2020 Supreme(SC) 502

SUPREME COURT OF INDIA
A.M. Khanwilkar, Dinesh Maheshwari, Sanjiv Khanna, JJ.
UNION OF INDIA AND OTHERS – PETITIONERS(S)
VERSUS
AGRICAS LLP AND OTHERS ETC. – RESPONDENT(S)
Transfer Petition (Civil) Nos. 496-509 of 2020 with Transfer Petition (Civil) No.......of 2020 (Diary No. 8823 of 2020)
Decided on : 26-08-2020

IMPORTANT POINTS
(1) Imposition of quantitative restrictions on imports is subject to fulfilment of certain conditions.
(2) International Treaties – Breach of a stipulation in international law cannot be justified by State by referring to its domestic legal position.
(3) Provisions of FTDR Act are in addition to and not in derogation of provisions of any other law for the time being in force.

Headnote:

(A) Foreign Trade (Development and Regulation) Act, 1992 – Section 6 – Foreign Trade (Regulation) Rules, 1993 – Rule 4 – Import – Challenge to validity of notifications dated 29th March 2019 bearing S.O. Numbers. 1478-E,1479-E, 1480-E and 1481-E and Trade Notice dated 16th April 2019, issued by Directorate General of Foreign Trade on the ground of excessive delegation – There is no ambiguity or vagueness in the notifications – Legal effect of notifications was to amend EXIM policy whereby specified commodities would henceforth not be ‘free’ (importable without restriction) but would fall in restricted category – Effect of Notifications is to bring specified commodities from free to restricted category and imports in question would require a prior authorisation for import – Requirement of licence is nothing but authorisation – In terms of paragraph 2.10, imports of specified commodities would only be by ‘actual user’, unless ‘actual user’ condition was specifically dispensed with or diluted by DGFT – Directorate by specifying that licence would be issued to miller or refiner has, just clarified that ‘actual user’ alone will be permitted to import restricted goods mentioned in notification for which a prior authorisation or licence is required – Importers are traders and it is not the case of any of importers that they are actual users – None of importers have applied for a licence or authorisation for import of restricted commodities – Violation of clause 9.03 of EXIM Policy defining expression ‘Actual User’, is neither alleged nor argued – Impugned notifications would be valid as they have been issued in accordance with power conferred in Central Government in terms of sub-section (2) to Section 3 of FTDR Act – Powers of Central Government by an order imposing restriction on imports under sub-section (2) to Section 3 is not entirely curtailed by Section 9A of FTDR Act.. (Paras 15, 17, 19, 43 and 48)

(B) International Law – International Treaties – Obligation of Contracting States – Contracting States are under obligation to act in conformity with rules of international law and bear responsibility for breaches whether committed by legislature, executive or even judiciary – Breach of a stipulation in international law cannot be justified by State by referring to its domestic legal position – This rule of international law is unexceptionable and prosaic, as contra view would permit international obligations to be evaded by simple method of domestic legislation, executive action or judicial decision – In a way, international treaties are constraint on sovereign activity, albeit voluntarily agreed – State cannot plead and rely upon internal law including judicial decisions as a defence to a claim for breach of an international obligation – Acts of legislation, executive measures and judicial decision making are not treated as third party acts for which State is not responsible – National law, executive mandate and action and decisions of domestic courts are facts which express will and constitutes activities of State – In international law, municipal laws cannot prevail upon treaties as internal actions must comply with international obligation – They may constitute breach of treaty – For the purpose of GATT-1994, municipal laws are evidences of fact, including evidence of conduct in violation of norms and objective of treaty – At the same time, failure to enact an internal domestic law in conformity with international obligation is not a breach of international law unless there is such requirement and obligation created by international treaty – In absence of any such binding clause, breach arises only when State concerned fails to observe its obligation on a specific occasion. (Paras 7, 8 and 9)

(C) International Law – Principle of Invocation – ‘Invocability’ is a generic term which means to embrace a small inventory of means of judicial control over use in a particular law suit of direct applicability of treaty – Whenever a peace treaty involves municipal execution, statutes have to be passed – Decision to implement award by exchange of letters treating award as an operating treaty by demarcating the correct boundary line was within executive power of government and no constitutional amendment was required – Invocability in simple terms refers to justiciability; admissibility of a claim before national courts – It is not connected with defence or merits of defence – In case where an ‘act of transformation’ is required, treaties may partially or entirely become part of domestic law – Where treaty or portion thereof become a part of the domestic law by ‘act of transformation’, only part incorporated or transformed into domestic law is invocable and justiciable and not parts that are not codified into domestic law – However, invocability can embrace several ideas which are intertwined and is of specific concern in cases of constitutions allowing direct application. (Paras 14 and 16)

(D) Foreign Trade (Development and Regulation) Act, 1992 – Section 9A – Imposition of Quantitative Restrictions – For quantitative restrictions to be imposed under Section 9A of FTDR Act, following conditions must be cumulatively satisfied, namely, (a) increased quantities of imports (b) that have caused (c) serious injury or threaten to cause serious injury to domestic industries – As per procedure prescribed by Rules, Appropriate Authority has to initiate proceedings, investigate, hear parties and adjudicate on satisfaction of conditions – Union of India cannot take recourse to Section 3 when conditions of Section 9A are not satisfied and impose ‘quantitative restrictions’, otherwise, Section 9A would become redundant – Unless conditions of Section 9A of FTDR Act are satisfied and procedure prescribed under the Rules is followed, no ‘quantitative restrictions’ could have been imposed by Union of India through medium of impugned notifications – Provisions of FTDR Act are in addition to and not in derogation of provisions of any other law for the time being in force – Section 9A is a special provision dealing with ‘quantitative restrictions’, whereas Section 3 is a general provision. (Paras 32, 33 and 36)

Facts of the case:

Petitions challenging validity of the notifications dated 29th March 2019 bearing S.O. Numbers. 1478-E,1479-E, 1480-E and 1481-E pending in several Writ Petitions filed before different High Courts.

Findings of Court:

Impugned notifications would be valid as they have been issued in accordance with the power conferred in Central Government in terms of sub-section (2) to Section 3 of the FTDR Act. The powers of the Central Government by an order imposing restriction on imports under sub-section (2) to Section 3 is, therefore, not entirely curtailed by Section 9A of the FTDR Act.

Result : Writ Petitions dismissed.