmed by orders dated 31-07-2000 85 14-06-2000 Annexures "G" and "H"

M \/ \ 13 me necﬂvely. So also, the Second di%ss.-2:1 the g.L*.:loners' by o1de1$s_of~-even'~d.ate' 3?-84

8. In the admitted notieetl supt'a.l{t}1ehq_uesﬁens fog. decision making are, L» l h At t H' V

a) whether the ehallel k uqoaihcjvpancy in so far as it relates to for_non--fu'§ﬁ1hnent of the export s'..-'.p-alat:-.d, is = the petiiioneﬁ-' eﬁm of f%= x dismissing the Appe.n_|s?

ll the teval1da' tion of the quota allotted V' = ;:ei:tjoners was at the instance of the petitioners who """"'l zip"-li._':.'-I-.mn to pennit it to export garments for the 'balance of ﬁn": q'"'ta the 1.112.!-.e stLpu_la.tec_l, and = __ firoluntarily furnisluxi a 'bank guarantee, 'i:1tere....=."'=, obligation, in its entirety. would be subject to forfeiture clause of the 'Policy'. The peliﬁonexs consciously agreed to 1 .n by K Appellate Committees were u 14 the terms of the forfeiture that if it exported garments beyond 75% upto 90% of the export entitle1Iie'zr:1:'t:,..V after :e..li._.a_7.ont it would be liable for and lea th"n '3"t"~3%, forfeiture wo""' betas ..._§%«.. '-'-.§---_- -~'-Q; E the amount in the 3 petitioners to be subjectecltto' the 'te_Ifn1--s of to forfeiture in the event t.*.;i.'.]j3'V]°:_ expo entitlement, in the to appmbate positions.

So also appeals before the First he tfotetmtttees. hate disentitled hum '1 .

The pdoihtetitahh that the terms of forfeiture are , mm=~.;e.-......t=...1.- i.. t_... c.i1rt_2I.1_m tanoes is beyond n. I my m because. the ......... ,....L.._, .. ojtotas is with the purpose of augtuenﬁg t'*r'i§n which is ofvital importance for the country and as .. , a eonsequenoe, export of under the quota allocated V' -is imperative and it is with the avowed object of maximising the utilisation of the quota, the policy provides a clause for lrk, .--.h._.hh;h,t;t_; ht' the~vtoit'eitu1e clause in the 'Policy'. t Ir-I Ir forfeiture. The Central Govern_ni_n__. e:r._7.t.|c-_._ :_;-.~' _a policy be-.9:-...,..d on-.. precise tin-ﬂag _. ii "of more appropriately in the,e'znotte1i's._oi' opinion, being peculiar in T was well within its and therefore, cannot be termed as 'ii€i):l'rll5§1GD11812ltuti0nal. It must be Imago niind em». taigei-=;m_g;§5t be free play with the well seiilejd v.':a"' in exercise of 'their jurisdiction, Vvtrans'g:e§a_e into the ﬁeld of policy decision, as they i to adjudicate on a policy decision. The r has a duty to see that in the undertalun' g of degisiuﬁ, no law is violated and people's fundament_.al- he s are not transgmessed upon except to the extent i "permissible under oonstitution.

11. In almost identical circumstances, alearned Single Judge of this Court in the case of GOKALDAS IMAGES ti'n 'f the qiiofa to ja '£J\,< 16 LIMITED vs. UNION ow INDIA in w.p.Ne.;9é33§}:?2oe%3feeeeea connected writ petitions. by_.en1er _'¢'iet g'1:d: . repelled the eentention that the er and imposition of penalty under the export quota byvfian exporter who had had the beueﬁt_ of a the dechion of the Amx (3.91 1'? 5 .1 anti theiif-EV, _!J'_J'~.'i":[_'§f Iuu."f 1996 oi: ii1ieri'e oe ' y writ emu-ts thus:

A 2 % has no vested right to have exporf or i:r1p«ort'I§beraoes in terms of the policies in ;:.........V".e4 41... {':',..4.. Ar 1.; .....I...'..... ........1.- '*__:u:u: mpg: 1.56 U] HIS nwuuuy IJ£.IflllIJl.tl'U"l"lu- reasons, granting of licences deyends Itige policvyprevailing an the date ofthe grant 'eff or permit. The authority eomasmed ' be in a better position to have the oven!!! " ipfczture of diverse fadors to grant permit" or refuse £6 g*rc'u"a€ ta fir;-m~rt or expert gaacis.

diverse economic perspectives which the executive is in a_ better informed position unless, as we have stated earlier, the refusal ah maiaﬁde or is an abuse of ihe power in which event if is for J} IQ "V \, 17 the apptiocmt to plead and satisfaction of the Court that the -- ' vitiatedbytheabovefac:to_rs.»» '

5. it wouici, tiierefhre4,".r5e'r:te-* at-..-at tiwm ...epem.isz the date of the i_ therefore, with a policy which date of appticzqtiora a_s'" A prior de;iéé;ior§1e'ii:§auté r;oi' the item-ma-..en: ﬁsr a.=:

" *t;h.at poticy was necessary in theﬁvufhjtic is wcrutd be entitled to revise " Vghe%%pa:i¢y---andi down new poucg. The Court, ttiereforve;v--.tiic~_tx1c£';prej'er to auaw free play to the _E_ _I..' V to waive pséﬁa fJuuC"y' i : nus j'i'u'uIiu P and to act up-era ..h.-.2 at In is Ie_ft_frBe to determirw priorities in A inatters of allocations or allotments or izxtitisation of its ﬁnances in the public interest. It a V is equally entitled, therefore, to issue or urititdmw or the exfvar-t or irr-"rt in a.m..'nr=:.="r.z.rr...n.e 1.-..»it.h the scheme emlyed, , , ,"

12. In yet another decision of a Single Judge of the High Court of Delhi in Gokaldas _l__1n__agee slupra, Met.

Ht mi asp-to u .-u-----; A; ..u..

7; er - '"I'(OrsC) took the View that being peculiar in its nature on account provided for each the .

its right to formulate a fer' l' utilisation of the quota cannot. Having read the entire 'tlie'V.judg.:tnez1t,:AAIVAV1V;'§nd no good i reason to deviate the _ tr 9.... c.r.~z-.c1us..ion-s atrium a. ..y the V'-"W-2-.~.i tbrnce in the submission of the petitioners that the notice dated 1 23-V07-2(')O-4' ?;ppe.ll.ate C.om__._..mittee ﬁxing th- txetbaiev the Second Appellate Committee and that the . of the petitioners on 34352004 at the the second appd tantamounts to violation of A. Vepninciples of natural justice. There is no dispute that the V' "petit1'oners' registered otﬁces -are in the State of_Karnataka, F at Bangalore. and were required to make arrangements to is travel to New Delhi to appea; betlze ﬂ1_. -_--__..r.! -.p-pe 1'. it "U K ﬁﬁfuee an the date of hw'ing, that is. §'-i%->2-E!94.r.- 121..-; notice dated 23- 7-12004 issued to the _ 'took few days to reach. --the. ipeutaangexs-jg, cannot be said that the pc;ﬁtip1_1ef§ arrangements to he Appellhtc Committee.

14. vlnifhc the petition is in ~v'I:'h§_= 3-8A§QC)0?I"VIV'\nnex1ue€i-"J" 85' "K" of the_ are quashed' :and. the cxtendiﬂﬁ hearm_ ' g -_1n:_ the pétitionexs while " opazﬁwthe of ex:isuc1_1o_: of _f9me-majeuie Lu?

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