Petition Nos
1483 1494 and 1544 of 1986 etc
Under Article 32 of the Constitution of India
Dr YS Chitale Satish Chandra PK Banerjee SN Kacker KC Agarawal SS Rathore LK Garg MKD Namboodiary PM Amin Ashok Grover Bulchandani MN Shroff PH Parekh and Sohail Dutt for the Petitioners
K Parasaran Attorney Genera1 G Ramaswamy Additional Solicitor General G Subramaniam AS Rao Ms Relan and PP Parmeshwaran for the Respondents
RS Nariman Indo Afghan Chamber of Commerce
Kapil Sibal Ms Raj Prakash Chemicals and Rajiv Dutta for the Interveners
The Judgment of the Court Was delivered by SABYASACHI MUKHARJI J
Writ Petition No 1483 Of 1986 is directed
against the Show Cause Notices dated 21st August 1986 11th September 1986 and 26th September 1986 issued to the petitioners MessrsD Navinchandra  Company a partnership firm and Dilip Kumar Dalpatlal Mehta a part ner of the said firm
In order to appreCiate this chal lenge it is necessary to refer to certain facts
This petition raises the question of the rights of the petition ers and 993 other diamond exporters who were entitled to export house certificates and additional licences under import policy of 1978 79 and who were granted the same pursuant to the judg ment and order of this Court dated 18th April1985
As we shall explain later there is no conflict With this decision of a Bench which consisted of a bench of three judges and the subsequent decisions of this Court which We
Shall presently refer
It is necessary also that in order to make out
a case the petitioners have sought to emphasise on the point that the decision dated 18th April 1985 was a deci sion of three learned Judges in Order to spin out a case of some sort of conflict with this decision and certain subse quent decisions of this Court consisting of benches of two  learned judges
It appears that the import policy issued by the Government of India for the year 1978 79 by paragraph 176 provided for additional licences
On 29th April 1979 the first petitioner a diamond exporters was refused Export House Certificate
The said
petitioner filed a writ petition before the High Court of Bombay
being Misc
peti tion No 12931979
By his order and judgment Pendse  J made the rule absolute holding that canalised items were not banned items and there was no reason why the first peti tioner should not be compel  led to approach the canalising agency for import of the same
On 7th April 1983 the Delhi High Court delivered a judgment in Civil writ Petition No 1501 of 1981 which for the sake of convenience the party has chosen to describe as Rajnikant Bros  Ors
case allow ing the diamond exporters the same and holding that merely Canalising an item could not be regarded as import of that item being absolutely banned
Against these judgments special leave petitions were filed in this Court Appeal was also filed on 27th March
1984 by the Import Control Authorities and Union of India against the judgment dated 11th November 1983 mentioned hereinbefore passed by Pendse J and the said appeal as dismissed on that date
Against the  same the Export Control authorities and Union of India filed special leave petition No 7190 Of 1984 in this Court
Similar special leave petitions were filed in this Court against similar judgments of the Bombay High Court
On 18th April 1985 by a common judgment the special leave
petitions were disposed of
As much has been made out of this judgment and order it is necessary to refer to the same
The matter was disposed of by the order in Civil Appeal No 1423 of 1984  by a bench consisting Fazal Ali J Varadarajan J and one of us Sabyasachi Mukharji J
It was held by the said order that there was no requirement of diversification of exports as a condition for the grant of Export 994 House Certificate in the Import Policy for 1978 79
There fore while confirming the High Court s judgment quashing the order impugned in the writ petitions in the High Court this Court directed the appellants namely Union of India and Import Control authorities to issue necessary Export House Certificates for the year 1978 79
It was further directed that Export House Certificates should be granted within three months from that date
The order stated that save and except items which are specifically banned under the preva lent import policy at the time of import the respondents shall be entitled to import all other items whether cana lised or otherwise in accordance with the relevant rules 
The appeals were disposed of accordingly with no order as to costs
Pursuant to the aforesaid order on 29th July 1985 import licence was issued it is claimed to the first petitioner
of the cif value of Rs7115900
Pursuant to the said import licence the first petitioner imported several consignments of items failing either under Appendix 3 List of Limited Permissible Items Appendix 2B List of Restricted Items or Appendix 5 Canalised Items
According to the petitioner in the matter of clearance of such con signments different standards were applied by the Custom authorities
On 18th October 1985 in special leave petition No 11843 of 1985 In the case of Raj Prakash Chemicals Ltd vs Union of India this Court directed that Acrylic Ester Mono mors would not be permitted to be cleared until further orders unless they had already been cleared
Similarly on 31st January 1986 interim order was passed in the case of Ms Indo Afghan Chambers of Commerce vs Union of India Writ Petition No 199 of 1986 directing that Dry Fruits in respect of which Custom clearance had been obtained till 30th January 1986 would be allowed to be cleared and no clearance of Dry fruits from 31st January 1986 onwards would be made by the Custom authorities until further or ders
On 5th March 1986 judgment was delivered in the case of Raj Prakash Chemicals Ltd and Another vs Union of India and Others by a bench consisting of three learned Judges Tulzapurkar J and two of us RS Pathak J as the Chief Justice then was and Sabyasachi Mukharji J
This Court held that additional licence holders were entitled to import items permissible to Export Houses under Import Policy 1978 79 excluding those items which fell in Appendix 3 List of Banned Items of the Import Policy 1985 88
This Court observed that diamond exporters who were granted Addi 995 tional Licences had formed a bona fide belief that they could import all the items accessible to them under Open General Licence under the Import Policy of 1978 79 except those placed in Appendix 2 Part A of the Banned List under the Import Policy 1985 88
This belief was formed on the basis of consistent orders of the High Courts and consistent manner in which Import Control authorities construed those orders
In view of such a belief it was further held by this Court in the interest of broad principles of justice equity and fair play and to avoid undeserved hardship without going to the legal technicalities that those diamond exporters who were granted Additional Licences under the Import Policy 1978 79 and had opened and established irrevo cable letters of credit before 18th October 1985 ie the date on which the interim order was passed by this Court in Raj Prakash s case as mentioned hereinbefore should be permitted notwithstanding the construction placed by this Court on the order dated 18th April 1985 of this Court to clear the goods imported or to be imported by them pursuant to such irrevocable letters of credit
In other words all imports effected pursuant to such letters of credit should be deemed to have been legally and properly made and should entail no adverse consequences whatsoever
This Court fur ther reiterated that the Court must be presumed to have given effect to law That presumption can be rebutted only upon evidence showing a clear intention to the contrary either expressly or by necessary implication
This Court noted that the order dated 18th April 1985 which we have set out hereinbefore used the expression specifically banned and the controversy before this Court in Raj Pra kash s case was on the meaning of the expression specifi cally banned  and the controversy between the parties cen tered round the meaning of the words specifically banned 
It was mentioned that Appendix 3 is the list of items which could not be imported by an Export House on additional licence it was a ban with reference to the category of importers
Appendix 4 is the list of items which could not be imported by anyone whosoever
This Court therefore was of the view that when regard is had to the Import Policy 1984 85 reference must necessarily be made to the corre sponding Appendix 3 formerly described as the List of Banned Items and now described as the List of Limited Per missible Items and Appendix 2 Part A which is now the list of Banned Items replacing Appendix 4 List of Absolutely Banned Items
In other words said the Court the Addition al Licences to be issued to diamond exporters entitled them to import items permissible to Export Houses under such licence under the Import Policy 1978 79 excluding those items which fell within Appendices 3 and 4 of the Import Policy 1978 79 and also excluding items which fell in Appen dix 3 and Appendix 2 Part A of the Import This Court was of the view that this is the meaning which must be given to the terms of the order dated 18th April 1985
This Court noted that when this Court made the previous order on 18th April 1985 when the Import Policy of 1985 88 was in force
there were only two items which were absolutely banned
and these were animal tallow and animal cannot
That was also Substantially the position under the Import Policy 1984 85
This Court was of the view that in the Import Policies of 1984 85 and 1985 88 the items open to import under Open General Licence were then set forth when Raj Prakash s judgment was delivered ie in Appendix 6
A perusal of Part I1 of List 8 in Appendix 6 indicated that it enumerated in fairly long detail the items allowed to be imported by the Export Houses holding Additional Licences for sale of those items to eligible Actual Users Industrial subject to Actual User conditions
That was the entitlement of the holder of an Additional Licence under paragraph 2654 of the Import Policy 1985 88
It is necessary to set out in detail the aforesaid judgment and also to refer to the order of 18th April
1985 to emphasise that whether non canalised items could be imported directly
and not through canalised agency was not in issue in either of these two cases
nor decided or adju dicated upon
In the judgment in Raj Prakash s case supra it was held that Additional Licence holders were entitled to import items permissible to Export Houses under the Import Policy 1978 79 excluding those items which fell in Appendix 3 list of banned items of the Import Policy 1985 88
On 17th March 1986 letter was written by the Joint Chief Controller of Imports to Messrs B Vijay Kumar and Co stating that against Additional Licences issued in terms of this Court s Order dated 18th April 1985 import of items permissible against Additional Licences in terms of Policy for 1978 79 would be allowed even if such items were in the list of canalised items in Policy for 1978 79
On 3rd April 1986 there was a meeting with Member of CBEC and Principal Collector where the minutes recorded that items which were under OGL during 1978 79 and subse quently canalised in Policy for 1985 88 would be allowed to be imported
On 23rd April 1986 a circular was issued from the Under Secretary to the Government of India to port authorities stating that canalised items 997 were not covered within the purview of this Court s decision in Raj Prakash s case and Additional Licence holders would be allowed to import canalised item
By a letter on 1415th May 1986 from Principal Collector to Chairman Western Region Federation of Indian Export Organisation the matter had been clarified and clearance of canalised items against Additional Licences was unconditionally allowed
This Court again dealt with the question in the case of Ms Indo Afghan Chambers of Commerce and Another etc
vs Union of India and Other etc 1986 3 SCC 352
In that decision two of us RS Pathak J as the learned Chief Justice then was and Sabyasachi Mukharji J were parties
It was held that under the import policy of 1978 79 dry fruits exclud ing cashewnuts could be imported by all persons under the Open General Licence
There was no need to obtain any Addi tional Licence for importing items in the year 1978 79 and therefore the wrongful denial of Additional Licences to diamond exporters in the year 1978 79 could not justify any restitution subsequently in regard to the import of dry fruits other than cashewnuts
It was further observed that under the Import Policy 1985 88 dry fruits excluding cashewnuts and dates were no longer open to import under the Open General Licence
The sanction for importing them must be found under some other provision of the Import Policy
The diamond exporters it was held  could not be regarded as dealers engaged in the trade of stocking and selling dry fruits excluding cashewnuts and dates
They were therefore not entitled to the advantage of paragraph 181 3 of the Import Policy 1985 88
Dry fruits it was further held must be regarded as consumer goods of agricul tural origin
The words agricultural origin in Item 121 of Appendix 2 Part B are used in the broadest sense
The words consumer goods  in item 121 referred to dry fruits imported for supply to Actual Users Industrial
It was further held that dry fruits do not appear in Appendix 3 Part A and 5 nor can be imported under the Open General Licence under the Import Policy 1985 88 Inasmuch as they fail within Item 121 of Appendix 2 part B they are excluded from the scope of Item 1 of Appendix 6 and cannot be imported as raw materi als and consumables for sale to Actual Users Industrial
Appendix 2 Part B List of Restricted Items was also suc cessor of Appendix 4 List of Absolutely Banned Items under the Import Policy 1978 79
This Court reiterated and it was important to emphasise that On the reasoning which found favour with this Court in Raj Prakash s case it must be held that diamond exporters holding Additional Licences were not entitled to import goods enumerated in Appendix 2 Part B of the Import Policy 1985 88
As held in that case holders of Additional Licences were 998 entitled to import only those goods which were included in Appendix 6 Part 2 List 8 of the Import Policy 1985 88
Dry fruits were not included in that list and therefore they could not be imported under Additional Licences
It is stated that on 20th May 1986 there was an order of adjudication in respect of one consignment of the first petitioner in this case ie Messrs D Navinchandra  Co of items falling in Appendix 2B List of Restricted Items  10 Bills of Entry imposing fine aggregating to Rs45000
Then on 21st August 1986 a show cause notice was issued to the first petitioner in this petition in respect of consign ment falling in Appendix 5 Canalised Items of the Policy for 1985 88
Reply was duly given on 9th September 1986 and a show cause notice was issued on 11th September 1986 to the first petitioner in respect of one consignment falling in Appendix 2B List of Restricted Items of Policy for 1985 88
In the meantime this Court had occasion to examine some passage of this decision
This question was examined and it is necessary to refer to the said two subsequent decisions of this Court
The first one is the decision in Union of India vs Godrej Soaps Pvt Ltd and Another  and the second one is the decision in Ms Star Diamond Co India vs Union of India and Others  It is neces sary first to refer to Godrej Soaps  case
It was held that a diamond exporter could import the items he was entitled to import under the Import Policy 1978 79 provided they were importable also under the Import Policy ruling at the time of import
These are items which are open to import by an Export House holding an Additional Licence for sale to eligible Actual Users Industrial
These are items which could be directly imported for example the items enumerat ed in Part 2 of List 8 of Appendix VI of the Import Policy 1985 88
These are items which are not canalised  Cana lised  items are those items which are ordinarily open to import only through a public sector agency
There is howev er nothing to prevent an Import Policy from providing in the future that an Export House holding an Additional Li cence can directly import certain canalised items also
In that event an Export House holding an Additional Licence would be entitled to import items whether canalised or otherwise meaning thereby items open ordinarily to direct import non canalised items as well as items directly importable although on the canalised list
It is in that sense that the Court had intended to define the entitlement of a diamond exporter by using the words whether canalised or otherwise in its order dated 18th April 1985
999 In that case this Court found that in respect of Palm Kernel Fatty Acid which was a canalised item listed as Item 9v in Appendix V Part B of the Import Policy 1985 88 there is no provision in that policy which permitted the import of such item by an Export House holding an Additional Licence
Therefore both on grounds of equity and construc tion the claim of the diamond exporters or as in that case a purchaser from the diamond exporter was held to be not maintainable
As importation of canalised items this Court reiterated directly by holders of additional licences was banned it should not be construed to have been permit ted by virtue of the order of this Court and the items sought to be imported do not come within List 8 of Part 2 of Appendix 6 of the Import Policy of 1985 88 against addition al licences
It was found that the goods were purchased by the respondents in that case after they were aware of the position of law as enunciated in Raj Prakash s case as well as Indo Afghan Chambers of Commerce s case
No question of any restitution of rights therefore arose
Goods in ques tion being specially banned goods these could not be im ported under Item I of Appendix 6 Import of items under Open General Licence of Import Policy 1985 88 more so the import being not by the Actual User Industrial but by somebody else from whom the respondent purchased the goods
This position was reiterated in the case of Ms Star Diamond Co India vs Union of India and others supra
This Court further reiterated that a decision of this Court is binding on all
To complete the narration of events reply was given by the first petitioner to the show cause notice dated 11th September 1986 on 18th September 1986
On 26th September 1986 another show cause notice was issued to the Petitioner in respect of another consignment falling in Appendix 2B List of Restricted Items of Policy for 1985 88
Personal hearing was given to the first peti tioner thereafter
The petitioner moved this Court under Article 32 of the Constitution for quashing the show cause notices dated 21st August 1986 11th September 1986 and 26th September 1986 and the order of adjudication dated 20th May 1986 and for consequential relief
We are however unable to find any merit in this appli cation either in law or in equity
1000 One of the points on which an argument was sought to be built up was that the Bench of two judges of this Court in the subsequent decisions had cut down the effect of the decision of this Court dated 18th April 1985 in the case of Union of India vs Rajnikant Bros
It has been stated that in subsequent decisions referred to hereinbefore this Court had deviated and indeed differed from the view expressed in that case
It was urged that in Rajnikant Bros case a bench of three judges categorically stated that the respondents would be entitled to import all other items whether cana lised or otherwise except those which were specifically banned under the prevalent import policy at the time of import with the relevant rules
In our opinion the subse quent decisions referred to hereinbefore do not take any different or contrary view
Indeed it gives effect to the letter and spirit of the said decision
It has to be borne in mind that the basic background under which the Rajni kant s decision was rendered the Export Houses had been refused Export House Certificates because it was insisted that they should have diversified their export and that was a condition for the grant or entitlement of an export house certificate
It was found and it is common ground now that that was wrong
Therefore the wrong was undone
Those who had been denied Export House Certificates on that wrong ground were put back to the position as far as it could be if that wrong had not been done
To do so the Custom au thorities and Govt
authorities were directed to issue necessary Export House certificates for the year 1978 79 though the order was passed in April 1985
This was a measure of restitution but tile Court while doing so ensured that nothing illegal was done
It is a presumption of law that the courts act lawfully and will not ask any authority to do anything which is illegal
Therefore the court directed that except those which were 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 not canalised in accordance with the relevant rules
Analysing the said order it is apparent 1 that the importation that was permissible was of goods which were not specifically banned 2 such ban ning must be under the prevalent import policy at the time of import and 3 whether items which were canalised or un canalised would be imported in accordance _with the relevant rules
These conditions had to be fulfilled
The court never did and could not have said that canalised items could be imported in any manner not permitted nor it could have given a go bye to canalisation policy
It must be emphasised that in the case of Raj Prakash supra this position has been explained by saying that only such items could 1001 be imported by diamond exporters under the Additional Li cences granted to them as could have been imported under the Import Policy of 1978 79
the period during which the dia mond exporters had applied for Export House Certificates and had been wrongly refused and were also importable under the import policy prevailing at the time of import which in the present case would be during the import policy of 1985 88
These were the items which had not been specifically banned  under the prevalent import policy
The items had to pass to two tests
firstly they should have been importable under the import policy 1978 79 and secondly they should also have been importable under the import policy 1985 88 in terms of the Order dated 18th April
1985 and if one may add
in such terms in accordance with the import rules  whether canalised or not canalised
It must be emphasised that in this case also
the CoUrt had no occasion to consid er the significance of the words whether canalised or otherwise  mentioned in the Order dated 18th April
1985 because that point did not arise in the case before it
What did the court then intend by these words used by the court We have seen that diamond exporters could import the items which they were entitled to import under the Import Policy 1978 79 provided they were importable also under the import policy ruling at the time of import
These are items which were open to import by Export Houses holding Additional Licences for sale to the Actual Users Industrial
These are items which were directly imported for example items in Part 2 List 8 of Appendix 6 of Import Policy 1985 88
These are items which are not canalised
Canalised items are those items which are ordinarily open to import only through a public sector agency
Although generally these are import able through public sector agencies it is permissible for any import policy to provide an exception to the rule and to declare that an importer might import a canalised item directly
It is in that sense and that sense only that the Court could have intended to define the entitlement of diamond exporters
They would be entitled to import items which were canalised or not if the import policy prevailing at the time of import permitted them to import items falling under such category
This was also viewed in that light in the case of Indo Afghan Chambers of Commerce supra
It must be emphasised that in the Order dated 18th April 1985 this Court did not do away with canalisation
That was not the issue before this Court
The expression whether canalised or not canalised  was to include both
This Court did not say that canalised items could be import ed directly by the importers ignoring the canalisation process
We are of the opinion that this Court did not say that canalisation 1002 could be ignored
That was not the issue
High public poli cy it must be emphasised is involved in the scheme of canalisation
This purpose of canalisation was examined by this Court in Daruka  Co vs Union of India  Ors  where the Constitution Bench of this Court ob served that the policies of imports or exports were fash ioned not only with reference to internal or international trade but also on monetary policy the development of agriculture and industries and even on the political poli cies of the country and rival theories and views may be held on such policies
If the Government decided an economic policy that import or export should be by a selected channel or through selected agencies the court would proceed on the assumption that the decision was in the interest of the general public unless the contrary was shown
Therefore it could not be collaterally altered in the manner suggested
The policy of canalisation which is a matter of policy of the Government was not given a go bye by the observations referred to in the Order of 18th April 1985
Indeed it is possible to read the Order in a manner consistent with canalisation scheme in the way we have indicated
If that is so then it should be so read
When this Court observed that the fact whether items were sought to be imported by diamond merchants were canalised would not be an impediment to the import directly by them the Court meant to say that this could be imported directly by them through the canalisation organisation
The need for canalisation stands on public policy and that need cannot be lightly or inferencially given a go bye
It should not be presumed that collaterally the court had done away with the system of canalisation based on sound public policy
We have found nothing in the different authorities on this subject which militate against the above views
Therefore the action taken by the Custom authorities in issuing adjudication notice and pro ceeding in the manner they did we are of the opinion that they have not acted illegally or without jurisdiction
This must proceed in accordance with law as laid down by this Court which in our opinion is clear enough
The fact that in subsequent decision the petitioner is not a party is not relevant
Generally legal positions laid down by the court would be binding on all concerned even though Some of them have not been made parties nor were served nor any notice of such proceedings given
As held in Star Diamond s case supra the meaning of the expression whether canalised or otherwise used by this Court in Rajnikant Bros  case as explained in Godrej Soaps Pvt Ltd case and reiterated and followed in the present case is applicable to the present petitioner
1003 We see no substance in the submission made in the peti tion and reiterated before us in this Court for a reconsid eration of this question by a larger Bench
In the aforesaid view of the matter we are unable to sustain the grounds urged in support of this petition
We are therefore of the opinion that proceedings must go in accordance with law
The government s understanding of the matter at one point of time is irrelevant
There are several applications for impleadment
These are allowed and they are impleaded
Their statements are taken on record
Before parting with this case certain factors must be noted
The diamond exporters and dry fruit exporters have their full round in this Court
Speaking entirely for my self my conscience protests to me that when thousands remediless wrongs await in the queue for this Court s inter vention and solution for justice the petitions at the behest of diamond exporters and dry fruit exporters where large sums are involved should be admitted and disposed of by this Court at such a quick speed
Neither justice nor equity nor good conscience deserves these applications to be filed or entertained
There is no equity of restitution against the law declared categorically and repeatedly by this Court and no principle of estoppel involved in these applications
The Writ petition is dismissed and in the facts and circumstances of this case we direct that the petitioner must pay cost of this application
It has been prayed that clear cut date must be fixed where contracts had been entered into and in which letters of credit prior to 15th April 1986 have been entered into there should be no prosecution
It has been further prayed that where however contracts have been entered into but no letters of credit have been opened such parties should not be penalised in the facts and circumstances of the case
No direction is necessary by this Court on this aspect
The authorities concerned will decide the same in taking into consideration all the facts and circumstances and taking into consideration the case of the petitioners and the alleged claim of bona fide on their part
A submission was made on the principle of promissory estoppel and reliance was placed on the several observations of several cases including the case in Union of India and Others etc
vs Godfrey Philips India Ltd etc
  It is true that the doctrine of 1004 promissory estoppel is applicable against the Government in the exercise of its government public or executive func tions and the doctrine of executive necessity or freedom of future executive action cannot be invoked to defeat the applicability of the doctrine of promissory estoppel
But in this case no such case of promissory estoppel has been made out
The intervention applications filed in this connection are allowed and the submissions contrary to what we had stated hereinbefore are rejected
As the points involved in Writ Petition No 1494 of 1986 are same this is also dismissed with costs
Interim orders if any are vacated forthwith
The proceedings will proceed as expeditiously as possible in accordance with law
For the same reasons Writ Petition No 1544 of 1986 is also dis missed with costs with the same observations
HLC Petition dis missed


Summary:
By a common order dated April 18 1985 in CA No 1423 of 1984 etc Union of India vs Rajnikant Bros the Court had directed issue of Export House Certificates and Addi tional Licences to the petitioners and other diamond export ers under the Import Policy 1978 79 stating Save and except items which are specifically banned under the preva lent Import Policy at the time of import the respondents shall be entitled to import all other items whether cana lised or otherwise in accordance with the relevant rules
The petitioners who were issued Additional Licences pursu ant to this order imported several consignments of items falling under Appendices 2B 3 and 5 of Import Policy 1985 88 and while clearing them the Customs Authorities imposed a fine of Rs45000 in respect of certain items failing in Appendix 2B and issued show cause notices in respect of certain other items failing in Appendices 2B and 5
The petitioners challenge was directed not only against these orders but extended to certain subsequent decisions of the Court which according to them had cut down the effect of the Court s earlier order dated April 18 1985 in Union of India vs Rajnikant Bros Dismissing the petitions HELD The decisions rendered subsequent to the decision dated April 18 1985 in Union of India vs Rajnikant Bros do not take any different or contrary view
Indeed they give effect to the letter and spirit of that decision
The basic background in which the decision in Union of India vs Rajni kant Bros was rendered was that Export Houses had been refused Export House Certificates on the ground that they had not diversified their exports
It was found that was wrong
The wrong was undone by directing issue of Export House Certificates for 990 the year 1978 79 though the order was passed in April 1985
That was a measure of restitution but the Court while doing so ensured that nothing illegal was done
It is a presumption of law that the courts act lawfully and will not ask any authority to do anything which is illegal
It was directed that except those items which were specifically banned under the prevalent import policy at the time of import the respondents therein were entitled to import all other items whether canalised or not canalised in accordance with the relevant rules
Analysing the said order it is apparent 1 that the importation that was permissible was of goods which were not specifically banned 2 that such banning must be under the prevalent import policy at the time of import
and 3 whether items which were canalised or uncanalised would be imported in accordance with the relevant rules
These conditions had to be fulfilled
The court never did and could not have said that canalised items could be imported in any manner not permitted nor it could have given a go bye to the canalisation policy
1000C H ii
In Raj Prakash Chemicals vs Union of India it was explained that only such items could be imported by diamond exporters under the Additional Licences granted to them as could have been imported under the Import Policy 1978 79 and were also importable under the Import Policy prevailing at the time of import
These were the items which had not been specifically banned  under the prevalent Import Policy
The items had to pass through two tests firstly they should have been importable under the Import Policy 1978 79 and secondly they should also have been importable under the Import Policy 1985 88 in terms of the Order dated 18th April 1985 and if one may add in such terms in accordance with the import rules  whether cana lised or not canalised
The Court had no occasion to consid er in that case the significance of the words whether canalised or otherwise  mentioned in the Order dated 18th April 1985 in Union of India vs Rajnikant Bros because that point did not arise there
1000H 1001A D iii What did the court then intend by the words whet her canalised or otherwise  used in the order dated 18th April 1985 in Union of India vs Rajnikant Bros The diamond exporters could import the items which they were entitled to import under the Import Policy 1978 79 provided they were importable also under the Import Policy ruling at the time of import
These are items which were open to import by Export Houses holding Additional Licences for Sale to the Actual Users Industrial
These are items which were di rectly imported for example items in Part II List 8 of Appendix 6 of Import Policy 1985 88
These are items which are not canalised
Canalised items are those 991 items which are ordinarily open to import only through a public sector agency
Although generally these are import able through public sector agencies it is permissible for any Import Policy to provide an exception to the rule and to declare that an importer might import a canalised item directly
It is in that sense and that sense only that the Court could have intended to define the entitlement of diamond exporters
They would be entitled to import items which were canalised or not if the Import Policy prevailing at the time of import permitted them to import items failing under such category
1001D G iv In the Order dated 18th April 1985 in Union of India vs Rajnikant Bros this Court did not do away with canalisation
That was not the issue before this Court
This expression whether canalised or not canalised  was to include both
This Court did not say that canalised items could be imported directly by the importers ignoring the canalisation process
High public policy it must be empha sised is involved in the scheme of canalisation
This purpose of canalisation was examined bythis Court in Daruka of this Court observed that the policies of imports or exports were fashioned not only with reference to internal or international trade but also on monetary policy the development of agriculture and industries and even on the political policies of the country and rival theories and views may be held on such policies
If the Government decid ed an economic policy that import or export should be by a selected channel or through selected agencies the court would proceed on the assumption that the decision was in the interest of the general public unless the contrary was shown
Therefore it could not be collaterally altered in the manner suggested
The policy of canalisation which is a matter of policy of the Government was not given a go bye by the observations referred to in the Order of 18th April 1985
Indeed it is possible to read the Order in a manner consistent with canalisation scheme in the way we have indicated
If that is so then it should be so read
When this Court observed that the fact whether items were sought to be imported by diamond merchants were canalised would not be an impediment to the import directly by them the Court meant to say that this could be imported directly by them through the canalisation organisation
The need for canalisation stands on public policy and that need cannot be lightly or inferentially given a go bye
It should not be presumed that collaterally the court had done away with the system of canalisation based on sound public policy
We have found nothing in the different authorities on this subject which militate against the above views
Therefore the action taken by the Customs Authorities in issuing adjudica tion notice and proceeding in 992 the manner they did we are of the opinion that they have not acted illegally or without jurisdiction
This must proceed in accordance with law as laid down by this Court which in
our opinion is clear enough
The fact that in subsequent decision the petitioner is not a party is not relevant
Generally legal positions laid down by the court would be binding on all concerned even though some of them have not been made parties nor were served nor any notice of such proceedings given
1001H 1002A G Union of India vs Rajnikant Bros CA No 1423 of 1984 decided on April 18 1985 Raj Prakash Chemicals Ltd  Anr
vs Union of India  Ors
  Ms Indo Afghan Chambers of Commerce Anr etc
vs Union of India  Ors etc 1986 3 SCC 352 Union of India vs Godrej Soaps Pvt Ltd Anr   and Ms Star Diamond Co India vs Union of India  Ors 1986 4 SCC 246 discussed explained and reiterated
Daruka  Co vs Union of India  Ors   referred to