RAJ PRAKASH CHl!MICALS LTD. & ANR,

UNION OF INDIA & ORS,

MARCH 5, 1986

[V, D. TULZAPURKAR; R.S. PATHAK AND SABYASACHI MUKHARJI, JJ,]

Practice & Procedure

Order of Court - Construction of - To be consistent with c principle that Court IJllJSt be presumed to have given effect to the law.

The first appellant, a public limited company, engaged in the manufacture of acrylic ester monOlll!rs (Butyl Acrylate, Bthyl Acrylate, 2-Ethyl Hexyl Acrylate and Methyl Acrylate) D under an industrial licence granted in February 197 5.,, cOlllllellCed ll&nllfacture in December 1980 and was until then the only manufacturer in India. In the year 1981 a public sector organisation also began to manufacture acrylic ester mo-ra • .

In the period before 1980 in the absence of indigenous E manufacture of acrylic ester monomers, the Govenment of India

permitted the import of those iteus on Open General Licence.

Thereafter, in the Import Policy 1981-82, with a view to protect indigenous industry and to conserve foreign exchange

the Government of India placed acrylic ester monomers in Appendix 5 (List of Restricted lte11S), and in July, 1981 Ethyl~ F Acrylate wss taken from Appendix 5 to Appendix 3 (List of Banned lteus). A public notice dated July 7, 1981 announced that Export Houses which were eligible to import Ethyl Acrylate would be allowed to import it only to the extent of irrevocable Letters of Credit opened before the dste of the notice.

Under Import Policy 1982-83, the tl01ll!llclature of the headings of the Appendices wss altered, and the heading "Li&~

of Banned Items" of Appendix 3 was changed to "List of Limited Permissible Items". Likewise, the heading "Absolutely Banned List" of Appendix 4 was altered to "List of Non-permissible

RAJ PRAKASH v. u.o.I. 449

tems (Banned)". And the heading "List of Restricted Ite1111" of Appendix 5 became the "List of Automatic Permissible Ite1111"., Ethyl Acrylate remained in Appendix 3 and all other acrylic ester monomers remained in Appendix 5.

Under Import Policy 1983-84, the headings of Appendices 3, 4 and 5 remained as they were, and all four acrylic ester monomers were placed in Appendix 3 (List of Limited "Permissible Items).

'Under Import Policy 1984-85 Appendix 2 Part A became the "List of Banned Items" and Appendix 2 Part B became the "List C of Restricted Items". Appendix 3 continued to be the "List of Limited Permissible Items". Appendix 5 was the "List of Canalised Items". Appendix 6 mentioned the import of ite1111 under Open General Licence.

That nomenclature and arrangement was reflected again D -,.under Import Policy 1985-88, except that Appendix 4 was deleted and the new Appendix 6 (the "Open General Licence" List) contained Part II which listed items open to import under Export House Additional Licence. Under both Import Policies, 1984-85 and 1985-88 the four acrylic ester monomers appeared at item 9 of Appendix 3 (List of Limited Permissible E Items). ,

Changes in the nomenclature of the headings of the Appendices in the Import Policy 1982-83 and thereafter were considered necessary to bridge the gap in India's balance of -ipayment. The change in the nomenclature did not alter the F principle underlying the grouping of items under the various heads. Each grouping was determined in acco.rdance with two major objectives of import policy, the conserving of foreign exchange and protecting the development of indigenous industries. by limiting the import of corresponding manufactured products. The items in Appendix 3 (List of G Limited Permissible Imports) were those whose import was not 'fp_ermissible ordinarily but could be permitted by the 'Government if their import was necessary and justified, while the import of ite1111 absolutely banned (and later simply described as "Banned") was not permissible at all.

The Import Policy 1978-79 incorporated a scheme under which Registered Exporters were eligible for the grant of

Export House Certificates on the basis of the exports actuall~ made in the three-year base period 1975-76, 1976-77 and .1977-

78. Export Houses were entitled to the following facilities:-

(i) Import replenishment licences'eligible to them as registered Exporters,

(ii) Import replenishment licences transferred to them by others. .•

(Hi) Import of items placed on Open General Licence, and

(iv) Additional Licences.

Several diamond exporters applied for Export House Certificates and consequent Additional Licenc:es, which were refused on the ground that they had not di11ersified their exports. A number of writ petitions were filed by these,, diamond exporters in the High Court of Bombay and the High Court of Delhi. The High Courts held that. the ground on which the Export House Certificates had been refused was wholly untenable and directed the issue of Export House Certificates as well as the consequent Additional Licences, but while defining the right of the diamond exporters to import items under the Additional Licences they also took into account the Import Policy prevailing at the time of import in regard to the items which could not be imported. Appeals against the orders of the High Courts were disposed of by this Court by its order dated April 18, 1985. The authorities were directed~ to issue the necessary.Export House Certificates for the year 1978-79. It was further directed that "save and except items which are specifically banned under the p1evalent illport policy at the time of illlpOrt, the diamond exporters shall be entitled to inport all other items whetheir canalised or otherwise in accordance with the relevant rules". Pursuant to

this order of the Court, the dismnd exporters were issued Additional Licences which permit them to illlpOrt acrylic est~~ mono•rs.

Feeling aggrieved by the grant of such Additional Licences, the appellants filed a writ petitio11 under Art. 32 complaining that the order dated April 18, l 98S of this Court

RAJ PRAKASH v. u.o.I. 451

..Vas misinterpreted and, in consequence thereof the import of acrylic ester monoaers was being allowed. This Court dismissed

the writ petition with liberty to move the High Court of Bombay. The appellants then filed a writ petition in the High Court of Bombay which was dismissed by a Single Judge, and B this order was confirmed in Appeal by the Division Bench on the ground that withdrawal or cancellation of the additional endorsement made on the"Additional Licences would conflict '11th this Court's Order and would amount to modifying or

mlllifying it.

On the question as to what is the true meaning and scope c of the order dated April 18, 1985 made by this Court, dismissing the appeal and writ petition,

llELD : 1. The meaning and scope of this Court's order dated April 18, 1985 llllSt be discovered from the terms of the High Court orders, because the language in which the order of D .this Court is couched bears close comparison with one or other of the High Court orders. (471 F-G)

2. The Additional Licences to be issued to diamond exporters entitled them to import ite1111 permissible to Export Houses under such Licence under the Import Policy 1978-79 E excluding those ite1111 which fell within Appendices 3 and 4 of the Import Policy 1978-79 and also excluding items which fell in Appendix 3 and Appendix 2 Part A of the Import Policy 1984-85. That is the meaning which lllUSt also be given to the terms of the order dated April 18, 1985 of this Court. Where

the Import Policy prevailing at the time of the import is the F Import Policy 1985-88, the ite1111 excluded are those enumerated in the corresponding Appendix 3 and Appendix 2 Part A of that Import Policy. That conclusion follows irresistibly on the analysis attempted by this Court and in the context in which the order was made. (473 A-C)

3. When the word "banned" was used, it was intended to >t...ake in ite1111 which were banned altogether as well as ite1111 )which were banned for import by the holder of an Additional Licence. The Court was concerned with the right to import of

the holder of an Additional Licence. The holder of an Additions! Licence was prohibited from importing ite1111 which H

were banned altogether and also ite!M which he, as the holder'-

of an Additional Licence, was banned from import:ing. [473 E-F)

4. This Court would be enlarging the sc.ope of relief granted by the High Court if the more liberal interpretation was given to the words "specifically banned" and such a construction is clearly impermissible when no di8110nd exporter had appealed against that order before this Court. When this Court made the orders dated April 18, 1985, w'tien the lmpore•

Policy 1985-88 was in force, there were only two ite.. which were absolutely banned, and they were anillal tallow and aninial

rennet. Thst was also substantially the posit:ion under the Import Policy 1984-85. (473 G-H; 474 A]

5. The right of a di8110nd exporter to an Additional Licence does not issue from paragraph 265 of the Import Policy,

1985-88.

Paragraph 265 enables the grant of Additional' Licences to other Export Houses, and diamond exporters "are not entitled to Additional Licences under that Import Policy. The'>< Export House Certificates granted to the diai10nd exporters pursuant to the orders of the High Courta and of this Court are those envisaged under the Import Policy 1978-79. But for the purpose of granting relief in their favour the Courts took into account the conditions prevailing at the time of import and, therefore, the provisions of the Import Policy 1985-88 become relevant.

They are relevant for the purpose of construing the ter!M in which relief has been granted by the Courts. They do not constitute the source of those rights,

(474 D-F]

6. The di8110nd exporters on the construction placed by this Court on its order dated April 18, 1985, cannot be regarded as denying restitution. But the restitution available to them has been reduced by the express direction of the Court that they are not entitled to import itellil excluded under the Import Policy prevailing at the time of import in addition to those excluded under the Import Policy 1978-79. (474 H; 475 A]

7. The construction placed by this Court on the orde.d dated April 18, 1985 is consistent with the priJ:Lciple that the Court 1111St be presumed to have given effect to t.he law. That. presumption can be rebutted only upon evidence showing a clear intention to the contrary, either expressly or by necessary implication. There is no such evidence before the Court.

(475 D-E]

' ..

RAJ PRAKASH v. u.o.I. 453

8. Those di8110nd exporters who were granted Additional Licences under the Import Policy 1978-79 and had opened and established irrevocable Letters of Credit before October 18, 1985 should be pemitted, notwithstanding the construction placed on the order dated April 18, 1985 of this Court, to clear. the goods imported, or to be imported, by them pursuant to such irrevocable Letters of Credit. (477 E-F)

9. All imports effected pursuant of such Letters of Credit should be deemed to have been legally and properly made, and should entail no adverse consequences whatsoever on the basis of principles of justice, equity and fair play and by the need to avoid undeserved hardship ignoring the legal technicalities. (477 F-G)

10. The diamond exporters who pursuant to the issue of Additional Licences under the lllpOrt Policy 1978-79 have opened and established irrevocable Letters of Credit on or .., after October 18, 1985 will not be entitled to the benefit of ' this order. (478 B-C)

Deputy .Autt. Iron • Steel Controller • Anr. v. L.

Jfanfctcti...,,, Proprietor, latrella lletal Corpa. Wra, (1972) 2 s.c.R. 1, relied upon.

Joint Qiief Controller of lqiorts & Eirporta, Madra v.

K/s. wM...,, "1tha etc., [1966) l s.c.R. 262, Union of Iadia

• Ora. v. K/s. lndo-Afgan Ageacies •• (1968) 2 s.c.R. 366 and .JapnMth .Aggarw1 v. B.R. Datta, (Civil Appeal No.801 of "'" 1.964 decided on January 10, 1967), referred to.

CIVIL APPELLATE JURISDICTION Civil Appeal No. 4978 of 1985.

From the Judgment and Order dated 16.8.1985 of the Bombay High Court in Appeal No. 726 of 1985.

V.M. Tarkunde and Rajiv Datta for the Appellants.

B. Datta, Additional Solicitor General, K.K. Venugopal, Ashok H. Desai, A.K. Ganguli, R.N. Poddar, s. Ganesh, Anand Bhatt, Harish Salve, Raian Karanjawala, Mrs.

Manik

Karanjawala, G.E. Vahanvati, B.R. Agarwala, M.M. Jayakara and ~· Miss V. Menon for the Respondents.

The Judgment of the Court was delivered by

PAl'llAK, J. This ppeal is directed against the judgment and order dated August 16, 1985 of a Division Bench of the High Court of Bombay summarily rejecting an app<!al filed by the appellants against the dismissal of their writ petition by ,• a learned Single Judge of that High Court.

The first appellant, Raj Parkash Chemicals Limited, is a public limited company with its registered office at Bombay.

It is engaged in the manufacture of acrylic ester monomers (Butyl Acrylate, Ethyl Acrylate, 2- Ethyl Hexyl Acrylate and Methyl Acrylate) at its factory in Tarapur, Maharashtra. These items are used by various industries engaged in the manufacture of Binders required in textiles, leather paint and paper industries.

The second appellant is the Managing ., Director and a shareholder of the appellant company. In February 1975, the appellants were granted an industrial licence for manufacturing acrylic ester monomers in a total quantity of 3,000 tonnes per annum. The installed capacity of the factory s, however, 1,000 tonnes per month. It commenced manufacture in December 1980, and was until then the only manufacturer in India of acrylic ester monomers. In the year 1981 the Indian Petrochemicals Corporation Limited, a public sector organisation, also entered the market and began to manufacture acrylic ester monomers at its factory at Baroda, which possesses a capacity of 10,000 tonnes per y1!ar. ,.<

In the period before 1980 in the abs1mce of any indigenous manufacture of acrylic ester monomers, the Government of India permitted the import of those items on Open General Licence. Thereafter in the Import Policy 1981-82, with a view to protect indigenous industry and to conserve foreign exchange the Government of India placed acrylic ester monomers in Appendix 5 (List of Restricted Items), and in Juiy -f

1981 Ethyl Acrylate was taken from Appendix 5 t.o Appendix y' , (List of Banned Items). A public notice dated July 7, 1981 announced that Export Houses which were eligible to import Ethyl Acrylate would be allowed to import it only to the extent of irrevocable Letters of Credit opened before the date

. ..., of the notice. Under Import Policy 1982-83, the nomenclature of the headings of the Appendices was altered, and the heading "List of Banned Item of Appendix 3 was changed to "List of Limited Permissible Items". Likewise, the heading " Absolutely Banned List" of Appendix 4 was altered to "List of Nonpermissible Items (Banned)".

And the heading "List of Restricted Items" of Appix 5 became the " List of Automatic Permissible Items." Ethyl Acrylate remained in Appendix 3,

~ and all other acrylic ester monomers remained in Appendix 5.

Under Import Policy 1983-84, the headings of Appendices 3, 4 and 5 remained as they wer:e, and all four acrylic ester monomers were placed in Appendix 3 (List of Limited Permissible Items). Under Import Policy 1984-85, there was another change in the nomenclature of the headings of the Appendices. Appendix 2 Part A became the "List of Banned

Items" and Appendix 2 Part B became the "List of Restricted Items". Appendix 3 continued to be the "List of Limited Permissible Items."· Appendix 5 was the "List of Canalised Items." " Appendix 6 mentioned the import of items under Open General Licence. That nomenclature and arrangement was reflected again under Import Policy 1985-88, except that Appendix 4 was deleted and the new Appendix 6 (the "Open General Licence" List) contained Part II now which listed items open to import under Export House Additional Licence. Under both Import Policies, 1984-85 and 1985-88 the four acrylic ester monomers appeared at item 9 of Appendix 3 (List of Limited Permissible Items).

Changes in the nomenclature of the headings of the Appendices in the Import Policy 1982-83 and thereafter were considered necessary in the context of loans and financial assistance ,. received from international agencies to bridge the gap in India's balance of payment, and because the Import Policy of India is considered a vital document by foreign countries in the for1111lation of their fiscal policies. The change in the nomenclature did not alter the principle underlying the grouping of items under the various heads. Each grouping was determined and continued to be so determined in accordance with two major objectives of import policy, the conserving of foreign \ exchange by limiting the total imports to a level ensuring r 'that payment for them could be met by the available foreign exchange resources or by maintaining a minimum deficit in the balance of trade, and the further objective of giving i8'>etus

to, and protecting, the development of indigenous industries by limiting the import of corresponding manufactured products.

The items in Appendix 3 (List of Limited Permissible Imports) ).. , were those whose import was not permissible ordinarily but could be permitted by the Government if their import was necessary and justified on the merits of the relevant consideration mentioned in the Import Policy, while the import of items Absolutely Banned (and later simply described as "Banned") was not permissible at all.

The Import Policy 1978-79 incorporated a scheme under - which Registered Exporters were registered as EKport Houses and granted special facilities to strengthen their negotiating capacity in foreign trade and to build up a more enduring relationship between them and their supporting manufacturers.

They were eligible for the grant of Export House Certificates on the basis of the exports actually made in the three year base period 1975-76, 1976-77 and 1977-78. Export Houses were entitled to the following facilities :-

(i) Import replenishment licences elig; ible• to them ,. as Registered Exporters,

(ii) Import replenishment licences transferred to them by others,

(iii) Import of items placed on Open General Licence , and

(iv) Additional Licences.

Replenishment Licences issued in the names of Export Houses, ,.._ or transferred to them by others, entitled th<!m to import capital goods placed on Open General Licence subj<!ct to Actual Users condition, and raw materials, components, and spares placed on Open General Licence for Actual Users (Industrial).

The Additional Licence granted for 1978-79 would be valid for the import of items appearing in Appendix 5 (List of Restricted Items) and Appendix 7 (Restricted List - Iron and Steel Items) excluding, however, the items appearing in Appendix 26'.--i' An Additional Licence would also be valid for import of rlN ' materials, components and spares placed on Open General Licence for Actual Users (Industrial), the Export House being obliged to dispose of the items so imported to eligible Actual Users only.

,, ..

Several diamond exporters including the fourth respondent, N. Nayan Kumar and Company, and the fifth respondent, Rajnikant Brothers, applied for Export House Certificates and consequent Additional Licences. Their applications were refused on the ground that they had not diversified their exports.

A number of writ petitions were filed in the High Court of Bombay and in the High Court of Delhi, and in each case the High Court held that the ground for rejecting the application

~ was invalid and directed the grant of an Export House Certificate and an Additional Licence to the applicant. As those orders became the subject of corresponding appeals by the Union of India in this Court which were disposed of by this Court by its order dated April 18, 1985, the construction of which is central to the controversy in this appeal, it would

be appropriate to refer to those orders at this point.

..,

Taking the orders seriatim passed by the High Court of Bombay there is first the order dated November 26, 1982 by

Pendse, J, in Writ Petition No. 1458 of 1979 filed by Natendra Mafatlal Mehta, whereby the learned Judge directed the grant o.f an Export House Certificate under Import Policy 1978-79 to the petitio.ner, but while extending the time for making application for an Additional Licence he held the pet~ tioner entitled to those facilities only which were provided by paragraph 174 of that Import Policy. Thereafter the same learned Judge passed an order dated November 11, 1983 in Writ Petition No. 1293 of 1979 filed by D. Navinchandra & Co. in which, while directing the grant of an Export House Certificate under the Import Policy 1978-79 to the petitioner, ,;.

Pendse, J. noted the objection on behalf of the Government that some of the items which could have been imported under the Import Policy 1978-79 could have been banned under the Import Policy 1983·54, and the learned Judge observed that if any item was banned \li:tder the Import Policy 1983-84 the petitioner would not be entitled to import that item even though it was not banned under the Import Policy 1978-79. Another objection by the Government that the petitioner should not be ., permitted to import items which were canalised items under .the !''Import Policy 1983-84 was rejected by Pendse, J., and he observed that canalised items were not banned items· and the petitioner, should not be compelled to approach the canalising agency for the import of items which were not canalised items under the Import Policy 1978-79. He directed that the petitioner would not be entitled to import only those' items which , were specifically banned under the Import Pol.icy 1983-84 prevalent at the time of import. On December 23, 1983, Pendse, J, passed an order in Writ Petition No. 761 of 1983 filed by Messrs. N. Nayankumar and Company where he directed the issue of an Export House Certificate to the petitioners under the Import Policy 1978-79 and held the petitioners entitled to an Additional Licence for the import of items in the same terms as was set forth in the order dated November 11, 1983 in the • earlier case. The foruth order in the series Wa!1 passed on January 25, 1984 by Bharucha, J. in Writ Petition No. 1048 of 1983 filed by Messrs. Mehta Gems., and that lea med Judge taking note of the orders passed earlier by Pendse, J. in similar cases, also directed the issue of an Export House Certificate to the petitioners and while granting time to the petitioners for applying for an Additional Licence he directed:-

"Save and except items which are specifically banned under the prevalent import policy at the ,.

time of import, the Petitioners shall be entitled . to import all other items whether canalised or otherwise."

Then followed the order dated January 30, 1985 passed by Sawant, J. In Notice of Motion No. 1194 of 1984 in Writ Petition No. 761 of 1983 filed by N. Nayankumar .~ Co. and the order directed :-

1. The Respondents should make the following ' endorsement on the licence in question :- ~

"This licence is valid for import of items permissible to export houses under additional licence category as per paragraph 176 of the Import and Export Policy for the period 1978-79 excluding those items which are banned for the period 1978-79 and which have been banned during the import policy for the period 1984-85. The additi.onal licenc~4 category import allowed to be imported subject to the provisions of paragraph 176 of the Import and Export Policy for the Period 1978-79.

2. The banned items referred to abo"e mean items which are "banned" and "absolutely banned".

3. 'Ille Petitioners will take out a separate Motion for Import Replenishment (REP) Licence transferred to them by others , if any. ·

4. No other order on the present Motion and the B Motion stands disposed of as above with no order as to costs.

• Adverting to the orders passed by the High Court of Delhi in the several Writ Petitions filed before it, we find that the High Court by its order dated July 15, 1980 in Writ Petition No. 250 of 1979 filed lTJ Jayantilal Mangalji Mehta c held the petitioner entitled to an Export House Certificate under the Import Policy 1978-79, and observed that the Certificate would operate with effect from the "original entitlement keeping in view the date of the application and the year for which it was applied". On September 3, 1982 the High Court directed in Civil Writ Petition No. 251 of 1979 filed by Vijay D Trading Company that an Export House Certificate for the year .. 1978-79 should be issued to the petitioner and declared him entitled to all the consequential Replenishment and Additional Licences, and further directed, on a concession made by the petitioner that he would be satisfied if he was permitted to import those items only which were not banned in the year E 1980-81, (as the case had originally come up for hearing on July 15, 1980), that the Replenishment and Additional Licences be issued in those terms. Tilereafter, on April 7, 1983 the High Court, while disposing of Writ Petition No. 1501 of 1981 filed by Raj nikant Brothers, ordered the renewal of their ._ Export House Certificate for the Year 1978-79 and directed F that as they had filed the Writ Petition on May 11, 1981 they would be entitled to the consequent licences for the import of those items only which were open to import under the Import Policy 1981-82. 'Ille High Court went on to observe :-

"It may be that some of the items, which were G permitted to be imported in the year 1981-82 may now have been absolutely banned under the Policy

for the current year, i.e. 1983-84. In such a case the petitioner, of course, cannot be permitted to import those items. If, for example, an item which could be freely imported under the Policy for the H year 1981-82 is now only canalised, then the

petitioner may still be entitled to import that ..

item because merely canalising an it.em cannot be "11111 regarded as import of that item being absolutely banned."

It has been .mentioned earlier that the Un.ion of India appealed against the orders of the High Court cif Bombay and the High Court of Delhi, the appeals being Civil Appeal No. 1423 of 1984 (Union of India v. Rajnikant Brothers) and Civil • Appeals Nos. 3232,3233 and 29020 to 29027 of 1984. A number of Special Leave Petitions, being S.L.Ps. Nos. 13826 to 13829 of 1983,9161,9174,10868, 952 to 971, 7190,2892 to 2899, 8224 of 1984, 14471 of 1982 and 9338 of 1983 were also disposed of along with the appeals. The order dated April 18, 1985 disposing of those cases reads as follows :-

''We have heard counsel for the parti.es and have gone through the judgments of the High Courts of Bombay and Delhi. We are unable to find, in the facts and circumstances of the case, any require- "' ment of diversification of exports as a condition for the grant of Export House Certificates in the Import Policy for the year 1978-79. While confirming the High Court's Judgment quashing the order impugned in the Writ Petitions in the High Court we direct the appellants to issue the nec.essary Export House Certificates for the year 1978-79. The Export House Certificates shall be granted wl.thin 3 ioonths from this date. Save and except items which are specifically banned under the prevalent import _. policy at the time of import, the respondents shall be entitled to import all other items whether canalised or otherwise in accordance with the relevant rules. The appeals are disposed of accordingly with no order as to costs."

Pursuant to the orders of this Court and of the High Court of Bombay and the High Court of Delhi, th.e diaioond exporters have been issued Additional Licences which permit them4

to import item such as acrylic ester monomers.

The appellants are aggrieved by the g1'.ant of such Additional Licences and see in the import of items under those

~Licences grave danger to their indigenous industry. Moreover, they say, valuable foreign exchange will unnecessarily go out

of the country. In the circumstances, the appeJ., lants filed Writ Petition No. 11676 of 1985 in this Court complaining that the order dated April 18, 1985 of this Court was being misinterpreted and, in consequence, the impor~ of acrylic B ester monomers was being allowed. On August 1, 1985, this Court dismissed the Writ Petition with liberty to the ;, appellants to move the High Court of Bombay. The appellants then filed Writ Petition No. 1549 of 1985 in the High Court of Bo!llbay, but the writ petition was rejected in limine by Pendse, J. on August 12, 1985. An appeal from that order, being Appeal No. 726 of 1985, was dismissed by a Division C Bench on August 16, 1985. The appeal was dismissed on the ground, inter alia, that the withdrawal or cancellation of the additional endorsement made on the Additional Licences would conflict with the order of this Court and would amount to modifying or nullifying it. Thereafter, the appellant filed a *special.leave petition in this Court, and on special leave D being granted, this appeal is now before us.

It is admited between the parties in this appeal that the fundamental question for consideration is the true meaning and scope of the order dated April 18, 1985 made by this Court. There is no dispute that'the diamond exporters enjoying E the benefit of the order are entitled to the issue of Export House Certificates under Import Policy 1978-79 and to the facilities flowing from such grant. There can also be no dispute that the consideration whether the items sought to be

~ imported by such diamond exporters are canalised cannot act as an impediment to the import directly by them.

The order F declares further that such diamond exporters shall be entitled to import all items "save and except items which are specifically banned under the prevalent import policy at the time of import." The controversy between the parties centres around the meaning of the expression "specifically banned", specially in the context of an Additional Licence granted to such G r iamond exporter.

Shri V .M. Tarkunde, counsel for the appellant company, contends that under the aforesaid order dated April 18, 1985 Export Houses holding Additional Licences are prohibited under the Import Policy 1985-88 fro]jl importing items other than H

those appearing in Part II they are taken into account the~ result would be the same. He points out that under the Import Policy 1978-79 an Additional Licence was valid for the import of raw materials placed on Open General Licence for Actual Users (Industrial) and the relevant item 1 of Appendix 10

(List of Items on Open General Licence) excluded from import the items under Appendix 3 (Banned List). As acrylic ester monomers did not appear in that list nor were ecluded by the other terms of item 1 of Appendix 10 they could, under the,.

Import Policy 1978-79, be imported under Open General Licence by the holder of an Additional Licence, who was under paragraph 176 of the Import Policy, obliged to dispose them off to Actual Users (Industrial) only. But now under the Import Policy 1985-88, prevalent at the time of import, the holder of an Additional Licence is no longer entitled to import acrylic ester monomers because that item is now inserted in Appendix 3 Part A, which by a change of nomenclature, is currently described as the List of Limited Permlssible Items• Further, learned counsel contends, inasmuch as the purpose of~

issuing Additional Licences is to satisfy the ne1ds of small scale manufacturers who are unable to import directly the small quantities of raw materials required by them, and therefore the holder of an Additional Licence is obl:lged to supply the imported item to Actual Users (Industrial), regard must be had to the circumstances that under the Import Policy 1985-88 even Actual Users are debarred from importing acrylic ester monomers because this item has been placed in Appendix 3 Part A. Item 1 of Appendix 6 of the Import Policy 1985-88, which lists the items to be imported under Open General Licence, excludes the items appearing in Appendix 3 Part A from import > by Actual Users (Industrial). Learned counsel urges that if Actual Users (Industrial) are themselves barred from importing that item the holder of an Additional Licence is also barred from doing so because in the final analysis he imports only to supply the item to Actual Users (Industrial).

The ban. has been imposed, it is pointed out, as part of a policy to protect indigenous industry. Learned counsel urges that when the orders of the High Courts and of this Cour.~-j directed the grant of an Export House Certificate under the ·

Import Policy 1978-79 to diamond exporters for use during the operation of a subsequent Import Policy, it must be regarded as the grant of an exceptional right to them, beocause in all the years after 1978-79 diamond exporters were not entitled to

any Additional Licence. In the circwnstances, it is said, when A

-1, construing the scope of those orders, regard must be had to the observations of this Court in Deputy Asst. Iron & Steel Controller & Anr. v. L. Man:lckclumd, Proprietor, Katrella Metal Corpn. Madras, [1972] 3 s.c.R. 1.

The Union of India has made common cause with the B appellant company, and Shri B. Datta, the learned Additional

i, Solicitor General of India, who appears on its behalf urges that the Export House entitlement under the Import Policy 1978-79 has to be reconciled with the entitlement and facilities available under the Import Policy 1985-88, He urges that the expression "specifically banned" in the order dated April 18, 1985 of this Court must be given a meaning c consistent with the changed Import Policy now prevailing at the time of import, and that what is impermissible for import against Additional Licences under the current Import Policy cannot be allowed to be imported now. In the first place learned counsel points out that the High Courts and this Court >'have already permitted a departure from the current Import D Policy in holding the diamond exporters entitled to Export House Certificates. Under paragraph 173 of the Import Policy 1978-79 an Export House Certificate is normally valid for three years only. It would no longer be valid now. In the year 1978-79 due to the need for protecting export trade and providing incentives to diamond exporters they became eligible E for a total import licence to the extent of Rs. 108 against an export valued at Rs. 100. The Replenishment Licence entitled them to import on an average of 75% of the F .O.B. value of exports while Additional Licences entitled them to another "- 33%. With the development of the national economy and the availability of indigenous products the policy was changed F from the year 1979-80 onwards, and for the prupose of calculating the entitlement fot an Additional Licence .the value of exports of select products carrying an import replenishment rate of more than 50% in Appendix 17 of the Import Policy 1979-80 was not to be taken into account, and the value of such exports was not to be included by an Export House while G }-applying for an Additional Licences. In the result, the year 1978-79 was the only year for which diamond exporters could be granted Additional Licences. Learned counsel emphasises the need, in the circwnstances, to ensure that further departure from the current Import Policy should not be permitted. He

invites our attention to paragraph 35(1) of the Import Policy~ 1985-88 which provides that Replenishment Licences and Additional Licences held by Export Houses would cease to be f valid for the import of any item which could have been imported under Open General Licence during the preceding financial year or earlier but was no longer so under the B Import Policy l985-88.

Shri K.K. Venugopal appearing for the fourth respondent, ' N. Nayankumar & Company, opposes the confined construction sought to be put by Shri V .M. Tarkunde, learned counsel for the appellant company and Shri B. Datta, Additional Solicitor C General of India on the order dated April 18, l985 of this Court, and urges that diamond exporters, who were entitled under the orders of the High Courts to the issue of ExpoL c Houses Certificates and consequently Additional Licences were entitled under the terms of those orders to import all items which could be imported under Open General Licence under the D Import Policy l 978-79 as well as all items w'1ich could be f.. imported under the Import Policy 1985-88, including items in Appendix 3 Part A (List of Limited Permissible Iems), but not items absolutely banned under the Import Policy 1985-88. He contends that the rights of such diamond exporters must be considered in the context of the Import Policy l978-79 and not E of the Import Policy 1985-88. The applications for Export House Certificates were made under the Import Policy 1978-79 and were denied by the Chief Controller of Imports on a wholly untenable ground and consequently the intent of the orders of the Courts was to entitle such diamond exporters to restitution. Such restitution could be effected only if the diamond~ F exporters could, notwithstanding the passage of time occasioned by the pendency of the proceeding in Court for releif against the wrongful order, be placed back in the position which they would have occupied had Export House Certificates being granted. As regards the items which such diamond exporters were entitled to import, he has referred to material on G the record indicating how respondent 1 to 3 themselves understood the orders of the Court. Our attention has been invit<; sl~ to paragraph 5 of the counter affidavit of Dr. R.K. Dhawan, ' Deputy Chief Controller of Imports and Exports, filed on behalf of respondents Nos. 1 to 3 which states :-

H "5. In terms of the Court order the parties can

import all the items which were under O.G.L. during 1978-79 except animal tallow and animal rennet which were now banned under Appendix 2-A."

In this connection, reference may also be made to the affidavit of Kanayalal J. Chellani, Deputy Chief Controller of B Imports and Exports, filed before the High Court of Bombay in Writ Petition No. 1686 of 1985 (Reliance Industries Limited J. v. Union of India), a copy of which has been included as Exhibit 19 to the affidavit of N. Nayankumar and Company in reply to Civil Miscellaneous Petition 43000 and 43001 of 1985 in Civil Appeal No. 3233 of 1985 (Union of India & Ors. v. N.

Nayanlnnnar & Ors.). Paragraph 9 states :- C

"9. I say that it is significant to note that the subject item has not been banned or restricted (Appendix 2 of 1985-88 Policy. It has. only been shifted from 0, G, L. to L.P.L. The petitioners after receiving a licence for import of the said item D can very well still import the item."

Shri Venugopal has attempted to demonstrate that there is need for importing acrylic ester monomers and that in fact the Government of India envisages such import notwithstanding that the item is no longer on the O.G.L. list but finds place now E in Appendix 3 of the Import Policy 1985-88. He invites our attention to the counter affidavit of Nikhal Premchand Shah filed on behalf of N. Nayankumar & Company to the effect that because of the inability of the Indian Petrochemicals Corpora-

..0 tion Limited to run its plant at full capacity the commodity which was being sold to Actual Users at Rs.30 per kilogram was F now being sold at Rs. 150 per kilogram. There is reference to a news item in the Indian Express dated April 18, 1985 stating that although the official price was about Rs. 67 per kilogram, a premium of over 155 per cent was being charged in the open market, and the purchaser was compelled to pay a total of Rs. 152 per kilogram. There are several provisions of the G

} Import Policy 1985-88 under which import of acrylic ester tbonomers is permitted. They can be imported by Actual Users as specified in paragraphs 82 (1) and 82(3) of that Import Policy read with Appendix V-D of the Hand Book of Import and Export procedures 1985-88. A Registered Exporter holding Replenishment Licences is entitled to import the item under paragraph H

195(1) of the Import Policy inasmuch as Ethyl Acrylate Monomer)... and Butyl Acrylate Monomer appear as item B. 36 :ln Appendix 17 of the Import Policy. Under paragraph 204(1) of the Import Policy, a special facility has been given' to a manufacturerexporter holding a valid Replenishment Licence issued in his name against exports of select products manufactured by'him to B import the item specified in Appendix 3. It is contended by Shri Venugopal that the Word "Banned" in the order dated April 18, 1985 of this Court should be interpreted in a manner con-• sistent with Joint Qiief Controller of hpon:s & Exports, Madras v. M/s. Aminchand Mutha etc., (1966] l S.C.R. 262 and Union of India & Ors. v. M/s. Indo-Afghan Agencies Ltd., C (1968] 2 S.C.R. 366 and it should, therefore, bE! construed as ref erring to the import of goods into the country and not in relation to the bar placed on an individual to import goods which can otherwise be imported into the country. Even if the goods covered by the Licences issued under the Import Policy 1978-79 were found to be canalised under the Import Policy D 1985-88 and, therefore, excluded from import directly by i< private importers, the licences would still operate in regard to such goods. Learned counsel urges that the word "in accordance with such rules" in the order of the Court would govern only the manner and method of import and the procedure for application, the fees to be paid, the duties to be paid and E other particulars and does not govern the entitlement to import the goods.

Shri S.J. Sorabjee, appearing for N.

Nayankumar and Company, a respondent in Civil Appeal No. 3233 of 1984 filed by the Union of India against the order of the High Court of • F Bombay, urges that there is a fundamental qualitative difference between the goods the import of which is prohibited and goods the import of which is restricted or controlled. The goods of which import is prohibited cannot lawfully cross the customs frontiers of India and enter the stream. of trade and co111Derce in the country.

The expression "banned goods" or G "banned items", he says, as understood in the diBcourse of the import and export trade, means prohibited goods. Restricted or I controlled goods whose import is permitted into the country i subject to the fulfilment of certain conditions, learned counsel submits, cannot be described as bannE!d goods. The feature of non-importability is a characteristic or an attri-

<I( bute of the goods themselves and does not depend upon the person who imports the goods. Our attention is drawn to the distinction between the prohibition of prescription of certain goods, for example, narcotics, counterfeit coins, obscene and seditious literature on the one hand and goods the import of which is qualified by the category of the person entitled to B import the goods. Carralised goods are goods of which import is subject to restriction, in that they cannot be imported •directly by the private importers and such goods are not considered "banned" goods. It is urged that the import of goods can be validly prohibited only by an order under s.3 of the Imports and Exports Act, 1947, and learned counsel refers to Aorlnchand Mutba's case (supra) and Jagan, nath Aggarwal v.

C B.N. Dutta (Civil Appeal No. 801 of 1964 decided on January 10, 1967). According to the learned counsel, it is the import of only the items mentioned in Appendix 2-A of the Import Policy 1985-88 which is covered by a notified order under the Act. No such notified order has been made in respect of "'acrylic ester monomers. Learned counsel points out that the D ban on the import of goods into India is to be found not only under the Imports and Exports Act, but under other enactments, such as the Customs Act, the Foreign Exchange Regulation Act, the Drugs and Cosmetics Act, and the Insecticides Act. Learned counsel contends that the objective of the orders of the High Courts and of this Court was to effect restitution to E aggrieved diamond exporters, who were victims of an unlawful denial of their applications for Export House Certificates.

It is urged that they are entitled to full and complete restitution, and they have suffered already a diminution of

their rights in the additional fetter imposed by the Courts in excluding items which were banned under the prevalent Import F Policy at the time of import. There is no justification, learned counsel contends, in further reducing the scope of the restitution to which the diamond exporters were entitled and the orders of the Courts sould be construed against any further reduction of their entitlement. It is asserted that the entitleioont of the diamond exporter flows from the Import G \Policy, 1978-79 and not from the Import Policy 1985-88. There

rare several items which can be imported under the Additional Licences issued under Import Policy 1985-88 but the import of which was not permissible to Additional Licences holders under the Import Policy 1978-79 and, it is said, if the construction sought by the appellant company and the Government of India H

were accepted the diaroond exporters would suffer the worst under both Import Policies and even partial restitution accorded by the order dated April 18, 1985 of this Court would be nullified. Finally, learned counsel contends that assuming there is an ambiguity in the matter we should choose such a construction as would not subject the party to pains and penalties under various statutes besides the loss and hardship which would be inevitable. 'That two views are possible, it is pointed out, is evident from the fact that the Import Control• authorities have taken the view that the expression "specifically banned" in the orders of the Courts does not include items placed on the Limited Permissible List of the Import Policy 1985-88.

Shri Ashok Desai, appearing for Rajnikant Brothers, Respondent No. 5, relies on considerations somewhat parallel to those placed before us'by Shri Sorabjee and urges in particular that the right of the importer to-an Export House Certificate and to a consequential licence does not alter with,. variations affected in the Import Policy during the passing of time when litigation was pending and is not dei?endent on the exact point of.time at which the benefits were made available.

In construing the order dated April 18, 1985 of this Court, learned counsel states that the central objective of effecting restitution should be borne in mind and that the entitlement to the Additional Licence is founded in the Import Policy 1978-79 and not in the Import Policy 1985-88 and, it is said, paragraph 265 of the Import Policy 1985-88 cannot be invoked for construing the rights of the holders of Additional Licences issued under the Import Policy 1978-79. The successive.~ screening of the rights through the two Import Policies, of 1978-79 and 1985-88, would result in a construction so severe as to deny the diamond exporter~ any restitution at all.

Learned counsel cites, as an example of the scope which this Court intended in its order dated April 18, 1985, the direction in that order that the canalisation of items under the Import Policy 1985-88, which were open to direct import under the Import Policy 1978-79, cannot. operate as a restrittion .• 4 It is said that the ban against direct import by private · importers imposed by canalisation as thus removed, and the invention of the court always was that only the items "specifically banned" fell within the exception to the. rights of the diamond exporter, "specifically banned" items .being those

.~ absolutely banned and appearing in Appendix 2-A of the Import

Policy 1985-88.

Shri Anil Dewan, who appears for Messrs Hiralal Chaganlal and Shrijee Sales Corporation, lntervenors in this B civil appeal, has also been heard by us. He contends that the expressions used by the courts in their orders must be understood in the sense in which those involved in the import of

~ goods and in import licensing understand such expressions, and that if the construction suggested by the appellant Company and the Union of India is accepted the diamond exporters would be wholly prohibited from obtaining an Additional Licence C under the Import Policy 1985-88. The expression "specifically banned" must, according to learned counsel, refer to items the import of which is banned not by reference to the person importing, but because they are prohibited from any import whatsoever. Reference was made to the change in the headings of the Appendices in successive Import Policies and, it is urged, D

i. the change of the heading "List of Banned Items" in Appendix 3 to the heading "List of Limited Permissible Items" llllst be given due significance. In other words, items which were banned are now regarded as open to restricted import. Besides this, learned counsel has adverted to the particular facts of his case, and asserts that while his case was not one of those E in appeal before this Court and therefore not directly covered by its order dated April 18, 1985, no appeal had been filed by the Government against the grant of licence in the case of these two diamond exporters, and that the said diamond exporters had opened irrevocable Letters of Credit before the

J writ petition filed by the appellant company, full payment had F been made and foreign exchange had left the country, and shipments had been effected in June, 1985, and the Customs authorities had interpreted the order in their case to mean that the goods imported were not "banned". It is pointed out that only a small quantity of 32 tonnes had been detained at the port, that the insurance cover of the shipper or seller no G longer covered the goods, that the goods were of hazardous

~.pature and were lying uninsured, and he prayed that the goods should be allowed to be cleared.

We think it necessary to keep in the forefront the limits of the enquiry before us. We are not concerend with the H question of what order should be made on the controversy

arising between the parties in the appeals, The Appeals have ).. already been disposed of. They were disposed of by the order dated April 18, 1985. It is not our function to redetermine the issues arising in those appeals, and this is not a rehearing of those appeals. We are charged with a more limited B and pedestrain task. And that is merely to construe the meaning and scope of the order dated April 18, 1985. The submissions of learned counsel have been thoughtful and elaborate, and having regard to the range covered by them they • would have done justice to a full hearing of the appeals themselves. We can take assistance from them,. but only for the c purpose of discovering what has been said by the Court in its order of April 18, 1985. That defines the scope of the present proceeding.

The terms in which the order has been made appear simple on the surface, and yet as the range and depth of the conten- D tions at the Bar have demonstrated, they embody a certain complexity. At the outset, it is necessary to examine the ,. context in which the order was made. Diamond exporters, who had been denied Export House Certificate under the Import Policy 1978-79, filed writ petitions in the High Court of Bombay and the High Court of Delhi. The High Courts ruled that E the ground on which the Export House Certificates had been refused was wholly untenable. They directed the issue of such Certificates as well as the consequent Additio:1al Licences, but while defining the right of the diamond exporters to import items under the Additional Licences they also took into account the Import Policy prevailing at the time of import in F regard to the items which could not be imported. The pendency .~ of the litigation had inevitably occupied time, and meanwhile events had not remained stationary.

The ccmtextal framework determining the import structure had altered. Considerations pertaining to current economic and fiscal needs had led to the periodic reorientation of the country's Import Policy. In- G digenous industry had put in appearance over the years, and it was necessary to protect its growth and encourage its development.

Many items which could formerly be imported with. j comparative freedom under Open General Licence w''re no longer l so permissible.

And, therefore, items W\!re moved from one List to another. There was a change in the nomenclature of H the Headings of different Lists, but that change was effected merely by way of clarification in order to promote a clearer comprehension among foreigen countries of India's import

policy. it was a change essentially in nomenclature, and for the ioost part effected no alteration in the basis governing the classification reflected in the Lists. The basis of the classification was supplied by the principle which determined

the constitution of each group. That principle bound the group B together. It was a principel which along with others formed the network of principles constituting the current Import Policy. It is in this light that we nnist understand the order .. dated April 18, 1985. The Courts were confronted with the problem that items which were open to import under Open General Licence to an Export House holding an Additional Licence were no longer included in that List and had meanwhile c been transferred to a List not accessible to the holders of Additional Licences. The dictates of reality rendered it necessary for the Courts to take into account the altered situation, and this they attempted to do by framing their respective orders_ in appropriate terms. They took into account not only the rights of the diamond exporters under the Import D •Policy 1978-79 but also the effect and impact on those rights of the Import Policy operating at the time of the import.

It is desirable at this point to keep in mind that the appeals filed in this Court against the orders of the High Courts were appeals filed by the Union of India. There were no E appeals by the diamond exporters. The complaint by the Union of India before this Court was that the High Courts had granted too nnich to the diamond exporters or even that no grant was called for at all. There was no complaint by the diamond exporters before the Court that the grant was insuffi-

~ cient and that more should have been granted. This Court was F required to consider only whether the relief granted by the High Courts should have been granted at all, not whether it should be enhanced. In other words, the terms of the High Court orders determined the outer limit of the rights of the diamond exporters. As this Court dismissed the appeals and affirmed those orders, the meaning and scope of this Court's G order dated April 18, 1985 nust be discovered from the terms l of the High Court orders. And that would plainly be so because rthe language in which the order of this Court is couched bears close comparison with one or other of the High Court orders.

In construing the order dated April 18, 1985 of this H Court, it is necessary to note that the real controversy

between the parties centres on the meaning of the words~ "specifically banned". They are the key weirds, and indeed the principal submissions 'made by the array of learned counsel before us have been devoted to ascertaining the significance of those words. They are words which were used by Pendse, J. and Bharucha, J. in the orders made by them, and our task is to find out what they were intended to mean. Now, all the appeals before this Court were disposed of by the order dated April 18, 1985. It was a single -or4er in respect of the• different appeals, and what it intended to say in one appeal it did in another. The Court proceeded on the assumption that the Judges of the High Court of Bombay should be considered to have spoken with one voice and meaning although in different language. And that Pendse, J. , Bharu_cha, J. and Sawant, J. were all in agreement as to the extent of relief to be granted to the diamond exporters. To appreciate then what is intended by the words "specifically banned" it is necessary to have recourse also to the order made by Sawant. J.

He directed that the Additional Licences were valid for the import of A items permissible to Export Houses under such Licence according to paragraph 176 of the Import Policy 1978--79 "excluding those items which are banned for the period 1978-79 and which have been banned during the Import Policy for the period 1984-85," and then explained that "banned items referred to above mean items which are 'banned' and 'absolutely banned'.

The word "banned" in that order has been used for the period 1978-79 , and it has also been used in relation to the period 1984-85.

It is obvious that in the light of the explanation appended by the learned Judge when he spoke of items which were banned for the_ period 1978-79, he had in mind items which 1' were "banned" and items which were "absolutely banned", and he was clearly referring to Appendix 3 (List of Banned Items) and Appendix 4 (List of Absolutely Banned Items). Appendix 3, it will be recalled, ' ; the list of items which could not be imported by an Export ·,:ouse on an Additional Licence. It was a ban with reference to the category of importer.

Appendix 4 is , the list of items which could not be imported by anyone whosoever. When regard is had to the Import Policy

1984-85, _J reference must necessarily be made to the corresponding 1 Appendix 3, formerly described as the List of Banned Items , and now described as the List of Limited Permissible Items, and Appendix 2 Part A which is now the List of Banned Items replacing Appendix 4 (List of Absolutely Banned Items). In

-' other words, the Additional Licences to be issued to diamond exporters entitled them to import items permissible to Export Houses under such Licence under the Import Policy 1978-79 excluding those items which'fell within Appendices 3 and 4 of the Import Policy 1978-79 and also excluding items which fell

in Appendix 3 and Appendix 2 Part A. of the Import Policy B 1984-85.

Upon what we have said earlier, that is the meaning which we think must also be given to the terms of the order _\ dnted April 18, 1985 of this Court. Where the Import Policy prevailing at the time of import is the Import Policy 1985-88, the items excluded are those enumerated in the corresponding Appendix 3 and Appendix 2 Part A of that Import Policy. That conclusion follows irresistibly on the analysis attempted by C us and in the context in which the order was made.

We are mindful of the submissions made before us by learned counsel for the different diamond exporters that the word "banned" in the import trade should mean item which are x absolutely banned and cannot be imported under any circumstance whatever, and that an import of ite~ subject to restrictions respecting the category of il!'Porter should not fall within the expression "banned". Reliance has been placed on Awfnchlll!d "1tha's case (supra) as well as lndo-Afgban Agencies Ltd.'s case (supra). Goods can be banned it is urged, only by an order under s. 3 of the Imports and Exports Act, 1947, and we are referred to Jagannath Aggarwal v. B.N. Dutta

(supra) (Civil Appeal No. 801 of 1964 decided on January 10, 1967). It seem> to us that when the word "banned" was used, it was intended to take in items which were banned altogether as

~ well as items which were banned for import by the holder of an Additional Licence. The Court was concrened with the right to import of the holder of an Additional Licence. The holder of an Additional Licence was prohibited from importing items which were banned al together and also items which he, as the holder of an Additional Licence, was banned from importing. If the more liberal interpretation suggested by learned counsel for the diamond exporters was given to the words "specifically , anned" we would be enlarging the scope of relief granted by Sawant, J., and such a construction is clearly impermissible when no diamond exporter had appealed against that order before this Court. It may be of some relevance to note that when this Court made the order dated April 18, 1985 when the Import Policy 1985-88 was in force, there were only two items

which were absolutely banned, and they were animal tallow and animal rennet. That was also substantially the position under"" the Import Policy 1984-85.

It has been urged on behalf of the respondent diamond exporters that if the order dated April 18, 1985 is constured B in the manner suggested by the appellants it will result in nullifying the relief envisaged by the Court in making the order. We are unable to subscribe to that view. In the Import Policies of 1984-85 and 1985-88 the items open to import under '- Open General Licence are now set forth in Appendix 6, A perusal of Part 11 of List 8 in Appendix 6 shows that it C enumerates in fairly long detail the items allowed to be imported by Export Houses holding Additional Licences for the sale of those items to eligible Actual Users (Industrial) subject to Actual User Condition. That is the "ntitlement of the holder of an Additional Licence under paragraph 265( 4) of the Import Policy 1985-88,

D We are conscious that the right of a diamond exporter to an Additional Licence does not issue from paragraph 265of the Import Policy 1985-88. Paragraph 265 enables the grant of Additional Licences to other Export Houses, and diamond exporters are not entitled to Additional Licences under that E Import Policy. There can be no dispute that the Export House Certificates granted to the diamond exporters pursuant to the orders of the High Courts and of this Court are those envisaged under the Import Policy 1978-79. But for the purpose of granting relief in their favour the Courts took into account the conditions prevailing at the time of import, and F therefore the provisions of the Import Policy l 985-88 become >- relevant. They are relevant for the purpose of c:onstruing the terms in which relief has been granted by the Courts. They do not constitute the source of those rights.

Great emphasis has been laid by learned c.ounsel on the G overriding consideration that the intent of the High Courts and of this Court was to effect restitution to the diamond exporters, who had been denied Export House Certificates to 4 which they were clearly entitled, and there is no justification, it is said, for so construing the order dated

H April 18, 1985 that the extent of restitution stands attenuated. We think it necessary to point out that the diamond exporters cannot, 11pon our construction <>f the order,

be regarded as denied restitution. But the. restitution IP" available to them has been reduced by the express direction of

 the Court that they are not entitled to import items excluded under the Import Policy prevailing at the time of import in addition to those excluded under the Import Policy 1978-79. We may, in this connection, refer to the observations of this Court in Manickchand's case (supra) where it was pointed out:

"In granting licences for imports, the authority concerned has to keep in view various factors which may have impact on imports of other items of relatively greater priority in the larger interest

of the over-all economy of the country which has C to be the supreme consideration ; and ail applicant has no absolute vested right to an import licence in terms of the policy in force at the time of his application."

)i It seems to us that the construction placed by us on . D order dated April 18, 1985 is consistent with the principle that the Court must be presumed to have given effect to the law. That presumption can be rebutted only upon evidence showing a clear intention to the contrary, either expressly or by necessary implication. We see no such evidence before us. En passant, we may refer to paragraph 35(1) of the Import E Policy 1985-88, which declares :

"35. (l). REP licences and Additional licences held by Export Houses/Trading Houses will cease to be valid for import of any item which could be imported under Open General Licence during the F preceding licencing year or earlier but is no longer so in this Import-Export Policy."

But while the construction suggested by the appellant company and the Union of India of the order dated April 18, 1985 of this Court has found favour with us , the scope of G

te relief to be granted remains to be considered. The interim orders passed by the Court in this appeal were made on the basis that they operate in respect of all diamond exporters seeking to import acrylic ester monomers pursuant to the Additional Licences issued to them and this case has been heard on th!' assumption that the orders made on the appeal H

will govern all such diamond exporters.

In drawing up those orders, a few facts need to be carefully considered. As men-~ tioned earlier, consequent upon the rejection of their applications for Export House Certificates under the Import Policy 1978-79 a number of diamond exporters approached the High Court of Bombay and the High Court of Delhi and were granted relief. The directions made by the High Courts issued in a steady and continuous stream from the year 1980 onwards, and the High Court of Bombay in particular detailed the facilities to which the petitioner diaioond exporter would be entitled on the issue of an Export House Certificate. The orders continued all the way upto January, 1985. Appeals filed by the Union of India in the High Court of Bombay against the orders of the respective learned Single Judges were dismissed by a Division Bench of the High Court and those orders were affirmed.

In the writ petition filed by Messrs. Vijay Tradi.ng Company in the High Court of Delhi, the High Court had directed that although the petitioner was entitled to an Export House Certificate for the year 1978-79 it would be entitled to import:< those items only which were not banned in the year 1980-81, the writ petition having been taken up for hearing during that year. A Special Leave Petition by the union of India against that order was dismissed by this Court on April 18, 1983. An application by the Union of India for review of that order was dismissed by this Court on May 4, 1984. Meanwhile, the Union of India appealed to this Court against the orders of the High Court of Bombay and of the High Court of Delhi made in favour of the diaioond exporters in the writ petitions filed by them and it has not been shown that any stay order was granted by this Court in thoae appeals. The appeals were heard along with~ several special leave petitions by this Court, and were dismissed by the order dated April 18, 1985 in terms which, as has been mentioned earlier, affirmed the High Court orders.

The appellant company in this case filed a writ petition in the High Court of Bombay and that writ petition was dismissed on August 12, 1985. Meanwhile, Additional Lfoences had been issued to some of the diamond exporters by the Import Control Authorities, and it appears clearly from the affidavit of Dr~ R.K. Dhawan, Deputy Chief Controller of Imports and Exports and the affidavit of Shri Kanayalal J. Chellan1l, Deputy Chief Controller of Imports and Exports that the Import Control Authorities themelves considered that the diamond exporters holding Additional Licences were entitled to import all the

tems accessible to them under Open General Licence under the Import Policy 1978-79 except those placed in Appendix 2 Part A of the Banned List under the Import Policy 1985-88. It also appears that some of those diruoond exporters who had been granted Additional Licences pursuant to the orders of the High Courts have already fully utilised those Licences and in some cases have partly utilised them.

Throughout this period: any diamond exporter granted an Additional Licence under the

Import Policy 1978-79 could bona fide believe having regard to the ccnsistent orders made by the Courts and the equally.consistent manner - in which the Import Control Authorities had construed those orders, that he was entitled to effect imports_ accordingly. Many of them opened irrevocable Letter of Credit on oders placed with foreign suppliers convinced that they. ·._.-e fully entitled to import the items ordered by them. This I, popular impression continued. unabted until October 18, 1985, i when for the first time since it all began this Court made an order, on the Special Leave Petition giving rise to the nresent appeal (Special Leave was granted on November 5, 1985), imposing a restraint on the clearing of acrylic ester monomers by the customs authorities. The date, October 18, 1985, is a critical date, because for the first time diamond exporters can be saidto have been warned that the Court.could possibly take a different view from that prevailing hitherto.

Meanwhile, as we have said, some of. the diamond exporters had already irretrievably committed tbemelves' by opening and establishing irrevocable Letters of Credit. We think it appropriate that those diamond exporters who were granted Additional Licences under the Import Policy_l978-79 and had opened and established irrevocable Letters of Credit before October 18, 1985 should be permitted, notwithstanding the construction we have placed on the order dated April 18, 1985 of this Court, to clear the goods imported, or to be iniported, by them pursuant to such irrevocable Letters of Credit. In other words, all imports effected pursuant to such Letters of Credit should be deemed to have been legally and properly made, and should entail no adverse consequences whatsoever.

In taking

h!s view we are. impressed by the broad principles of justice, equity andfairplay and by the need to avoid undeserved hardship, and we are not persuaded to the contrary by legal technicalities. We may point out that the validity of this principle has been recognised in paragraph 35(3) of the Import Policy 1985-88 itself,.where while declaring that Additional Licences issued to Export Houses in the Preceding licencing

year or earlier shall cease to be valid for the import of'- items of spares appearing in certain Appendices, including Appendix 3, of the Import Policy for the licencing year an exception has been carved out insofar that "these restrictions . will not apply to the extent the licence holders have made firm commitments' by irrevocable Letters of Credit opened and established •••••••••• before 1st April 1985'', the date when the Import Policy 1985-88 came into force. • At the same time we make it clear that diamond exporters who pursuant to the issue of Additional Licences under the Import Policy 1978-79 have opened and established irrevocable C Letters of Credit on or after October 18, 1985 will not be entitled to the benefit of this order.

The appeal, and therefore the writ petition filed by the appellants, are disposed of accordingly. Thre is no order as to costs.

A.P.J.