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2006 Supreme(Del) 1371
High Court Of Delhi
MUKUL MUDGAL, S. MURLIDHER RAO
AGRI TRADE INDIA SERVICES PVT.LTD. - Appellant
Versus
UNION OF INDIA - Respondents
CM 8807 Of 2006
Decided On : 08/18/2006
A.K.Sharma, A.M.SINGHVI, GAURAV SHARMA, Mukesh anand, P.P.Malhotra, Praveen Kumar Singh, Punit D.Tyagi
Headnote:
FOREIGN TRADE - Export and Import Policy - Amendment - Retrospective effect - Notification dated 4. 7. 2006 issued by the Central Government purporting to amend the earlier Notification dated 27. 6. 2006 - Whether ultra vires Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 - Held, yes - Section 5 of the Act requires any amendment to the foreign Trade Policy to be made "in like manner" i. e,. in the same way as the earlier amendment is made - In other words an amendment of the policy will also have to be made only by way of a notification in the Officer Gazette and in no other manner - The amendment in public interest in terms of Para 1. 3 of the policy also indicates that "such amendment shall be made by means of a notification published in the Gazette of India" - Unless Section 5 itself is amended by the Parliament, this mode of publication of the amendment has to be strictly followed - This mode cannot be sought to be deviated from or changed by the Central Government by way of a notification issued under that Section - That is precisely what the impugned Notification dated 4. 7. 2006 seeks to do - A delegated legislation cannot seek to override the main section under which it is made, in this case, Section 5 - On this short ground it must be held that the impugned Notification dated 4. 7. 2006 is ultra vires Section 5 of the Act.
Fact of the Case:
Petitioners, a company having its registered office in Mumbai, is a subsidiary of Petitioner no. 2 (Agrocorp International Pte. Ltd.) which is a company incorporated in singapore. It is the case of the petitioners that on 12. 6. 2006, the Trading corporation of Pakistan (TCP) invited international bids for the supply of 150,000 MT of Chick Peas. Petitioner No. 2 is stated to have submitted its bids some time in the first week of June 2006. On 17. 6. 2006 it was awarded two contracts for supply of 15,000 MT each of Chick Peas at USD 624 per MT and USD 650 per MT respectively. One of the terms of the contract was that the awardee of the contract was required to submit, by 22. 6. 2006, a Performance Guarantee equivalent to 5 per cent of the value of the contracted quantity. It is stated that on 20. 6. 2006 the Petitioner No. 2 furnished a combined Performance Guarantee equivalent to 5 per cent of the value of the contracted quantity under the two contracts, through a bank in Singapore. The petitioners submit that the contract for supply of Chick Peas to TCP in the agreed quantities stood concluded by this date.
Finding of the Court:
The impugned Notification dated 4. 7. 2006 is ultra vires Section 5 of the Act and strike down the said notification as such.
Issues: Whether the impugned Notification dated 4. 7. 2006 is ultra vires Section 5 of the Foreign Trade (Development and Regulation) Act, 1992.
Ratio Decidendi: Section 5 of the Act requires any amendment to the foreign Trade Policy to be made "in like manner" i. e,. in the same way as the earlier amendment is made - In other words an amendment of the policy will also have to be made only by way of a notification in the Officer Gazette and in no other manner - The amendment in public interest in terms of Para 1. 3 of the policy also indicates that "such amendment shall be made by means of a notification published in the Gazette of India" - Unless Section 5 itself is amended by the Parliament, this mode of publication of the amendment has to be strictly followed - This mode cannot be sought to be deviated from or changed by the Central Government by way of a notification issued under that Section - That is precisely what the impugned Notification dated 4. 7. 2006 seeks to do - A delegated legislation cannot seek to override the main section under which it is made, in this case, Section 5 - On this short ground it must be held that the impugned Notification dated 4. 7. 2006 is ultra vires Section 5 of the Act.
Final Decision: The writ petition is allowed in the above terms.
S. MURALIDHAR J.
( 1 ) IMPORTANT questions of law concerning the interpretation of Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (hereinafter "the act') and certain notifications issued thereunder arise for consideration in this writ petition. The cause for this invitation to judicial determination is a cross-border transaction that requires the petitioners before us to export 30,000 metric tonnes (MT) of Chick Peas from this country to her neighbour, pakistan.
( 2 ) FOR those needing proof that globalisation of trade is not a recent phenomenon one has only to look at the history and the evolution of cuisines around the world. In many countries, the currently popular cuisine is an adaptation of a foreign one. The popularity in our country of Chinese, Italian and recently Lebanese food bears testimony to this growing trend. Indian spices and pulses were among the earliest to be traded at the height of the ancient civilizations of Egypt, Greece and Rome. As much as we relish our chick peas (chana) and the imported Kabuli variety, our "desi" chick peas it seems is equally popular abroad. Chick peas are devoured in many forms: The Arab speaking world relishes its falafel (ground chickpeas shaped into balls and fried) and hummus (a smooth thick mixture of mashed chickpeas with garlic ). Global trade in chick peas as in other pulses has indeed grown. The Act and the Policy
( 3 ) THE relevant provisions of the Act may be first noticed. Section 3 of the Act reads as follows:-"3 (1) The Central Government may by order published in the Official Gazette, make provisions for the development and regulation of Foreign Trade by facilitating imports and increasing exports; (2) The Central Government may also, by order published in the Official gazette, make provisions for prohibiting, restricting or otherwise regulating in specified classes of cases and subject to such exceptions, if any, as the case may be made by or under the order, the import and export of goods; (3) All goods to which any order under Sub Section (2) applies shall be deemed to be goods the import of export of which has been prohibited under section 11 of the Custom Act, 1962 and all the provisions of that Act shall have effect accordingly. "the power to formulate and announce the export and import policy as well as amend that policy is contained in Section 5 of the Act which reads thus:"5. The Central Government may, from time to time formulate and announce by notification in the Official Gazette the import and export policy and may also in the like manner amend that policy. "the power to amend the policy, therefore, flows from Section 5 itself. This power to make the policy and to amend the policy has been delegated by the Act to the Central Government.
( 4 ) FOR some years now there have been major changes in India's Foreign Trade policy ("policy' ). The Preamble to the Policy, which is itself a document of statutory character notified under Section 5 of the Act, records the objectives of the Policy as under:-"objectives trade is not an end in itself, but a means to economic growth and national development. The primary purpose is not the mere earning of foreign exchange, but the stimulation of greater economic activity. The Foreign Trade Policy is rooted in this behalf and built around two major objectives. These are: (i) To double our percentage share of global merchandise trade within the next five years; and (ii) To act as an effective instrument of economic growth by giving a thrust to employment generation. "para 1. 3 of the Policy spells out the power of the Central Government to amend the Policy in public interest and reads as under:-"amendments 1. 3 The Central Government reserves the right in public interest to make any amendments to this Policy in exercise of the powers conferred by Section-5 of the Act. Such amendment shall be made by means of a Notification published in the Gazette of India. "para 2. 1 of the Policy reflects the gen
