Case: Daruka &amp; Co Vs. Union Of India &amp; Ors

behalf and compliance with other terms laid down in that policy and in particular opening irrevocable letter of credit by a foreign buyer in a Bank in India for 100% of the invoice value of the goods. Shipment of fabricated mica under that policy continued to remain free from the above stipulation regarding opening of l00% irrevocable letter of credit. Fabricated mica in that policy is said to include micanite, built up mica, mica tapes, mica cloth, mica silk, mica paper, mica folium and all varieties of mica cut or purched to specific shapes and sizes, and mica powder. It is said on behalf of the petitioner that as a result of the exclusion of mica powder from the scope of the canalisation scheme, there are possibilities of mica waste and mica scrap being converted into mica powder and exported by individual exporters and there may he a loss in foreign exchange. The affidavit evidence on behalf of the State is that the exclusion of mica powder from the canalisation scheme is to develop mica powder industry in our country, because this industry is developing and is practically nascent in growth. Therefore, there is intelligible differentia between mica powder on the one hand and mica scrap and waste or, the other in excluding mica powder from the canalisation scheme. 28. The State issued another Trade Notice on 20 April 1972. This April 1972 Notice is also impeached. Under the April Notice which can be described as the second impugned Notice it is stated that the canalisation scheme provided in the unpugned Notice of 29 January, 1972 is modified to the extent that shipments will be allowed up to 30 June, 1972 against subsisting contracts for all grades and varieties of mica which had been executed prior to 24 January, 1972 and in respect of which letters of credit have not been opened prior to 24 January, 1972. The petitioners contend that the relaxation of the date for opening letters of credit from 24 January, 1972 to 31 March. 1972 was intended to benefit influential people. It was said that such influential people went on opening letters of credit up to 31 March, l972, because of their previous knowledge that there was going to be a relaxation in the date. The contention of the petitioners was that this relaxation was mala fide to help influential people. The affidavit evidence an behalf of the State is that this relaxation was made because several exporters made representations that they did not understand the import of restrictions and went on opening letters of credit. On behalf of the State it was said that the relaxation was to minimise the hardships which the traders were likely to suffer on account of the coming into force of the impugned Trade Notice. 29. The three representations received by the Ministry are from the Bihar Mica Exporters Association dated 25 January, 1972, the Mica Chamber of Commerce, Gudur, Andhra Pradesh dated 9 February. 1972 and the Bihar Mica Exporters Association dated 16 March 1972. Broadly stated, the representations of the traders were that the absence of any detailed information or direction as to the procedure to be followed under the new system presented three difficulties to the traders. First, there was serious set back in usual Dow of mica exports. Second, there was financial loss to the mica exporters. Third, there was financial crisis in the mica industry. 30. The difficulties pointed out were that export consignments worth about Rs. 70 lakhs in the names of different exporters supported by valid contracts and letters of credit were under processing through Joint Chief Controller of Imports and Exports and Customs at Calcutta port for shipment within 31 January, 1972. The Orders and Credit were not assignable and were covered under Buyers Import Licence which stipulated specific dates for shipment and consequently the letters of credit could not be extended or amended if so desired under the new system. Under similar conditions export consignments worth about Rs. 130 lakhs were lying ready for shipment In the month of February, 1972. Goods worth about Rs. 150 lakhs were under manufacturing process against orders and letters of credit for shipment in March 1972. Goods worth about; Rs. 150 lakhs were awaiting processing line against shipment commitment for the months of April to June, 1972. There were other export contracts for shipment after the month of June. 1072. Some consignments of mica scrap; cuttings, powder, flakes and mica splittings were despatched by Rail Wagon from Giridih/Kodarma to Calcutta Port for shipment by specific steamer. If for the reason of the changed pattern of export steamers were not availed or shipment was delayed the traders would suffer loss for non-shipment of the goods and incur railway demurrage and Port Commissioners demurrage and storage charges. The Association therefore asked for relief in the matter of export in accordance with the contractual terms of existing contracts. 31. The Andhra Pradesh Chamber of Commerce added that there were contracts prior to 24 January. 1972 stating shipment date subsequent to 24 January, 1972 for which letters of credit were to be established in due course. Certain contracts were executed in part and for the remaining part letters of credit were to be established in due course prior to the stipulated time of shipment. There were contracts prior to 24 January. 1972 for which letters of credit originally established had expired. Therefore, the Andhra Chamber of Commerce asked for extension of last date for registration of contracts up to 29 February, 1972. 32. In this background it cannot be said that the Government authorities acted mala fide in extending the date of the opening of the letter of credit from 24 January, 1972 to 31 March, 1972. The relaxation was to minimise hardships to the traders. The relaxation was to prevent dislocation of trade on a large scale. The Association gave instances of traders who could not succeed in opening letters of credit for reasons beyond their control. 33.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]16. Policies of imports or exports are 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 but rival theories and views may be held on such policies.If the Government decides 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 is in the interest of the general public unless the contrary is shownthe dominant purpose of the scheme is canalisation of export and not to acquire the business or goodwill of traders in favour of the Corporation. The restriction on traders is reasonable. There is no acquisition of property of traders. The Corporation is an agency through which export is canalised to the total exclusion of citizens20. The contention that the Impugned Notice showed preference for the Corporation in infringement of Article 14 is unsound. The Corporation is a State owned body. The Corporation is appointed to undertake this export scheme. No preference is shown to the Corporation, where canalisation is decided no licence is granted in favour of any one. Therefore, there is neither any competition nor any choice in the matter of grant of licence. It is a total exclusion of citizens in order to enable all the countrys exports to be made by one licenceeTherefore the State gave concession to the traders in order to eliminate hardship. The traders were given the choice to export provided they fulfilled certain conditions. These were that they could export through the Corporation and they were to pay service charges. It is significant that if the Press Note had not laid down the procedure conferring the privilege of exporting goods even after 24 January. 1972 in performance of contracts which were not supported by irrevocable letters of credit being opened prior to 24 January, l972 the traders would have suffered loss. The traders could not perform the contracts with the foreign buyers after 24 January, 1972 where letters of credit had not been opened. Therefore, it is apparent that there was no transfer of business of goodwill m favour of the Corporation23. The service charge collected by the Corporation is not in the nature of a tax. The provisions of Article 265 are not therefore attracted. Counsel for the petitioner contended that the levy of service charges was not authorised by the 1947 Act which permitted only levy of fee in respect of applications for issue or renewal of licence. The Corporation is a licencee under the 1947 Act and the 1968 Order. The Corporation acts in accordance with the terms and conditions of the licence. It was said on behalf of the petitioner that Section 4 (a) of the 1947 Act and clause 4 of the 1968 Order excluded levy of any other fees under the Act. The Government and the licensing authority under the Act are not collecting any fee or charges from the traders. It is the Corporation which is collecting service charges from the traders who avail the services of the Corporation. The Corporation is in the nature of commercial undertaking to which a licence has been granted for the export of certain commodities. The service charges are nothing but quid pro quo for the services rendered by the Corporation25. In the present case, the affidavit evidence is that the obligation to export goods arises when the foreign buyers open letters of credit for the specified quantity of goods. If no date is fixed for bringing into effect the canalisation scheme with reference to opening of letter of credit it will give rise to ingenious devices of creating specious contracts. Contracts may be brought into existence by antedating such contracts. The entire purpose of the canalisation scheme with a view to increasing the export trade of the country assisting small mine-owners, exporters and processors, checking smuggling in foreign exchange under-invoicing illegal acquisition of foreign currency and eliminating the chances of contravention of various provisions of the Foreign Exchange Regulations Act and Exports (Control) Order will be stultified. The utility of a State agency in the smooth running of export trade in such commodity as mica blocks, condenser-films, splittings, scrap or waste forms a very significant part of exports of our country. Therefore, the opening of letters of credit has rational relationship with the object of the canalisation scheme and there is no violation of Article 14If an absolute prohibition of export supervenes upon a contract which is subject to the licence the duty cannot be absolute. Nothing has been show that contracts in the present case were not subject to the usual terms of Contract in such cases that the export was subject to the licence laws of our country for the export of goodsThe affidavit evidence on behalf of the State is that the exclusion of mica powder from the canalisation scheme is to develop mica powder industry in our country, because this industry is developing and is practically nascent in growth. Therefore, there is intelligible differentia between mica powder on the one hand and mica scrap and waste or, the other in excluding mica powder from the canalisation scheme29. The three representations received by the Ministry are from the Bihar Mica Exporters Association dated 25 January, 1972, the Mica Chamber of Commerce, Gudur, Andhra Pradesh dated 9 February. 1972 and the Bihar Mica Exporters Association dated 16 March 1972. Broadly stated, the representations of the traders were that the absence of any detailed information or direction as to the procedure to be followed under the new system presented three difficulties to the traders. First, there was serious set back in usual Dow of mica exports. Second, there was financial loss to the mica exporters. Third, there was financial crisis in the mica industry.The difficulties pointed out were that export consignments worth about Rs. 70 lakhs in the names of different exporters supported by valid contracts and letters of credit were under processing through Joint Chief Controller of Imports and Exports and Customs at Calcutta port for shipment within 31 January, 1972. The Orders and Credit were not assignable and were covered under Buyers Import Licence which stipulated specific dates for shipment and consequently the letters of credit could not be extended or amended if so desired under the new system. Under similar conditions export consignments worth about Rs. 130 lakhs were lying ready for shipment In the month of February, 1972. Goods worth about Rs. 150 lakhs were under manufacturing process against orders and letters of credit for shipment in March 1972. Goods worth about; Rs. 150 lakhs were awaiting processing line against shipment commitment for the months of April to June, 1972. There were other export contracts for shipment after the month of June. 1072. Some consignments of mica scrap; cuttings, powder, flakes and mica splittings were despatched by Rail Wagon from Giridih/Kodarma to Calcutta Port for shipment by specific steamer. If for the reason of the changed pattern of export steamers were not availed or shipment was delayed the traders would suffer loss for non-shipment of the goods and incur railway demurrage and Port Commissioners demurrage and storage charges. The Association therefore asked for relief in the matter of export in accordance with the contractual terms of existing contractsThe Andhra Pradesh Chamber of Commerce added that there were contracts prior to 24 January. 1972 stating shipment date subsequent to 24 January, 1972 for which letters of credit were to be established in due course. Certain contracts were executed in part and for the remaining part letters of credit were to be established in due course prior to the stipulated time of shipment. There were contracts prior to 24 January. 1972 for which letters of credit originally established had expired. Therefore, the Andhra Chamber of Commerce asked for extension of last date for registration of contracts up to 29 February, 1972In this background it cannot be said that the Government authorities acted mala fide in extending the date of the opening of the letter of credit from 24 January, 1972 to 31 March, 1972. The relaxation was to minimise hardships to the traders. The relaxation was to prevent dislocation of trade on a large scale. The Association gave instances of traders who could not succeed in opening letters of credit for reasons beyond their control.