Karnataka High Court
Personality Ltd vs Union Of India Rep By Its Secretary on 2 April, 2008
Author: Ram Mohan Reddy
Bench: Ram Mohan Reddy
ON THE HIGH COURT OF KARNATAKA, BANGALORE DATED THIS THE 2" DAY OF APRN. 2008 BEFORE THE HON'BLE Mi. JUSTICR '(RAM MOHAN REDDY PERSONALITY LTO 123, CHORD ROAD RAJAJINACAR > BANGALORE 10 REP BY ITS MANAGING DIRECTOR JAGADISH N HINDUUA - .. PETITIONER - 'Gets Seapanbeey «co, ADV ) "4 JUNION OF INDIA REP BY ITS SECRETARY - MINISTRY OF TEXTILES -- \. UDYOG BHAVAN ~NEW DELHI 110 011 SENIOR OFFICER'S APPELLATE COMMITTEE OFFICE OF THE TEXTILE COMMISSIONER NEW CGO BUILDINGS 48, NEW MARINE LINES MUMBAI 400 020 REP.BY ADDL.TEXTILE COMMISSIONER SECOND APPELLATE COMMITTEE GOVERNMENT OF INDIA MINISTRY OF TEXTILES short), forfeiting Rs.6,92,836/- by onder dated 68-06-90 O05 - Annexure-"B" which when carried in appen! before the First Appellate Committee, the amount of forfeivure was reduced to Rs.6,70,613/- from Rs.6,92,826/- by order dated 2-2- 2006 Annexure-'D" and dismissal of a further appeal by order dated - 25-04-2006 Annexure" of the Second Appellate Committee. Hence, thie: writ petition. . 2 Petition is oppoved hy filing Statement of objections dated 9-8-2065 of the 4th respondent and Statement of
objections dated 22-09-2006 of Respondents 1 to 3.
"8, nthe Statement of objections of Respondents 1 t 3, it is contended that export of textiles and clothing from India is based on bilateral agreements entered into between Government of India and Governments of developed ~ countries under the aegis of the erstwhile Multi Fibre Arrangement (MFA) governing international textile trade from the year 1974. The Textile Importing countries are referred to as "Quota countries" who have placed restraints on import of specified textile categories "Quota items" within the Lk
c) 5% under Non-quota export (NOE) entitlement to "encourage diversification of ponte. tw > on-quota
d) 10% on First Come First Serve (FCFS) to provide . oar mpportenties ll Sarat op bee of eh Value Realisation, nee The framing of police, it is said is im exercise of power conferred unvier Seotion 5 of the Foreign Trade (Development | and Regulation) Act, 1992 (No.22 of 1992) and Item No.8 of Appendix-I Schedule-2 of 'irc (HS) Classification of Export aed Import published under the Export and Import policy. It | ia farther stated that in order to implement the policy, an Apparel Export Promotion Council (AEPC) headed by | Director General is designated as Quota Administering Authonity, on behalf of the Government, responsible for
-_ alfocation of quota in terms of the policy. The availability of
- quota, it is said, vastly over strips the demand and in view of the restricted availability, commands a premium. _ Major importers of textile garments being the quota countries, it is essential to ensure quotas are fully utilised and are not allowed to go waste due to speculative trading by unscrupulous elements and therefore, the policy cevioages utilisation of the quota ky 30% 'September of the yelevent year and failure to do so, the exporter is required to surrender the quota. and seek Tevalidation of unutilised quota allocated in 'the categories, iu. the manner and Procedure as taid down ia the policy. Revalidation of quota beyond B08 Sepiember 'and upto 31¢* December of the relevant year is in the form of a Bank guarantee or a fixed deposit receipt or Demaud Draft while the policy in operation till the year 20C0, ate exporters cover the amount of EMD by a etter of undertaking or post dated cheques. The » exports eas than 9086 of the export entitlement, to EMD shail be released in full In case of utilisation upto 75% of oN fast moving items and upto 50% in case of slow moving "items, EMD is forfeited im proportion to the shortfall of utiization. * If an exporter is aggrieved by any order of forfeiture, it could maintain an appeal to the First Appellate Committee and thereafter to a Second Appellate Committee.
The Appellate Committees rejected the petitioner's claim of ne force-majeure in the abserce of relevant - material constituting substantial lege] evidence of the fact that faiintre to fulfil the export obligation wes due to acts Dae the control of the exporter:
4. The Smicment of objections of the 4" respondent raises almost identical contwutions as are advanced by Respondent Nos. fo 3i in their Statement, of objections. In addition, 'it is contended 'hat the exporter having taken the benefit: of the germent export entitlement policy by fucaishing = bank guarantee and having failed to export garments _ im terms of the quota provided, cannot be i 'permitted w spprobate and reprobate. It is stated that the . petitioner is 'estopped from contending that no amount could "be forfeited. 'The further contention of the 1st respondent is _. that the exporter did not place relevant material in support
- of its claim of force-majeure.
5. Learned counsel for the petitioner advances the following contentions:
a) that the 'Policy' providing for forfeiture of the 75% and proportionate forfeiture for exports between. 75% | and 90% under the First Come First Serve (FCFS), 'is irrational, 'mmereernensiee net tomtemmerits fo peranlty."
b) the appelinte authority Sell in error in not consilering the docinnentary evidence produced by the petitioner in support of the ciel of foiomionniowre, while directing orate of the EMD.
co) thei the petitioner sind exported garments upto
77. 715 of the export entitlement, the non-fulfillment was not due to willful failure of the petitioner but for reasons beyond its cortrol. Say
6. Per contra, earned Senior counsel Sri G.L. Rawal
- for Respondent No.4 contends that the challenge to the . policy is unavailable to the petitioner as the 'garments _exposted fell short of the quota allotted to it within the period terms of the policy, the petitioner was fully aware of the | consequences of proportionate forfeiture of Bank guarantee on failure to export garments upto 90% but not less than 73%, and forfeiture in full if less than 75%. Petitioner be heard to contend that the policy in so far as it relates to forfeiture is cither rational or unrerscuable. | Veomed Senior counsel further contends that. an identical contention over the validity of the policy. when advenced, in the case of GOKALDAS IMAGES UMITED va, UNION. OF INDIA, a learned Single Judge of the High Court of Delhi, rejected the plea in the Gecision reported in 2007 (7) STR 347 (DEQ.
Learned Senior counsel, in aidition, contends that the petinoner having not lei 'relevant material constituting substantial legal evidence of a claim of force-majeure, the rightly corsidered and rejected the said plea. Lostly. it is contented that the petitioner having exported authorities | _ gamnexts_ upto 77.71% of the export entitlement, the
-aithoritics were justified in directing forfeiture of the ainounts from out of the bank guarantee, in proportion, to
- : - the extent of unfulfilled quota.
7. Sri Devadass, learned Senior counsel for Respondents, 1 to 3 contends that the petitioner having secured an allotment of a quota to export garments under _ the policy, without questioning the terms and conditions of forfeiture, cannot be permitted to approbate_an 10 by calling in question the policy that too, for Shur export of garments. According to the learned Senior counsri, quotu for export of garments once sllitted to an exporter, it is presumed that the exporter would discharge its obligation to export garments to fulfil the quota allotted and in order to ensure such compliance, the policy providing for forfeiture of the amounts from out of the hank guarantee as stated therein canmot be characterised as cither irational or unreasonable. "Learned Senior counsel hastens to add that garment cxpert is peculiar in ite nature since quotas provided for each country, under the policy is to maximise | - foreign exchange. The Government, according to the learned °* Senior" Graiasel, is well within its right to provide for forfeiture of the Bank guarantee, so as to ensure full and os, maximum utilisation of the quota and that is _ Precisely what * has been done.
8. Having heard the learned counsel for the parties, perused the pleadings, there can be no more dispute that in terms of the "Policy", the petitioner applied for and secured export entitlements, under FCFS, to export garments and 11 having failed to do 90 within the time specified, the A AEPC | issued notice calling upon the petitioner to show cause ae to why action should not be talon to foritit the monies from out of bank guaranter, which owas: responded to by the petitioner. The AEPC, not being satisfied with the explanation offered, forfeited Fa.6,99,836/-, calculated in Proportim to the percentage of non-exported quota, from out of the mounts in the bank guarantee, by order dated 8-6- forfeiture was reduced to Rs.6,70,613/- from Re.6,92,836/-
by onder dated 2-2-2006 Annexure-"D*, and the Second 7 9. In the admitted facts noticed supra, the questions : for decision making are,
a) whether the challenge to the policy in so far as it relates to forfeiture, for non-fulfillment of the export obligation within the time stipulated is sustainable?
bs 12
b) Whether the AEPC and the "Appellate Cotmittces . were justified in rejecting tke paiiticos's claim of force-majeure?
10. Indisputably, the "export, si quotas allotted was on the petitioner's application to permit it to export garments within the time atipuisted, and furnished a bank guarentee, interalta, covecanting thet in case of failure to fulGil the export obligation, in its entirety would be subject to. forseiture 'ause of the 'Policy'. The petitioner | consciously agreed to the terms of the forfeiture that if it exported gencents beyond 75% upto 90% of the export 7 "entitlement, would be lable for proportionate forfeiture and
- "it less then 75%, forfeiture would be in full, from out of the amount in the Bank guarantee. The consent of the | petitioner to be subjected to the terms of the policy, relating "te forfeiture in the event of failure to fulfill the export | entitlement, im the circumstances cannot be permitted to approbate and reprobate nor assume inconsistent positions.
11. The contention that the terms of forfeiture are irrational and unreasonable in the circumstances is beyond bX 13 is imperative and itis with the avowed object of maximising .
the utilisation of the quota, the policy provides a clause for forfeiturs. The Central Goverment entitled to formulate a otey tied on. precise timing and! manner_ of more spprogiacy in the matters of bibtcal tade, in my | opinion, being peculiar in its nature, the Government was _ weil within its rights to provide for forfeiture and therefore, io "cannot be fs termed as cither irrational or unconstitutional. It must be borne in mind that there must be free play with the Government in matters of economic policies which are not 7 "subject to judicial review, unless demonstrated to be | contrary to statutory provisions or the Constitution. It is well settled law that courts, in exercise of their jurisdiction, will not transgress into the field of policy decision, as they are ill equipped to adjudicate on a policy decision. The Lyk 14 court, po-doubt has a duty to se that in the wndcraking of ; a decision, no law is viedated and people's fundemental rights sre not tranagreseed upon except to the extent . permissible under constitution. |
12. In almost tention cea a learned Single | LIMITED | vs. "UNION oF INDIA in W.P.No.8539/2003 and connected writ" petitions, 'by order dated 12-03-2003, repelled the contention that the policy providing for forfeiture aud imposition of penalty for non-fulfillment of the obligation os - under the export quota could be challenged by an exporter "who had had the benefit of a poticy, following the decision of "the Apex Court in the case of PTR Exports (Madras) Pvt Ltd. and Gthers, 'Vs. Union of India and Others :
in AIR | | with policy matters, by observing thus:
"4. An applicant has no vested right to have export or import cences in terms of the policies in force at the date of his making application. For _ @bvious reasons, granting of licences depends |
- upon the policy prevailing on the date of the grant Sirsa icine 16 provided for each country, the Goverament was well within | its right to formulate © policy for full and maximum utilisation of the quota which cannot be interfered with. Having read the entire text of tir judgment, I ind no good reason to deviate from the yasons, fidiiogs and conclusions arrived at by the learne:i Judge. Be 7 14 Learned connce! for the petitioner contends that the AEPC, prong reckoned the total quantity of 2,90,496.75 pieces of garments by axing 39,087 pieces of erent So. hh: gote eaten. mee t sO vith the time 'stipulated. According to the Leamed | Counsel, the actual quota allotted was for 2,51 349.75 pieces and quota certificates issued. The total shipments effected : performance when rounded off to 90% would not occasion forfeiture. Learned counsel for the petitioner while pointing out to the contents of the order Annexure-"D' of the First Appellate Committee, recording the plea of the petitioner that 39,087 pieces against 11 quota certificates though shown to ca by 17 have been alloted by the AEPC were in fact aot ollotted, contends that the AEPC and the First & Second Appeliat Committees fell in error in not cunsidering the said plea, in the light of. Clause ADM viEME of 'the Garment Export Bntinement POMed. anes {Beéiton 2009),
18. Lemme connsel for the "respondents does not dispute the positen that if the defects noticed in the applications fw alloticent of quota under the FCFS category are not rectified within the time stipulated, the application siands rejected 3 in terms of Clause AD vii(t) of the Garment Report Entitlement Policy, 2000-2004 (Edition 2003). " Learned counsels also agree that the i quota certificates for 99057 cs of garment were not eon othe ptone "16. Having regard to the terms of the policy and the fact that 11 quota certificates for 39,087 pieces of garments were not issued to the petitioner as a consequence of failure to rectify the defects within time, that quota cannot be added to the total quantity of garments to be exported, to calculate DA 18 es has been done by the AEPC in its onler Annexire-"B".
The First Appellate Commitine too, . having not noticed the fact that the 11 quota certificaics i Jn respe rn tof the above said quantity of garments was not issued to the petitioner, fell in error in not appreciating the terms of the Policy (Edition 2003), that the zetitioner's application =n for allotment of eleven quotas for 59,087 pioora were rejected for non-compliance. The Second Apgeilate Committee too fell in error in not consitering the ples of the petitioner over the error in inclusion: of the said: yuantity of garments to calculate the oo percentage of total: performance, in its order Annexure-*F".
"perverse, "unjustified and 'unsustainable, occasioning grave injustice to the petitioner.
17. The last contention that the benefits extended by "the authorities in identical circumstances im pre-decided cases, were not applied im the present case, is also without any merit. {I say so because, claim of force-majeure is dependant upon facts of each case, based on documentary evidence to establish the existence of such conditions. The In 19 petitioner has not been able to show that. in identical - circumstances, the authority accepted the aim of force:
majeure. If the decision to extend the benefit of the claim of force-majeure being . dependant pon the facts and circumstances and materia! on revord in ® particular case, it _ goes without saying thet amy decision rendered in that case, woukl rot, unless facts au circumstances are shown to be identical, have © syplication. .
"18 In that view of the matter the order of the Second Appellate Committee at Annexure-"F" is gpanhed and the _ -_ proceading remitted for consideration afresh by extending
-Feasopaisle: opportunity of hearing to the parties and pass "orders in accordance with law, as expeditiously #3 possible.
KS Judge