1996 Supreme(SC) 878

1996(4) Supreme 386
SUPREME COURT OF INDIA
J.S. Verma and B.N. Kirpal, JJ.
Agricultural and Processed Food Products -Appellant
versus
Oswal Agro Furane & Ors. -Respondents
Civil Appeal No. 3785 of 1992
with
Civil Appeal No. 3787 of 1992
with
Civil Appeal No. 3786 of 1992
with
Transfer Case (Civil) No. 15 of 1996
All decided on 30-4-1996

Headnote:(i) Imports and Exports (Control) Act, 1947-Section 3-Export (Control) Order, 1988-Clauses 3 and 15(j)-Amendment order dated 14.10.1991-Trade Notice dated 15.10.1991-100 percent export oriented unit-Export of non-basmati rice without registration-cum-allocation certificate-Whether permissible ?-(No)-Fixation of minimum price-Whether arbitrary ?-(No)-High Court misconstrued Clause 15(j) and held that because respondent was an export oriented unit, it could export any item manufactured by it-Having taken advantage of interim orders of High Court, respondent cannot be permitted to escape from condition imposed upon it. (Constitution of India-Arts. 226 & 136).

       Held : Clauses 3 and 15 of the Export (Control) Order have to be read together. Clause 3 places restrictions and makes provision with regard to export of goods specified in Schedule I and Schedule III of the Order. If, however, a case falls within any of the various provisions of sub-clauses of Clause 15, then in that case only the Order does not apply. Clause 15, to put it differently, merely preserves any right or obligation which existed prior to the issuance of the Export (Control Order and it did not, and could not, confer any new or additional right. Clause 15 (j) merely preserves the right of Oswal Agro to export those products which it could export as on 30th March, 1988, and any amendment in the schedule to the said Order, like the one made on 14th October, 1991, would not and cannot give Oswal Agro a right to export non- basmati rice, which right it did not have on 30th March, 1988. On 30th March, 1988, when the Export Trade (Control) Order 1988 was promulgated. Oswal Agro had an industrial licence which made it obligatory to export its entire production of Furfural. It was this right to export furfural which was preserved by Clause 15 (j) and Oswal Agro could make its exports without following the provisions of the said Order. (Para 21)

       Further held : Keeping in view the nature of a saving provision it is not possible to accept the contention of Mr. Jethamalani that on the plain reading of the said sub-clause every product manufactured in a 100 export oriented unit was exempt from the applicability of the provisions of the said Order. Clause 15 clearly provides that what is saved are the products for which the export oriented unit is approved and not any other product manufactured by it. The word approved in sub-clause (j) of Clause 15 must be read both with the words products as well as with words the export oriented unit . A unit is granted approval, as an export oriented unit in respect of specific product to be manufactured by it. The names of those products are indicated in the licence granting approval and the saving Clause 15 (j) is applicable to those products the manufacture and export of which has been approved as a 100 export oriented unit. The language of the said sub-clause is, in our opinion, capable of no other interpretation. (Para 23)

       When the Clause 15 (j) refers to "100 export oriented unit" it is quite obvious that the clause has been inserted in the Export Trade (Control) Order, 1986 in view of the promulgation and existence of the export promotion scheme of 1980. The said scheme for export oriented units was for grant of approval for the manufacture of products which, according to the conditions contained in the approval, had to be exported from the country. (Para 24)

       Consequently held that the High Court ought not to have exercised its jurisdiction under Article 226 of the Constitution, for more than one reason, and, therefore, it would be incumbant upon this Court of interfere under Article 136 of the Constitution and not to allow Oswal Agro to take advantage of an obviously wrong decision of the High Court. Firstly the High Court misconstrued Clause 15 (j) of the Order and held that because Oswal Agro was an export oriented unit, therefore, it could export any item manufactured by it, which conclusion is wholly incorrect. Secondly the High Court ought not to have entertained the writ petition because of Oswal Agro s conduct. It had filed an earlier writ petition in the Punjab and Haryana High Court dealing with the same issue, namely, its obligation and right to export its products under the licence and in terms of the Export (Control) Order. It is possible that the Delhi High Court may not be aware of the pendency of the writ petition in the Punjab and Haryana High Court, regarding the export of edible rice bran oil, because there is no reference to the filing of the said case in the writ petition filed in the Delhi High Court. Oswal Agro is guilty of suppression of this very important fact. It was contended in the Punjab and Haryana High Court that it was under no obligation to export the edible rice bran oil and its only obligation was to export Furfural while, in the writ petition filed in the Delhi High Court, a somewhat contrary contention was raised, namely, that being an export oriented unit, it was entitled to export non-basmati rice, in addition to Furfural. Had Oswal Agro indicated in the writ petition filed in the Delhi High Court that it had also filed a petition in the Punjab and Haryana High Court which was still pending, relating to export of edible rice bran oil, then Delhi High Court most probably would not have entertained the petition because the proper course which should have been followed by Oswal Agro was to raise this contention, regarding export of non-basmati rice, in the writ petition filed in the Punjab and Haryana High Court or to file a new petition there. (Para 29)

       Under these circumstances, the exercise of jurisdiction under Article 136 of the Constitution is clearly called for, more so when it is admitted that the respondent had exported over 87000 M. T. of non-basmati rice at a price far less than the minimum price fixed by the appellant. (Para 30)

       Oswal Agro had exported non-basmati rice which, in law, it was not entitled to export without getting the permission form the appellant and at a price less then what was fixed by it. The export was possible only because of the interim orders which were passed first by the Delhi High Court and thereafter by this Court. (Para 33)

       Having taken advantage of the interim orders of the Delhi High Court and of the Order dated 15.5.1992 of this Court, in particular, Oswal Agro cannot now be permitted to escape from the condition which was imposed upon it. Even though, if a valid authorisation had been issued for the export of rice, the appellant may have been entitled to receive only 5 commission but as Oswal Agro has made export of rice in violation of law and under the conditional orders passed by this Court, it cannot be now allowed to say that it is not liable to pay the difference between the price at which the rice was exported and the minimum price fixed by the appellant. The liability to pay to the appellant, in other words, arises by virtue of interim orders passed by the High Court and this Court, which orders are binding on the parties. (Para 34)

       (ii) Industries (Development and Regulation) Act, 1951-Registration and Licensing of Industrial Undertakings Rules, 1952-Amendment of industrial licence-100 Export Unit-Edible rice bran oil-Obligation to export-Whether the industrial licence could be amended so as to incorporate a specific condition requiring the export of edible rice bran oil ?

       Held : Under Rule 16 (2) of the aforesaid Rules the owner of an industrial undertaking may ask for variation or amendment of the licence and under sub-rule (2) the Ministry of Industrial Development has the power to vary or amend the licence and, while doing so, amend or alter or add any one or more conditions. Inasmuch as the export promotion scheme of 1980 had been promulgated with a view to encourage export oriented units so as to earn more foreign exchange, it is not surprising that, viewed in that context, the Government of India accepted the request for permission to export edible rice bran oil and a specific condition to that extent was incorporated in the industrial licence by the amendment letter dated 18th May, 1987. It is interesting to note that though the amendment in the industrial licence was made on 18th May, 1987, no protest against the said amendment appears to have lodged by Oswal Agro. The reason obviously must have been that this amendment was sought for, and in fact as far back as 1982 an undertaking to export edible rice bran oil had been given and even in the letter dated 30th July, 1986, the respondent had categorically stated that it was willing to export edible oil, if permitted. Oswal Agro did not readily protest and, on the contrary, commenced the production of the rice bran oil. It also accepted the other amendments made in the license, which had been sought by it. Under these circumstances, and seeing the conduct of Oswal Agro, it is not entitled to any relief under Article 226 of the Constitution as it was obliged to export the rice bran oil. (Para 42)

       In the Writ Petition filed in the Punjab & Haryana High Court what was impugned was the decision of the Customs and Excise Authorities of Chandigarh in not allowing the respondents to clear the rice bran oil for sale in domestic tariff area. The prayer in the writ Petition, inter alia, was that Oswal Agro should be allowed to clear the rice bran oil manufactured by it for sale in the domestic tariff area as it was not obligatory on its part of export the rice bran oil produced by it. The High Court vide order dated 14.1.1991, inter alia, stayed the operation of the oforesaid clause (vi) of the letter dated 18. 5. 1987 requiring the export of rice bran oil subject to the undertaking that if the Writ Petition was dismissed, then Oswal Agro would be liable to pay an amount equal to the custom duty leviable as if the edible bran oil was deemed to have been imported. This was followed by another interim order dated 4.2. 1991, after notice to the opposite party, whereby Oswal Agro was granted permission to sell the rice bran oil in the domestic tariff area. The oil which had been produced so far had been stored in the custom bonded area and by this order of 4.2.1991, it was further directed that the said oil would be released under the supervision of the concerned Revenue Officer. The interest of the revenue was sought to be safeguarded by the Court directing that an undertaking should be filed by Oswal Agro that in the eventuality of the dismissal of the Writ Petition, they will pay the customs duty along with interest treating the oil to have been imported. (Para 45)

       Apart from the fact that by virtue of the interim order of the High Court Oswal Agro has to pay duty, inasmuch as it has now been held by us that the respondent was not entitled to sell the rice bran edible oil in the domestic market and he was under an obligation to export the same, Oswal Agro was infact not entitled to the type of interim relief which was granted by the High Court. As will be presently seen it s conduct has been such that it succeded in obtaining an interim order contrary to the statutory provisions which were applicable. (Para 46)

       (iii) Central Excise and Salt Act, 1944-Sections 3 and 5A-Notification dated 20.3.1990-Liability of payment of excise duty on goods manufactured by a 100 export oriented units which goods were cleared for sale in domestic market-Rate of interest to be paid on amount of excise duty payable.

       Held : In a present case the oil which had been produced was stored in a bonded warehouse and it is only after the interim orders of the Punjab and Haryana High Court dated 4.1.1991 and 4.2.1991 that the oil was cleared from a bonded warehouse. As on that day, by virtue of the aforesaid Notification dated 20.3.1990, there was no exemption from payment of excise duty on edible rice bran oil and full amount of duty was payable on clearance of the goods. (Para 48)

       Oswal Agro has clearly gained a undue advantage by obtaining an order which it was not entitled to get in accordance with law. Oswal Agro which is a commercial organisation had approached the High Court in exercise of its discretionary jurisdiction under Article 226 of the Constitution of India purportedly to get justice. In actual fact it sought and obtained interim orders which resulted in its not becoming liable to pay excise duty which, under no circumstances, could have been a matter of dispute. A litigant who obtains an incorrect order and does not pay the statutory dues should not be allowed to make any profit or gain from the infraction of law. The money which was legitimately due to the Government has been utilised by Oswal Agro in its business. Dealing with such cases which have financial implications involving business houses or companies it is the commercial principles which must be applied by the Court while ordering payment of interest. Oswal Agro has, on the other hand, not paid the excise dues to the Government and the Government money has presumably been used in its business. No collateral security has been furnished by them because none was ordered by the Court. Under these circumstances, there is no reason as to why Oswal Agro should not be required to pay at least that rate or interest, and on such terms, as it would have to pay to a bank if that amount of money had been obtained by it on loan. Keeping this principle in mind, it would be just and proper that Oswal Agro be directed to pay, in addition to the excise duty payable, interest at the rate of 18 per annum. (Para 50)

       (iv)STATUTORY INTERPRETATION-Saving clause-Scope. (Para 20)

       (v) INTEREST-A litigant who obtains an incorrect order and does not pay statutory dues should not be allowed to make any profit or gain from infraction of law-Cases which have financial implications involving business houses or companies-It is commercial principles which must be applied by the Court while ordering payment of interest. (Para 50)