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PETITIONER: INDO AFGHAN CHAMBERS OF COMMERCE & ANR. ETC.

       Vs.

RESPONDENT: UNION OF INDIA & ORS. ETC.

DATE OF JUDGMENT15/05/1986

BENCH: PATHAK, R.S. BENCH: PATHAK, R.S. MUKHARJI, SABYASACHI (J)

CITATION:  1986 AIR 1567            1986 SCR  (3)  79  1986 SCC  (3) 352        1986 SCALE  (1)1290  CITATOR INFO :  E&D        1987 SC 175  (2,7,9,13,16)  F          1987 SC 179  (1,2)  RF         1987 SC1794  (5,12,15,21)  RF         1989 SC 690  (6)  RF         1992 SC 696  (11,12)

ACT:      Import Policy  1985-88-Appendix 2  Part B and Item 1 of Appendix 6-Dry  fruits-Import by  diamond  exporters-Holding additional licences-Whether permissible.

HEADNOTE:      The petitioner,  an associations  of dealers engaged in the business  of selling  dry  fruit  in  North  India,  who purchase dry  fruits either  locally or through imports from outside India,  challenged the  grant of additional licences to the  respondents-diamond exporters,  under Article  32 of the Constitution.      On behalf  of the  petitioners, it  was contended:  (i) that the  goods sought  to be  imported  on  the  Additional Licences  included   those  which  were  prohibited  by  the prevalent Import  Policy; (ii)  that the principle which was applied to  the import  of acrylic  easter monomers  extends likewise to  the  import  of  all  other  commodities  under Additional Licences  granted to diamond exporters in similar circumstances and,  therefore, the diamond exporters are not entitled to  import dry  fruit; and (iii) that the import of dry fruit  is covered by item 121 in Appendix 2 Part-B (List of Restricted  Items) of  the  Import  Policy  1985-88  and, therefore, the  respondents are  not entitled  to resort  to Item 1 of Appendix 6.      On behalf  of the  respondents, it  was contended:  (i) that paragraph  176 of  the Import  Policy 1978-79 envisages the grant  of Additional  Licences for  the  import  of  raw materials which have been placed on Open General Licence for Actual Users  (Industrial); (ii)  that they  import the  dry fruits as  raw  material  for  the  purpose  of  selling  to eligible  Industrial   Actual  Users   for  processing   for manufacturing into  a variety  of products  under Item  1 of Appendix 6 of the Import Policy 1985-86; (iii) that item 121 of Appendix  2 Part-B  (List of  Restricted  Items)  is  not attracted  because   it  refers  to  "consumer  goods",  and

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consumer goods 89 are not  raw material for the purposes of item 1 of Appendix 6; and  (iv) that  the petition  under  Article  32  is  not maintainable because the petitioners’ fundamental rights are not violated,  in as much as no appeal has been filed by the Customs Authorities  or by  the Import  Control  Authorities against the  interim order dated January 8, 1986 of the High Court  directing  the  Customs  Authorities  to  permit  the respondents to clear the imported consignment of almonds.      Allowing the Writ Petition and the Appeal, ^      HELD: 1. Respondents Nos. 10 and 11 are restrained from importing dry  fruits during  the period  1985-88 under  the Additional Licences  granted to them under the Import Policy 1978-79. [97F]      2.  Under   the  Import   Policy  1978-79,  dry  fruits (excluding cashewnuts)  could be imported by all persons for whatever  purpose   under  the   Open  General  Licence.  No Additional Licence  was  required.  By  wrongful  denial  of Additional Licence  to diamond  exporters no  damage can  be said to  have been  suffered by  them  and  no  question  of restitution could, therefore, be said to arise. The wrongful denial of  the Additional  Licences was wholly immaterial to the importing  of  dry  fruits  (exluding  cashewnuts).  The respondents have  not shown  that the dry fruits were placed on  Open  General  Licence  specifically  for  Actual  Users (Industrial). Under  the Import  Policy 1978-79 their import was open to all persons.[94F,C]      3. The  position in  regard to the import of dry fruits (excluding  cashewnuts)   is  simple  and  suffers  from  no complexity.  Dry  fruits  (excluding  cashewnuts)  could  be imported by all persons under Open General Licence under the Import Policy  1978-79. But  under the Import Policy 1985-88 dry fruits  (excluding cashewnuts  and dates)  are no longer open to  import under  Open General  Licence. If  dry fruits (excluding cashewnuts  and dates)  are regarded as items for stock and  sale, the  import is governed by paragraph 181(3) is Chapter XIII of the Import Policy 1985-88, which declares that import  of dry  fruits (excluding cashewnuts and dates) will be  allowed against  licences issued to dealers engaged in this trade. [94E-H]      4. The  diamond exporters cannot be regarded as dealers engaged in  the trade  of stocking  and selling  dry  fruits (excluding cashewnuts  and dates).  They are, therefore, not entitled to  the advantage of paragraph 181(3) of the Import Policy 1985-88. [95A-B]      5. Dry  fruits must  be regarded  as consumer  goods of agricultural 90 origin. The  words "agricultural  origin" are  used  in  the broadest sense. Dry fruits do not appear in Appendix 3 Part- A and 5 nor can be imported under Open General Licence under the Import  Policy 1985-88.  In as  much as they fall within item (121)  of Appendix  2 Part-B they are excluded from the scope of item 1 of Appendix 6, and cannot be imported as raw materials  and   consumables  for   sale  to   Actual  Users (Industrial). "Consumables"  are referred  to in  item 1  of Appendix 6  as goods  meant for  Actual  Users  (Industrial) "Consumer goods"  in item 121 of Appendix 2 Part-B can refer to  dry   fruits  imported   for  supply   to  Actual  Users (Industrial).[95F-H; 96A]      6. The  expression "specifically  banned" occurring  in the order  dated April 18, 1985 of this Court determines the range of  the items  open to  import  by  diamond  exporters

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holding Additional  Licences. The items excluded from import by diamond  exporters under  Additional Licences  under  the Import Policy  1985-88 were the items enumerated in Appendix 3 and  Appendix 2  Part-A of  that Import Policy. Appendix 2 Part-A is  the successor  of Appendix  4 (List of Absolutely Banned Items) of the Import Policy 1978-79. Appendix 2 Part- B (List  of Restricted  Items) was  also  the  successor  of Appendix 4  (List of Absolutely Banned Items). Appendix 4 in the Import  Policy 1978-79  was described  as the Absolutely Banned List. [96B-E]      The present  Appendix 2  Part-A and  Appendix 2  Part-B constitute together  what was  originally List  4  (List  of Absolutely Banned  Items) under  the Import  Policy 1978-79. The diamond  exporters  holding  Additional  Licences  were, therefore,  not  entitled  to  import  goods  enumerated  in Appendix 2 Part-B of the Import Policy 1985-88.[96F-G]      7. The  diamond exporters  are  not  entitled  to  take advantage of  item 121  of Appendix 2 Part-B for the purpose of importing  dry fruits. The holders of Additional Licences are entitled  to import  only those goods which are included in Appendix  6 Part  2 List  8 of the Import Policy 1985-88. Dry fruits  are not  included in  that List  and, therefore, they cannot  be imported under Additional Licences. They are also not entitled to the benefit extended by the judgment of this Court  dated March  5, 1986  to those diamond exporters who had  imported items  under irrevocable Letters of Credit opened and established before October 18, 1985. [97B-C]      8. An  interim  order  cannot  defeat  the  fundamental rights of  the petitioners  merely because  it has  not been questioned by  the Customs Authorities or the Import Control Authorities. [97E] 91

JUDGMENT:      ORIGINAL/CIVIL APPELLATE  JURISDICTION:  Writ  Petition No. 199 of 1986      Under Article 32 of the Constitution of India.                             with Civil Appeal No. 664 of 1986      From the Judgment and Order dated 20th January, 1986 of the Bombay High Court in Writ Petition No. 183 of 1986.      V.M. Tarkunde  and Rajiv  Datta, for  the Petitioner in W.P. No. 199 of 1986.      B. Datta, Additional Solicitor General, Soli J. Sorabji and K.K.  Venugopal, A.G.  Ganguli, A. Subba Rao, Miss Kutty Kumarmangalam, C.V.  Subba Rao, Harish Salve, K.R. Nagaraja, B.R. Agarwala,  M.M. Jayakar  and Miss  V.  Menon,  for  the Respondents in W.P. No. 199 of 1986      F.S. Nariman  and A.B.  Diwan,  P.H.  Parekh  and  Uday Lalit, for the Appellants in C.A. No. 664 of 1986      B.   Datta,    Additional   Solicitor   General,   K.K. Venlugopal,  A.G.   Ganguli,  A.   Subba  Rao,   Miss  Kutty Kumarmangalam, C.V.  Subba Rao,  B.R. Agarwala, M.M. Jayakar and Miss  V. Menon,  for the  Respondents in C.A. No. 664 of 1906.      The Judgment of the Court was delivered by      PATHAK, J. The petitioners, M/s Indo-Afghan Chambers of Commerce and its President, Sundar Lal Bhatia, are aggrieved by the  grant of additional licences to the respondents, M/s Rajnikant Brothers  and M/s  Everest Gems  for the import of dry fruits.      The petitioner,  M/s Indo-Afghan  Chambers of Commerce, is an  association of  dealers engaged  in the  business  of

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selling dry fruit in North India. The dry fruit is purchased by them  either locally  or  through  imports  from  outside India. The  respondents,  M/s  Rajnikant  Brothers  and  M/s Everest Gems,  are diamond  exporters who  have been  issued additional licences pursuant to an order of the Court in the following circumstances. 92      The respondents  diamond exporters  had applied for the grant of  Export House  Certificates under the Import Policy 1978-79  and   had  been  denied  the  Certificates  on  the erroneous  ground   that  they  had  not  diversified  their exports. In  writ petitions  filed in the Bombay High Court, they were  held entitled  to the  Export House Certificates. Special leave  petitions filed by the Union of India against the order  of the High Court were dismissed by this Court by its order  dated April  18, 1985 which, while confirming the order of the High Court directed the appellants to issue the necessary Export  House Certificates  for the  year 1978-79, and  further   that:  "Save   and  except  items  which  are specificially 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 respondents diamond exporters and  other like  diamond  exporters  were  granted Additional Licences,  and started  importing goods  on those Additional Licences.  It is the case of the petitioners that the goods  sought to  be imported on the Additional Licences included those which were prohibited by the prevalent Import Policy.  The  diamond  exporters  commenced  the  Import  of acrylic ester  monomers. This  was  challenged  by  M/s  Raj Prakash Chemicals  Ltd.,  an  Indian  company  manufacturing acrylic ester  monomers in  India, by a writ petition in the Bombay High Court seeking a clarification of the order dated April 18,  1985 of  this Court  mentioned earlier.  The High Court rejected  the writ  petition, and an appeal by Special Leave filed  by the  Indian company  was disposed of by this Court by  its order dated March 5, 1986. The Court held that it was  not permissible  for the diamond exporters to import acrylic ester monomers under the Additional Licences granted to them  during the period of the Import Policy 1985-88, but having regard  to the  circumstance that the High Courts had already passed  orders permitting  such import  and  further that the Import Control Authorities had specifically allowed such  import   this  Court  permitted  such  imports  to  be completed in  respect of which irrevocable Letters of Credit had been opened and established before October 18, 1985, the date on  which for  the first  time an order was made by the Court imposing  a restriction  on the  clearing  of  acrylic ester  monomers   by  the  Customs  authorities.  The  Court regarded the  date, October  18, 1985  as  a  critical  date because the  diamond exporters  could be  said to  have been warned on  and from  that date that the Court could possibly take a different view from that prevailing during the period before that  date when,  because of  the orders  of the High Courts and  the conduct  of the  Import Control Authorities, the diamond  exporters could have legitimately believed that they were 93 entitled to  effect such  imports. It  was made clear by the Court that  cases in which irrevocable Letters of Credit had been opened and established after October 18, 1985 would not be entitled  to the  benefit of  that order. The petitioners contend that  the principle  which was applied to the import of acrylic  ester monomers extends likewise to the import of all other  commodities under  Additional Licences granted to

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diamond exporters  in similar  circumstances. It is asserted that  the  respondents  diamond  exporters  and  other  like diamond exporters  began to  import dry  fruit  under  their Additional Licences.  It is  contended that having regard to the terms of the order of this Court dated April 18, 1985 as construed and clarified by its order dated March 5, 1986 the diamond exporters are not entitled to import dry fruit.      By order  dated March  5, 1986  the Court construed its order dated  April 18,  1985 to  mean that  only such  items could be  imported by diamond exporters under the Additional Licences granted  to them  as could have been imported under the Import  Policy 1978-79,  the  period  during  which  the diamond exporters  had applied for Export House Certificates and had  been wrongfully  refused, and  were also importable under the  Import Policy  prevailing at  the time of import, which in  the present  case is  the Import  Policy  1985-88. These were  the  items  which  had  not  been  "specifically banned" under  the prevalent Import Policy. The items had to pass through  two tests.  They should  have been  importable under the  Import Policy 1978-79. They should also have been importable under  the Import  Policy 1985-88 in terms of the order dated April 18, 1985.      The case  of the  petitioners is  that under the Import Policy 1978-79  dry fruits  (excluding cashewnuts)  could be imported by  all persons under the Open General Licence. Dry fruits (excluding  cashewnuts), is  mentioned at  item 22 of Appendix 10  of the  Import Policy 1978-79 as open to import under the  Open General Licence. There was no need to obtain an Additional  Licence for  importing them in the year 1978- 79,  and   therefore,  the  wrongful  denial  of  Additional Licences to diamond exporters in the year 1978-79, could not justify any restitution subsequently in regard to the import of dry fruits (other than cashewnuts). There is substance in the contention.  Under the  Import Policy 1978-79 dry fruits (excluding cashewnuts)  could be imported by all persons for whatever  purpose   under  the   Open  General  Licence.  No Additional Licence  was required.  If an  Additional Licence was wrongfully  denied to diamond exporters at time when dry fruits (excluding cashewnuts) were importable under the Open General Licence no 94 damage  can  be  said  to  have  been  suffered  by  diamond exporters who  had been  refused Export  House Certificates, and  consequently  Additional  Licences,  under  the  Import Policy  1978-79.   In  the  circumstances,  no  question  of restitution could  be said  to arise for the wrongful denial of the  Additional Licences.  The  wrongful  denial  of  the Additional Licences  was wholly  immaterial to the importing of dry fruits (excluding cashewnuts).      It is  urged by  the respondents diamond exporters that paragraph 176  of the  Import Policy  1978-79 envisages  the grant of Additional Licences for the import of raw materials which have  been placed  on Open  General Licence for Actual Users (Industrial).  It has  not been  shown to  us that dry fruits were placed on Open General Licence specificially for Actual Users  (Industrial). Under  the Import Policy 1978-79 their import was open to all persons.      We may  assume for  the purpose  of this  case  that  a diamond exporter  is  legitimately  entitled  to  obtain  an Additional Licence  under the  Import Policy  1978-79 for an item which  is different  from the item he may have intended to import  had the  Additional Licences been rightly granted to him  originally. In  that event, the diamond exporter can succeed only  if the item could have been imported under the Import Policy 1978-79 and also under the Import Policy 1985-

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88 in  accordance with  the terms of the order of this Court dated April  18, 1985  as construed  by this  Court  by  its judgment dated March 5, 1986.      The position  in regard  to the  import of  dry  fruits (excluding  cashewnuts)   is  simple  and  suffers  from  no complexity. As  has been  mentioned, dry  fruits  (excluding cashewnuts) could  be imported by all persons under the Open General Licence  under the  Import Policy 1978-79. But under the Import  Policy 1985-88,  when the  dry fruits (excluding cashewnuts and  dates) are  now sought  to be  imported, dry fruits (excluding  cashewnuts and  dates) are no longer open to import  under the  Open General Licence. The sanction for importing them  must be  found under some other provision of the Import  Policy. If  dry fruits (excluding cashewnuts and dates) are  regarded as items for stock and sale, the import is governed  by paragraph  181(3) in  Chapter  XIII  of  the Import Policy 1985-88. Paragraph 181(3) declares that import of dry  fruits (excluding  cashwenuts  and  dates)  will  be allowed against  licences issued  to dealers engaged in this trade, the  value of  the import  licence in each case being equal to  20 per cent of the C.I.F. value of the best year’s imports of the applicant in respect of dry fruits (excluding 95 cashewnuts and  dates) during  any of  financial years  from 1972-73 to  the  preceding  Licencing  year,  subject  to  a minimum of  Rs.5000. Admittedly  the diamond exportes cannot be regarded  as dealers engaged in the trade of stocking and selling dry  fruits (excluding  cashewnuts and  dates). They are, therefore,  not entitled to the advantages of paragraph 181(3) of the Import Policy 1985-88.      But the  case of  the respondents diamond exporters, is that they  import the  dry fruits  as raw  material for  the purpose of  selling to  eligible Industrial Actual Users for processing or manufacturing into a variety of products, such as almond  oil, Ayurvedic  drugs and  medicines, Unani drugs and medicines,  processed  and  package  foods,  sweets  and confectionary, and  we are  referred to item 1 in Appendix 6 of the  Import Policy  1985-88. Now  item 1  of  Appendix  6 speaks of:           "1. Raw materials, components and consumables (non           iron and steel items) other than those included in           the Appendices 2, 3 Part-A, 5 and 8."      The petitioners  point out  that the item is covered in Appendix  2   Part-B  of  the  Import  Policy  1985-88  and, therefore,  the   respondents  diamond   exporters  are  not entitled to resort to item 1 of Appendix 6. Appendix 2 Part- B (List of Restricted Items) contains item 121 which reads:           "(121) All consumer goods, howsoever described, of           industrial, agriculatural  or animal  origin,  not           appearing individually  in Appendices 3 Part-A and           5 or  specifically listed  for import  under  Open           General Licence." There can  be no dispute that dry fruits must be regarded as consumer   goods   of   agricultural   origin.   The   words "agricultural origin"  are used in the broadest sense. It is also clear that dry fruits do not appear in Appendix 3 Part- A and  5 nor  can be imported under the Open General Licence under the  Import Policy  1985-88.  Inasmuch  as  they  fall within item  (121) of  Appendix 2  Part-B they  are excluded from the  scope of  item 1  of Appendix  6,  and  cannot  be imported as raw materials and consumables for sale to Actual Users (Industrial).  It is  urged by the respondents diamond exporters that  item 121  is not attracted because it refers to "consumer goods", and consumer goods are not raw material for the purposes of item 1 of Appendix 6. There is a fallacy

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here. It  will be noticed that "consumables" are referred to in item 1 of 96 Appendix 6  of goods meant for Actual Users (Industrial). We are not  satisfied that  "consumer goods"  in  item  121  of Appendix 2  Part-B cannot  refer to  dry fruits imported for supply to Actual Users (Industrial).      In construing  the order  dated April  18, 1985 of this Court, the  judgment dated  March  5,  1986  of  this  Court explained  the   singificance  of  the  words  "specifically banned"  occurring  in  the  former  order.  The  expression determines the  range of the items open to import by diamond exporters holding  Additional Licences. It was declared that the items  exluded from  import by  diamond exporters  under Additional Licences under the Import Policy 1985-88 were the items enumerated in Appendix 3 and Appendix 2 Part-A of that Import  Policy.  Appendix  2  Part-A  is  the  successor  of Appendix 4  (List of  Absolutely  Banned  Items)  of  Import Policy 1978-79.  A question arose before us whether Appendix 2 Part  B of Import Policy 1985-88 could also be regarded as a successor  of Appendix  4. It  appears from  the  material placed before  us that Appendix 2 Part B (List of Restricted Items) was  also successor of Appendix 4 (List of Absolutely Banned Items).  Appendix 4  in the Import Policy 1978-79 was described as  the Absolutely  Banned  List.  In  the  Import Policy 1982-83,  the same Appendix 4 is described as List of Non-Permissible Items  (Banned).  The  same  description  of Appendix 4  continued in  the Import  Policy 1983-84. During that year Beef Tallow was added in Appendix 4. In the Import Policy 1984-85,  Appendix 4  became Appendix  2 Part  A  and Appendix 2 Part B. Appendix 2 Part A was described as a List of Banned  Items and Appendix 2 List B was described as List of Restricted  Items. In  the Contents  of the Import Policy 1985-88 the  list of  Appendices makes clear that Appendix 4 of Import  Policy 1983-84  became  Appendix  2  Part  A  and Appendix 2  Part B  of the  Import Policy  1984-85. The same description of  Appendix 2  Part A and Appendix 2 Part B was continued in  the Import  Policy 1985-88.  Therefore, it  is apparent that  the present  Appendix 2 Part A and Appendix 2 Part B  constitute together what was originally List 4 (List of Absolutely Banned Items) under the Import Policy 1978-79. On the  reasoning which  found favour  with the Court in its judgment dated  March 5, 1986 we hold that diamond exporters holding Additional  Licences were  not  entitled  to  import goods enumerated  in Appendix  2 Part B of the Import Policy 1985-88.  On   that  ground  also  the  respondents  diamond exporters are  not entitled to take advantage of item 121 of Appendix 2  Part B  for the purpose of importing dry fruits. As held  by this  Court in its judgment dated March 5, 1986, holders of Additional 97 Licences are  entitled to  import only those goods which are included in  Appendix 6  Part 2  List 8 of the Import Policy 1985-88. Dry  fruits are  not  included  in  that  List  and therefore they cannot be imported under Additional Licences.      In our  opinion the  respondents diamond  exporters are not entitled  to import  dry fruits  under the Import Policy 1985-88 under  the Additional  Licences possessed  by  them. They are  also not  entitled to  the benefit extended by the judgment of  this Court dated March 5, 1986 to those diamond exportes who had imported items under irrevocable Letters of Credit opened  and established  before October  18, 1985. It appears from  the record  before  us  that  the  respondents diamond exporters  opened and  established  the  irrevocable Letters of Credit after that date.

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    One  more   contention  of   the  respondents   diamond exporters remains  to be  noticed. It is urged that the writ petition under  Article 32  is not  maintainable because the petitioners’ fundamental  rights are  not  violated.  It  is pointed out  that no  appeal has  been filed  by the Customs authorities or by the Import Control authorities against the interim order dated January 8, 1986 of the Bombay High Court directing the  Customs authorties to permit M/s Everest Gems to clear  the imported  consignment of  almonds. We  do  not think that  an interim  order  can  defeat  the  fundamental rights of  the petitioners  merely because  it has  not been questioned by  the Customs authorities or the Import Control authorities.      The writ  petition is  allowed and the respondents Nos. 10 and  11, M/s Rajni Kant Brothers and M/s Everest Gems are restrained from importing dry fruits during the period 1985- 88 under  the Additional  Licences granted to them under the Import Policy  1978-79. In  the circumstances  there  is  no order as to costs.      Civil Appeal  No. 664  of 1986  is directed against the judgment and  order of  the Bombay  High Court rejecting the appellants’ writ  petition challenging  the  import  of  dry fruits by  the respondent, M/s Everest Gems under Additional Licences  granted  under  the  Import  Policy  1978-79.  The questions raised  in this  appeal are  identical with  those raised in the writ petition disposed of earlier.      In the  result this appeal is allowed, the judgment and order dated  January 28,  1986 of  the Bombay High Court are set aside and the writ 98 petition filed in the High Court is allowed. The respondent, M/s Everest  Gems is  restrained from  importing dry  fruits during the  period 1985-88  under  the  Additional  Licences granted to  them under  the Import Policy 1978-79. There is, however, no order as to costs. A.P.J.                                       Appeal allowed. 99