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PETITIONER: M/S. JAIN EXPORTS PVT. LTD. & ANR.

       Vs.

RESPONDENT: UNION OF INDIA & ORS.

DATE OF JUDGMENT:       14/08/1996

BENCH: BHARUCHA S.P. (J) BENCH: BHARUCHA S.P. (J) MAJMUDAR S.B. (J)

CITATION:  1996 SCALE  (5)839

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T BHARUCHA, J.      The correctness of the order of the High Court of Delhi dismissing the  writ petition filed by the appellants before it is under challenge.      The appellants imported liquid caustic soda in bulk, on which Customs, auxiliary and countervailing duty was payable at the  aggregate rate of 98.5 per cent. The State Chemicals and Pharmaceuticals  Corporation  of  India  Ltd.  (the  3rd respondents) also imported caustic soda but were required to pay duty  thereon only at the rate of 10 per cent because of an exemption  granted to the public interest under the terms of Section  by the  appellants on  the ground that there was discrimination; the  appellants were  also entitled  to  the exemption granted  to the 3rd respondents. The writ petition prayed  for  the  grant  of  such  exemption;  and,  in  the alternative,  that  the  exemption  in  favour  of  the  3rd respondents should he declared null and void.      It is  not now  in dispute  that the  case would  stand covered by  the judgment of this court in M.Jhangir Bhatusha and Ors.  vs. Union of India & Others, 1989 Supp. (2) S.C.C. 201, but  for  the  appellant’s  argument  that  there  were special or peculiar circumstances which created an equity in its favour.      Learned counsel  for the  appellants  relied  upon  the following passage in Jhangir Bhatusha’s case:      "13. First,  as to  the  contention      that both  the reasons set forth in      the exemption  notifications  under      Section  25(2)   of  the   Act  are      without foundation.  It seems to us      that the  two reasons  set forth in      the  exemption   notifications  can      constitute a  reasonable basis  for      those notifications. It does appear      from the  material before  us  that

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    international      prices      were      fluctuating, and  although they may      have shown a perceptible fall there      was the  apprehension that  because      of  the   history  of  fluctuations      there was  a possibility  of  their      rising in  the future.  The need to      protect  the   domestic  market  is      always   present,   and   therefore      encouragement had  to be  given  to      the imports  effected by  the State      Trading Corporation by reducing the      rate  of  customs  duty  levied  on      them. This  involved  a  long  term      perspective,  since  the  exclusive      monopoly  to  import  these  edible      oils was now entrusted to the State      Trading Corporation.  What  appears      to have dominated the policy of the      government in issuing the exemption      notifications was the consideration      that   the   domestic   prices   of      vanaspati should  be maintained  at      reasonable  levels.  It  cannot  be      doubted that  the entire edible oil      market is  an integrated  one,  and      that it  is not reasonable to treat      any one  of the edible or vanaspati      in isolation. It is a well accepted      fact that  vanaspati  manufacturers      constitute  a   powerful  organised      sector in  the edible  oil  market,      and a  high vanaspati  prices would      encourage an unauthorised diversion      of the  edible  oils  to  vanaspati      manufacturing units, resulting in a      scarcity in  the edible oil market,      giving rise  to arratic  prices and      depriving consumers  of  access  to      edible   oils.    The   need    for      preventing vanaspati  prices ruling      high was  also  to  prevent  people      normally   using    vanaspati   rom      switching  over   to  other  edible      oils, thus  leading to an imbalance      in the  oil market. An overall view      made it  necessary to  ensure  that      domestic   prices    of   vanaspati      remained at  reasonable levels.  To      all   these    considerations   the      learned Attorney  General has drawn      our attention,  and we  cannot  say      that  they   are   not   reasonably      related to  the  policy  underlying      the exemption  orders. So  that the      government  would  have  sufficient      supplies of edible at hand in order      to feed  the  market,  the  learned      Attorney  General   says,  it   was      considered  desirable  and  in  the      public interest  to reduce the rate      of customs  duty to  5 per  cent on      the  imports   made  by  the  State      Trading Corporation.  Now it is the      Central Government  which has to be

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    satisfied,   as    the    authority      appointed   by   Parliament   under      Section 25(2), that it is necessary      in the  public interest to make the      special orders of exemption. It has      set out  the reasons which prompted      it  to  pass  the  orders.  In  our      opinion,     the      circumstances      mentioned  in  those  notifications      cannot be  said to be irrelevant or      unreasonable. It  is not  for  this      Court to  sit in  judgment  on  the      sufficiency of  those reasons.  The      limitations the jurisdiction of the      court   in    cases    where    the      satisfaction has  been entrusted to      executive authority  to  judge  the      necessity  for  passing  orders  is      well  defined  and  has  been  long      accepted.      14. It  is true that the State dons      the  robes  of  a  trader  when  it      enters  the   field  of  commercial      activity,  and  ordinarily  it  can      claim no  favoured  treatment.  But      there may  be clear and good reason      for making  a departure.  Viewed in      the background  of the  reasons for      granting a  monopoly to  the  State      Trading Corporation,  acting as  an      agent or  nominee  of  the  Central      Government   in    importing    the      specified oils,  it will be evident      that policy considerations rendered      it necessary  to make  consummation      of that policy effective imposing a      concessional levy  on the  imports.      No such concession is called for in      the case  of the  private importers      who,  in   any  event,  are  merely      working out  contracts entered into      by them with foreign sellers before      December 2, 1978."      Learned  counsel  for  the  appellants  submitted  that special circumstances  favoured the  appellants in  that the interio order  passed by  this Court  on 23rd  April,  1980, obliged the  appellants to  sell its caustic soda at a price that did  not take  duty at  the rate  of 92.5 per cent into account.      By  the   said  interim   order  on   the   appellant’s application for  stay of recovery of the difference in duty, the appellants  were permitted  to  clear  the  quantity  of caustic soda  stated therein  on  the  condition  that  they furnished security  to the  satisfaction of the Collector of Customs, Bombay,  for the  difference in duty between 10 per cent and 92.5 per cent, and, in the event that the Collector was  not   satisfied  with  such  security,  the  appellants furnished a  bank guarantee  for the  said  difference.  The interim order recorded that the appellants undertook "not to sell caustic  soda imported under the aforesaid licence at a rate higher  than Rs.5132  only per M.T. Ex-godown, which is represented  by   the  counsel   for  State   Chemicals  and Pharmaceuticals Corporation of India Limited as one price at which they  have sold  the quantity of caustic soda imported by them."

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    According to  learned counsel  for the  appellants,  an obligation  had   been  imposed   by  this  Court  upon  the appellants not  to sell  the caustic  soda at  more than Rs. 5132 per metric tonne. The appellants mad complied with that obligation. Consequently,  they had  been unable  to realise from the  purchasers of  the caustic soda a price sufficient to cover  the balance 82.5 per cent of duty. An equity arose in favour  of the  appellants by reason of the interim order and they should be permitted to pay as duty only 10 per cent as provided under its terms.      In the  first place,  the interim order was passed upon the application  for stay  of recovery  of the difference in duty made  by the  appellants. If  the appellants  found the conditions imposed  by the  order unacceptable,  they  could have sold  the caustic  soda at a price higher than Rs. 5132 per metric  tonne and  paid duty thereon at the rate of 92.5 per cent  after applying  to this  Court to  relieve them of their undertaking.  The appellants  acted upon  the  interim order knowing  full well  that if  the  appeal  was  decided against them  they would be required to pay duty at the rate of 92.5  per cent.  Acting upon the interim order created no equity in  favour of  the appellants,  nor are  these any or peculiar circumstances.      In the  second place,  an undertaking given to Court is not an  obligation imposed  by the  Court. It  as a  promise voluntarily  made   to  the   Court.  Acting  upon  its  own undertaking to  court creates  no equity  in favour  of  the party  giving   it,  nor   is  it   a  special  or  peculiar circumstance.      In the  third place,  the passage  from the decision in Jhangir Bhatusha’s case does not assist the appellants.      In the  fourth  place,  should  a  court  come  to  the conclusion that  an exemption is arbitrary or discriminatory or violative of Article 14, it may strike the exemption down but it  cannot widen its scope so as to cover those it finds have been  discriminated against.  Reference in  this behalf may be  made to  the judgment  in State  of M.P.  vs.  Mohan Singh, (1995)  6 S.C.C.  321,  to  which  one  of  us  (S.P. Bharucha, J.) was a party. Paragraph 6 is self-explanatory :      "6. Here  we part  company with the      High  Court.  Having  come  to  the      conclusion  that   the   grant   of      special  remission   to   Scheduled      Caste and Scheduled Tribe prisoners      was unlawful,  the proper course to      about should have been to strike it      down.  It   was  beyond   the  High      Court’s power  to expand  the reach      of the  remission so as to give the      benefit   of   it   to   the   writ      petitioner, who  did not  belong to      the Scheduled  Castes or  Scheduled      Tribes.  The  power  to  grant  the      remission lay  with the  State.  If      the power was improperly exercised,      the  High  Court  could  quash  the      exercise. The High Court could not,      in   effect,    grant   a   general      remission  where   the  State   had      intended it to be restricted."      Before we  part with  the appeal we should mention that it had once been allowed and that judgment and order was set aside on a review petition filed by the 1st. respondents.      The appeal  is dismissed, with costs. The costs payable by the  appellants  to  the  1st  and  2nd  respondents  are

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quantified at  Rs.25,000/- and  to  the  3rd  respondent  at Rs.5,000/-.