Canalised items require importation through public sector agencies, and additional licenses do not permit imports of such items unless explicitly allowed by policy.

The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This is an application for special leave to appeal against the order of the Division Bench of the Bombay High Court dated 22nd/ 23rd July, 1986 filed on behalf of the Union of India.

M/s Godrej Soaps (P) Limited, and a shareholder and Director of the said company, Mr A.B. Godrej who were petitioners went before the Bombay High Court in Writ Petition No. 1665 of 1986. The said petitioners who are respondents herein (hereinafter described as respondents) purchased 544.860 Metric Tonnes of Palm Kamel Fatty Acid on high sea basis imported under an additional licence. They challenged the action of the Customs authorities refusing to permit the clearance of the said Palm Karnel Fatty Acid in view of the decision of this Court in Raj Prakash Chemical’s case [1986] 2 SCR 297 and Indo Afghan Chamber of Commerce’s case AIR 1986 S.C. 1567 It may be mentioned that one Messrs. Dimexon a firm carrying on business of importing rough diamonds and exporting cut and polished diamonds were issued Export House Certificate under the Import Policy for the period 1978-79 and certain additional licences in or about the month of July, 1986 covered by the licensing period AM-79. The said licence was claimed to have been issued in compliance with the order of this Court dated 18th April, 1985. As the purport of that order was the subject matter of two subsequent decisions of this Court and the genesis of the right of the present respondents was claimed from the said decision, it may not be inappropriate to refer to the said decision. The said decision was given in Civil Appeal No. 1423 of 1984. This Court held that there was no requirement of diversification of exports as a condition for the grant of Export House Certificates in the Import Policy for the year 1978-79. In that appeal, this Court confirmed the High Court’s judgment quashing the order whereby the Government had refused Export House Certificates

775 on the ground that the petitioners in those cases had not diversified its export and as such were not entitled to Export House Certificates. The High Court quashed that order. This Court confirmed that direction of the High Court and further directed the Union of India and its employees to issue the necessary Export House Certificates for the year 1978-79 within a period of three months from the date This Court further directed as follows:

"Save and except items which are not specifically banned under the prevalent Import Policy at the time of import, the respondents shall be entitled to import all other items whether canalised or otherwise in accordance with the relevant rules. Appeals are disposed of accordingly with no order as to costs." (Emphasis supplied in view of the contentions now sought to be raised in these proceedings).

This direction was given by a Bench of three learned judges consisting of S. Murtaza F. Ali, A. Varadarajan and one of us (Sabyasachi Mukharji, J.)

According to the petitioners before the Bombay High Court in pursuance of the order of this Court, Import Trade Control Authority issued diverse additional licences expressly covered by the licensing period AM-79 where under the description of the goods was as under:

"This licence is valid for import of items permissible to export houses under additional licence category as per para 176 of Import Policy for 1978-79 excluding those items which were banned in the Policy for the period 1978-79 and which have been banned in the Import Export Policy volume 1, 1985-88. The additional licence category import shall be subject to the provisions of para

176 of the Import Policy for 1978-79."

It was the contention of the petitioners before the Bombay High Court that it was absolutely clear that the holders of the said licences would be entitled to import items permissible to export houses under the additional licence category as per para 176 of the Import Policy for

1978-79.

It may be mentioned that the said direct