Kerala High Court
Parisons Foods (P) Ltd vs The Union Of India Represented By The on 21 October, 2008
Author: H.L. Dattu
Bench: H.L.Dattu, A.K.Basheer
IN THE HIGH COURT OF KERALA AT ERNAKULAM
WA.No. 642 of 2008()
1. PARISONS FOODS (P) LTD.
... Petitioner
2. PARISONS AGROTECH (P) LTD.
3. N.K.HARRIS S/O. A.V.KUNHI PARI
Vs
1. THE UNION OF INDIA REPRESENTED BY THE
... Respondent
2. THE DIRECTOR GENERAL OF FOREIGN TRADE
3. THE COMMISSIONER OF CUSTOMS
4. THE COMMISSIONER OF CUSTOMS
5. STATE OF KERALA, REPRESENTED BY THE
6. THE DIRECTOR OF AGRICULTURE
For Petitioner :SRI.E.K.NANDAKUMAR
For Respondent :ADDL.ADVOCATE GENERAL
The Hon'ble the Chief Justice MR.H.L.DATTU
The Hon'ble MR. Justice A.K.BASHEER
Dated :21/10/2008
O R D E R
H.L. DATTU, C.J. & A.K. BASHEER, J.
-------------------------------------
W.A. No.642 and 1716 of 2008
------------------------------------
Dated this, the 21st day of October, 2008
JUDGMENT
H.L. DATTU, C.J.
The challenge in these appeals is to the order passed by the learned Single Judge in W.P.(C) No.218 of 2008 and connected matters disposed of on 15th day of February, 2008.
2. In the petition filed, the petitioner had called in question the legality or otherwise of the Notification No.63 (RE-2007)/2004-09 dated 24th December, 2007, issued by the Director General of Foreign Trade (DGFT, for short) amending the Foreign Trade Policy (Schedule - I) (Imports) of the ITC (HS) Classifications of Export and Import items 2004-09, in exercise of the powers conferred by Section 5 read with Section 3 of the Foreign Trade (Development and Regulation) Act, 1992, along with Paragraph 2.1 of the of the Foreign Trade Policy 2004-09. By this notification, a condition is imposed, that, the import of palm oil and its fractions, whether or not refined, but not chemically modified, would not be permitted through all the ports in State of Kerala.
3. Prior to this notification, the Central Government had issued another Notification No.39 (RE-2007)/2004-09, dated 16th October, W.A. No.642 & 1716/2008 - 2 - 2007, prohibiting the import of the aforesaid commodities through Kochi Port only. That had been questioned by the petitioners in W.P.(C) No.31397 of 2007.
4. The learned Single Judge has repelled the challenge to these notification and accordingly by a common order dated 15th day of February, 2008 has rejected the writ petitions.
5. The appellant companies are engaged in the refining and manufacture of edible oils, vanaspathi, bakery shortening, margarine etc,. They have their registered office at Kozhikode and factories at Kozhikode and Malappuram Districts in the State of Kerala. The factories were set up for the purpose of refining and manufacturing of edible oils within the State of Kerala. The main raw material used in the manufacture of RBD Palm Oil is crude palm oil, which the appellant company imports from countries like Indonesia and Malaysia. The crude palm oil is imported through the ports of Kochi and Beypore. After the import of crude palm oil through the aforementioned ports, the appellants stores the same in the storage tanks at the ports and thereafter transport the same by road to main factories at Kozhikode and Malappuram. Since the notifications issued by the Central Government affected the business interest of the petitioners, the same is called in question by the petitioners by filing petitions under W.A. No.642 & 1716/2008 - 3 - Article 226 of the Constitution of India. A spate of public interest litigation was also filed by public spirited citizens, to issue a writ in the nature of mandamus to the Central Government to extend the ban of import of crude palm oil through all the ports in Southern India. A public spirited person has also impleaded himself to support the stand of the Central Government.
6. The two notifications issued by the Central Government are as under:
"Notification No.39 (RE-2007)/2004-2009
-------------------------------------------------------- NEW DELHI, DATED 16th OCTOBER, 2007 S.O.(E). In exercise of powers conferred by Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 read with paragraph 2.1 of the Foreign Trade Policy - 2004-09, the Central Government hereby amends Schedule I (Imports) of the ITC (HS), Classifications of Export and Import items, 2004-09, as under:-
1. Import Policy for the following items will be amended as follows:
Exim Item Description Policy Policy Conditions
Code
Palm Oil and its fractions , whether or not refined, but not 1511 chemically modified.
1511 10 00 Crude Free Import not permitted
through Kochi port
1511 90 Other Free Import not permitted
through Kochi port
1511 90 10 Refined, bleached Free Import not permitted
deordorised palm oil through Kochi port
1511 90 20 Refined, bleached Free Import not permitted
deordorised palmolein through Kochi port
W.A. No.642 & 1716/2008 - 4 -
Exim Item Description Policy Policy Conditions
Code
1511 90 90 Other Free Import not permitted
through Kochi port
1513 21 10 Palm Kernel OIl Free Import not permitted
through Kochi port
1513 21 10 Palm Kernel Oil and Free Import not permitted
its fractions through Kochi port
2. This issues in public interest.
Sd/-
(R.S. Gujral),
Director General of Foreign Trade,
And Ex Officio Additional Secretary to the Govt. of India."
"Notification No.63 (RE-2007)/2004-2009
-------------------------------------------------------- NEW DELHI, DATED 24th December, 2007 S.O.(E). In exercise of powers conferred by Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 read alongwith paragraph 2.1 of the Foreign Trade Policy - 2004-09, the Central Government hereby amends Schedule I (Imports) of the ITC (HS), Classifications of Export and Import items, 2004-09, as under:-
1. Import Policy for the following items as amended vide Notification No.39 (RE-2007) dated 16th October, 2007 will be further amended as follows:
Exim Item Description Policy Policy Conditions
Code
Palm Oil and its fractions, whether or not refined, but not 1511 chemically modified.
1511 10 00 Crude Free Import not permitted
through any port in Kerala
1511 90 Other
W.A. No.642 & 1716/2008 - 5 -
Exim Item Description Policy Policy Conditions
Code
1511 90 10 Refined, bleached Free Import not permitted
deordorised palm oil through any port in Kerala
1511 90 20 Refined, bleached Free Import not permitted
deordorised palmolein through any port in Kerala
1511 90 90 Other Free Import not permitted
through any port in Kerala
1513 21 10 Palm Kernel Oil Free Import not permitted
through any port in Kerala
1513 21 10 Palm Kernel Oil and Free Import not permitted
its fractions through any port in Kerala
2. This issues in public interest.
Sd/-
(R.S. Gujral),
Director General of Foreign Trade,
And Ex Officio Additional Secretary to the Govt. of India."
7. A detailed counter affidavit is filed by the Central Government and other respondents in the writ petition. In the counter affidavit filed, it is the stand of the Central Government, that the decision to impose prohibition with regard to import of Palm Oil and its fractions was a policy decision taken with a view to protect the interest of the coconut farmers within the State of Kerala, based on the letter received from the Chairman of Coconut Development Board who had recommended the total prohibition of import of palm oil and its fractions through the ports of all the Southern States and the letter from the Chief Minister of the State, seeking a reversal of the earlier decision of the W.A. No.642 & 1716/2008 - 6 - Central Government to reduce the import duty on palm oil and consequently to increase the duty on the said commodity.
8. The learned Single Judge after noticing the entire factual matrix and the legal issues raised and canvassed, is of the view, that, the impugned notifications of the Central Government has only given expression to a policy decision of the Central Government and the same is beyond the pale of judicial review and hence could not be interfered with, in a petition filed under Article 226 of the Constitution of India. It is the correctness or otherwise of the conclusion reached by the learned Judge, is called in question in this appeal.
9. At the time of hearing of the writ appeal, the learned Senior Counsel Sri.Hidayatulla would contend, that, under the Foreign Trade (Development and Regulation) Act, 1992, while the Central Government has the power to issue a notification prohibiting, restricting or otherwise regulating the import of goods into the country, it does not have the power to issue a notification prohibiting the import of goods through any particular port in India alone. Therefore, the decision of the Central Government is ultra vires the Act. Further, it is contended that the decision of the Central Government as evidenced by the impugned notification was manifestly arbitrary, irrational and unreasonable, since it W.A. No.642 & 1716/2008 - 7 - was taken on the basis of insufficient material and on incorrect factual assumptions and therefore, the impugned notifications, though it is termed as a policy decision is liable to be struck down as violative of Article 14 and 19(1) (g) of the Constitution of India. The learned counsel would further submit, that, the learned Single Judge, having come to the conclusion that this court has the power to review the policy decision of the Central Government has refused to do the same, on the sole ground that the policy decision of the Central Government is beyond the pale of judicial review and hence could not be interfered in a petition filed under Article 226 of the Constitution of India. While elaborating the aforesaid contention, the learned counsel would submit, that, the learned Single Judge has failed to consider the issue whether there was any material before the Central Government before formulating the policy which would affect the palm oil industry in the State of Kerala. It is submitted, that, the Chief Minister in his letter dated 19.4.2007 addressed to the Hon'ble Prime Minister had only expressed his apprehension with regard to reduction of import duty on palm oil, by stating that, if the decision to reduce the import duty is carried out, it will result in large scale import of palm oil and resultant effect would be the steep decrease in the price of coconuts and coconut oil, and, therefore, immediate steps requires to be W.A. No.642 & 1716/2008 - 8 - taken to reverse the decision to reduce the import duty of palm oil and protect the livelihood of the coconut farmers of the country. The learned senior counsel would further contend, that, the figures which are reflected in the letter of the Chairperson of the Coconut Development Board is in variance with the literature on coconut industry in the State which is co-authored by the Chairperson herself. Therefore, there is total non-application of mind by the Central Government while formulating the policy decision which has been notified by issuing the impugned notification. The learned Senior Counsel fairly submits that the writ court should not normally interfere with the policy decision of either the Central or the State Government, but would definitely use its power of judicial review, if the policy decision is demonstrably the result of total non-application of mind and manifestly arbitrary. In aid of his submission, the learned senior counsel has placed reliance on the decision of the Apex Court in the case of Union of India vs. Dinesh Engineering Corporation (2001) 8 SCC 491, wherein the Apex Court has observed, that, "there is no doubt that this court has held in more than one case that where the decision of the authority is in regard to the policy mater, this court will not ordinarily interfere since these policy matters are taken based on expert knowledge of the persons concerned and courts are W.A. No.642 & 1716/2008 - 9 - normally not equipped to question the correctness of a policy decision. But then this does not mean that the courts have to abdicate their right to scrutinise whether the policy in question is formulated keeping in mind all the relevant facts and the said policy can be held to be beyond the pale of discrimination or unreasonableness, bearing in mind the material on record". The court has further proceeded to observe that, "any decision be it a simple administrative decision or policy decision, if taken without considering the relevant facts, can only be termed as an arbitrary decision. If it is so, then be it a policy decision or otherwise, it will be violative of the mandate of Article 14 of the Constitution". The learned counsel also makes reference to the decision of the Supreme Court in the case of Directorate of Film Festivals and Others vs. Gaurav Ashwin Jain and Others (2007) 4 SCC 737, wherein the court has observed, that the scope of judicial review of governmental policy is now well defined. "Courts do not act as appellate authorities examining the correctness, suitability and appropriateness of a policy, nor are the courts are advisors to the executive on matters of policy which the executive is entitled to formulate. The scope of judicial review when examining a policy of the Government is to check whether it violates the fundamental rights of the citizens, or is opposed to the provisions of the Constitution, or opposed to statutory W.A. No.642 & 1716/2008 - 10 - provisions or manifestly arbitrary. Courts cannot interfere with the policy either on the ground that it is erroneous or on the ground that a better, fairer or wiser alternative is available. Legality of the policy and not the wisdom or soundness of the policy, is the subject of judicial review".
10. The learned Senior Counsel would further contend that the notifications are issued by the Central Government in purported exercise of their powers under Section 3(2) and Section 5 of the Foreign Trade (Development and Regulation) Act, 1992. Section 3(2) empowers the Central Government to make a provision for prohibiting, restricting or otherwise regulating, in all cases or in specified cases, and subject to such exceptions, if any, as may be made by or under the order, the import or export of the goods. Section 5 of the Act enables the Central Government, to formulate the export and import policy and also to amend the policy. The power exercised by the Central Government under Section 3(2) cannot be at variance with or contradictory to the export and import policy formulated by it under Section 5 of the Act. Thus, when the policy formulated by the Central Government was to permit the import of palm oil and its fractions into the Country, it could not in purported exercise of its powers under Section 3(2) of the Act, prohibit the import of the said commodity through particular ports in India, thus rendering the W.A. No.642 & 1716/2008 - 11 - decision of the Central Government ultra vires, conferred under the Foreign Trade (Development and Regulation) Act. In aid of this submission, reliance is placed on the decision of the Calcutta High Court in the case of Kalindi Woollen Mills (P) Ltd. vs. Union of India, 1994 (74) ELT 827, in which reference is made to the decision of Rajasthan High Court in the case of Swastika Woollen Industries (P) Ltd. vs. Union of India, 1992 (62) ELT 17 (Raj.) and the decision of the Madras High Court in the case of B.L.Tandon vs. Union of India, {unreported decision in WPC No.2167/90, decided on 25.4.1990}.
11. The learned Assistant Solicitor General, Sri.Parameswaran Nair, would submit that, the Central Government has issued the impugned notification on proper application of mind to the relevant factors and materials that are available on record and in particular the recommendations made by the Coconut Development Board and the State Government, and therefore, the policy decision of the Central Government cannot be characterised as either arbitrary or contrary to the mandate of the Constitutional provisions. Reliance is placed on the decision of the Apex Court in the case of M.P.Oil Extraction vs. State of M.P.(1997) 7 SCC 592, Federation of Railway Officers Association vs. Union of India, (2003) 4 SCC 289, Subhash Photographics vs. Union W.A. No.642 & 1716/2008 - 12 - of India, 1993 Supp.(3) SCC 323, Union of India vs. International Trading Co.,(2003) 5 SCC 437, Union of India vs. Ashutosh Kumar Srivastava, (2002) 1 SCC 188. The learned counsel would also submit that Article 14 of the Constitution does not forbid the geographical classification. In aid of this submission, the learned counsel relies on the decision of the Apex Court in the case of Gopal Narain vs. State of Uttar Pradesh AIR 1964 SC 370.
12. The learned counsel would further submit that the Foreign Trade Policy 2004-09 was formulated and announced by the Central Government in exercise of the powers conferred by Section 5 of the Foreign Trade (Development and Regulation) Act, 1992, and under clause 1.3 of the above said policy, a right is reserved by the Central Government to effect any amendments to the Foreign Trade Policy for any purpose conducive to the interest of general public, such a policy decision cannot be assailed on the ground that it is violative of Article 14 of the Constitution of India as well as violative of Article 301 of the Constitution of India.
13. The State Government in support of the impugned notification issued has also filed its counter affidavit. In that, it is stated that the oil from the coconut is a most important commercial product W.A. No.642 & 1716/2008 - 13 - derived from coconut. The coconut farmers mainly depend on the income derived from the coconut and its allied product. The increasing import of palm oil and its fractions has been adversely affecting the farmers who are depending on the coconut economy. The import of palm oil has caused steep reduction in the price of coconut oil. There is strong co-relation between the import of palm oil and fall of price of coconut oil. The Coconut Development Board in order to protect the coconut farmers had requested the Central Government to impose restrictions on import of palm oil through the ports of South India and pursuant to the request made, the impugned notifications are issued in public interest and in order to protect the interest of coconut farmers in the State. Hence, it does not infringe the fundamental rights of the petitioners either under Article 14 or under 19(1)(g) of the Constitution of India. The learned Additional Advocate General while reiterating the aforesaid contention submits that the Central Government in order to protect the interest of coconut farmers in the State, the impugned notifications are issued, and therefore this court need not upset the policy decision of the Central Government which has been done in the public interest. In aid of his submission, the learned counsel has relied on certain observations made by the Apex Court in the case of Premier Tyres Ltd. vs. K.S.R.T.C. 1993 (2) KLT 130. W.A. No.642 & 1716/2008 - 14 -
14. Sri.Kelu Nambiar, learned senior counsel appearing for the Coconut Development Board, would submit, that, the Board is a statutory authority controlled by the Union Government and the Board has a duty to promote the development of coconut industry by employing such measures as it deems fit. The learned counsel further contends that the records/Note sheet maintained by the agency which has issued the impugned notification would clearly demonstrate that the relevant inputs were taken into consideration by the agency before issuing the impugned notifications, and therefore, the decision on which reliance was placed by the learned Senior Counsel for the petitioners would not assist him in any manner whatsoever. It is further stated that the decision of the Calcutta High Court which is pressed into service was rendered in the context of a different enactment and also on a different fact situation and therefore, it cannot be said that the impugned notifications are in violation of any Constitutional provisions.
15. The method by which the Central Government has reached its decision and the extent the judicial review of the decision can be made has been the subject matter of discussion for a long period predating the Administrative Procedure Act. A series of Supreme Court decisions dating back to "New deal era" and continuing up to 2008 have W.A. No.642 & 1716/2008 - 15 - provided orderly approach to these issues.
16. Petitioners claim that the final decision making process by the Director General of Foreign Trade, prior to issuance of the notification was primarily dependent on the letter of the Chief Minister and the letter of Chairperson of the Coconut Development Board, and there was no other relevant material which could facilitate to formulate a policy by amending its earlier policy and therefore, the policy decision is invalid and manifestly arbitrary.
17. In our view, in matters like this, the full record must be utilised, although such enquiry into the mental process of the decision maker is generally to be avoided, since the policy decision is entitled to a presumption of regularity. However, that presumption is not to shield its action if it is manifestly arbitrary. In the present case, there was contemporaneous explanation of the decision maker in the counter affidavit filed before this court, but that explanation may have been "curt" but it surely indicates the determinative reason for the final decision. In the records produced by the Additional Solicitor General, we find a lot of correspondence by the representatives of the coconut farmers with various Ministries including the Hon'ble Prime Minister. The first letter is dated 15.8.2005, by All Kerala Coconut Farmers' Union to increase W.A. No.642 & 1716/2008 - 16 - minimum support price of copra and to restrict import of coconut oil and copra. In the letter, it is further stated, that the steep fall in the prices of coconut, copra and coconut oil is in view of indiscriminate import of coconut and coconut oil from foreign countries. The reiteration of this request is made by yet another letter dated 15.12.2005. Sequel to these two letters, Ministry of Agriculture has written a letter dated 3.2.2006, to Joint Director of General Foreign Trade (JDGFT) enclosing a copy of the letter from All Kerala Coconut Farmers Union, Thrissur to increase minimum support price of coconut oil and to cut import of coconut and coconut oil into the country and in that letter a request is made to JDGFT to offer their comments, if any.
18. The Chairperson of Coconut Development Board by her letter dated 6.12.2006 addressed to Director General of Foreign Trade (DGFT) seeks restrictions/prohibition on the import of coconut oil and coconut oil cake and the reason being slump in the prices of coconut and coconut oil in the country and in particular, States like Kerala. This correspondence was forwarded by DGFT Office to Ministry of Agriculture.
19. The Chief Minister of Kerala. by his letter dated 19.4.2007 to the Hon'ble Prime Minister has brought to his notice the W.A. No.642 & 1716/2008 - 17 - plight of coconut farmers in the State, in view of steep decrease in the price of coconut, copra and coconut oil and therefore, a request was made to reverse the decision to cut import duties of palm oil. This was followed by another letter by Hon'ble Commerce Minister to Commerce Secretary requesting the action on the letter of Coconut Development Board dated 6.12.2006. Then we come to the another crucial letter dated 8.5.2007, wherein the Deputy Secretary, Ministry of Commerce forwards a report of the Centre for Development Studies on import of palm oil on the coconut economy in Kerala to DGFT for its views on the detrimental effect of import of palm oil on coconut prices. In the report, the Centre for Development Studies on imports of palm oil on the coconut economy in Kerala, in clear and unequivocal terms have stated, "some of the recent years that have witnessed large imports of palm oil have also reported high prices. The influence of palm oil imports on domestic coconut oil prices also works out in an indirect manner. The international prices of coconut oil move together with price of palm oil. Even though coconut oil and palm kernel oil are not perfect or close substitutes, many consumers tend to substitute these oils in their use as edible oils. As such the possibility of palm oil imports having a dampening effect on coconut oil prices cannot be ruled out". This is the report of the independent W.A. No.642 & 1716/2008 - 18 - agency set up to make a detailed study on the effect of import of palm oil on the coconut economy in the State. They have given a gloomy picture of the whole scenario in regard to the importation of palm oil into the State and what would be its impact on the coconut oil industry in the State. The report contains the facts and figures for a few previous years and how the large importation of palm oil has cascading effect not only on the prices of coconut and also on the prices of coconut oil.
20. On 5.6.2007, the Chairperson of Coconut Development Board while bringing to the notice of the Ministry of Agriculture the need for imposing total ban on import of palm oil through the ports of Southern States, has indicated certain details with regard to the price effect of import of palm oil into the State of Kerala on the coconut oil industry in the State. The learned Senior Counsel, Sri.Hidayatulla, keeping his fingers on some of the figures mentioned in her letter and by comparing with the figures mentioned in one of the articles published, where she is the co-author, would inform us the figures/statistics stated does not meticulously tally and therefore, the agency which has issued the notification ought not to have been carried away by the request made by the Chairperson in her letter dated 5.6.2007. This submission of the learned Senior Counsel, in our view, is highly hyper technical. By this W.A. No.642 & 1716/2008 - 19 - letter, what the Chairperson was trying to impress upon the Central Government is the urgent need to bring out some measures which could alleviate the hardship caused to the coconut farmers in the State. In our view, merely because some variations are there in the price index of coconut oil with the steep increase in the import of palm oil in the letter of the Chairperson of Coconut Development Board with that of an article, which she has co-authored should influence us to take a different view of the matter, is a far fetched thinking and this cannot be neither countenanced nor can be accepted by us. In our view, the policy decision cannot be tested by trying to match the figures in a correspondence with that of an article published in a journal. If there is some re-relation with the figures brought out in the correspondence and the article published after collecting necessary data, the same requires to be accepted by this court, unless the party who has come before the court proves otherwise. In our view, merely because there is some variation in the figures furnished in the letter of the Chairperson to the Ministry of Agriculture would not make the decision taken by the Central Government unreasonable and manifestly arbitrary. If we go by the tenor of the letter of the Hon'ble Chief Minister and the letter of Chairperson of Coconut Development Board, they are only referring to the plight of the coconut W.A. No.642 & 1716/2008 - 20 - farmers in the State, in view of large scale importation of palm oil which is being used as a substitute to the coconut oil by the poor and middle class families in the State as an alternate for their day to day need of edible oil and this was the precise reason for the Central Government to issue the impugned notification in the public interest and in particular to protect the interest of the coconut farmers in the State.
21. Then, we have the letter of the Ministry of Agriculture to Prime Minister's Office by referring to the letter of Chief Minister of Kerala dated 19.4.2007 and the letter of the Chairperson of Coconut Development Board dated 5.6.2007. This letter has lot of significance. While referring to the letter of the Chief Minister of the State of Kerala and Chairperson of Coconut Development Board, the Ministry would bring to the notice of the concerned persons about the declining whole price of coconut oil, though the whole price of edible oil is increasing and the same is causing hardship to the coconut farmers. Thus a reference is made to the letter of Chairperson of Coconut Development Board and the request made therein and they also bring to the notice of the PMO's Office that the Ministry of Agriculture had recommended the suggestion made by the Department of Commerce. The Ministry had further stated, "that considering the increased trend of edible oil prices as a whole, their W.A. No.642 & 1716/2008 - 21 - department had supported a recent proposal of Ministry of Finance for reduction of duties on crude palm oil and reiterated the suggestion not to allow import of palm oil through southern ports as suggested by Chairperson of CDB". They sum it by suggesting that the import of palm oil to Southern Ports particularly through Cochin, Tuticorin, Mangalore and Chennai should be disallowed with immediate effect and also the import duty of crude palm oil should not be reduced further, since it may have adverse impact on the livelihood of oil seed growers, particularly the coconut farmers of Kerala as pointed out by the Chief Minister of Kerala. This was followed by the letter dated 3.9.2007 by the Director of Statistics to the Director General of DGCI and S seeking import data of Palm oil for last three years in the case of Cochin, Tuticorin, Mangalore and Chennai. This was followed by the fax massage requesting the Chairperson to clarify on certain issues narrated in her letter dated 5.6.2007. All this input has resulted in issuance of the first notification dated 16.10.2007 prohibiting import of palm oil through the Port of Kochi. This was followed by subsequent notification dated 24.12.2007 prohibiting import of palm oil through all ports in Kerala.
22. The consistent view of law courts is that, the decision maker has a latitude not merely to find facts and make judgments, but also W.A. No.642 & 1716/2008 - 22 - to select the policies deemed in the public interest. The function of the court is to see whether the decision maker has considered all the material facts and issues before arriving at the decision. The power of judicial review calls on the court to intervene not merely in case of procedural inadequacies, but more broadly, if the court becomes aware, especially from the combination of "danger signals" projected by the aggrieved persons whether the decision maker has taken a "hard look" at the salient problems and has genuinely addressed them while making the decision. If the agency has not shirked this fundamental task, the courts would not interfere with the policy decision and in fact would restrain itself in upsetting the decision or the agency's action, even though the court on its account could have made different findings or adopted different standards. In fact if the court is satisfied that the agency has taken a hard look at the issues with the use of reasons and standards, the court will uphold its findings, though they are less than ideal clarity.
23. The administrative function is statutorily committed to the agency, not to the judiciary. A reviewing court is not to supplant the agency on the administrative aspects of the litigation. Rather, the judicial function is fundamentally and exclusively - an inquiry into the legality and reasonableness of the agency's action, matters to be determined solely W.A. No.642 & 1716/2008 - 23 - on the basis upon which the action was administratively projected. The grounds upon which an administrative order must be judged are those upon which the record discloses that its action was based and the reviewing court cannot supply an alternative, unstated ground to support an agency's decision if that ground is one that the agency alone is authorised to make. Formulation of a policy and its implementation is pre-eminently a function of the Executive and the task of the executive is facilitated by the parliamentary system of government. As a general proposition, it may be stated that, ordinarily the courts refuse to review a policy decision of the Executive. Therefore, it is ultimately a question of choice for the courts to decide whether they would review or not, a particular policy decision and if they decide to review, to what extent. Now, the Apex Court in Dinesh Engineering Corporation Case has stated that a policy decision can be reviewed by this court on the grounds such as whether the policy in question is formulated keeping in mind all the relevant facts and the said policy can beheld to be beyond the pale of discrimination or unreasonableness. In Gaurav Ashwin Jain's case, the Apex Court has stated that the judicial review can be extended to check whether 'policy decision violates the fundamental rights of citizens or is opposed to the provisions of the Constitution, or opposed to any statutory W.A. No.642 & 1716/2008 - 24 - provisions or manifestly arbitrary. Judicial Review of a policy decision is not possible, if such policy decision is made fairly and would not give an impression that it was so done arbitrarily or by any ulterior motive. Further, every State action must be informed by reason, and it follows that an act uninformed by reason is per se arbitrary. The courts do not review a government policy on merits. The courts do realise that a government policy emanates after consideration of a number of technical factors and the Judges do not possess the necessary expertise and consequently, they may not be the most competent to evaluate these non-legal factors and pass judgment, on the appropriateness or adequacy of a particular policy, if the decisions have been taken in a bona fide manner, although not strictly following norms laid down by the courts, such decisions are upheld by the courts on the principle that courts while judging the constitutional validity of executive decisions, must grant certain measures of freedom of "plays in the joints" to the executive. It is not normally within the domain of any court to weigh the pros and cons of the policy or to scrutinise it and test the degree if it is beneficial or equitable dispositions for the purpose of varying or annulling it, based on however good reasoning, except where it is arbitrary or violative of any constitutional, statutory or any other provisions of law. When W.A. No.642 & 1716/2008 - 25 - Government forms its policy, it is based on a number of circumstances on facts, law including constraints based on its resources. It is also based on expert opinion. It would be dangerous, if the court is asked to test the validity, beneficial effects of the policy or its appraisal based on facts set out in the affidavit. The court would dissuade itself from entering into this realm which belongs to the Executive. (See State of Pubjab vs. Ram Lubhaya Bagga, AIR 1998 SC 1703), K.Ramulu vs. S.Surya Prakash Rao, AIR 1997 SC 1803, Tata Iron and Steel Co. vs. Union of India, AIR 1996 SC 2462). On matters affecting policy and requiring technical expertise, the court would leave the matter for decision of those who are qualified to address the issues, unless the policy or action is inconsistent with the constitution and the laws or arbitrary or irrational or abuse of power, the court will not interfere with such matters. Courts in exercise of their power of judicial review, do not ordinarily interfere with the policy decisions of the executive unless the policy can be faulted on the grounds of mala fide, unreasonableness, arbitrariness or unfairness etc. However, if the policy cannot be faulted on any of these grounds, the mere fact that it would hurt business interest of a party, does not justify invalidating the policy; when a policy decision is challenged before the court, it could be demonstrated that the decision has been made on a W.A. No.642 & 1716/2008 - 26 - proper consideration of relevant materials. The scope of judicial review is limited to the deficiency in the decision making process and not the decision. The value of the decision lies on its propriety not in the decision being right or wrong. (See, Rajiv Ranjan Singh vs. Union of India, (2006) 6 SCC 613). Judicial Review is permissible only to the extent of finding the process in reaching the decision has been observed correctly, and not the decision itself as such, unless the exercise of power is shown to violate any provision of the Constitution or any of the existing statutory rules. But, while examining and scrutinising the decision making process, it becomes inevitable to also appreciate the facts of a given case as otherwise the decision cannot be tested on the grounds of illegality, irrationality or procedural impropriety. Therefore, to a limited extent of scrutinising the decision making process, it is open to the court to review the evaluation of facts by the decision maker. It is well settled that the policy decision of a Government cannot be interfered with or struck down merely on certain factual disputes, in the matter. It is not open to the court to strike down such a decision until and unless a serious and grave error is found on the part of the Government.
24. It would be wrong to assume that while considering the policy decision it would only consider the formal grounds or W.A. No.642 & 1716/2008 - 27 - considerations mentioned by the concerned authority in the order and ignore completely the background facts and the grounds lying behind the decision. Though the courts do not consider the sufficiency or adequacy of the facts, yet they may enquire the facts with a view to find out their relevance to or whether it was possible to draw the inferences from those facts in support, of the policy decision. In recent years, the courts have relented somewhat on this point and in number of cases, they have adopted a somewhat liberal approach and have called the relevant files from the concerned authority to satisfy themselves that there were some materials on the basis of which the authority could have been satisfied to take the impugned action. The Government files which have been produced by the learned Assistant Solicitor General, would clearly demonstrate that the DGFT has exercised its power keeping in view the relevant material. To arrive at this conclusion, we have extensively referred to all the correspondence which is available in the records. Having gone through the counter affidavit filed and the entire records produced by the learned counsel for the Central Government, we are fully satisfied that the policy decision is neither irrational nor arbitrary as contended by the learned Senior Counsel.
25. The learned Senior Counsel Sri.Hidayatulla contends W.A. No.642 & 1716/2008 - 28 - that the impugned notification is discriminatory and violative of Article14 of the Constitution of India, since by the impugned notification the Central Government has imposed ban on importation of palm oil through the ports in Kerala alone. In aid of his submission, the learned Senior Counsel relies on the observations made by the Calcutta High Court in Kalindi Woollen Mills' case. 1994 (74) ELT 827.
26. In Kalindi's case the challenge of the importer was to the notice issued by the Central Government amending the open general licence issued under the Open General Licence Scheme of the Government of India contained in the import policy 1988-91, by restricting imports of woollen rags/synthetic rags/shoddy wool only through two ports viz.Bombay and Delhi, ICD and also the amendment of import policy in consonance with the amendment of Open General Licence. These amendments were carried out by the Central Government in exercise of its power conferred by Section 3 of the Imports and Exports (Control) Act, 1947. The decision was sought to be justified by the Central Government on the plea that the administrative machinery to supervise mutilation of woollen rags is not available. In this factual backdrop, the Calcutta High Court was of the opinion that the imposition of the condition in the Open General Licence that woollen rags/synthetic W.A. No.642 & 1716/2008 - 29 - rags/shoddy wool could be imported only through the ports of Bombay and Delhi, ICD, is arbitrary, discriminatory and without jurisdiction and violative of Articles 14, 19(1)(g) and 301 of the Constitution of India and ultra vires of Section 3 of the Imports and Exports (Control) Act, 1947. Section 3 of the Act enabled the Central Government to prohibit or restrict import and export of the goods of any specified description and the scope of the said section was never intended nor could be construed to empower the authorities under the Act to pick and choose a port through or at which only the goods could be imported and if it has to be done, it should be made applicable to all the ports in the country, is the reasoning of the learned Judges.
27. The Foreign Trade (Development and Regulation) Act, 1992 has come into force with effect from 19th day of June, 1992. The object of the Act is to provide for development and regulation of Foreign Trade by facilitating imports into and augmenting exports from India and for the matters connected therewith. The whole scheme of the Act appears to be to control imports and exports in the public interest.
28. The Foreign Trade (Development and Regulation) Act, 1992 has repealed the Imports and Exports (Control) Act, 1947. W.A. No.642 & 1716/2008 - 30 -
29. Section 3 of the Act enables the Central Government to make provisions relating to imports and exports. Section 3(1) of the Act authorises the Central Government to make provision for the development and regulation of foreign trade by facilitating imports and increasing exports in the manner provided in the Section. Section 3(2) of the Act enables the Central Government to make provision for prohibiting, restricting or otherwise regulating in all cases or specified class of cases and subject to such exceptions, the import or export of goods. The power under Section 3 of the Act is required to be exercised in the manner provided for under Section 5 of the Act. Section 5 of the Act enables the Central Government to formulate and announce from time to time the export and import policy, in the manner prescribed under the Section. The provision also authorises the Central Government to amend the policy formulated and notified in the official gazette. The Central Government in exercise of this power has announced its policy for the years 2004-2009.
30. The contention of the learned Senior Counsel for the appellants is, that, the impugned notifications are contrary to the provisions of the Act, and the Act does not authorise the Central Government to issue a notification either in exercise of their power under W.A. No.642 & 1716/2008 - 31 - Section 3(2) read with Section 5 of the Act, only to ban or prohibit the import of palm oil through the ports of State of Kerala alone and if any ban has to be imposed it should be done in all the ports through out the country. Alternatively, it is contended that neither the Act 1992 nor the Foreign Trade Policy for 2004-2009 does not permit the Central Government or DGFT to permit import of Palm Oil through some ports alone in the country. The arguments look attractive at the first blush, but on a deeper consideration of the matter it has no merit whatsoever. We say so, for the reason, that, the legislature while enacting Section 3(2) of the Act read with Section 5 of the Act, enables the Central Government to make provision for prohibiting or restricting in all cases or specified class of cases the import or export of goods. In the instant case, the import of goods of a particular class is prohibited by the Central Government through certain ports in a particular region. This policy decision of the Central Government is well within the spirit and language of the statutory provision and the Foreign Trade Policy of the Central Government. In view of the above discussion and the view we have taken, it may not be necessary to comment on the views expressed by Calcutta High Court in Kalindhi's case. We leave at that.
W.A. No.642 & 1716/2008 - 32 -
31. In W.A. No.1716 of 2008, the appellant calls in question the judgment of the learned Single Judge in Writ Petition (C) No.35645 of 2007.
32. In the writ petition filed, the main relief sought for by the petitioner, was to direct the Central Government to impose a ban on import of palm oil through the ports of Southern States. The learned Single Judge has rejected the writ petition, mainly on the ground that, writ in the nature of mandamus cannot be issued to the State or Central Government to frame a Foreign Trade Policy in a particular manner.
33. We have heard learned counsel for the appellant and also have perused the reasons of the learned Judge. The issue raised in this appeal need not detain us for long for the reason, that no court can compel the Government to frame a policy or change its policy to suit the needs of particular group of persons. This is the settled legal position. A detailed discussion on this issue in our opinion is wholly unnecessary.
34. In view of the above discussion, we do not see any merit in the appeals. Accordingly, it requires to be rejected and it is rejected. Consequently, all pending interlocutory applications are also W.A. No.642 & 1716/2008 - 33 - rejected. In the facts and circumstances of the case, the parties are directed to bear their respective costs.
Ordered accordingly.
Sd/-
H.L.DATTU, CHIEF JUSTICE.
Sd/-
A.K. BASHEER, JUDGE.
DK.
(True copy)