The judgment establishes the importance of interpreting force majeure conditions and the application of penalty provisions under the Foreign Trade (Development and Regulation) Act, 1992 in cases of failure to fulfill export quotas.

( 1 ) IN these proceedings under Article 226 of the Constitution the petitioner questions concurrent orders of the Apparel Export Promotion Council; the Appellate Textile Commissioner and the Second Appellate Committee constituted to decide grievances, by the Central Government, Ministry of textiles.

( 2 ) THE Petitioner was allocated a quota in terms of the Garment Export policy prevalent in 1997, under provisions of the Foreign Trade (Development and regulation) Act, 1992 (hereafter, "the Regulations" ). At that time, garment exports were entitled to benefits/schemes such as Past Performance Entitlement (PPE); Past Performance Transfer (PPT); First Come First Served (FCFS); Non-Quota Entitlement (NQE) NQT and NIE (New Investment Entitlement) etc. These enabled exporters to a slew of concessions/ quota. In terms of these schemes if an exporter completed his obligations before 30th of September of the concerned calendar year, he was unconditionally, eligible, to benefits without submission of legal undertakings or bank guarantees. However, if quantities were left over and were sought to be exported on or after October, till December of the year, extension was to be obtained from the fourth respondent (AEPC ). This was usually given, subject to the exporter furnishing an undertaking that in case the targeted exports were not fulfilled, he would be subjected to levy of a quantified amount as penalty.

( 3 ) THE policies further stipulated that if the exporter fulfilled 90% or more of the targeted quantity, no amounts could be forfeited; on the other hand, if the export was between 75 to 90% a proportionate benefit was given after deduction of some amount. In case the export was less than 75% the amount stipulated was forfeited as penalty, in entirety.

( 4 ) IN this case the grievance is that the quantity revalidated was 45937 pcs and quantity exported was 32920 PCS/nse. The shortfall thus was 130137 pcs/nse; in terms of percentage, the actual quantity exported was 71. 66% of the quota which the petitioner had to fulfil. The petitioner claims that its inability to achieve the export target was because fabrics to be manufactured into garments and exported to the foreign buyer, could not be processed. This was on account of labour problems in the supplier's unit. It was contended that the order for processing was placed well in advance; yet the processor could not fulfil its commitments to complete the dyeing and printing of the fabrics. It was contended that the petitioner had confirmed orders and procured raw material which were sent for processing. However, due to the unforeseen factor i. e labour problems of the Processor's unit, there was delay in obtaining the fabrics and manufacturing which in turn led to short utilization of the quota.

( 5 ) THE AEPC had issued show cause notice before proceeding to levy penalty of Rs. 3,54,130/ -. The petitioner preferred an appeal to the Appeal committee in the Office of the Textile Commissioner, Government of India. By its order dated 31. 8. 2001, the committee rejected the appeal. The said order is as follows :

"we have carefully gone through the records of the case and it is clear that the exporters could not substantiate their claim that their performance was affected because of any force majeure condition, as spelt out under para 13 of Ministry of Textiles, Govt. of India's Notification no. 1/50/96-EP (Tandj)-I dt. 16. 10. 96. ORDER on a perusal of the records and on examination of the circumstances as stated by the exporter in his appeal the Committee is satisfied that the circumstance as stated in the appeal are not the force-majeure conditions. Therefore, the Committee hereby uphelds the forfeiture imposed by aepc in PPE, NQE systems. However, the oeverall performance in NIE system being more than 75%, the Committee performance in NIE system being more than 75%, the committee hereby orders AEPC to give proportionate relief based on overall performance, if