Case: Parisons Agrotech (P) Ltd.  Vs. Union Of India

2. The appellants are engaged in refining and manufacture of edible oils, vanaspathi, bakery shortening, margarine etc. Their registered offices and the factories are in the State of Kerala. The main raw material used in the manufacture of RBD palm oil is crude palm oil. The appellants have been importing this raw material from other countries, primarily from Indonesia and Malaysia. Before the issuance of the aforesaid Notifications, this import was through the ports of Kochi and Beypore from where it used to be transported by road to its main factories which are in Kozhikode and Malappuram, in the State of Kerala itself. The impugned Notifications have prevented them from importing crude palm oil through the ports of Kochi and Beypore. Instead, they are forced to import this raw material through the ports outside Kerala. The effect thereof is that distance from the ports of import to the factories of appellants in Kerala stands increased, in contrast with the situation prevailing earlier. It has led to increased transportation cost for the appellants and that is precisely the cause of grievance3. As mentioned above, vide Notification No.399 dated 16.10.2007, certain items mentioned therein, which are all different varieties of crude palm oil, were not allowed to be imported through Kochi port. The Notification gives the description of the items and mentions the policy condition in respect thereof by stipulating:t not permitted through Kochi. This Notification was amended thereafter with the issuance of Notification No.639 dated 24.12.2007 in respect of same items by enlarging the scope of restriction/prohibition with the stipulation:4. Again, as already pointed out above, these Notifications were challenged on two grounds, viz.:(i) The Notifications are issued purportedly in exercise of powers under Section 5 read with Section 3 of the Act, but these provisions do not confer any such power on the Central Government. Therefore, the Notifications are ultra vires the provisions of Section 3(5) of the Act;(ii) Imposition of selective restriction and confining the prohibition of import of crude palm oil to the ports in Kerala has not only resulted in invidious discrimination, such an action is manifestly arbitrary, irrational and unreasonable as well it is contended that there is no rational objective which is sought to be achieved with such Notifications and, therefore, they offends the equality clause enshrined in Article 14 of the Constitution.

Court's reasoning:
Having regard to the importance of this crop not only for the economy of the State but also livelihood of about 35 lakhs farmers, the State Government has constituted Coconut Development Board (hereinafter referred to as the Board) which takes care of the interests of the farmers growing Coconut crop and also takes initiatives and steps for the development of this crop7. The significant and marked difference between the price of coconut oil and palm oil manifested the fact that percentage difference between the two stood at 109% in the year 2004, reduced to 50% in December, 2006, to 12% in September 2007 and 0.6% in October 2007. The Board also observed that the import of palm oil in one particular year had a cascading downward impact on coconut oil prices in the subsequent years. For example, the huge import of 1,53,513 tonnes of palm oil in5 had led to a price decline in coconut in6 and. While the average price of coconut oil is Rs.6,155/per quintal in, in, it declined sharply to Rs.4,978/per quintal with further fall in7 when the price was Rs.4,459/per quintal. This raised concern with the policy makers to protect the interest of huge number of small time farmers in the State of Kerala. Such concerns were raised by the Board as well as Union of Coconut Farmers with the concerned authorities including Chief Minister, who in turn, took up the matter with the Central Government at the highest level11. Having regard to the material that is produced and taken note of by us in extenso, which led to the issuance of the impugned Notifications, we are unable to countenance the submissions made by Mr. Naphade. It is well known that State of Kerala is the largest producer of Coconutand,in turn,there is substantial production of coconut oil as well. It is also a matter of common knowledge that coconut oil as well as palm oil are used for cooking and other common purposes. In that sense, coconut oil and palm oil are competing products. Whereas coconut oil produced from indigenous raw material and for the production of palm oil in India, the raw material i.e. crude palm oil is largely imported. Since the import price of crude palm oil has been much less than the price of coconut oil, the perception of Coconut growers in the State of Kerala was that it was affecting their livelihood. It is a matter of record that there are approximately 35 lakhs farmers in the State of Kerala who sustain their livelihood on Coconut crop. Therefore, it becomes their life sustaining crop. The Coconut crop covers more than 9 lakhs hectares in Kerala and contributes to nearly 35% of the agricultural income of the State which is a sufficient evidence to indicate that it is not only main but important crop of the State. The Coconut growers are predominantly small and marginal with the average size of holding being only half an acre. As already pointed out above, the significant and marked difference between the price of coconut oil and palm oil was manifest the fact that percentage difference between the two stood at 109% in the year 2004, reduced to 50% in December, 2006, to 12% in September 2007 and 0.6% in October 2007. The Board also observed that the import of palm oil in one particular year had a cascading downward impact on coconut oil prices in the subsequent years. For example, the huge import of 1,53,513 tonnes of palm oil in5 had led to a price decline in coconut in6 and. While the average price of coconut oil is Rs.6,155/per quintal in, in, it declined sharply to Rs.4,978/per quintal with further fall in7 when the price was Rs.4,459/per quintal. It is more than abundantly clear that the restriction is imposed keeping in view the welfare of 35 lakhs farmers in the State of Kerala. Matter was examined at the highest level. The Government had two alternatives before it, either to increase the custom duty i.e. duty on the import of crude oil or to issue impugned Notification. Enhancing the import duty would have all India ramification, whereas the problem was Kerala specific.Therefore,t step was taken. When a particular decision is taken in the interest of the said farmers which are marginalized section of the society, more so for their survival, this policy decision of the Central Government provides a complete rational in support of the decision having nexus with the objective sought to be achieved12. No doubt, the writ court has adequate power of judicial review in respect of such decisions. However, once it is found that there is sufficient material for taking a particular policy decision, bringing it within the four corners of Article 14 of the Constitution, power of judicial review would not extend to determine the correctness of such a policy decision or to indulge into the exercise of finding out whether there could be more appropriate or better alternatives. Once we find that parameters of Article 14 are satisfied; there was due application of mind in arriving at the decision which is backed by cogent material; the decision is not arbitrary or irrational and; it is taken in public interest, the Court has to respect such a decision of the Executive as the policy making is the domain of the Executive and the decision in question has passed the test of the judicial review19. Insofar as judgment of Calcutta High Court in Kalindi Woolen Mills (P) Ltd. (supra) is concerned, we have our reservations on the correctness thereof wherein the High Court found that Notification dated 28.04.1989 allowing imports of Woolen rags, Synthetic rags, Shoddy wool through two ports only, namely, Bombay and Delhi ICD. In anycase,insofar asargument based on Article 14 is concerned, the said judgment is distinguishable as in that case the Court did not find any intelligible basis which was disclosed before the Court either in the affidavits filed by the Customs Authorities or in the Import Licensing Control Authorities of the Government of India. Likewise, no rational nexus for imposing the restrictions on importation of the subject goods only through Delhi ICD and Bombay ports disclosed. In the absence of such a justification, on the facts of thatcase,the Court found the Notification to be violative of Article 14 of the Constitution20. In, inthe presentcase,as already pointed out above, the respondents have been able to demonstrate intelligible basis for issuing the impugned Notifications having rational nexus with the objectives sought to be achieved. We, thus, reject the arguments based on Article 14 of the Constitution21. The argument of Mr. Naphade to the effect that interests of consumers is equally important which is not taken into consideration needs an outright rejection for more than one reason. In the first place no such case was made out by the appellants either in the High Court or even in the special leave petition filed in this Court. This argument was raised for the first time during oral hearing. There is, thus, no material produced on record to show how the impugned Notification would affect the interests of the consumers. An argument of this nature cannot be raised in the air without having solid foundation with relevant material. In anycase,as we have found that the Notifications were issued in the interests of farmer class in the State of Keralaand,therefore, they are in public interest, this argument is of no avail24. We may also point out that proviso ton (2) as well asn (4) were inserted by Act 25/2010 w.e.f. 27.08.2010. In anycase,we are primarily concerned with the interpretation ofs (1) and (2) of Section 3 as far as present case is concerned.n (1) empowers the Central Government to make provision for the development as well as regulation of foreign trade by facilitating imports and increasing exports. Thus, the Government is empowered to make provisioninsofar asthey relate to the development of foreign trade and it has also empowered to regulate the foreign trade. The two key words here are development and regulation. It is also important to note that such development and regulation is aimed at facilitating imports as well as increasing exports. First argument of Mr. Naphade was that regulatory provision has to be for facilitating imports whereas inthe presentcase,it was to curb the importsinsofar asports in Kerala are concerned.n (2) of Section 3 further empowers the Central Government to make provision for: (i) prohibiting; (ii) restricting; or (iii) otherwise regulating the import or export of goods or services or technology. It can be done in all cases or in specified classes of cases. The submission of Mr. Naphade was that such provisions prohibiting, restricting or otherwise regulating are to be made in respect of import or export of goods or services or technology which essentially were custom based. He referred to the definition of import and export contained in Section 2(e) of the Act, inrelation to goods, means bringing into, or taking out of, India any goods bysea or air. He, thus, submitted thatinsofar asimport of goods is concerned, it only meant bringing the said goods into India. That is by crossing the custom barrier, to bring the same in the territory of India.Therefore,27. According to us, we need not deal with these submissions elaborately as the aforesaid contention of the learned senior counsel for the appellants need to be discarded on altogether different reason. These arguments ignore the crucial words appearing inn (2) of Section 3, namely, provision for prohibiting, restricting or otherwise regulating, the import or export of goods etc. can be madet to such exceptions, if any, as may be made by or under the. These words are of wide amplitude giving necessary powers to make such exceptions as the Central Government deems fit while issuing the Notifications or the Order in prohibiting, restricting or regulating import or export of goods etc. In the process, it can restrict the import of particular goods through particular ports or disallow the import through specified ports28. Inthe presentcase,as already held above, there is a sufficient public good sought to be achieved by laying down the exception banning the imports of crude palm oil through ports in Kerala. That, according to us, provides complete answer to the argument of the learned senior counsel for the appellants. Calcutta High Court in Kalindi Woolen Mills (P) Ltd. (supra) overlooked the aforesaid pertinent aspect which gives sufficient powers to the Central Government to act in the manner it has acted. The argument of Mr. Naphade predicated on the contrast between old and new provisions of Section 5 of the Act, again, would be of no avail in view of our aforesaid discussion holding thatn (2) of Section 3 of the Act gives ample power to the Government to issue such Notifications in exceptional cases and present case falls within those parameters. No other argument was addressed.