IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE ANTONY DOMINIC TUESDAY, THE 20TH DECEMBER 2011 / 29TH AGRAHAYANA 1933 WP(C).No. 23646 of 2011(E) -------------------------- PETITIONER(S): --------------- SYNTHITE INDUSTRIES LTD., HAVING REGISTERED OFFICE AT 39/2031, AJAY VIHAR, M.G.ROAD, COCHIN, PIN - 682016, REPRESENTED BY ITS DIRECTOR, SRI.GEORGE PAUL, S/O.LATE SRI.E.J.PAULOSE, AGED 61 YEARS, RESIDING AT EMBASSERY HOUSE, BANERJI ROAD, COCHIN - 682 018. BY ADV. SRI.M.R.HARIRAJ SRI.SURAJ.S SRI.P.A.KUMARAN SMT.VINEETHA B. SRI.NIRMAL V NAIR SRI.ANISH JAIN RESPONDENT(S): --------------- 1. UNION OF INDIA, REPRESENTED BY THE SECRETARY TO GOVERNMENT OF INDIA, MINISTRY OF ENVIRONMENT AND FORESTS, PARYAVARAN BHAVAN, NEW DELHI - 110003. 2. SECRETARY, MINISTRY OF COMMERCE AND INDUSTRY, NEW DELHI - 110003. 3. DIRECTOR GENERAL OF FOREIGN TRADE, UDYOG BHAVAN, NEW DELHI - 110011. 4. CITES MANAGEMENT AUTHORITY, PARYAVARAN BHAVAN, MINISTRY OF ENVIRONMENT AND FORESTS, NEW DELHI - 110003. ADV. SRI.P.PARAMESWARAN NAIR,ASG OF INDIA THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 16/12/2011, THE COURT ON 20/12/2011 DELIVERED THE FOLLOWING: WPC NO.23646/11 APPENDIX PETITIONER'S EXHIBITS EXT.P1A TRUE COPY OF THE ORDER NO.5/2/2011-SU (VOL.VI) DATED 7.3.2006 ISSUED BY THE FIRST RESPONDENT. EXT.P2A TRUE COPY OF THE NOTIFICATION NO.94(RE-2005/ 2004-2009 DATED 27.3.2006 ISSUED BY THE SECOND RESPONDENT. EXT.P3A TRUE COPY OF THE LETTER NO.6.5.2003/2006/RS WOOD/SIC/1800 DAED 19.5.2006 ISSUED BY THE ANDHRA PRADESH FOREST DEVELOPMENT LTD. EXT.P4A TRUE COPY OF THE APPLICATION DATED 9.7.2009 SUBMITTED BY THE APPLICANT BEFORE THE 3RD RESPONDENT. EXT.P5A TRUE COPY OF THE LETTER NO.10-16/WCCB/2008 DATED 1.4.2008 BY THE IST RESPONDENT. EXT.P6A TRUE COPY OF THE APPLICATION FOR EXPORT LICENSE DATED 28.4.2010. EXT.P7A TRUE COPY OF THE REPRESENTATION BY THE PETITIONER DATED 6.9.2010. EXT.P8A TRUE COPY OF THE REPRESENTATION BY THE PETITIONER TO THE MINISTER OF ENVIRONMENT AND FOREST DATED 1.12.2010. EXT.P9A TRUE COPY OF THE OFFICE MEMORANDUM OF OM.NO. 4-11/2007 WL-I (PT) BY THE IST RESPONDENT TO THE PETITIONER DATED 11.2.2011. EXT.P10 A TRUE COPY OF THE OFFICE MEMORANDUM BY THE 4TH RESPONDENT COMMUNICATED BY OM NO.4-11/2007 WL-I (PT) TO THE PETITIONER DATED 31.1.2011. EXT.P11 A TRUE COPY OF THE LETTER SENT BY THE PETITIONER POINTING OUT CERTAIN ERRORS IN THE MINUTES BY LETTER DATED 4.2.2011. EXT.P12 A TRUE COPY OF THE ORDER NO.01/91/110/71/AM 10/EC/336 DATED 5.5.2011 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER. //TRUE COPY// P.A. TO JUDGE Rp ANTONY DOMINIC, J. ================ W.P.(C) NO. 23646 OF 2011 ===================== Dated this the 20th day of December, 2011 J U D G M E N T Petitioner is a company incorporated under the provisions of the Companies Act. A substantial quantity of Red Sanders Wood was available with the Forest Department of State of Andhra Pradesh. On being authorised by the Forest Department, the Andhra Pradesh Forest Development Corporation Ltd., invited tenders for its disposal and tender for 354.98 MT of Red Sanders Wood was settled in favour of the petitioner. The remaining quantity tendered was settled in favour of two firms from Japan and Singapore. As per the Import Trade Control (HS) Classification of Export and Import Items, the export of Red Sanders in log form was prohibited. Therefore, the Principal Secretary to the Department of Environment, Forest, Science and Technology of Government of Andhra Pradesh requested for one time exemption from the Ministry of Environment and Forests, Government of India. Accordingly, Government of India issued Ext.P1 order dated 7th of March, 2006 granting one time exemption from the prohibition of export of Red Sanders in log WPC No.23646/11 :2 : form and permitting sale of 885.14 MTs to the aforesaid foreign buyers. However in so far as the remaining quantity of 354.98 MTs, settled in favour of the petitioner is concerned, in Ext.P1, it was stated thus:- “1. In order to protect the interest of local value addition and preferential treatment of local buyers, the State Government of Andhra Pradesh must allow the rest of the 354.98 MT of Red Sanders Wood to M/s Synthite Industrial Chemical Ltd., Ernakulam wherever they participated in the tender for the manufacture of value added products but at the highest bid value only in the first instance. The said firm will not be allowed to export these Red Sanders Wood in log form and they will have to take the necessary licence for export of value added products from the Government of India as per the rules and procedures under the EXIM Policy. 2. The remaining quantity of 885.14 metric tons of Red Sanders Wood may be allowed by the State Government for export in the log form to the respective highest bidder only in each case as per tender. There must not be any intermediary or middle men and the entire disposal of the material must be under the proper and strict supervision of the officers of the Forest Department only. 2. Subsequently, on 27th of March, 2006, Government of India issued Ext.P2 public notice, wherein it was specified thus:- WPC No.23646/11 :3 : “(iv) 354.98 MT of Red Sanders Wood in log form shall be allowed to M/s.Synthite Industrial Chemical Ltd., Ernakulam wherever they participated in the tender for manufacture of value added products, export of which shall be allowed only as per Foreign Trade Policy.” 3. Accordingly, the Andhra Pradesh Forest Development Corporation Limited, which was appointed by the Government of Andhra Pradesh as its agent for the disposal of the Red Sanders Wood, sold 354.98 MTs to the petitioner. 4. As provided in Exts.P1 and P2, petitioner made extract of Red Sanders Wood, a value added product. According to the petitioner, over the years they were granted export licences and nearly 45000 Kgs of Red Sanders extract with nearly 300% value addition was exported to different countries. It is stated that, 23,272 kgs of Red Sanders extract is still available with the petitioner. 5. While so, on obtaining export order for 11,167 kgs of Red Sanders extract from various countries, petitioner submitted Ext.P4 application for export licence. Ext.P6 is yet another application made by the petitioner seeking export licence for the export of 12,105 kgs. Response was not forthcoming and WPC No.23646/11 :4 : therefore the petitioner made Ext.P7 representation to the 3rd respondent requesting for expeditious orders on their applications. Meanwhile, the petitioner came to know that their applications were forwarded to the 1st respondent and thereupon, they made Ext.P8 representation to the Minister for Environment and Forests, Government of India. 6. At that stage, petitioner received Ext.P9 communication requiring them to appear before the 4th respondent for a hearing in the matter. Accordingly, petitioner's representative appeared before the 4th respondent and was heard on 21/1/11. Subsequently, Ext.P10 office memorandum was issued by the 1st respondent enclosing Ext.P10 proceedings of hearing, which also contained the decision of the 4th respondent on Exts.P4 and P6 applications made by the petitioner. In Ext.P10, it was stated interalia that the export of extract of Red Sanders could not be allowed without a Non-Detriment Findings (NDF) study as per provisions of CITES and that the Ministry has commissioned a study on NDF to be carried out by the Institute of Forest Genetics and Tree Breeding, Coimbatore, which was to be completed in a time period of one year and that based on the findings of the study, it would be decided as to how to regulate WPC No.23646/11 :5 : the export of Red Sanders and its derivatives. 7. The relevant portion of Ext.P10 reads as under:- “Decision of CITES Management Authority After hearing the statement, ADG (WL) and CITES Management Authority (MA) informed that the export of extract of Red Sanders could not be allowed without a Non-Detriment Findings (NDF) study as per provisions of CITES. The CITES MA, India, pointed out that Pterocarpus santalinus is listed in Appendix II of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) and is covered under Annotation #7 of the CITES which regulates trade in logs, wood-chips, powder and extracts. He informed that the Ministry has commissioned a study on Non- Detriment Findings (NDF) as per the requirements for export of this Appendix II species, to be carried out by the Institute of Forest Genetics and Tree Breeding (IFGTB), Coimbatore. The study would be completed in a time period of one year and based on the findings of the study, it would be decided as to how to regulate the export of Red Sanders and its derivatives, i.e. whether export should be allowed or not, and if yes the limits on quantity to be exported. The MA clarified that before the findings of the study are available, the permission for the export of red sanders products and its derivatives cannot be given. The CITES MA also directed that NDF study by WPC No.23646/11 :6 : IFGTB, Coimbatore should be regularly and scrupulously reviewed by DIG (WL) so that it is completed in time, and consequently, the Ministry can take informed decisions of long term consequence rather than taking ad-hoc decision on the trade of the Red Sanders wood, derivatives and products. Further, when requested by Mr.George Paul, M/s Synthite Industries Ltd, for export of the Red Sanders extract as a blend with other dyes and colors, it was clarified by CITES-MA that even in such cases the provisions of CITES appendix II would apply and, therefore, cannot be agreed to without mandatory NDF studies.” 8. Based on Ext.P10, the 3rd respondent issued Ext.P12 communication rejecting Exts.P4 and P6 applications made by the petitioner. The relevant portion of Ext.P12 reads as under:- 2. Your aforesaid request was considered in the EFC Meeting No.12/2011-12 held on 27.4.11 and the Committee decided to reject the case as Ministry of Environment & Forests does not support the proposal and CITES Management Authority has clarified that before finding of the study are available, the permission for the export of red sanders products and its derivative cannot be given.” 9. It is in these circumstances, the writ petition has been WPC No.23646/11 :7 : filed seeking to quash Exts.P10 and P12 and to direct the 3rd respondent to issue export licence to the petitioner as sought for in Exts.P4 and P6 applications. 10. Counter affidavit has been filed on behalf of the 1st respondent reiterating the stand taken in Ext.P10. The relevant portion of the counter affidavit contained in para 1 to 3 reads as under:- “1. It is most respectfully submitted that, India is a party to the convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). The Pterocarpus santalinus (Red Sanders) is included in the Appendix II of CITES, thereby regulating its international trade by provisions of CITES. In this context, it is mentioned that the 59th Standing Committee (SC59) of CITES has recommended to parties not to accept permits issued under Article IV of the Convention for specimens of Pterocarpus santalinus from India. This recommendation is still in force. Therefore, the export of Red Sanders material. 2. It is submitted that meanwhile CITES Management Authority (MA) of India, Ministry of WPC No.23646/11 :8 : Environment and Forests (Wildlife Division), Paryavaran Bhawan, CGO Complex, Lodhi Road, New Delhi 110003 which is the only authority in India to permit the international trade of CITES listed species, has assigned a study on Non- Detriment Findings (NDF) of Pterocarpus santalinus as per the provisions of CITES, to the Institute of Forest Genetics and Tree Breeding (IFGTB), Coimbatore, India which is a CITES Scientific Authority for India. The study would be completed in a time period of 1 year (November 2011). Any decision on the export of Red Sanders products and derivatives can only be initiated after the NDF study is complete. One of the terms of reference is to assess the seized and confiscated stocks of the species all over India and suggest the methodology and procedure for the disposal of the same. The sustainable yield and source of the specimens of P.santalinus in question for export can only be determined by an NDF study, which is underway by IFGTB, Coimbatore. However, the NDF study report and its Findings will be showed by CITES, MA of WPC No.23646/11 :9 : India with the CITES authorities to facilitate review of the ban on trade of the species from India. The report of Red sanders material would be regulated accordingly by the CITES, MA. 3. It is further submitted that, according to Article IV of the CITES, the export of any specimen of a species included in Appendix II shall require the prior grant and presentation of an export permit. An export permit shall only be granted if a Scientific Authority of the State of export has advised that such export will not be detrimental to the survival of that species. CITES Resolution Conf. 10.3 also mentions that issuance of permits by a management authority without approximate Scientific Authority findings constitutes a lack of compliance with the provisions of the Convention and seriously undermines species conservation. Therefore any export of Pterocarpus santalinus would require a positive recommendation of the CITES Scientific Authority of India and also the lifting of the present international trade ban by CITES.” 11. I heard the learned counsel for the petitioner and also WPC No.23646/11 :10 : the learned counsel who represented the Assistant Solicitor General appearing for the respondents and in my considered view, the petitioner is entitled to succeed in this writ petition. 12. In March 2006, Government of India issued Exts.P1 and P2 permitting sale of 354.98 MTs of Red Sanders Wood to the petitioner. Such a permission was necessary because of the prohibition of export of Red Sanders in log form, which was already in force. It is inspite of it that the Government permitted sale of 885.14 MTs of Red Sanders Wood by the Forest Department of Andhra Pradesh to M/s.Kyoei Trading Company, Japan and Radeep Services, Singapore exempting them from the prohibition and permitting to export Red Sanders in log form itself. In that order, Government of India specified that the petitioner in whose favour 354.98 MTs was sold will not be allowed to export the wood in log form and that it will have to manufacture value added products and take necessary licence for export. In Ext.P2 public notice issued in exercise of its powers under para 2.4 of the Foreign Trade Policy 2004-09 also, it was specified that the sale of the Red Sanders Wood in favour of the petitioner was for manufacture of value added products, export of which shall be allowed only as per the Foreign Trade Policy. In WPC No.23646/11 :11 : pursuance to the above, petitioner purchased huge quantity by paying `4,98,92,125 to the Andhra Pradesh Forest Department Corporation. It was accordingly that the petitioner manufactured extract of Red Sanders Wood, a value added product, obtained export licences and exported about 45000 Kgs of its product. Even the respondents have no case that these licences were obtained fraudulently or that, these licences were issued erroneously. Thus the licences were granted in accordance with EXIM Policy. It was thereafter for the export of the balance quantity of 11,167 kgs and 12,105 kgs of extract of Red Sanders Wood that the petitioner submitted Exts.P4 and P6 applications seeking licence. It is this request of the petitioner which is now turned down by Exts.P10 and P12. 13. In my view, after allotting the Red Sanders Wood with a specific condition that it will be allowed to export only value added products and on that basis, when the petitioner manufactured such value added products, and was permitted to export a part of it, there is absolutely no justification for the Government of India to now turn around and say that in view of the prohibition which was already in force when the logs were sold to the petitioner, they will not permit export of value added WPC No.23646/11 :12 : products. As already seen, for about 45000 kgs of extract of Red Sanders Wood, licences have already been granted to the petitioner. Respondents do not have a case that subsequent to the grant of the aforesaid licences, there was any change of policy or any other circumstances justifying a different approach to the issue. In other words, the rules which were prevailing prior to the grant of export licences and at the time when Exts.P4 an P6 applications were made, remain the same. Such a factual position also prevents the respondents from taking a view which is different from what they have already taken, when licences were granted to the petitioner. 14. In any case, it is an undisputed fact that the Red Sanders extract has already been manufactured by the petitioner from the Red Sanders Wood purchased by it from the Andhra Pradesh Forest Department Corporation. Once oil has been extracted from out of legally procured Red Sanders wood, there is no rhyme or reason to prevent the petitioner from marketing the products. If such an unrealistic stand is adopted, apart from causing substantial loss to the petitioner, nobody will be benefitted and the respondents should have shown atleast that much of practical wisdom. For that reason also, I see no WPC No.23646/11 :13 : justification in the stand now taken by the respondents. 15. For the aforesaid reasons, I am satisfied that the view taken by the respondents in Exts.P10 and P12 cannot be justified. Therefore, Exts.P10 and P12 will stand quashed. Respondents are directed to pass orders on Exts.P4 and P6 and grant export licences to the petitioner as sought for by them. Such orders shall be passed as expeditiously as possible, at any rate within four weeks of production of a copy of this judgment. Writ petition is disposed of as above. ANTONY DOMINIC, JUDGE Rp