Case: Messrs British Machinery Supplies Company Vs. Union of India and Others

The appellant is an actual user of various items of steel as well as of G.P. sheets/coils. The import of G.P. sheets/coils under the policy of the Government of India is canalised through the Steel authority of India Limited (SAIL). On January 14, 1981, the appellant applied to the SAIL for the supply of 600 metric tonnes of G.P. sheets/coils of 0.45 mm gauge. On March 17, 1981, the SAIL registered the demand of the appellant for only 300 metric tonnes of G.P. sheets/coils. On November 13, 1981, the SAIL sent a telegram offering the appellant 62 metric tonnes of G.P. sheets/coils of 0.45 mm thickness subject to the appellantss acceptance reaching it before November 19, 1981, and also required the appellant to open an irrevocable letter of credit. By its telegram of November 16, 1981 the appellant conveyed its acceptance and on November 26, 1981 opened an irrevocable letter of credit in favour of the SAIL for a sum of Rs. 64, 000. This demand of the appellant for the yearwas to be supplied latest by March 31, 19812. According to the appellant, during the period from April 1981 to November 1981, ignoring the claim of the appellant, the SAIL supplied imported G.P. sheets/coils to some parties but did not supply any quantum of G.P. sheets/coils to the appellant3. On December 16, 1981, a meeting of the Pricing Committee resolved to increase the price of the imported G.P. sheets/coils by about Rs. 800 per metric tonne. This decision of the Pricing Committed was communicated to the SAIL on February 8, 19824. In the meanwhile, on January 12, 1982, the SAIL offered to the appellant, 59 metric tonnes of G.P. sheets/coils of 0.5 mm thickness subject to the appellants acceptance reaching the SAIL latest by January 25, 1982. The SAIL also required the appellant to establish an irrevocable letter of credit, although the requirement of the appellant was for G.P. sheets/coils of 0.45 mm thickness. On January 24, 1982, the appellant accepted the said offer and on February 1, 1982, opened an irrevocable letter of credit in favour of the SAIL for a sum of Rs. 3, 10, 0005. By its letter of March 16, 1982, the SAIL wrote to the appellant that the Government of India had decided to increase the release price of G.P. sheets/coils imported/to be imported by Rs. 800 per metric ton6. By its letter of April 19, 1982, the SAIL offered another 211 metric tonnes of G.P. sheets/coils and required the appellant to confirm the acceptance by April 30, 1982 and also to establish a fresh letter of credit covering 106.5 per cent of CF value plus Rs. 800 per metric ton (towards increase in release price of imported G.P. sheets/coils). On May 2, 1982, the appellant accepted the offer of 211 metric tonnes of G.P. sheets/coils but protested against the increase in price of Rs. 800 per metric ton and requested for allowing the opening of irrevocable letter of credit at the actual price7. It appears that by its letter of May 8, 1992, the SAIL informed thethat the foreign suppliers had invoked the force majeure clause in the contract due to fire and had not supplied 62 metric tonnes of G.P. sheets/coils of 0.45 mm thickness, and therefore, the said supply could not be made. As regards the increase in price by Rs. 800 per metric ton, the SAIL wrote to the appellant that the release price of imported G.P. sheets/coils had been increased by the Pricing Committee constituted under the Import Trade Control Policy for the yearand as such the increase was binding both on the SAIL as well as the actual users like the appellant. The SAIL, therefore, asked the appellant to take necessary action to enhance the value of the letters of credit established by them to enable theto release material to the appellant when it arrived in the India8. According to the appellant, the SAIL had supplied to certain concerns, viz., Irshad Enterprises, Best Trunk House and Steel House, G.P. sheets/coils on February 20, 1982, February 22, 1982 and February 28, 1982 respectively without charging the increased price of Rs. 800 per metric ton. Since the SAIL refused to supply the material except at the increased price, the appellant approached the Delhi High Court by way of a writ petition raising three contentions. The first contention was that the appellant having registered its demand and opened its letter of credit prior to February 8, 1982, it was not liable to pay the increased price of Rs. 800 per metric ton. The second contention was that SAIL was treating the appellant discriminately inasmuch as they had supplied other G.P. sheets/coils at theprice. The last contention was that the increased in price itself was arbitrary and the reasons given for the increase were neither germane nor justified. The High Court rejected all the three contention and dismissed the petition. Hence this appeal

Court's reasoning:
In the first instance, as paragraph 65 of the Import Policy for the yearshows, in the case of the items listed in Appendix 8 of the Handbook of81 (which include the present material), the eligible actual user had to register their 12 months requirement with the canalised agencywhich is the SAIL in the present casetogether with earnest money calculated at 2 per cent of the sale value of the quantity registered or Rs. 50, 000 whichever is less. Paragraph 66 states that the canalising agency would take financial cover as it considered necessary before arranging the imports. Paragraph 72 states that there would be a Pricing Committee under the chairmanship of the Chief Controller of Imports and Exports for determining/prescribing the selling price of canalised items from time to time. Paragraph 73 states that imports distribution and pricing of the items would be governed by the concerned policy of the Government. It may be added here that on the Pricing Committee, representative of the SAIL was only an invitee member11. Paragraph 151 of the Handbook on Import Policystates that under the Import Policya canalising agency is expected to take into account the availability of indigenously produced material before imports are arranged. It further states that no person registering his requirements with the canalising agency will have the right to ask for a particular brand or make. Paragraph 152 then states as follows"152. An Actual User, while registering his requirements for allotment of a canalised item, should indicate to the canalising agency the phased programme of delivery on a quarterly basisor monthly if so laid down by the canalising agency. The canalising agency will scrutinise such registration and indicate within a period of 90 days, the arrangements it would be able to make for effecting supplies. In case, the canalising agency does not (a) give any such indication for a period of delivery at least three months ahead from the date of registration or (b) effect deliveries as registered with it and for which it has or could have taken financial cover as laid in the Import Policy,the Actual User may approach the(Monitoring Committee), New Delhi, for appropriate relief by way of direct imports."12. It is clear from paragraph 72 of the Import Policy that Government of India had constituted a Pricing Committee for determining/prescribing the selling price of the canalised items from time to time. There are various considerations which go into revising the price of the canalised items, from time to time. The Pricing Committee is independent of the SAIL where representative is only an invitee member to the Committees meetings, and the SAIL being only a canalising agency has to abide by the decisions on pricing taken from time to time by the Pricing Committee. The SAIL has no authority to fix the price. In fact, if it releases items at prices other than fixed by the Pricing Committee, it would be committing a breach of the Government Policy. Hence at the time of the release of an item the SAIL has to release it at the price fixed by the Pricing Committee. It is not disputed that the appellant was bound by the Import Policy. In fact, the application made by the appellant for registering itself for the imported G.P. sheets/coils makes it clear that the appellant is bound by the said Policy, Hence, the appellant cannot make any grievance that they had to pay the price of the material as was prevalent at the time of the release of the material. Admittedly, the release of the material in favour of the appellant is after February 8, 198113. As regard the contention that the appellant was not supplied 62 metric tonnes of G.P. sheets, as has been explained in thefiled on behalf of the SAIL, the foreign suppliers of the said material could not supply the same since there was a fire and the supplier had invoked the force majeure clause of the contract. It is in these circumstances that no supply of the material could be made to the appellant. Hence the appellant cannot make a grievance in the behalf. The contention that during the period from April 1981 to November 1981, other were supplied whereas the appellant was ignored the same is untenable. As has been pointed out on behalf of the SAIL in itsall the said suppliers had registered their demands prior to February 8, 1982. They have also given the dates on which the said concerns had registered their demands which bear out the truth of their statement made in theThe contention that three enterprises, viz., M/s Irshad Enterprises Best Trunk House and Steel House were supplied the material atAIL in itshas pointed out that in respect of M/s Irshad Enterprises, a sum of Rs. 20, 000 had not been charged through inadvertent mistake in calculation. It had no relevance whatsoever to the increased price of Rs. 800 per metric ton. As soon as the said mistake was discovered, a debit note was raised against the said party to recover the amount. It has also been pointed out that the increased price of Rs. 800 per metric ton had been charged from all the said three parties and the allegation in that behalf is baseless and incorrect. As regards the contention that the appellant had registered its demands prior to February 8, 1982, as has been stated above, the Pricing Committee met on December 8, 1981 for the first time to consider the increase in the price wherein a tentative decision to increase the price of Rs. 800 per metric ton was taken. It again met on December 16, 1981 to finally approve the said decision and it was resolved formally that the price would be increased by Rs. 800 per metric ton. The minutes of the meeting were circulated by the Ministry of Steel and Mines on January 2, 1982 and formal order were issued in that behalf by the Chief Controller of Imports and Exports on January 30, 1982. The said orders were received by the SAIL on February 2, 1982 by its head office in New Delhi, and on February 8, 1982 by its office at Calcutta and were implemented on the same day. The SAIL could not increased the price unless formal written orders of the Government were received by it which it did on February 8, 198215. As regards the contention that between December 16, 1981 and February 8, 1982, certain parties were supplied the material at the old rate, it is pointed out on behalf of the respondent that till February 8, 1982 they could not charge the price at the enhanced rate. However, even in respect of the said parties, supplementary invoices were raised in order to release and recover the enhanced price of Rs. 800 per metric ton for the supplies made to them during that period. In fact, as against the amount of Rs. 2, 36, 895 (approx.) being the total value at the rate of Rs. 800 per metric ton, an amount of Rs. 80, 868 has already been recovered from the said five parties to clear 101.085 metric tonnes of G.P. sheets/coils sold during the said period. From the remaining 8 parties, an amount of Rs. 1, 56, 027 is due on account of the said increase, the quantity involved being 195.034 metric tonnes. One of the reasons why the said amount has yet to be recovered is that the concerned eight parties are not regular customers of the SAIL and have not come forward for further imports through it. However, thestates that the SAIL is taking all necessary steps available to it in law to realise the aforesaid amount from the said eight parties as well16. Coming to the last contention, viz., that there is no justification for increase in the price, suffice it to say that it is not for the Court to decide whether the prices of particular items should be increased or lowered or fixed at particular rates. The Government of India and its Pricing Committees appointed to determine the prices for the commodities, have to take several factors into consideration including the indigenous market conditions of the material concerned and the effect of the prices on the production, availability and prices of the goods which are produced with the help of such imported material, and the price of the very same material or substituted material or its substitutes in the indigenous as well as international markets. Pricing is a part of the package of the import and export policy. It does appear, as has been stated in thefiled on behalf of thethat at the relevant time there was a need to increase the price of G.P. sheets/coils