Case: Zodiac Clothing Co. Ltd Vs. Apparel Export Promotion Council &amp; Others

3. The appellant is a company engaged in the manufacture and sale of clothing articles under the brand name "Zodiac". As part of its business, the appellant exports its products to different countries.4. The quota policy framed for the periodwas amended from time to time. The Union of India set up a system of allotment of export quotas to different manufacturers and exporters to different countries in certain agreed quantities. As part of the policy, a penalty may be levied upon the exporter for not fulfilling the complete export quota, subject, however, to force majeure. The stipulation is that the export quota should be completed by the end of September each year, and this time can be extended to the end of December subject to the exporter furnishing a security for performance of the export obligations.5. The specific provision relating to penalty, with which we are directly concerned, is set out hereinThe EMD/BG of an exporter who exports not less than 90% of the export entitlement shall be released in full. The DG, AEPC shall forfeit the EMD/BG in case of utilization is upto 75% in case of fast moving items and upto 50% in case of slow moving items, proportionate to the short fall in utilization. If utilization of export entitlement allocation is, less than the above percentages EMD/BG shall be forfeited in full. For this purpose utilization shall be computed on individual entitlements or on the basis of each system separately.For the year 2002, the appellant was allotted quotas for export under the said policy in First Come First Serve category, against depositing the requisite bank guarantee as per the terms of the policy.7. A show cause notice was issued by theExport Promotion Council (for short "the AEPC") allegingof quota by the appellant, and alleging that only 87.5% quota was used, and thereby proposed to forfeit the bank guarantee for the same.8. After the appellant replied, AEPC passed an order dated 18.08.2003 directing forfeiture of the sum of Rs.In the First Appeal that was filed, the First Appellate Committee, on 31.03.2004, revised and scaled down the forfeiture amount from Rs. 8,79,867/i.e. the appellants performance being revised to 88.91%, by giving relief against 3 quota certificates. However, given the figure of 88.91%, the First Appeal was dismissed.9. On 18.06.2004, a Second Appeal was disposed of with directions to the AEPC to reconsider the matter. The AEPC, thereafter, invoked the bank guarantee that was submitted of Rs.Being aggrieved by this, the appellant knocked at the doors of the Textile Commissioner, who, in First Appeal asked the appellant to submit documentary proof that the quota certificate was not, in fact, allotted to it. The appellant then submitted a copy of the said quota certificate to the Committee which bore the mark "rejected". However, the appellant was again turned down on the ground that there was a rectifiable defect, and then the penalty amount was scaled down from Rs. 4,24,415/. The First Appellate Committee, by its order dated 13.06.2013, rejected the appeal, again reiterating the same amount as penalty. A Second Appeal was thereafter filed by the appellant, in which the Second Appellate Committee, by its order dated 22.07.2015, for the first time, stated that the rectifiable defect was, in fact, the fact that an authenticated L/C was not produced within either the stipulated period or the extended period of 15 days. What was added in this order was that such discrepancy was placed on the Notice Board for information of the trade. Therefore, the Second Appeal was also rejected.15. In a Writ Petition against this order, the Delhi High Court dismissed the same, by the impugned judgment dated 21.09.2015, stating that since a pure question of fact has been raised, and the matter has gone up and down twice, and that, since the appellant has been heard throughout there was no reason to interfere.

Reasoning:
17. We are, therefore, of the view that, despite the several rounds of litigation between the parties, the respondent(s) never ever informed the appellant about the ground for rejection of the Q.C. until the Second Appellate Committee stage when it was informed about one particular ground. As has been mentioned herein above, the fact that in accordance with the policy this Q.C. was put up on the Notice Board was never the case of the respondent(s) before the Second Appellate Committee and remains a fact which is completely unauthenticated.18. In this view of the matter, we feel that the appellant has not been fairly dealt with. Also the appellants case, that it was never informed about the unauthenticated letter of credit throughout the proceedings right till the Second Appellate Committee stage, and that the Q.C. in question was never in fact put up on the Notice Board, appears to be correct.