IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN MONDAY, THE 30TH NOVEMBER 2009 / 9TH AGRAHAYANA 1931 WA.No. 294 of 2007() -------------------- AGAINST THE JUDGEMENT/ORDER IN WPC.26611/2006 Dated 31/10/2006 .................... APPELLANTS/RESPONDENTS IN W.P: --------------------------------- 1. THE MARINE PRODUCTS EXPORT DEVELOPMENT AUTHORITY, MPEDA HOUSE, PANAMPILLY NAGAR, COCHIN-682036, REPRESENTED BY ITS CHAIRMAN. 2. THE DEPUTY DIRECTOR, THE MARINE PRODUCTS EXPORT DEVELOPMENT AUTHORITY, REGIONAL OFFICE, VALLARPADOM, KOCHI-682031. BY ADV. SRI.JOSEPH MARKOSE, SENIOR ADVOCATE SRI.MATHEWS K.UTHUPPACHAN RESPONDENT(S): PETITIONER IN W.P: --------------------------------- MR. MATHEW JOSEPH, PROPRIETOR, M/S. ATELIER EXPORTS, AP 3/27 B, AROOR-688534. ADDL. RESPONDENT: M/S.STAR FISH EXPORTS, PEEVEES BUILDING, EDAKOCHI, KOCHI-6. (ADDL. RESPONDENT IS IMPLEADED AS PER ORDER DT.13.2.2009 IN THIS WRIT APPEAL.) ADV. SRI.S.P.ARAVINDAKSHAN PILLAY SMT.N.SANTHA SRI.PETER JOSE CHRISTO SRI.S.A.ANAND THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 30/11/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & V.K.MOHANAN, JJ. .................................................................... Writ Appeal No.294 of 2007 .................................................................... Dated this the 30th day of November, 2009. JUDGMENT Ramachandran Nair, J. Appellant is a statutory agency authorised to grant licence to marine exporters. The exporters are classified under two categories, one called the manufacturer exporter and the other called merchant exporter. Every fish and fish product should be processed in premises licensed by the appellant. The additional second respondent has a licence for processing as a manufacturer exporter and has also got a licence for exporting chilled fish. Since the second respondent has excess capacity for handling chilled fish, they licensed the facilities to the first respondent who is a small exporter, for processing and handling of chilled fish for export. Even though licence was granted to the first respondent from 2002 onwards to carry on fish handling facility in the premises of the second respondent who is also a licencee, the appellants declined to renew the licence for the period commencing from 1.10.2006 for the reason that second respondent being engaged in W.A. 294/2007 2 fish processing as well in his premises, cannot permit the first respondent to avail packing of fresh and chilled fishery products. The Regulation cited in support of appellants' action is clauses 4 and 5 of the new guidelines for issuing certificate of registration as an exporter by MPEDA dated 23.7.2004 produced as Ext.R1(a) in the W.P.(C) filed before this court. Before the learned Single Judge, the appellants supported their action by stating that first respondent can be granted renewal of licence only if he has a tie-up with an approved handling center engaged only in chilled fish as first respondent was engaged in export of only chilled fish. The learned Single Judge after hearing both sides, found no rational basis or regulation standing in the way of the first respondent getting renewal of licence. It is against this judgment the appellants filed this Writ Appeal and we have heard Senior Counsel Sri.Joseph Markose appearing for the appellants and Adv. Sri.S.P.Aravindakshan Pillai appearing for the first respondent. 2. Admittedly the appellants' Regulations authorise a fish processor to allow his unutilised facility to be shared by a maximum number of two exporters for processing fish. In other words, if the first W.A. 294/2007 3 respondent was processing fish, he would have been entitled to renewal of licence. However, admittedly the first respondent is engaged in limited processing of chilling of fish and export of the same, which under the norms of the appellants is an independent operation of handling and export of chilled fish. Fish is exported in various forms and one form of export is fish chilled and exported as such without peeling, removing head or tail i.e. without any serious processing except chilling and packing. Likewise, certain varieties of fish are exported only after peeling, removing head, tail and other inedible portions or in other words, export is in the form of fish meat in frozen condition. The objection raised against renewal of first respondent's licence for export of chilled fish is that he availed the facility from the second respondent which has two separate licences, one as a fish processor in his capacity as a manufacturer exporter and the other as exporter of chilled fish. Appellants have no dispute that the second respondent has the facilities required for the first respondent also to process and export chilled fish. It is also not disputed that the second respondent is also engaged in export of chilled fish and what is W.A. 294/2007 4 licensed to the first respondent by the second respondent is excess capacity available in their chilling plant and other facilities. We do not know the rational basis for the appellants to insist that the first respondent cannot avail the excess unutilised capacity of the second respondent for processing and handling of chilled fish for export. Counsel for the appellants submitted that the purpose of the restriction i.e. not to permit lending of excess capacity, is to prevent cross- contamination in processed fish and chilled fish. The learned Single Judge found that if second respondent can be permitted to have processing as well as handling of chilled fish in the same premises, how the same stands as a bar in renewing the licence for the first respondent who is only utilising the excess capacity under licence from second respondent. Senior counsel appearing for the appellants relied on judgment of the Madras High Court in Writ Petition No.9716/2006 and connected cases dated 16.2.1997 wherein the High Court has upheld the validity of Regulations. Counsel for the first respondent contended that there is no violation of the Regulation by the first respondent and that is the finding by the learned Single Judge. The W.A. 294/2007 5 Madras High Court has in the above decision relied on decision of the Supreme Court in UNION OF INDIA & ANOTHER VS. INTERNATIONAL TRADING COMPANY reported in 2003(5) SCC 437. 3. Applying the test laid down by the Supreme Court, we are of the view that the appellants' stand is destructive of the very purpose for which it is constituted because the purpose of the organisation is to promote export of marine products in a regulated manner which should result in sustained growth of the industry. If restrictions are imposed against utilisation of excess capacity of fish processors by others, the same will have adverse impact on the industry in two ways. In the first place, underutilisation of capacity will result in loss to owners because operating cost by way of power charges will be disproportionate to the output. Secondly, if hiring of unutilised facility is not allowed, then new entrepreneurs cannot come to the field at all because of the deterrent cost involved in setting up of freezing plants and other processing units. In order to promote new entrepreneurs to take up export of marine products, we feel they should be allowed to outsource W.A. 294/2007 6 facilities from existing units and start their business. Further, if such facility is not provided, the export business will remain in the hands of few existing exporters and the same is certainly not going to advance the interest of trade for the country as a whole. The quality of fish for export should certainly be the concern of the appellants and they are free to implement any regulation to ensure that commodity exported conforms to the quality required for the foreign buyers so that the industry does not lose it's name. However, if the same premises can be permitted to be used by the original owner namely, the second respondent, we do not know how excess capacity cannot be permitted to be used by the first respondent. We are in complete agreement with the conclusions drawn by the learned Single Judge in as much as the renewal of licence applied for by the first respondent in the premises of the second respondent does not violate any Regulation as apprehended by the appellants. The appellants have no case that more than two persons in violation of the Regulation abovereferred are permitted to utilise the excess capacity by the second respondent. On the other hand, on record the only person sharing the facility of the second W.A. 294/2007 7 respondent is the first respondent and so much so, there is no violation of clause 4 of the Regulation as alleged by the appellants. It is also interesting to note that the appellants have no allegation of any contamination or cross-contamination in the course of business so far carried out by the first respondent sharing the premises of the second respondent for the last over six years during which he enjoyed the same licence for handling of chilled fish for export in the premises of the second respondent. We, therefore, uphold the findings of the learned Single Judge and dismiss the Writ Appeal. C.N.RAMACHANDRAN NAIR Judge V.K.MOHANAN Judge pms