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2020 Supreme(MP) 945
IN THE HIGH COURT OF MADHYA PRADESH
(DIVISION BENCH)
S. C. Sharma and Shailendra Shukla,JJ.
Akshay N. Patel (Mr.) v. Reserve Bank of India & Another
Writ Petition No. 7902 of 2020 (Indore);
Decided on 8.10.2020
Abhinav Malhotra for petitioner; Bharat A. Chitale for respondent No.1; Milind Phadke for respondent No.2.
Headnote:
(1) Constitution of India -- Art. 19 (1) (g) -- Foreign Trade (Development and Regulation) Act, 1992 -- S. 3 -- Foreign Exchange Management Act, 1999 -- Ss. 10 (1), 10 (4) and 11 (1)-- Reserve Bank of India notification dated 23.1.2020 revising guidelines for Merchanting Trade Transactions -- restriction imposed -- import and export and framing of policy on subject of import and export is purely within domain of Central Government -- it is a purely policy decision to allow import/export of particular goods keeping in view policy framed by Central Government -- even though goods not coming to India under Merchanting Trade Transactions, only goods permitted for export or for import are eligible for Merchanting Trade Transactions -- circular issued by Reserve Bank of India is in no way violating petitioner's right under Art. 19(1)(g) of Constitution. 2020 SCC Online SC 275, AIR 1952 SC 196 and AIR 1960 SC 430 distinguished. (2005) 8 SCC 612, (2003) 7 SCC 589, (2003) 7 SCC 628, (2016) 7 SCC 592, (2005) 8 SCC 534, AIR 1958 SC 731, (2004) 3 SCC 402, 1994 Supp (1) SCC 160, AIR 1966 Cal. 167 and 2001 SCC Online AP 421 referred to. [Paras 36, 53 & 61]
(2) Policy -- Courts normally do not interfere with State policy
-- particularly in financial matters -- unless fraud or lack of bona fides is alleged and established. (1995) 1 SCC 274, (1996) 5 SCC 268 and (2011) 3SCC 778 relied on. [Para 46]
(3) Constitution of India -- Art. 19 (1) (g) -- freedom of trade and commerce -- Constitution guarantees fundament alright in respect of freedom of trade and commerce -- however, same can be subjected to reasonable restrictions. [Para 60]
¼1½ Hkkjr dk lafo/kku & vuqPNsn 19¼1½¼N½ & fons'k O;kikj ¼fodkl vkSj fofu;eu½ vf/kfu;e] 1992 & /kkjk 3 & fons'kh eqæk Áca/k vf/kfu;e] 1999 & èkkjk 10¼1½] 10¼4½ rFkk 11¼1½ & okf.kfT;d O;kikj laO;ogkjksa ds fy, fn'kk&funsZ'k iqujhf{kr djus dh Hkkjrh; fjtoZ cSad dh vf/klwpuk fnukad 23-1-2020 & fucZèku vf/kjksfir & vk;kr&fukZr rFkk vk;kr&fukZr fd fo"k; esa uhfr cukuk 'kq)r% dsUæh; ljdkj ds vf/kdkj {ks= ds Hkhrj gSa & dsUæh; ljdkj }kjk fojfpr uhfr n`f"V esa j[krs gq, fof'k"V eky dk vk;kr@fu;kZr vuqKkr djuk 'kq)r% uhfr fo"k;d fofu'p; gS & ;|fi okf.kfT;d O;kikj laO;ogkjksa ds v/khu eky Hkkjr ugha vk jgk] rFkkfi okf.kfT;d O;kikj laO;ogkjksa ds fy, ogh eky ik= gS ftlds fu;kZr ;k vk;kr dh vuqefr gS & Hkkjrh; fjtoZ cSad }kjk tkjh ifji= ls fdlh Hkh Ádkj lafo/kku ds vuqPNsn 19¼1½ ¼N½ ds v/khu ;kph dk vfèkdkj vfrØfer ugha gksrkA 2020 ,l lh lh vkWuykbu ,l lh 275] , vkb vkj 1952 ,l lh 196 rFkk , vkb vkj 1960 ,l lh 430 ÁHksfnrA ¼2005½ 8 ,l lh lh 612] ¼2003½ 7 ,l lh lh 589] ¼2003½ 7 ,l lh lh 628] ¼2016½ 7 ,l lh lh 592] ¼2005½ 8 ,l lh lh 534] , vkb vkj 1958 ,l lh 731] ¼2004½ 3 ,l lh lh 402] 1994 lIyhŒ ¼1½ ,l lh lh 160] , vkb vkj 1966 dydRrk 167 rFkk 2001 ,l lh lh vkWuykbu , ih 421 fufnZ"VA ¼iSjk 36] 53 ,oa 61½
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¼3½ Hkkjr dk lafo/kku & vuqPNsn 19¼1½¼N½ & O;kikj rFkk okf.kT; dh Lora=rk & lafo/kku esa O;kikj rFkk okf.kT; dh Lora=rk ds laca/k esa ewyHkwr vfèkdkj ÁR;kHkwr gS & rFkkfi] og ;qfDr;qDr fuc±/kuksa ds v/;/khu gks ldrk gSA ¼iSjk 60½
ORDER
1. The petitioner before this Court has filed this present petition challenging the circular issued by the Reserve Bank of India dated 23.1.2020 which is in respect of Merchanting Trade Transactions (MTT).
2. The petitioner's contention is that the petitioner is an Indian citizen and is engaged in the business of manufacturing and trading of Pharmaceutical, Herbal, Skin Care and Personal Protective Equipment (PPE) products in India and several other countries. The petitioner has further stated that Corona Virus has infected large number of people over the entire globe and Personal Protective Equipment (PPE) Kits, Masks and Ventilators are in acute shortage all over the globe.
3. The petitioner has further stated that as there was an acute shortage of PPE Kits, Masks, Sanitizer, etc. and as some of the countries were manufacturing more than the demand in their own country, the petitioner wanted to supply the goods to United States of America (USA).
4. The petitioner has further stated that he has negotiated the supply of PPE Kits and other goods with a buyer of United States of America and he has placed an order for purchase of KN95 Masks from a manufacturing Company based in China, meaning thereby, the petitioner wanted to purchase the goods from China and to supply in United States of America by exploiting the system of Merchanting Trade Transactions which involves an Indian Bank as well as Reserve Bank of India.
5. The petitioner has further stated that under the Merchanting Trade Transactions an Indian Citizen facilitates the export of any goods or material from a Company or individual of an export country (other than India) and then import / supply of the said goods to a Company in another country, which is also other than India. Thus, in short their contention is that goods are neither manufactured in India nor imported to India at any point of time, however, the profit comes to India in various currencies.
6. The petitioner has further stated that Merchanting Trade Transaction Contracts are regulated and governed by Reserve Bank of India by issuing circulars from time to time and the Reserve Bank of India in the year 2000 in exercise of its powers conferred under section 10(4) and section 11(1) of the Foreign Exchange Management Act, 1999 has issued a circular dated 24.8.2000 to regulate any Merchanting Trade Transaction contract entered into by any Indian national. The aforesaid circular was amended later on in the year 2014 i.e. on 27.1.2014.
7. The petitioner has further stated that on 23.1.2020 the Reserve Bank of India has issued another notification dated 23.1.2020 and revised guidelines for Merchanting Trade Transactions have been issued superseding its earlier guidelines. The petitioner's grievance is that Rule 2 Clause (iii) provides that MTT shall be undertaken for the goods that are permitted for export / import under the prevailing Foreign Trade Policy (FTP) as on the date of shipment.
8. The petitioner has further stated that after receiving the Merchanting Trade Transaction contracts for supply of KN95 Masks manufactured in China to the buyer based in United States of America, the petitioner on 1.5.2020 contacted its banker for execution of necessary international trade documents and requested its bankers to open a Letter of Credit in favour of manufacturer / supplier based in China.
9. The petitioner has further stated that on 5.5.2020 the officials of HDFC Bank wrote to the petitioner that at present on account of spread of Corona Virus Disease, the Union of India through Director General of Foreign Trade (DGFT) has prohibited export of PPE Kits, Masks, Ventilators and Sanitizer from India and because Merchanting Trade Transactions regulations dated 23.1.2020 as contained in Clause 2(iii) which is in respect of the MTT contracts read with the Foreign Trade Policy of India prohibited such contracts, the R
