Union Of India Represented By Its vs M/S.Unik Traders

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT

RESERVED ON : 19.10.2022 PRONOUNCED ON : 28.10.2022

CORAM:

THE HONOURABLE MRS.JUSTICE J.NISHA BANU AND THE HONOURABLE MR.JUSTICE N.ANAND VENKATESH

W.A(MD)Nos.396 to 406 of 2009 and M.P(MD).Nos.2, 3, 3, 3, 3, 3, 3, 3, 3, 3 & 3 of 2009

W.A(MD)No.396 of 2009: 1.Union of India Represented by its Seceretary, Ministry of Commerce and Industry, Department of Commerce, Udyog Bhavan, New Delhi-110 001.

2.The Director General of Foreign Trade and Ex-Office Additional Secretary to Government of India, Udyog Bhavan, New Delhi-110 001.

3.The Commissioner of Customs, Customs House, New Harbour Estate, Tuticorin-628 004. .. Appellants

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Vs

M/s.Unik Traders, 140, Old Tharagupet, Bangalore- 560 053, represented by its Proprietor, Hanif Thara .. Respondent

PRAYER: Writ Appeal filed under Clause 15 of Letters Patent to allow

these Writ Appeal by setting aside the order, dated 08.09.2008 made in

W.P(MD)No.5284 of 2008, on the file of this Court.

For Appellant : Ms.L.Victoria Gowri Assistant Solicitor General in all cases

For Respondents : Mr.B.Sathish Sundar for Sole Respondent in W.A(MD)Nos.396,397, 403, 405 & 406/2009 :Mr.A.K.Jayaraj for Sole Respondent in W.A(MD)Nos.398 to 402 & 404/2009

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COMMON JUDGMENT

J.NISHA BANU, J.

AND N.ANAND VENKATESH,J.

These Writ Appeals have been filed by the Union of India,

Director General of Foreign Trade and the Commissioner ofCustoms,

against the Common Order passed by the learned Single Judge allowing

the Writ Petitions filed by the respondents and thereby declaring the

Notification dated 04.06.2008 issued by the Director General of Foreign

Trade as illegal, arbitrary and unconstitutional.

2. The Writ Petitioners are importers of betel nuts and

spices. They were importing the betel nuts from various countries.

Considering the local demand for the betel nuts, the import was made

free and there were no restrictions except the customs duty to be paid on

the imported betel nuts.

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3. The grievance of the Writ Petitioners was that through

the impugned Notification issued by the Director General of Foreign

Trade, the importers were directed to import the betel nuts provided that

the c.i.f. value (minimum import price) of the betel nuts was fixed at Rs.

35/- per kg. According to the petitioners, such fixation of price by

issuing a Notification under Section 5 of the Foreign Trade

(Development and Regulation) Act, 1992 (hereinafter referred to as ‘the

Foreign Trade Act’) by the Director General of Foreign Trade (DGFT) is

arbitrary and unconstitutional and beyond the powers of the DGFT.

4. The appellants took a stand that a policy decision was

taken by the Central Government to fix the c.i.f. value of Rs.35/- per

kg,keeping in view the domestic prevailing prices and to protect the

interests of the domestic cultivators to ensure that the prices of the

domestic produce do not fall. According to the appellants, the DGFT

was only authenticated by the Central Government to issue the

Notification and there was no delegation and that the policy decision of

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the Central Government which was taken after hearing the grievance of

all concerned, cannot be subjected to judicial review.

5. The learned Single Judge allowed the Writ Petitions

mainly on the ground that the Central Government cannot delegate its

exclusive powers under Section 6(3) of the Foreign Trade Act to the

DGFT and that the restriction and price fixation is governed by the

special enactments viz. The Customs Act and The Customs Tariff Act

and the so called policy decision is not backed by proper study and data

to fix the c.i.f. value at Rs.35/- per kg for import of betel nuts.

Accordingly, the learned Single Judge interfered with the impugned

Notification dated 04.06.2008 and allowed all the Writ Petitions.

Aggrieved by the same, the Union of India and the departments have

filed these batch of Writ Appeals.

6. Heard Ms.L.Victoria Gowri, learned Assistant Solicitor

General for the appellants in all cases, Mr.B.Sathish Sundar, learned

counsel for sole Respondent in W.A(MD)Nos.396,397, 403, 405 &

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406/2009 and Mr.A.K.Jayaraj, learned counsel for Sole Respondent in

W.A(MD)Nos.398 to 402 & 404/2009.

7. This Court has carefully considered the submissions

made on either side and the materials available on record and also the

common order passed by the learned Single Judge. On considering the

same, three broad issues are involved in these batch of Writ Appeals and

they are:

(a) Whether the impugned Notification No.

15(RE-2008)/2004-2009, dated 04.06.2008 was issued by the

Director General of Foreign Trade (hereinafter referred to as

“DGFT” for brevity), without jurisdiction, in view of the

specific bar under Section 6 (3) of the Foreign Trade

(Development and Regulation) Act, 1992 or whether the

impugned notification was not issued by the DGFT by way

of delegation and it was issued by the DGFT only on

authentication by the Central Government, as per the

Government of India (Allocation of Business) Rules, 1961?

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(b) Even if the notification is taken to have been issued

by the DGFT by virtue of authentication by the Central

Government, whether such authentication can be made, in

view of the specific manner/procedure provided under

Section 6(3) of the Foreign Trade (Development and

Regulation) Act, 1992, and where the Foreign Trade

(Development and Regulation) Act, 1992, prescribes a

procedure to be done in a particular manner, it should be

done only in that manner or not at all as held by the Hon'ble

Apex Court in Babu Verghese and Others vs. Bar Council

of Kerala and Others reported in AIR 1999 SC 1281,

tracing this principle from the Judgment of Taylor vs. Taylor

reported in (1875) 1 Ch D 426?

(c) Even if the impugned notification is taken to have

been issued by the DGFT by way of authentication by the

Central Government, whether the Central Government is

entitled to place restriction on the import of areca nuts and

fix the value under the Foreign Trade (Development and

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Regulation) Act, 1992 or such restriction of imports and

fixation of tariff can be carried out only in accordance with

the provisions of the Customs Act, 1962 and the Customs

Tariff Act, 1975 and as an ancillary issue, whether the

Foreign Trade (Development and Regulation) Act, 1992 must

be considered to be a General Act and the Customs Act, 1962

and the Customs Tariff Act, 1975 should be considered to be

Special Acts and thereby, the principle of generalia

specialibus non derogant (special things to derogate from the

general things) will apply?

8. The appellants had filed counter affidavits in all the Writ

Petitions and the reasons assigned by them for taking a policy decision

to fix a c.i.f. value for importation of betel nuts is explained in the

following manner:

“1. The Notification No.15 (RE-2008)/2004-2009 dated 04.06.08 has been issued permitting import of betel nut freely subject to cif (cost, insurance, freight) value of Rs.35 per Kg. and above keeping in view the

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domestic prevailing prices and to protect the interests of the domestic cultivators for ensuring that the prices of the domestic produce do not fall down. The said notification has been issued by the DGFT in public interest in exercise of powers conferred under Section 5 of the Foreign Trade (Development & Regulation) Act, 1992 read with para 2.1 of the Foreign Trade Policy 2004-09 according to which the Central Government is empowered to make amendment in Schedule I (Imports) of ITC (HS) Classification of Export & Import Items, 2004-2009 to protect the interests of the domestic betelnut farmers. The issuance of the above notification is a policy decision of the Central Government in exercise of the powers conferred under the above Act. The impugned notification has been issued in public interest in order to protect the interests of the domestic producers on the following considerations:

a) The low priced import of betel nut was causing decline in domestic prices and consequential loss to the domestic betel nut growers. The complaints were also received in regard to the imported betel nut of being an inferior quality.Therefore, in order to prevent import of ______________ Page No.9 of 66

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inferior quality betel nut and to bring the cost of imported betel nut close to the price of domestic betel nuts so that the domestic farmers can be provided adequate remunerative price for their produce, the impugned notification was issued in the interest of the domestic producers and also in public interest in order to provide protection to the domestic betel nuts farmers against low quality and cheaper priced imports.

b) A considerable number of farmers directly employed in the production of around 5 Lakh MT of betel nuts from around 4 lakh hectares of land in Assam, Kerala and Karnataka and other people directly or indirectly employed in the production, processing, business and trading of betel nuts in the country.

c) The bulk quantities of substandard low-priced betel nut was being imported into India. Due to this type of imports, the market rate had drastically decreased and the demand for the indigenously produced betel nut had reduced considerably inmost of the Indian markets in the States of West Bengal, Bihar, U.P. and other markets where major quantities of betel nut is ______________ Page No.10 of 66

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consumed. This had adverse effect on the domestic betel nut industry.The low-priced imported betel nuts has been posing a threat and a challenge to the employment and consequential interest of the domestic producers, cultivators and other allied persons.

d) In order to generate perfect competition between the home produce and imported betel nuts by eliminating the monopoly ofthe low cost imported betel nut of inferior quality.

e) Protection to the home producers from being dislodged in the competition in the realm of low cost imported betel nuts resulting in inevitable unemployment necessitated the Government to issue such a Notification.

f) To create conditions for treatment of imported betel nuts at par with the betel nut produced indigenously.

g) To remove the resultant discrimination between the producers of South Indian States with the importers.

h) To generate employment potentialities by saving the home producers and the produce.

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importation as before subject to prescribed c.i.f value(minimum import price) and conduct their business in a competitive market. Minimum import price condition is a mechanism which has been used by the Government in case of import of Marble also to protect the interest of domestic producers.The related Notification No. 18/RE 2008/2004-2009 dated 30th June, 2008 is enclosed in the type set of papers.

j) It is the primary duty of the Government to look after the interest of the people at large and as such, the issuance of the said Notification was a demand of the day and hence has been issued. In view of the grounds elaborated above, the Central Government, in order to protect the interests of the domestic producers, considered it necessary, reasonable and justified to issue impugned Notification No. 15(RE-2008)/2004-09, dated 04.06.2008 allowing the importation of betelnut freely subject to a cif value of Rs.35/kg and above. The said notification has been issued by DGFT in public interest in exercise of powers Conferred under Section 5 of the Foreign ______________ Page No.12 of 66

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Trade(Development & Regulation) Act, 1992 read with para 2.1 of the Foreign Trade Policy 2004-2009 according to which the central government is empowered to make Amendment in Schedule I (Imports) of ITC(HS) classification of Export & Import Items, 2004-2009 to protect the interest of the domestic betel nut farmers.

The issuance of the above notification is a policy decision of the Central Government in exercise of the powers conferred under the above Act.

2. Before the fixation of minimum import/floor price of betel nut at the rate of Rs.35/- per kilogramme and above notified vide Notification No. 15/RE2008/2004-2009, dated 04.06.08, various representations were received from the domestic producers suggesting fixation of floor price for betel nut at the rate of Rs.60 to Rs.65 per killograme. In 2007, the matter in regard to prevailing prices of betel nut in the country was also consulted with the Directorate of Arecanut and Spices Development, Calicut (under Union Ministry of Agriculture). It was reported that the average domestic price of betel nut during the year 2006-07 varied between Rs.

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66 to Rs.75 per kg. As per the import data of betel nut for the year 2006-07 collected from the Directorate-

General of Commercial, Statistics &Intelligence(DGCIS), Kolkata, the import price of betel nut (whole) comes to Rs.15.50 paise per killograme and that of split betel nut comes to Rs.13 per killograme. Thus, as per the information received from the DGCIS, the import price of imported betel nut is very low compared to the domestic prevailing prices. This low import price could be low either on account of very low international prices or on account of probable under-invoicing having been resorted to by the importers. Whatever may be the reasons for low import price of betelnut, it was considerednecessary to provide protection to the domestic producers of betel nut to enablethem to get a reasonable rate of remuneration of their produce. Therefore, in order to protect the interests of the domestic growers of betel nut and to provide a level playing field to them and to ensure that the domestic prevailing price of betelnut does not fall down, the minimum floor price for import of betelnut has been fixed at Rs.35 per killograme and above vide Notification no.15/RE2008/2004-2009, dated 04.06.08 Presently, the import duty on betel nut ______________ Page No.14 of 66

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is 100%. The floor price of betel nut @ Rs.35 per Kg. coupled with 100% custom duty would result in the landed price of betelnut to Rs.70 per kg. which is approximately at par with the rate prevailing during 2006-07(i.e. ranging from Rs.66 per kg. 75 per kg.) as reported by the Directorate of Arecanut and Species Development, Bangalore.”

9. It is clear from the above that the import of betel

nut/areca nut was permissible freely,provided the c.i.f. value (cost,

insurance and freight) is Rs.35 per kg and above and subject to payment

of customs duty prescribed by the Central Government. The reason for

the Central Government for taking such a policy decision has also been

explained by the appellants.

10. The first issue that has to be dealt with by this Court is

as to whether the impugned Notification issued by the DGFT is without

jurisdiction in view of the specific bar under Section 6(3) of the Foreign

Trade Act. For the sake of understanding this issue, the relevant

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provisions under the Foreign Trade Act viz. Section 3, 5 and 6 are

extracted hereunder:

“3. Powers to make provisions relating to imports and exports.—(1) The Central Government may, by Order published in the Official Gazette, make provision 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 provision for prohibiting, restricting or otherwise regulating, in all cases or in specified classes of cases and subject to such exceptions, if any, as may be made by or under the Order, the [import or export of goods or services or technology]:

[Provided that the provisions of this sub-section shall be applicable, in case of import or export of services or technology, only when the service or technology provider is availing benefits under the foreign trade policy or is dealing with specified services or specified technologies.] (3) All goods to which any Order under sub-section (2) applies shall be deemed to be goods and import

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or export of which has been prohibited under section 11 of the Customs Act, 1962 (52 of 1962) and all the provisions of that Act shall have effect accordingly.

[(4) without prejudice to anything contained in any other law, rule, regulation, notification or order, no permit or licence shall be necessary for import or export of any goods, nor any goods shall be prohibited for import or export except, as may be required under this Act, or rules or orders made thereunder.] [5. Foreign Trade Policy.—The Central Government may, from time to time, formulate and announce, by notification in the Official Gazette, the foreign trade policy and may also, in like manner, amend that policy:

Provided that the Central Government may direct that, in respect of the Special Economic Zones, the foreign trade policy shall apply to the goods, services and technology with such exceptions, modifications and adaptations, as may be specified by it by notification in the Official Gazette.]

6. Appointment of Director General and his

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functions.—(1) The Central Government may appoint any person to be the Director-General of Foreign Trade for the purposes of this Act.

(2) The Director General shall advise the Central Government in the formulation of the [foreign trade policy] and shall be responsible for carrying out that policy.

(3) The Central Government may, by Order published in the Official Gazette, direct that any power exercisable by it under this Act (other than the powers under sections 3, 5, 15, 16 and 19) may also be exercised, in such cases and subject to such conditions, by the Director-General or such other officer subordinate to the Director-General, as may be specified in the Order.”

11. Section 3 of the Foreign Trade Act gives wide powers to

the Central Government to pass Orders by making provision for

prohibiting or restricting or otherwise regulating, in all or in specified

cases, the import or export of goods. Sub-section (3) to Section 3 states

that where an Order is passed under sub-section (2), whereby the import

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or export of goods is prohibited, restricted or otherwise regulated, the

goods in question would be deemed to be prohibited goods under

Section 11 of the Customs Act, 1962 and accordingly, the provisions of

the latter Act would apply.

12. The Order prohibiting or restricting or regulating the

import or export of goods is passed in terms of a policy decision taken

by the Central Government and such policy is formulated and

announced through a Notification in the Official Gazette issued under

Section 5 of the Foreign Trade Act.

13. Section 6(3) of the Foreign Trade Act makes it clear that

the powers exercised under Sections 3 and 5 of the Act, shall be

exercised only by the Central Government and by no other authority.

14. Keeping the above provisions in mind, the impugned

notification dated 04.06.2008, is extracted hereunder:

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15. The stand taken by the Writ Petitioners and as affirmed

by the learned Single Judge is that the above Notification was issued by

the DGFT and such a power was delegated by the Central Government,

when there is an express prohibition under Section 6(3) of the Foreign

Trade Act.

16. The specific stand taken by the Central Government is

that the Central Government did not delegate the power to the DGFT

and that the Central Government only authenticated the DGFT to issue

the impugned Notification. Inorder to explain the stand taken by the

Central Government, the learned Additional Solicitor General brought to

the notice of this Court,the Government of India (Allocation of

Business) Rules, 1961. These Rules are made by the President of India

in exercise of powers conferred under Article 77(3) of the Constitution

of India for the allocation of business of the Government of India. The

business of the Government of India is transacted in the Ministries,

Departments, Secretariats and Offices specified in the First Schedule to

the Rules. Insofar as the Ministry of Commerce and Industry, the

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Allocation of Business pertaining to Foreign Trade (Goods and Services)

covers all matters relating to foreign trade and import and export trade

policy and control. The power is conferred, apart from the other offices,

specifically on the DGFT.

17. The President of India, in exercise of powers conferred

under Article 77 (2) of the Constitution of India, issues Authentication

(Orders and other Instruments) Rules, 2002. In exercise of such power,

the authentication was given to the DGFT to issue notification for and

on behalf of the Central Government.

18. In Vinayaga Marine Petro Limited v. Union of India,

2019 366 ELT 210, an identical issue was raised before the Delhi High

Court contending that the notification was ultra vires as it had not been

issued by the Central Government but by the Ministry of Commerce and

DGFT. Repelling the contention, the High Court held as under:

“29. The contention that the Gazette Notification quoted above is invalid as it was not an order of the Central Government under Section 3 read with Section

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5 of the FT Act is erroneous and should be rejected.

Notification in the heading states; published by the Ministry of Commerce and Industry, Department of Commerce, Director General of Foreign Trade. The first paragraph of the Notification records:— “the Central Government hereby amends the import policy conditions against 173 HS Codes under Chapter 72 and had imposed the conditions as per annexure”.

30. Clearly, this is a Notification by the Central Government and not an act of delegated legislation exercised by the Director General of Foreign Trade under sub-section (3) to Section 6 of the FT Act. Section 6(3) of the Act states that the Central Government may by an order published in the Official Gazette authorise the Director General or such other officers subordinate to him to exercise any power under the Act, except powers under Sections 3, 5, 15, 16 and 19. Therefore, exercise of powers under Sections 3, 5, 15, 16 and 19 of the FT Act cannot be delegated. Notification No. 38/2015-2020 has not been issued by the Director General of Foreign Trade under a power delegated to him by the Central Government.

31. The Notification in question is issued by the Central Government and would be in terms of Article 77 of the Constitution of India. We would elaborate this aspect a little further, but first notice that the Director General of Foreign Trade is appointed by the Central Government under sub-section (1) to Section 6 of the FT Act. Director General is to advise the Central Government in formulation of Foreign Trade Policy and is responsible for carrying out the policy. As noted above, on plain reading of Notification No. 38/2015-2020, it is apparent that the Notification was issued by the Central Government, for the Notification states that Central Government hereby amends the

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import policy. The decision taken to amend and issue the Notification was of the Central Government.

32. Referring to the constitutional provisions, the Supreme Court in Delhi International Airport Limited v. International Lease Finance Corporation, (2015) 8 SCC 446 had referred to Articles 77 and 163 of the Constitution and held that in respect of former Article, the Constitution stipulates that whenever executive action is taken by way of an order or instrument it shall be expressed to be taken in the name of the President in whom the executive power of the Union is vested. Under subsection (3) to Article 77, the President is to make Rules for more convenient transaction of business and allocation of same amongst Ministers. The Article does not provide for delegation of any power. Under the Government of India (Transaction of Business) Rules, 1961, the Government business is divided amongst Ministers and specific functions are allocated to different Ministries. We would not dilate further on Article 77 except notice that clause (2) to Article 77 provides that validity of an order or instrument made or executed in the name of the President, authenticated in the manner specified in the Rules made by the President, shall not be called in question on the ground that it is not an order or an instrument made or executed by the President.

33. The website of the Ministry of Commerce and Industry, Department of Commerce, states that Director General of Foreign Trade is an agent of the Central Government and attached office to it.

34. The Notification No. 38/2015-2020 is a Notification of the Central Government under Section 3 read with Section 5 of the FT Act as stated in the Notification itself. It is not a Notification published by Director General of Foreign Trade as a delegatee of the Central

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Government performing any act traceable to delegation under sub-section (3) to Section 6 of the FT Act. Merely because Director General of Foreign Trade had published the order on behalf of the Central Government/Government of India would not affect its legality and make the Notification invalid. Such notifications have been issued since long and we have come across, in fact, an order issued as early as on 31st December, 1993. The respondents have also pointed out that the Director General of Foreign Trade is ex officio Additional Secretary in the Government of India. This being the position, the second contention of the petitioners is rejected.”

This view was reiterated by the Supreme Court in Union of India and

Others v. AGRICAS LLP and Others, reported in 2020 SCC Online SC

675.

19. The Gujarat High Court had an occasion to deal with a

similar Notification issued by the DGFT by prescribing a minimum c.i.f.

value for cashew kernels and while dealing with the issue, the

authentication order issued by the President of India in favour of the

DGFT was considered in M/s. Pam Agro Industries and others v.Union

of India and Othersthrough judgment dated 19.03.2021 and the relevant

portions are extracted hereunder:

“29. On perusal of the above notification,

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it is clear that the same is issued under section 5 of the Foreign Trade Act read with paragraph no. 2.1 of the Foreign Trade Policy, 2009-2014, as amended from time to time by prescribing the minimum CIF value of cashew kernels under Chapter 8 of ITC (HS) 2012, Schedule 1 (Import Policy) per kilogram being Rs. 288/- for cashew kernel (broken) for HS Code 0801 32 10 and Rs. 400/- for cashew kernel (whole) for HS Code 0801 32 20. Since 2013, the MIP for two different categories of cashew kernels broken and whole are in existence.

30. The power to issue such notification by the Director General of Foreign Trade came up for consideration before the Calcutta High Court in case of Bimal Kumar Modi (supra), wherein the notification dated 13.5.2013 issued by DGFT fixing the CIF value of betel-nut (areca-nut) was under

challenge. The Calcutta High Court after considering the history and relevant provisions of the law, came to the conclusion that such notification cannot be sustained from whichever angle it is viewed and accordingly, the same was quashed and set aside. However, Madras High Court in case of S. Mira Commodities Pvt. Ltd. ______________ Page No.26 of 66

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(supra), considering the similar notification dated 4.6.2008 issued by the DGFT with regard to restricting the import of betel nuts valued at Rs. 35/-

or more per kg., held that the DGFT has no power to issue the notification under section 5 read with section 6(3) of the Foreign Trade Act on artificial basis. It was further held that no material data has been furnished for arriving at the figure of Rs. 35/- per kg of the betel nuts imported when the market of betel nuts require 90% import and the free import policy has been evolved for such import and the said notification goes contrary to such policy.

31. This Court in case of Premium Pulses Products & Kusum Agency (supra), while considering such notification issued by the Central Government under section 3 of the Foreign Trade Act, held as under:

"12. A perusal of the impugned notification reveals that by virtue of such notification the Central Government, in exercise of powers conferred by section 3 of the Act read with paragraphs 1.02 and 2.01 of the Act as amended from time to time, has amended the import policy of items of Chapter 7 of ITC (HS)2017, Schedule-1 (Import Policy) as ______________ Page No.27 of 66

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provided there under. On a plain reading of the notification, it is clear that powers under section 3 of the Act have been exercised by the Central Government, and it is the Central Government which has amended the import policy. At the same time it can also be seen that such amendment bears the signature of the Director General of Foreign Trade, which is the root cause of the dispute raised in these petitions. On behalf of the respondents it has been contended that the import policy has been amended by the Central Government in exercise of powers under section 3 of the Act and that the DGFT has only authenticated the same in accordance with the Authentication Rules. In support of such submission, a notification dated 16th February, 2002 of the Ministry of Home Affairs whereby an order made by the President on 16.01.2002 has been published for general information has been placed on record, whereby in exercise of powers conferred under clause (2) of Article 77 of the Constitution, rules called the Authentication (Orders and other Instruments) Rules, 2002 have been framed. Rule 2 thereof provides that all ______________ Page No.28 of 66

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orders and other instruments made and authenticated in the name of the President shall be authenticated, and specifies the persons who may authenticate the same. Item No. 12 therein provides that in case of orders and other instruments relating to the Directorate General of Foreign Trade, by the Director General of Foreign Trade, or the Additional Director General of Foreign Trade, or the Export Commissioner or Joint Director General of Foreign Trade. Thus, the Authentication Rules specifically empower the Director General of Foreign Trade to authenticate instruments relating to the Directorate General of Foreign Trade. A perusal of the impugned notification reveals that the same has been issued by the Government of India, Ministry of Commerce and Industries, Department of Commerce, Directorate General of Foreign Trade. Thus, by the impugned notification the amendment made by the Central Government in the import policy in exercise of powers under section 3 of the Act has been notified which relates to the Directorate General of Foreign Trade, accordingly, the same is authenticated by the Director General of Foreign ______________ Page No.29 of 66

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Trade. Therefore, it is crystal clear that the DGFT has not exercised powers under section 3 of the Act but has merely authenticated an order which relates to the Directorate General of Foreign Trade in accordance with the Authentication Rules. The contention that the impugned notification has been issued by the DGFT in exercise of powers under section 3 of the Act, and is, therefore, ultra vires sub-section (3) of section 6 of the Act, does not merit acceptance."

32. The Supreme Court by order dated 28.1.2019 has dismissed the SLP (C) 1922/2019 against the aforesaid judgment of this Court.

33. Thus from the above judgment of this Court it is clear that DGFT has not exercised powers under section 3 of the Foreign Trade Act but has merely authenticated an order which relates to the DGFT in accordance with the authentication rules. Therefore, the contention raised by the petitioners that DGFT has no authority to issue such notification is not sustainable in view of above dictum of law.”

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20. The above judgments give the complete answer on the

nature of power that was exercised by the DGFT. When the above

judgment was passed, the Gujarat High Court had the advantage of

looking into the judgment passed by the learned Single Judge which is

the subject matter in these Writ Appeals and also the judgment passed by

the Calcutta High Court in Bimal Kumar Modi case. We are in complete

agreement with the above judgment wherein it was categorically held

that the DGFT did not exercise powers under Section 3 of the Foreign

Trade Act and it was merely authenticated by the Central Government to

issue the Notification and such Notification was issued only by virtue of

the Authentication Rules. Consequently, there was no delegation of

power by the Central Government and the DGFT was merely

authenticated by the Central Government to issue the Notification under

Section 5 of the Foreign Trade Act, pursuant to the policy decision taken

by the Central Government.

21. The learned counsel for the Writ Petitioners brought to

the notice of this Court the judgment of the Calcutta High Court in

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Bimal Kumar Modi case reported in 2014 (306) ELT 97(Cal.) and

submitted that the Calcutta High Court considered a very similar

Notification issued by the DGFT wherein the c.i.f. value was fixed at Rs.

110 per kg and above. The learned counsel specifically placed reliance

upon paragraph 17 of the judgment and the same is extracted hereunder:

“17. The meaningful reading of Section 5 & Section 6 of the FTDR Act suggest that the power to formulate and announce the Foreign Trade Policy vest in the Central Government who can delegate some of its powers to the DGFT by taking recourse to Section 6. Sub-section 3 of Section 6 clearly prohibits the delegation of power by the Central Government exercisable under Section 3, 5, 15, 16 & 19 of the said Act. According to the DGFT, the executive functions of the Union is vested in the President which is required to be exercised by him either directly or to officers subordinate to him. All the executive actions of the Union is expressed to be taken in the name of the President who by Order and other instruments shall authenticate in a manner as may be specified in the Rules for convenient

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transactions of the business and for allocation amongst the Ministers. The Allocation of Business Rules made in exercise of such power by the President includes Ministry of Commerce and Industry in Item No. VI of the First Schedule. The Second Schedule thereof which relates to the distribution of the subject amongst the departments incorporated DGFT under Item No. VIII which relates to attached and subordinate offices. The Allocation of Business Rules framed by the President facilitates for convenient transaction of the business of the respective Ministers, which is to be exercised subject to the restrictions imposed in any legislation passed by the Parliament. Though the expression 'Central Government' means President in terms of the definition enshrined under Section 2(8) of the General Clauses Act, but it is subject to the restrictions embargo and prohibition created in any other law in force. The contentions of the respondent, if accepted, would lead to the proposition that the executive action of the DGFT is deemed to be the action of the Central Government despite the specific embargo created ______________ Page No.33 of 66

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under Sub-section 3 of Section 6 of the FTDR Act. Though the Allocation of Business Rules entrusted the DGFT to act for the Central Government but in view of the specific embargo created under Sub-section 3 of Section 6, the Central Government cannot delegate the power enshrined under Section 3, 5, 15, 16 & 19 of the said Act to be exercised by the DGFT.”

22. We are in respectful disagreement with the above view

taken by the Calcutta High Court. A combined reading of the

Notification along with the Authentication Order, clearly shows that the

impugned Notification dated 04.06.2008 has been issued by the

Government of India through the concerned Ministry and the DGFT was

merely authenticated to issue this Notification and the DGFT has not

exercised any powers under Section 3 of the Foreign TradeAct. Hence,

the embargo provided under Section 6(3) of the Foreign Trade Act

pertains only to the bar for the Central Government to delegate the

powers. Insofar as the Central Government authenticating the DGFT to

issue the Notification, it must be deemed to be a Notification issued only

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by the Central Government. Stricto sensu, the bar under Section 6(3) of

the Foreign Trade Act would have applied only if the DGFT had

exercised a statutory power. In the present case, the authentication at the

best can only be held as an executive exercise of a power by the

President of India through the DGFT. Hence, the impugned Notification

published in the Gazette under Section 5 of the Foreign Trade Act

cannot be held to be ultra vires as was contended by the learned counsel

for the Writ Petitioners.

23. Clause (2) of Article 77 provides for the authentication

of orders and instruments in a manner as may be prescribed by the

Rules. Vide S.O.No. 2297 dated 03.11.1958 published in the Gazette of

India, the President of India has issued the Authentication (Orders and

other Instruments) Rules, 1958. The said Rules have been superseded

subsequently by the Authentication (Orders and other Instruments)

Rules, 2002. The Notification dated 04.06.2008 recites that the

amendment has been effected by the Central Government and not the

DGFT as contended. Secondly, it is also authenticated by the DGFT who

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is the ex officio Additional Secretary in the Government of India and is

qualified to authenticate the instrument, as pointed out by the Delhi

High Court. There is, therefore, no question of any violation of Article

77 in the light of the decision of the Supreme Court in Sable Waghire&

Co. v. Union of India, (1975) 1 SCC 763, wherein it was observed thus:

“20. Lastly it was submitted that the notification under Section 8 was not published in the name of the President and was issued by the Under-Secretary who was not authorised to do so. The notification is not an executive order but is a piece of subordinate legislation made by the Central Government under Section 8 of the Act. It was duly published in the Gazette of India over the signature of the Under- Secretary who was authorised for the purpose. The question of violation of Article 77 does not arise.”

24. The learned counsel for the Writ Petitioners also relied

upon the judgment of the Apex Court in Director General of Foreign

Trade and Another v. Kanak Exports and Another, reported in (2016)2

SCC 226. This was a case where a concession/incentive was available

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under the EXIM policy and under the guise of issuing a Notification, the

benefits which had already accrued to the exporters was sought to be

taken away. The Apex Court, while dealing with this issue, found that

the DGFT cannot exercise a power under Section 5 of the Foreign Trade

Act and take away certain incentives/privileges which had already

accrued to the exporters by a Notification issued by the Central

Government. The Apex Court held that if at all such a notification is

issued, it is only the Central Government which should have exercised

such a power and not the DGFT. This judgment will not apply to the

facts of the present case since the policy decision was taken by the

Central Government and thereafter, the DGFT was only authenticated to

issue the Notification. The authentication order issued by the Ministry of

Commerce, dated 24.03.1993 makes this position very clear.

25. The entire file pertaining to the policy decision taken by

the Central Government was placed before us and we are satisfied that a

lot of deliberations had gone upto the office of the Hon’ble Prime

Minister of India, based on various representations and ultimately, the

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Government of India, in order to strike a balance, permitted to import

betel nut freely, subject to the c.i.f. value of Rs.35 per kg and above.

While fixing this price, the average domestic price of betel nut was also

taken into consideration and import data was also collected from the

concerned department and the Central Government thought it fit to fix

the price at Rs.35 per kg and above. The c.i.f. value per kg coupled with

customs duty worked out to an average of Rs.70 per kg and this was in

line with the average domestic price of betel nut prevailing at the

relevant point of time. In view of the same, the policy decision taken by

the Central Government is supported by sufficient data and such a policy

decision cannot be interfered with by this Court.

26. Compliance with Article 77 can also be garnered by

calling for and perusing the files of the DGFT. Such a course was

explicitly held to be permissible by a Division Bench of this Court in

Union of India v. K.S. Krishnaswamy, reported in 2005 SCC OnLine

Mad 358 : (2005) 2 LLN 890 : (2005) 2 CTC 661, wherein it was

observed thus:

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“Therefore the law is well settled now that Art. 77 of the Constitution of India is not mandatory but only directory in character. In this case the clarification, dated 11 May, 2001, is not expressed to be taken in the name of the President. Therefore we have decided to go through the file produced by the learned Additional Solicitor-General to find out whether the clarification dated 11 May, 2001 is in compliance to the requirement of Art. 77 of the Constitution of India. On going through the file, we have seen that apart from the Minister of State and the Minister of Finance signing the proceedings, there is an endorsement namely, “Prime Minister approved”, under the authentication of the Secretary Personnel/Director of the Prime Minister's Office. The said proceeding has come to be issued by the appropriate authority namely, the Ministry, and Rule 3 of the Government of India (Transaction of Business) Rules, 1961 issued under Art. 77(3) of the Constitution of India enables such decision to be taken by the concerned Ministry. Accordingly we conclude that the clarification, dated 11 May, 2001, is valid and it is an executive action taken by the Government of India in accordance with the Rules ______________ Page No.39 of 66

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framed under Art. 77(3) of the Constitution of India.”

27. The other contention relates to whether price fixation

under the notification was on an “artificial basis” as alleged by the

learned Single Judge. The fixation of prices and/or the limits of

import/export are matters of economic policy. The scope of judicial

review in such matters is extremely minimal keeping in mind that Courts

are not possessed of the skill and expertise of dealing with matters of

economic policy which are best left to the wisdom of the executive. The

wisdom of pursuing a particular economic policy is a matter for the

executive and not the Courts. The parameters of review have been set

out in a recent decision of the Supreme Court in Small Scale Industrial

Manufactures Assn. v. Union of India, reported in (2021) 8 SCC 511,

wherein it was held as under:

“60. In catena of decisions and time and again this Court has considered the limited scope of judicial review in economic policy matters. From various decisions of this Court, this Court has consistently

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observed and held as under:

60.1. The Court will not debate academic matters or concern itself with intricacies of trade and commerce. 60.2. It is neither within the domain of the courts nor the scope of judicial review to embark upon an enquiry as to whether a particular public policy is wise or whether better public policy can be evolved.

Nor are the courts inclined to strike down a policy at the behest of a petitioner merely because it has been urged that a different policy would have been fairer or wiser or more scientific or more logical. Wisdom and advisability of economic policy are ordinarily not amenable to judicial review.

60.3. Economic and fiscal regulatory measures are a field where Judges should encroach upon very warily as Judges are not experts in these matters.”

The Court concluded by observing as under:

“71. The correctness of the reasons which prompted the Government in decision taking one course of action instead of another is not a matter of concern in judicial review and the court is not the appropriate forum for such investigation. The policy decision must be left to the Government as it alone can adopt which

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policy should be adopted after considering of the points from different angles. In assessing the propriety of the decision of the Government the court cannot interfere even if a second view is possible from that of the Government.”

28. The second issue that has been framed by this Court

also stands answered by virtue of the above discussion, since the

Notification has been issued in line with Section 5 of the Foreign Trade

Act and we do not find any illegality or diversion in the procedure since

the Notification was technically issued by the Central Government by

authenticating the DGFT to issue the same. Thus, we hold that there was

no delegation of power by the Central Government to DGFT and the

Notification was issued in accordance with Section 5 of the Foreign

Trade Act and the findings of the learned Single Judge to the contrary

are hereby set aside and the first two issues are answered accordingly.

29. That leaves us with the third issue formulated by us. It

was contended by the learned counsel for the Writ Petitioners that

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Section 11 of the Customs Act gives sufficient power to the Central

Government to prohibit or regulate import or export of goods and it can

even extend to cases where the Central Government apprehends serious

injury to domestic market and even to the interests of the general public

at large. Similarly, Section 14 of the Customs Tariff Act specifically

provides for fixation of tariff and no such tariff was fixed under Section

14(2) of the Act. It was hence contended that if at all any restriction on

imports or rate of tariff is fixed, a Notification can be issued only under

the Customs Act and the Customs Tariff Act which are special

enactments and the same cannot be done under the Foreign Trade Act

which is a general enactment. Inorder to impress upon the doctrine of

generalia specialibus non derogant, various judgments were cited

before us.

30. The Apex Court in Union of India v. Asian Food

Industries reported in (2006) 13 SCC 542 was dealing with a case

where the Central Government banned the export of pulses by issuing a

Notification under Section 5 of the Foreign Trade Act. The Apex Court

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considered the effect of Section 3(3) of the Foreign Trade Act qua

Section 11 of the Customs Act and held as follows:

“25. Would the terms “restriction” and “regulation” used in Clause 1.5 of the Foreign Trade Policy include prohibition also, is one of the principal questions involved herein.

26. A citizen of India has a fundamental right to carry out the business of export, subject, of course to the reasonable restrictions which may be imposed by law. Such a reasonable restriction was imposed in terms of the 1992 Act.

27. The purport and object for which the 1992 Act was enacted was to make provision for the development and regulation of foreign trade inter alia by augmenting exports from India. While laying down a policy therefor, the Central Government, however, had been empowered to make provision for prohibiting, restricting or otherwise regulating export of goods.

28. Section 11 of the 1962 Act also provides for prohibition. When an order is issued under sub-

section (3) of Section 3 of the 1992 Act, the export of goods would be deemed to be prohibited also under

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Section 11 of the 1962 Act and in relation thereto the provisions thereof shall also apply.

29. Indisputably, the power under Section 3 of the 1992 Act is required to be exercised in the manner provided for under Section 5 of the 1992 Act. The Central Government in exercise of the said power announced its Foreign Trade Policy for the years 2004-2009. It also exercised its power of amendment by issuing the Notification dated 27-6-2006. Export of all commodities which were not earlier prohibited, therefore, was permissible till the said date.

30. The implementation of the said policy was to be made in terms of the procedures laid down in the Handbook. The provisions of the 1992 Act, the Foreign Trade Policy and the procedures laid down thereunder, thus, provide for a composite scheme. In implementing the said provisions of the scheme, in the event an order of prohibition, restriction or regulation is passed, the provisions of the 1962 Act mutatis mutandis would apply.”

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31. It is clear from the above that the Foreign Trade Act

provides for a composite scheme to the Central Government for

regulation of foreign trade and hence, wherever any prohibition,

restriction or regulation is imposed by the Central Government under the

Foreign Trade Act, the provisions of the Customs Act mutatis mutandis

will apply.

32. The learned Assistant Solicitor General brought to the

notice of this Court the judgment of the Apex Court in Union of India

and Others v. AGRICAS LLP and Others reported in 2020 SCC Online

SC 675. This was a case where the Union of India through a Notification

amended the existing policy and placed restriction on the import of

certain goods for a particular period. The Notification was issued by the

DGFT and the primary grounds that were raised in the Writ Petitions

were captured at paragraph 11 of the judgment and the same is extracted

hereunder:

“11. Several traders had thereafter filed Writ

Petitions before different High Courts challenging

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imposition of restrictions on import of Peas and

pulses and interim orders were passed staying the

notifications which had the effect of permitting

imports without any restriction as to quota or

licence. The primary grounds raised in the Writ

Petitions before the High Courts were:

(a) The impugned notifications issued by the DGFT

had the effect of modifying or amending the EXIM

policy as the specified items were withdrawn from

the free category and moved to restricted category.

But, the DGFT, a statutory authority under the

provisions of FTDR Act, was not authorised to

authenticate/issue an order amending or modifying

the EXIM policy as this power vests with the

Central Government in terms of sub-section (2) to

Section 3, read-with sub-section (3) to Section 6 of

the FTDR Act, which states that powers exercisable

under Section 3, 5, 15, 16 and 19 of the FTDR Act

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cannot be delegated to the DGFT or any other

officer subordinate to the Director General.

(b) Section 19(3) of the FTDR Act provides that

every rule or every order passed by the Central

Government shall be laid, as soon as may be after it

is made, before each House of the Parliament while

it is in session or thereafter. The impugned

notifications had not been laid before the Houses of

the Parliament.

(c) The Notifications and trade notices suffer from

the vires and defects mentioned by this Court

in Director General of Foreign Trade v. Kanak

Exports.1

(d) The notifications and the trade notices offend

the right to equality and violate Article 14 of the

Constitution.”

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33. The challenge to the authority of the DGFT to issue the

Notification was answered at paragraph 15 of the judgment and for

proper appreciation, the same is extracted hereunder:

“15. At the outset, we must record that the importers, and in our opinion rightly, have not raised the contention that the DGFT could not have notified the impugned notifications. The notifications themselves record that they were published by the Ministry of Commerce and Industry, Department of Commerce, Directorate General of Foreign Trade. The first paragraph of the notification states that they had been issued by the Central Government in exercise of powers conferred under Article 77 of the Constitution. Clearly, the notifications were issued by the Central Government, and not the DGFT that had performed the ministerial act of publication.

The decision to amend and issue the notification was of the Central Government. Neither Section 3(2) nor Section 6(3) of the FTDR Act was violated. This Court in Delhi

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International Airport Limitedv. International Lease Finance Corporation2, had referred to Articles 77 and 166 of the Constitution and held that the Constitution stipulates that whenever executive action is taken by way of an order or instrument it shall be expressed to be taken in the name of the President and Governor in whose name the executive power of the Union and the States, respectively, are vested. Article 77 does not provide for delegation of any power, albeit under sub- section (3) of Article 77, the President is to make Rules for more convenient transaction of business and allocation of same amongst Ministers. Under the Government of India (Transaction of Business) Rules, 1961, the government business is divided amongst Ministers and specific functions are allocated to different Ministries. The Director General of Foreign Trade is an ex officio Additional Secretary in the Government of India and is appointed by the Central Government under sub-section (1) to Section 6 of the FTDR Act to advise the Central Government in formulation ______________ Page No.50 of 66

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and carrying out the Foreign Trade Policy. Wherefore, even the website of the Ministry of Commerce and Industry, Department of Commerce, states that the DGFT is an agent of the Central Government and attached office to it. Further, clause (2) of Article 77 provides that validity of an order or instrument made or executed in the name of the President, authenticated in the manner specified in the Rules made by the President, shall not be called in question on the ground that it is not an order or an instrument made or executed by the President. Therefore, the contention of issuance of the impugned notification sans authority, cannot be sustained.”

34. The above finding of the Apex Court sufficiently covers

the first and second grounds that have already been answered by this

Court. The finding of the Apex Court only strengthens the conclusion

arrived at by this Court for the first and second issues.

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35. The Apex Court thereafter took up the effect of Sections

3 and 9A of the Foreign Trade Act and considered it in consonance with

the GATT 1994 obligations and the following findings were rendered:

“(v) Contention of the importers on Sections 3 and 9A of the FTDR Act and the response by the Union of India.

58. Before we go on the interpretation of respective sections, namely, Sections 3 and 9A of the FTDR Act, we would like to reproduce in brief the contentions of the importers. The importers submit that the FTDR Act was introduced and enacted for development and regulation of foreign trade by facilitating imports and augmenting exports from India and to make India competitive in conformity with GATT-1994 obligations. Section 3 of the FTDR Act reflects the said position and incorporates Article XI of the GATT-1994 which stipulates that there shall not be any provision or restrictions other than duty, taxes and other charges by any contracting party. Section 9A is almost a replica of Article XIX of the GATT-1994 and this is the only provision which confers power on the Central Government to impose ‘quantitative restrictions’ on imports. It, therefore, follows that unless the conditions of Section 9A of the FTDR Act are satisfied and the procedure prescribed under the Rules is followed, no ‘quantitative restrictions’ could have been imposed by the Union of India through the medium of the impugned notifications.

Section 9A is a special provision dealing with ‘quantitative restrictions’, whereas Section 3 is a general provision. The Union of India cannot take

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recourse to Section 3 when conditions of Section 9A are not satisfied and impose ‘quantitative restrictions’, otherwise, Section 9A would become redundant for the reason that Union of India could always impose ‘quantitative restrictions’ under the general power. This would be in conformity with the India's obligation under GATT-1994 and the domestic or municipal law must be construed in consonance with the GATT-1994 obligations.

59. For quantitative restrictions to be imposed under Section 9A of the 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. Further, as per the procedure prescribed by the Rules, the Appropriate Authority has to initiate proceedings, investigate, hear parties and adjudicate on the satisfaction of the conditions. In the present case, there has been no increase in imports as per the following table:

1 Apr - 31 Peas in Mar metric ton 2014-2015 19,51,973 2015-2016 22,45,390 2016-2017 31,02,75729 2017-2018 28,77,032 2018-2019 8,51,408 2019-2020 6,66,69630

60. ‘Quantitative restrictions’ were imposed in the financial year 2018-19. Further, the Union of India has themselves stated that there was serious injury to the domestic industry due to import of pulses and

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Peas. Our attention was drawn to paragraphs 5 and 9 of the written submissions filed by the Union of India, which read as under:

“5. It is submitted that the farmers are one of the most important stakeholders in matters related to import/export of agricultural goods and the Government is required to strike a balance between the interests of domestic producers and importers. Thus, whenever it is observed that large scale imports of an item is adversely impacting the interest of the domestic producers, due to fall in prices in the local market, the Government in consultation with stakeholders concerned, tries to uphold the interests of domestic producers through suitable measures like restriction on import quotas etc. XxxxXx

9. It is submitted that since domestic production of pulses/grams has been very good, therefore the Government has imposed restrictions on the import of peas. Yellow Peas which are largely imported to India are mainly grown in countries like Canada, Russia, Ukraine etc. Due to agro-climatic conditions of these countries they export peas in bulk. Therefore, price of Yellow Peas is lower in comparison to other imported/domestically available pulses, including Gram. It is to be noted that the end use of Gram is mainly flour, commonly known as “Besan”, used in preparations of Indian savouries. As per industry estimates, about 70% of the Gram produced is used in manufacture of Besan. It is informed that Yellow Peas are a near perfect substitute for Gram in the making of Besan.

As the price of imported Yellow Peas in India is

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cheaper than the domestic market price of Gram, a huge shift in industry usage from Gram to Yellow Peas had happened. Increased supply of Yellow Peas had taken away Gram demand, the resulting in fall in prices of Gram. Thus, despite large scale procurement of Gram under the PSS scheme in Rabi 2018 and 2019, prices of Gram continued to be below the MSP announced by the government.”

61. Thus, the Union of India themselves have accepted that the conditions of Section 9A had impelled then to issue the impugned notifications but they did not follow the procedure prescribed by the applicable Rules.

62. The Union of India, in their affidavit filed on 26th June 2020, have pleaded that they were required to strike a balance between the farmers and the importers as largescale imports would adversely impact the interests of the farmers due to fall in prices in the local market. Reference was made to the Minimum Support Price (MSP) for Moong, Urad and Toor dal and Gram fixed on the recommendation of the Commission for Agricultural Costs and Prices. Further, the Central Government under the schemes being run had procured 85 lakh MT of pulses directly from 53 lakh farmers by paying them MSP in the last five years. There was also increase in production of pulses from 25.42 Million MTs in 2017-18 to 26.66 Million MTs in 2020-21. Imported Yellow Peas are the perfect substitute for Gram in making of Besan which is primarily used in preparation of Indian savouries. As the price of imported Yellow Peas in India is cheaper than the domestic price of Gram, a huge shift in industry usage from Gram to

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Yellow Peas has taken place. In these circumstances that the government has imposed restrictions from April, 2018 onwards with a small window of annual quota for permitted imports. However, in view of the interim orders passed by the various High Courts, the actual imports of peas were to the tune of 8,51,408 MT and 6,52,607 MTs in 2018-2019 and 2019-2020 respectively, though the annual quota for these two years was 1/1.50 lakh MTs. The Government is presently holding a buffer stock of 26.94 lakh MT of Gram, against the target quantity of 3 lakh MTs. The Gram is being sold at Rs. 4,000 - 4,200 per quintal, which is below the MSP of Rs. 4,875/- per quintal. Imported CIF value of Yellow Peas is Rs. 2,028/- per quintal. Due to the pandemic, the farmers could be compelled to make panic disposal at much lower prices. In the further affidavit filed on 1st July 2020, the Union of India has stated that they had not issued any quota for Peas, Yellow Peas etc. as inspite of restricted quota of 1 lakh and 1.5 lakh MTs for Peas in the Financial Years 2018-19 and 2019-20, due to interim orders passed by the various High Courts, the actual import was 8.51 lakh MTs and 6.67 lakh MTs during the Financial Years 2018-19 and 2019-20, respectively. Consequently, it has been decided not to import Yellow Peas in the current Financial Year 2020-21. In the affidavit filed on 6th July 2020, with reference to Section 9A of the FTDR Act, the Union of India has stated that the said section is attracted only when the goods are imported into India in increased quantity and under such conditions as to cause or threaten to cause serious injury to domestic industry. Section 9A is enacted as a

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safeguard mechanism in terms of Article XIX of the GATT-1994 and Article II of the WTO Agreement on Safeguards vide the Amendment Act, 2010. The notifications under challenge have been issued within the express terms of Section 3 of the FTDR Act which permits the Central Government to impose restrictions without any qualification of the nature specified in Section 9A. Power of the Central Government to restrict imports to limited quantities under Section 3 and quantitative restrictions under Section 9A of the FTDR Act are completely distinct and have no connection or interplay. The power under Section 3(2) of the FTDR Act is of a wide amplitude. Reference is also made to Rule 5(2) to assert that there is necessity of evidence that the imports had increased as a result of ‘unforeseen developments’ in addition to the necessity for evidence disclosing serious injury or threat of serious injury to domestic industry and a causal link between imports and serious injury. The restrictions have been imposed not due to increased quantities of imports but to prevent panic disposal by farmers as the prices of Gram would come down. It is submitted that special provisions like 9A of the FTDR Act would be limited to areas within its scope leaving the general provision free to operate in other areas.

(vi) Discussion and interpretation of Sections 3 and 9A of the FTDR Act.

63. Section 3 of the FTDR Act, as enacted, had undergone amendments by addition of proviso to sub-section (2) and by insertion of sub-section (4) vide Act 25 of 2010 with effect from 25th August 2010. Sub-section (1) of Section 3 states that the

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Central Government may, by an Order published in the Official Gazette, make provision for the development and regulation of foreign trade by facilitating imports and increasing exports. It is a general provision which has no reference to GATT-1994. It authorises the Central Government to publish an order in the Official Gazette for development and regulation of foreign trade, i.e. imports and exports. Sub-section (2) states that the Central Government can, by an order in the Official Gazette, make a provision for prohibiting or restricting or otherwise regulating, in all or specified cases and subject to such exceptions, if any, the import or export of goods and after the amendment vide Act 25 of 2010, services or technology. Sub-section (2) to Section 3, therefore, authorises the Central Government to, by an Order published in the Official Gazette, make provisions restricting the imports or exports. Imposition of quantitative restrictions on imports or exports would clearly fall within sub-section (2) to Section 3 of the FTDR Act. We are not concerned with the proviso to sub-section (2) in the present case. Sub- section (3) to Section 3 states that where an order is passed under sub-section (2) whereby the import or export of goods is prohibited, restricted or otherwise regulated, the goods in question would be deemed to be prohibited goods under Section 11 of the Customs Act, 1962 and accordingly the provisions of the latter Act would apply.

64. Sub-section (4) to Section 9A of the FTDR Act introduced by Act 25 of 2010 with effect from 27th August 2010, requires some elucidation. The sub-section on one hand states that no permit or

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licence shall be necessary for imports or exports of goods, nor any goods shall be prohibited from import or export, except as may be required under the FTDR Act, or the rules or orders made thereunder. At the same time, by using the phrase ‘without prejudice to anything contained in any other law, rule, regulation, notification or order’, it protects the operation of the other law, rule, regulation, notification or order to the extent that they do not directly or indirectly deal with the permit or licence necessary for import or export of goods or prohibit import or export of goods. Operation of such law, rule, regulation, notification or order not dealing with the permit or licence necessary for import or export on a prohibition of import of goods is, therefore, protected and not overridden. Sub-section (4) to Section 3 therefore gives limited primacy to the FTDR Act, restricting it to the scope and subject matter of the FTDR Act, and not to override other laws. This is also clear from Section 18A of the FTDR Act which was also enacted and inserted by Act 25 of 2010 with effect from 27th August 2010 and reads as under:

“18A. Application of other laws not barred.- The provisions of this Act shall be in addition to, and not in derogation of, the provisions of any other law for the time being in force.”

65. The provisions of FTDR Act, therefore, are in addition to, and not in derogation of, the provisions of any other law for the time being in force. This would be the correct way to harmoniously read and interpret sub-section (4) to Section 3 and Section 18A of the FTDR Act. We may, at this stage, notice that the original amendment had used the phrase

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‘Notwithstanding anything contained in any other law, rule, regulation, notification or order’, but the Standing Committee had noticed the contradiction and also the object and purpose behind enacting sub-rule (4) and had recommended that the said expression should be replaced with the expression ‘Without prejudice to anything contained in any other law, rule, regulation, notification or order’. Sub-section (4) to Section 3 of the FTDR Act, therefore, in the context of import and exports or prohibition of imports or exports of goods states that no permit or licence shall be necessary or required except as may be required under the FTDR Act, rules or orders made thereunder. The expression ‘order’, as per clause (h) to Section (2) of the FTA means any Order made by the Central Government under Section 3. It is, therefore, clear to us that there is no violation of Section 3 of the FTDR Act in the issuance of the impugned notifications or orders, which are intra vires and not ultra vires.

66. We have already reproduced and quoted Article XI31 of the GATT-1994 and have to say that the same has not been statutorily made a subject of ‘act of transformation’ and incorporated in the domestic legislation, i.e. the FTDR Act. The FTDR Act does not legislate and transform Article XI of the GATT-1994. As noticed above, Section 3 of the FTDR Act empowers and authorises the Central Government, i.e. the Union of India to frame policy, rules or regulations for import or export of goods. The policy is framed under Section 5 of the Act, which reads as under:

“5. Foreign Trade Policy. - The Central

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Government may, from time to time, formulate and announce, by notification in the Official Gazette, the foreign trade policy and may also, in like manner, amend that policy:

Provided that the Central Government may direct that, in respect of the Special Economic Zones, the foreign trade policy shall apply to the goods, services and technology with such exceptions, modifications and adaptations, as may be specified by it by notification in the Official Gazette.”

67. Thus, the Central Government i.e. the Union of India has been given the necessary discretion and election with regard to framing of policies for import and export of goods, services and technology. Therefore, implementation of GATT-1994, including Article XI, is left to the Central Government by means of delegated legislation.

68. Clause (2) of Article XI of GATT-1994 states that provisions of paragraph (1) shall not extend to three specified situations as stated in sub-clauses

(a), (b) or (c). Clause (c) deals with import restrictions on any agricultural or fisheries product, imported in any form necessary for enforcement of governmental measures specified therein. Similarly, Article XII of GATT-1994 states that notwithstanding the provisions of paragraph (1) of Article XI, any contracting party, in order to safeguard its external financial position and its balance of payments, may restrict the quantity or value of merchandise permitted to be imported, subject to the provisions of paragraphs of that Article. Paragraph 23 (supra) lists a number of other provisions, which allow and permit

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exceptions. We have referred to these provisions to highlight that paragraph (1) to Article XI is not an absolute rule. It is subject to exceptions in the form of paragraph (2) to Article XI, Article XII and other provisions. Of course, the conditions specified the respective Articles have to be satisfied for a contracting party to be GATT-1994 compliant.

69. Reference to this position is necessary and required when we interpret Section 9A of the FTDR Act which we would accept incorporates into the domestic law Article XIX of GATT-1994, but neither Article XI and nor all exceptions by implication. Consequently, Section 9A for the FTDR Act, is to be understood an enabling provision empowering imposition of ‘quantitative restrictions’ after following the procedure in the situations referred to therein. However it does not limit and restrict the expans and power of the Central Government to prohibit, regulate or restrict imports of goods in terms of Section 3(2) of the FTDR Act. As a sequitur, it has to be held that notwithstanding Section 9A, the Central Government continues and has authority to impose quantitative restrictions by an order under Section 3(2) of the FTDR Act. Principle of Lex specialis derogat legi generali, therefore, is not applicable to the case in hand.”

36. On a careful reading of the above findings of the Apex

Court, it can be seen that the Central Government has been given very

wide powers under Section 3(2) of the Foreign Trade Act which includes

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the power to prohibit, restrict or otherwise regulate in all cases or in

specified classes of cases, import or export of goods. When any order is

passed by the Central Government under Section 3(2) of the Foreign

Trade Act, it shall be deemed to have been prohibited or restricted or

regulated under Section 11 of the Customs Act. The Customs Tariff Act

is nothing but an Act which provides for rates at which duties of customs

shall be levied under the Customs Act as specified in the First and

Second Schedules. This Act is not a stand-alone enactment and it goes

along with the Customs Act. Hence, any order passed by the Central

Government under Section 3(2) of the Foreign Trade Act must be

considered to be an exercise of a wide power conferred on the Central

Government and the provisions of the Customs Act and the Customs

Tariff Act mutatis mutandis will automatically apply. In other words, the

Central Government need not issue a separate Notification under the

Customs Act and the Customs Tariff Act in this regard. In view of the

same, the principle of lex specialis derogat legi generali will not have

any application to the case in hand. The third issue formulated by this

Court is answered accordingly.

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37. In the light of the above discussion, we do not find any

illegality in the issuance of the impugned Notification dated 04.06.2008.

The Notification is only an expression of a policy decision taken by the

Central Government and the DGFT was authenticated to issue the

Notification. We were informed that this policy decision continues and

by virtue of the subsequent Notifications, only the c.i.f. value was

increased. Consequently, we interfere with the findings of the learned

Single Judge and the common order passed in the batch of Writ

Petitions,dated 08.09.2008,is hereby set aside and all the Writ Petitions

stand dismissed.

38. In the result, all these Writ Appeals stand allowed and

considering the facts and circumstances of the case, there shall be no

order as to costs. Consequently, connected miscellaneous petitions are

closed.

[J.N.B.,J] & [N.A.V.,J] 28.10.2022 Index : Yes / No Internet : Yes PJL

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J.NISHA BANU, J. AND N.ANAND VENKATESH,J.

PJL

Pre-delivery Judgment made in

W.A(MD)Nos.396 to 406 of 2009

28.10.2022

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