Dishing Out Unfair Treatment

 

 

IN THE judgement of the case – M/s Shah Nanji Nagsi Exports Ltd., Nagpur v the Director General of Foreign Trade at the Union Ministry of Commerce and Industry, delivered on November 22, 2024, Justice Nitin W Sambre and Justice Vrushali V Joshi at the Nagpur Bench of the Bombay High Court, have dealt with the aspect of “unfair treatment” meted out by the State to an Importer. The High Court has explained why it has observed so in quite uncomplicated words, that there is absence any component in the decision making process of the respondents that empowers them legally to impose such restrictions to limit the quantity of Maize to be imported from Brazil in South America. As such, an “unfair treatment” has been meted to the petitioner by the respondents, thereby affecting its right to trade guaranteed under Article 19(1)(g) of the Constitution of India.

 

he High Court has observed that there are no principled to guide the Licencing Authority in the matter of grant of authorisation and in such an eventuality, the expectation from the Licencing Authority or the Authority granting authorisation is to act fairly and to adopt a procedure, which can be said to be ‘fairplay in action’. In one of its judgements – M/s Kamdhenu Cattle Feed Industries, the Supreme Court has held that due observance of the statutory obligations as a part of good administration raises a reasonable or legitimate expectation fair treatment. As a sequel to the impugned decision will lead to suffering of business losses by the petitioner as it would be unable to work to its full capacity. As such, the respondents were expected to give due weightage to reasonability and legitimate expectation of the petitioner, which can be said to be a form of principle of non-arbitrariness. In this view of the matter, the High Court has felt that it is needed to be observed that the respondents, who are ‘State’ are required to act in consonance with Article 14 of the Constitution of India thereby not acting arbitrarily.

 

The respondents cannot claim that they have been vested with unfettered discretion as per the provisions of sections 3 and 9A of the Foreign Trade (Development & Regulation) Act, 1992 to impose restrictions on the quantity to be imported. The respondents are expected to act fairly and to adopt a procedure which can be termed as fairplay in action. While dealing with the request of the petitioner for granting authorisation to import, the law contemplates a procedure to be adopted and to adhered to for imposing the restrictions under the Act of 1992, Sections 3 and 9A of the Act of 1992 provide for making provisions by the Central Government relating to import and export and prohibit, restrict or otherwise regulate in a specified class of cases or in all cases of import or export so also putting quantitative restrictions. The High Court has declared that as there are no such statutory restrictions under sections 3 and 9A of the Act of 1992, it holds that the reliance placed by the respondents on Clause 13 of the FTP-2023 lacks merit. Therefore, the contention canvassed by the Dy SGI Nandesh S Deshpande that the said Clause confers absolute right on the respondents to reject authorisation dies not hold any water.

 

The Court has also already held that the even otherwise such refusal can be only on the basis of Act of 1992, Rules framed thereunder and the FTP-2023. The High Court has pointed out that the fact about the respondents having power to make provisions relating to imports and exports under Section 3 of the Act of 1992 is not in dispute. The Central Government in such an eventuality is required to publish an order in the official Gazette making provisions for the development and regulation of foreign trade by facilitating imports and increasing exports. Section 3(2) of the Act of 1992, contemplates that the Central Government may by order publish in the official gazette, make provision for prohibiting, restricting or otherwise regulating, in all cases or in specified class of cases and subject to such exceptions, if any, as may be made by or under the Order, the import or export of goods or services or technology. In response to the Courts query, the Deputy SGI, though tried to claim that it is vested with the power to deal with issuance of authorisation, he was unable to demonstrate before the Court that the Central Government has made any order published in the official gazette thereby prohibiting, restricting or otherwise regulating import of Maize Corn/Pop Corn. Even otherwise, under section 5 of the 1992 Act, the Central Government has power to frame the Foreign Trade Policy and also to make amendments in the same, part of which has been placed on record. After perusal of the same, the Court was unable to read any such restriction but for oral claim of the respondents, that authorisation to import cannot be claimed as of right. In addition, the Central Government is also empowered under Section 9A of the Act to impose quantitative restrictions. When confronted, the respondents are not in a position to demonstrate that the Central Government in the import of Maize Corn has imposed any quantitative restriction. In such an eventuality, the position taken by the respondents that under the FTP-2023, since authorisation is not a right, the petitioner can only be granted authorisation to import 2,000 Metric Tonnes Maize Corn/Pop Corn cannot said to be substantiated based on exercise of statutory powers, rather such restrictions imposed by the respondents by granting authorisation for importing only 2,000 Metric Tonnes of Maize Corn, is without authorisation under Section 9A and also in absence of statutory provision to import Maize Corn. Against the backdrop these facts, The High Court has said that it is of the view that the respondents’ refusal to grant authorisation to import balance 8,000 Metric Tonnes is not sustainable and is held to be arbitrary and in breach of Article 19(1)(g) of the Constitution of India. The Bombay High Court has directed the respondents to issue authorisation to the petitioners to import balance 8,000 Metric Tonnes of Maize/Pop Corn expeditiously latest within 4 weeks from the date of production of this Order.