# [1962] 3 S.C.R. 72

- **Citation:** [1962] 3 S.C.R. 72
- **Court:** Supreme Court of India
- **Decided:** 1962
- **Bench:** P.B. GAJE:>ImAGADKAR, K. Si::nBA RAo, )l. HrnAYATt;J.LAH, J.C. SHAH arnl RAG!lt"RAR DAYAL
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/1962-3-s-c-r-72-2473
- **Pages:** 16

## Headnote

Import
I,,c,nrr-Imporl Trad< Co11trol Pol1sy-Export
l'romotion-SrMmp-Jlight of Statr to im/>OR< 1eatrictioru °"
imports-If infringes fundamental righl-·f.icencing Authority
-l'ou:er., granted undrr the Erhfmf:·-·H'hethtT u11ranalised and
arhitrary-E111e,.genry J>rot1.,efo11,, (contr'nuanre) (Jrdinance, 1946
-Import" and ExJ1orl" (Control) Act, 1947t18 of J.947) •.JImpo1ta (Control) Ord.r J.9,55, Cl.
3, Ap]undix 42, cl. ~
Const.itution of India-Arts.
N, l.'l(l)(g).
In.tert•cncr-H'rit petition disn1is.1:ed hy lligh (,'ourt-I'ct1'tion.tr
could {If! 1Le1rd aA interrener in i'Jupre1nc (·ourf-]{iyht of appealConatitulion of India-Art. 226.
(;ovcr111nent of India published a schcn1c known as the
"Export Promotion Schcn1e" according to \vhich the value of
import licence for
rav.· matrrials in an
industry depended
upon the \'alue of specified ,·arieties of .~oo<ls exported by
the applicant for an import licence.
It also empowered the
Controller
of
Imports
ond
Exports
under cl. 2 of
Appendix 42 of the Import (Control) order 1955 to issue
a license up
to 66! P"' cent of the export value in the case
of Indian artsilk sarees and up to 100 per cent in the case
of other Indian artsilk fabrics. The appellant firm
R of
exporters and importers relying upon cl2 of the Export
Promotion Scheme applied for
an import licence equivalent
to the value of the goods it had exported and earned foreign
exchange.
In view of certain 1nalpracticcs the Government
of India suspended the "Export
Promotion" scheme and
set
up a committee for verification of the values of goods exported.
'l'hc Comtnittce after scrutinising the firm's claim found that
rates of sonic of the itetns could not be accepted as reasonable,
and recommended an import licence approximately of the
value of 45 per cent of the goods exported. The firm R after
making an infructuous demand for a licence for the full value of
the goods exported filed a \\Tit petition.
They
submitted
that the Controller of l,icenccs had arbitrarily reduced
the
value of their irnport licence
aod had thereby unlawfully
infrioged their fundamental right. They also claimed that
the Controller was bound to grant licence under the Export
Promotion Scheme for the full Yalue of rhe goods exported by
them and in failing to do so had pracfoed discrimination -
--
1
• \
A
-__/
3s.c.:R.
SUPREME COURT REPORTS
against them)
becau~e se\·eral
other irr,potters
during th~
identical period were givrn licences for the full value of goods
exported.
Held,
that the fundamental right of a citizen to carry
on any occupation, trade or business under Art. 19(l)(g) of
the Co11stituti.on is not absolute;
it is
subject to reasonable
restrictions which may· be imposed by the State in the interest
of the general public.
The right of the State to impose control in the larger
interest of the general public on imports has accordingly
not been denied;
nor is the authority of the State to issue the
Imports
(Control) Order,
1955 in exercise of the powers
conferred by the Imports and Exports (Control) Act providi':'g
for imposition of restrictions by permitting iinport of certrun
goods only in accordance with the licences or customs permits
granted by the Central Government, open to challenge. The
authority to grant or refuse to grant the licence is conferred.
upon high officers of the State and the grant of licence is
governed by the Import Trade Control Policy and detai~ed
provisions
are
made setting out the
grounds
on
which
licences
may
be refused,
suspended or
cancelled and
provision to afford a hearing before action is taken is
also
made;
thus
the powers conferred under cl.3 of the Imports
(Control) Order, l 955 are not uncanalised or arbitrary.
The power granted to the licensing authority to grant
licences only up to the maximum specified in cl.2 of the appendix
42 is by itself not an. unreasonable restriction,
nor will the
notification directing
scrutiny of all applications amount to
imposing an unreasonable restriction.
The clause invests the
Co

## Text

1961
'
SUPREJ\IE COl'.RT REPORTS
[196Zj
M/s. RAMCHA.ND JAGADI~H CHAND
ti.
CNION OF INDIA AND .OTHERH
(P.B. GAJE:>ImAGADKAR, K. Si::nBA RAo,
)l. HrnAYATt;J.LAH, J.C. SHAH arnl RAG!lt"RAR
DAYAL, JJ.)
Import
I,,c,nrr-Imporl Trad< Co11trol Pol1sy-Export
l'romotion-SrMmp-Jlight of Statr to im/>OR< 1eatrictioru °"
imports-If infringes fundamental righl-·f.icencing Authority
-l'ou:er., granted undrr the Erhfmf:·-·H'hethtT u11ranalised and
arhitrary-E111e,.genry J>rot1.,efo11,, (contr'nuanre) (Jrdinance, 1946
-Import" and ExJ1orl" (Control) Act, 1947t18 of J.947) •.JImpo1ta (Control) Ord.r J.9,55, Cl.
3, Ap]undix 42, cl. ~
Const.itution of India-Arts.
N, l.'l(l)(g).
In.tert•cncr-H'rit petition disn1is.1:ed hy lligh (,'ourt-I'ct1'tion.tr
could {If! 1Le1rd aA interrener in i'Jupre1nc (·ourf-]{iyht of appealConatitulion of India-Art. 226.
(;ovcr111nent of India published a schcn1c known as the
"Export Promotion Schcn1e" according to \vhich the value of
import licence for
rav.· matrrials in an
industry depended
upon the \'alue of specified ,·arieties of .~oo<ls exported by
the applicant for an import licence.
It also empowered the
Controller
of
Imports
ond
Exports
under cl. 2 of
Appendix 42 of the Import (Control) order 1955 to issue
a license up
to 66! P"' cent of the export value in the case
of Indian artsilk sarees and up to 100 per cent in the case
of other Indian artsilk fabrics. The appellant firm
R of
exporters and importers relying upon cl2 of the Export
Promotion Scheme applied for
an import licence equivalent
to the value of the goods it had exported and earned foreign
exchange.
In view of certain 1nalpracticcs the Government
of India suspended the "Export
Promotion" scheme and
set
up a committee for verification of the values of goods exported.
'l'hc Comtnittce after scrutinising the firm's claim found that
rates of sonic of the itetns could not be accepted as reasonable,
and recommended an import licence approximately of the
value of 45 per cent of the goods exported. The firm R after
making an infructuous demand for a licence for the full value of
the goods exported filed a \\Tit petition.
They
submitted
that the Controller of l,icenccs had arbitrarily reduced
the
value of their irnport licence
aod had thereby unlawfully
infrioged their fundamental right. They also claimed that
the Controller was bound to grant licence under the Export
Promotion Scheme for the full Yalue of rhe goods exported by
them and in failing to do so had pracfoed discrimination -
--
1
• \
A
-__/
3s.c.:R.
SUPREME COURT REPORTS
against them)
becau~e se\·eral
other irr,potters
during th~
identical period were givrn licences for the full value of goods
exported.
Held,
that the fundamental right of a citizen to carry
on any occupation, trade or business under Art. 19(l)(g) of
the Co11stituti.on is not absolute;
it is
subject to reasonable
restrictions which may· be imposed by the State in the interest
of the general public.
The right of the State to impose control in the larger
interest of the general public on imports has accordingly
not been denied;
nor is the authority of the State to issue the
Imports
(Control) Order,
1955 in exercise of the powers
conferred by the Imports and Exports (Control) Act providi':'g
for imposition of restrictions by permitting iinport of certrun
goods only in accordance with the licences or customs permits
granted by the Central Government, open to challenge. The
authority to grant or refuse to grant the licence is conferred.
upon high officers of the State and the grant of licence is
governed by the Import Trade Control Policy and detai~ed
provisions
are
made setting out the
grounds
on
which
licences
may
be refused,
suspended or
cancelled and
provision to afford a hearing before action is taken is
also
made;
thus
the powers conferred under cl.3 of the Imports
(Control) Order, l 955 are not uncanalised or arbitrary.
The power granted to the licensing authority to grant
licences only up to the maximum specified in cl.2 of the appendix
42 is by itself not an. unreasonable restriction,
nor will the
notification directing
scrutiny of all applications amount to
imposing an unreasonable restriction.
The clause invests the
Controller with authority,
it does not impose an obligation
upon him enforceable at the instance of the exporter, to issue
a licence for the amount (subject to the maximum prescribed)
claimed by the exporter. The power is plainly discretionary
and the order passed by the Controller granting a licence only
for 45% of the value of goods exported does not infringe the
ti.rndamental right of the petitioner under Art. !9(l)(g) of
the Constitution by imposing an unreasonable restriction.
Held, further that in the absence of evidence to show
that discriminatory treatment was made between the aggrieved
person and to persons similarly circumstanced, there can be
no violation of Art. 14 of the Constitution which confers a
guarantee against arbitrary
discrimination between persons
similarly circumstanced.
Held, also that where an application for writ of
·n1andamus,
direction or order under
Art.
226
of the
1~1
M/s. ftamchano
J agadish OM.f!d
v:
Union of India
1111
Mja. Ramcliatid
J09<Jdi•h Chat1d
v.
U1'ion of India
Shah .!.
•
SUPREME COURT REPOHTS
tl962J
Constitution is dimoi,,ed by the High Court, tl:e only remedy
to the aggric\'cd
perrnn is to come up by appeal and he has ~
no right to be heard as an intervener.
CRIMINAL JcmSDICTION: Writ Petition No. 1 of
1960.
Under article 32 of t.he Constitution of India
for the enforcement of Fundamental Rights.
A. V. V1'.su-anatha Sastri, K.K. J11in and Ganpat
Rai, for the PctitionerR.
C. K. Daphlary, Solicilor.Ueneral of India, V.A.
Saiyed Mohamad and T. Jf. Sen, for the Respondents.
1961. August 8. The Judgment of the Co11rt was
delivered by
SHAH,
J .-Controls on exports and imports
imposed as an emergency measur!' during the last
war in respect of certain commodities were kept
alive after the lapse of the Defence of India
Rules by the Emergency Provisions (Continuance)
Ordinance, 1946 which was later replaced by the
Imports
and
Export.;
(Control)
Act,
1947
(LS of 1947), hy s.(3) of the Act, the Central Government was authorised by ordCT published in the
Official Gazette, to provide for prohibiting, restricting
or otherwise controlling, in all cases or in specified
classes of cases, and subject to such exceptions if
any, as may be made by or under the order, inter
alia the import, export, carriage xxx xxx of goods
of
any
specified
description.
By
sub-s.(2)
of s.3., it was provided that all goods to which
an ordor under sub-s.( 1) applied shall be deemed
t-0 be goods of which the import or export has
been prohibited or restricted umler a.19 of the
Sea Customs Act. Exercising authority under a.3
of the. Imports and Exports (Control) Act, 1947,
the Central Government issued notifications from
time to time prohibiting, restricting or otherwise
controlling the export and import of diverse
commodities.
By a
consolidated order dated
•
•
j
3S.C.R.
SuPREll\IE COURT REPORTS
Dec<'mber 7, 1955, known as the Imports (Control)
Order,
HJ55,
restrictions
on the import of
certain goods were ·imposed by cl. 3 of the said
order.
By d. 3, it was provided that save as
otherwise provided in the order,· no person shall
import any goods of the description specified in
Schedule I, except under, and in accordance with,
a licence or a customs clearance permit granted
by the Central Government, or by an officer
specified in Schedule II.
For implementing the
scheme of controlling imports, diveroe provisions
were made in els. 3 to 11 of the Imports (Control)
Order.
The Government of India makes known its
import policy every six months by issuing in the
Government Gazette the procedure and the conditions for
eligibility of licences
and for the
grant of import licences. This policy is published
for tho use
of the public in
a
hand-book
called the "Import Trade Control Policy". The
policy is obviously framed having regard to
requirements for home consumption of commodities to be im~lorted, the foreign currency situation
and the economy of the country as a whole.
By para 51
of the Import Trade Control
Policy for the licencing period October 1958 to
March. 1959, a scheme of "Export Promotion"
permitting imports depending upon the value of
specified varieties of goods exported by the importer was devised. It was recited in that paragraph
that
in
certain
items,
the
inter-relation
between
imports and exports was direct and
intimate and the ability to export some manufactured goods depended largely on the facility with
which the exporter or the manufacturer could
procure the basic raw materials required in the
manufacture.
With a view to promoting the
export of such goods, a scheme was therefore
devised for the grant of special import licences to
•
·'
1961
MI•. R<1111ehand
Jagadish Cht.md
v.
Union of J.itdia.
Shah ·J.
1H1
M/•. Ramdtand
Ja111di1h Chand
v.
U"U... eJ India
.Blta/o J.
•
SUPREME COtJR.T REPORTS
[1Q62j
replace the imported raw n:ate1ial ccmponent of
the product export rd or to Jll ovide :m incrntive
for larger exportii.
·
Artsilk yarn and artsilk fabrics wen· covered
by the Export Promotion Scheme. In Appendix
42, cl.2 of tho Import Trade Control Policy for
October 1958 to March 1959, it was stated:
"With a view to stimulak exports of
Indian artsilk
fabrics, sarces, garments,
hosiery and other artsilk manufactures, it
ha~ been decided to grant import licences
at thC\ ports under th!' Export Promotion
Scheme' for the import offermissible varieti<'s of artsilk yarn to actua exporters upto
tho
following
percentage of tho rupee
cquiv1de11t of foreign exchange <'amcd on the
basis of tlw f. o. b. \•aluc of the artsilk goods
PXportcd, or the value assessed by customs,
whichever is less.
(i) 66-2/3 per cont in the case of
Indian artsilk ~arce8,
(ii) 100 per eeut in the case of other
Indian artsilk fabriCM including Indian
artJ!i!k hosiery goods."
The pctitionern, M/s. R~m Chand Jagadish
Chanel are a firm engaged in business as exporters
and import-0rs.
In the period October 1958 to
March 1959, the petitioners exported to Singapore,
Bush Shirt Cloth, GID.ss Nylon, Art silk Piece
Goods and Superior Class Nylon of the total C.I.F.
value of Rs. 7,10,817/-, and relying upon cl. (2)
of the Export Promotion Scheme as out.linod in the
Import Trade Control Policy, called upon the
Controller of Imports to issue licenoes for artsilk
yarn for R~. 4,04,218.62 np. and Rs. 3,03,490.93 np.
respectively for tho months of Fcbruqry and
-
3 S.C.R.
SUPREME COURT REPORTS
77
March 1959. The petitioners claimed that they had,
pursuant to the Export Promotion Scheme, exported
artsilk goods to Singapore and had earned net
foreign exchange of the value of Rs. 7,07, 709.55 np.
and that. they were entitled to import licences for
artsilk yarn of that amount. In September 1959,
the petitioners were informed by the Assistant
Controller of Imports and Exports that a consolidated licence for the months of February and
March, 1959 was granted to them for import of
artsilk goods of the value of Rs. 3,19,35~/-.
It appears that the Government of India,
having come to learn of certain malpractices by
the importers of artsilk yarn, while suspending the
Export Promotion Scheme as from March 9, 1959,
announced that applications which were pending
with the port licensing authorities will be scrutinised
by a Committee and in May 1959, the Government
of India appointed a Committee for verification of
the value of goods exported.
The petitioners
appeared before the Committee and furnished documentary evidence in support of their claim for 100%
of the rupee equivalent of the cloth exported. The
Committee accepted as reasonable the rates at
which the exported "Flock Printed Nylon Dyed"
cloth was exported by the petitioners, but in their
view, the rates at which "Bush Shirt Cloth" was
exported could not be accepted as reasonable and
for the purpose of the Export Promotion Scheme,
the value of that cloth should be computed at the
rate of Re. 1.50 np. per yard of 36" width.
The
Controller of licences accepted the recommendation
of the Committee and issued to the petitioners an
import licence for Rs. 3,19,354/- only. The petitioners after making an infructuous demand for a
licence for the value of the goods exported, filed
this petition under Art. 32 of the Constitution for
a writ or direction in the nature of mandamus
directing the Chief Controller of Imports and
:Exports to grant to the petitioners al} imporfi
'
<
•
'
1981
M/•· Baaich<!ll<l
J"4afi,llh' ChsJatl
v.
Uni<m of India
Shal>J.
1981
M /._ Raf!Vhond
Jq,.diah Oliand
v.
Unio11 of India
Sltah J.
'
78
SUPREME COURT REPORTS
[1962]
licence for the month~ of February and March 1959
equivalent to I 00% of the goods exported by them
in rnlevant previous months and in the alternative,
to issue a w·rit of certiorari c•alling for the records
and proceedings resulting in the issue of a licenco
of the value of Hs. 3,19,354/· and for an ordor
quashing the same anrl granting to the petitioners
a licence for the fnll amount claimed by them.
The petitioners submitted that the Controller of
licences had arbitrarily reduced the valnc of their
import licence under the Export Promotion Scheme
and had thereby unlawfully infringed their fundamental right to carry on busine;;8.
They also
claimcrl that the Controller was hound to grant
licence to import artsilk yarn under the Export
Promotion Scheme for the fnll value of the goods
exported by thorn, and in failing to do so, had
practised discrimination against the petitioners,
because several other importers of artsilk yarn who
were the petitioners' ri\·als in trade during the
identical period were gi,·en licences for amounts
"ranging between 85 and 100 per cent of their
exports".
Tn paragraph 22 of their petition, the
petitioners submitted a table setting out the names
of eight such exporlern, the amount and the
percentages granted to such exporters.
Thc> fundamental right of a citizen to carry
on any occupation, trade or business nndcr Art. I !I
...
:
...
(l){g) of the· Constitution is not absolute: it is
<
subject to reasonable restrictions which may be
imposed h.v the statn in the interests of the general
public. The right of the State to impose controls
in the larger interest of the general public on
imports has accordingly not been denied : nor has
the authority of the State to i;;sue the Imports
(Control) Order, l!l5ii in exercise of the power8
conferred by the Imports and Exports (Control) Act
pro\Tiding for imposition of restrictions by permitting import of certain goods only in accordanco
with licences O!" cqstoms permits granted by tlw
•
-
...
3S.C.R.
SUPREME COURT REPORTS
79
Central Government, been challenged. It was
suggested somewhat faintly by Mr. Viswanatha
Sastri on behalf of the petitioners that the power
granted under cl. (3) of the Imports (Control) Order,
1955
was uncanalised power in the matter of
fixing percentages and to that extent, the authority
imposed an unreasonable restriction on the freedom
to carry on business. But the authority to grant
or refuse to grant licences is conferred upon high
officers of the State and the grant of licences is
governed by the Import Trade Control Policy
which is issued from time to time and detailed
provisions arc made in the Imports (Control) Order
setting out the grounds on which licences may be
refused, amended, suspended or cancelled (see els.
6 to 9 of the Order). Provision to afford a bearing
to the licence before action is taken under els. 6 to
9 is also made. It cannot therefore be said that
the power conferred is uncanalised or arbitrary.
The argument seriously canvassed by counsel
for the petitioners was that relying upon cl. 2 of
appendix 42 of the Import Trade Control Policy,
the petitioners had exported artsilk fabrics, and
had earned foreign currency, and they could not,
except for good :ctnd adequate reasons, be deprived
of import licence to the full extent of 100% of the
value of the artsilk fabrics exported.
The
petitioners say that they purchased the goods from
various merchants and by exporting those goods
earned foreign exchange which was duly credited to
their account by their bankers, and in reducing the
import licence to approximately 45% of the value
of the goods exported, the State has, by executive
order, imposed an unreasonable restriction upon
their right to carry on business. But under cl. 2
of the Export Promotion Scheme as outlined in
appendix 42 in so far as it related to licences for
import of artsilk yarn, the Controller of Imports
is authorised to grant licences upto the percentages
specified in that clause : there is no right t4erebr
1981.
M/•. ·Ram&hatld
Jagadi•h Chand
v.
Union of India
Shah J.
-·
1981
M/1. R..,,chand
JltgOO;.h Chand
v.
Union of India
Slla% J.
80
SUPREME COURT REPORTS
[1962J
created to the exporter t-0 obtain a licence for the
full
1·nluc
of tho commodity exported. Under
cl. 2 oft]}(' scheme the Controller has the powm·
..
to grant a licence for a.ny amount upto I 00% of tho
rupee equivalent of the foreign exchange earned on
tho basis of the l<'.0.B. value of the goods exported. By that clause, the exporter is not given
the opt ion to claim an import licence for any
amount not C'Xcceiling the value of the foreign
exchange earned by Pxport of good~. The clause
invests the Controller with authority, it <locs not.
impo8c an obligation upon him <!11for1·<'able at the
instance of the exporter, to ibsu" a liccn('c for the
amount (Subject to the maximum
prescribed)
clainrnd by the exporter. The power is plainly
discretionary. It i8 true that the discretion has to
he exerci;;ed reasonably and not arbitrnrih-. The
licensing authority woul;l normally issue an' import
licence for l 00% of tho Yalue of tho good.~ export<'d,
but having regard to ~pecial considcratiims such as
difficult foreign exchange position or other matters
which have a bearing on the goncral intcn·~t of the
State, import licences for a smaller percentage may
he granted to the exporters. But h:•: the use of the
expres~ion "upto tho following percentage of the
rupee equivalent" power to fix arbitrarily a percentage of the ,·alue of the goodR exported for
awarding an import licence
is
not
granted.
fn ~ranting a licence to the petitioners for·
Rs. 3,19,354/-, has th<'
authority ht'<'n
exercised
arbitrurily or is it supportr<l by som<' reasonbly
discemible prinriplc?
Ram llfurth Sharma, Deputy
Chief Controller of' Imports unrl
Export~ i11 his
affidavit stated that of the Export Promotion
Scheme wrongful advantage waH take11 by some
exporterR of artsilk fabrics ' it wa~ found by the
Government of India that invoice valu<'s
or
artificial silk fabrics were inflated by the exporters /-
by more than 100% of the value with the object of
importing "speculative'' coplmoqities like artij,icia!
,
•
•
3 S.C.R.
SUPREME COURT REPORTS
81
silk yarn. Sharma stated that "as againsi, 381
thousand yards of artificial silk fabrics exported
during the period January-June, 1957 at a value
of about Rs. 456 thousand i.e., at about Rs.l-2-0
per yard the merchants sought to show the rise in
price for tho export of suuh goods during OctoberMarch 1959 at Rs. 2-9-0 per yard so that for 986
thousand yards exported, the invoice value shown
was 28, 799 thousand rupees, even though the actual
price of the goods in the wholesale market had no1
at
all .risen to that extent between those two
periods. The index number of wholesale price 111
India in respect of "silk and rayon" fabries rluring
the month of June 1957 was 85 and during the
month of March 1959 it rose to 95. 7 only thm
showing a rise of about 11 %-
Against this rise, the
rise in the price invoiced by the exporters showed
a rise of over 125% during the span of the same
period.
This will clearly show that the aforesaid
rise was shown by merchants merely with a view to
get licences for higher value for the import of
speculative item .like "Art Silk Yarn." Relying
upon this evidence, counsel for the Union contended
that this perversion of the Export Promotion
Scheme had seriouH repercussions on the foreign
exchange position, and the scbeme was suspended by
notification dated March fl, I 959, and the Government directed that the pending applications for
import licences for artsilk yarn be scrutinised by a
Committee
appointed
in
that
behalf.
The
Committee scrutinised the cases of 1106 parties
including the petitioners, and the petitioners were
given a licence for Rs. 3,19,354(-, and by reducing
the value of the import licence, no fundamental
right of the petitioners under Art. 19 of the Constitution was infringed.
A scrutiny of the applications for licences in
view of the misuse of the Export Promotion
Scheme and granting of licences on the result of
~qch scrutiny cannot be regarded as imposin¥ all
19il
M/s.
llam~anJ
J agadi1h Chand
v.
Union of lndig,
Shah J.
·-
M / •. Ji<t>nc 1""'4
J<>g/J/Ji•h. Girand
v.
lloim of India
Shah J.
82
. SUPREME COURT REPORTS
(1962]
urtreasona hie restriction. Tbe State is as much
concerned with
earning
foreign
exchange as
maintaining and consolidating its export trade.
If a large quantity of goods bo dumped at excessive
prices in foreign markets to meet a temporary
demand in tho ultimate result tho export trado of
the State may suffer.
If taking advantage of
temporary cleman<l.s in the foreign market, the
exporters charge excessive prices which are not
commensurate with reasonable profits on the roal
value of the goods awl seek to iil\'cst tho profits earned
in speculative commo<litics thereby endangering the
internal ccoriomy of the country, the State may be
justified in taking steps to prevent the exporters from
obtaining advantage of such excessive profits by
refusing to afford facilities for
importin~ goods to
the exporters who seek to rel.v upon tho export
value of tho goods at inflated rates. The affidavit
of Sharma shows that in ;i number of cases, the
importing firm in tl1c foreign country was only a
"sister concern" of the exporting house, and the
exporters adopted the expedient of inflating the
price with the object of adjusting the excess valuo
received by them. It appears therefore that some
exporters under cover of the Export Promotion
Scheme by inflating the prices were fouucl uot only
to import speculative varieties of goods for very
much larger values than the real prices justified,
but were suspcctc<l
by tho authorities even to
repatriate foreign assets without disclosing the
same to the State n.s require<l by law. It <'annot
th1~refore be sai<l that the power granted to the
licensing authorities to grant licences only upto
the maximum specified in el. 2 of the Scheme ia. by
itself an
unreasonable restriction; nor will the
notification directing scrutiny of all applicatiom1
amount to .imposing an unreasonable restriction. ,;..
· Counsel for the petitioners however submitted
.that .the Controller had placed no evidence. on the
record that the petitioners have, for the goods
-
.38.0.R.
SUPREME COURT REPORTS
.83
. purchased by them in the Indian market, not paid
· Rs. 7,07,709:.55 nP. or that any part thereof represented foreign assets intended to be repatiated
contrary to law. Counsel submitted that M/s. V. M.
S. Abdul Razak & Company to whom the goods
were consigned are not a "sister concern" of the
~
petitioners and that in the affidavit of the Deputy
Chief Controller of Imports and Exports it is not
denied that the petitioners had received the full
----
''alue for which the goods were exported by them.
But in considering the case of the petitioners,
the Committee observed :
"The party hae purchased Bu~h Shirt Cloth
from J. C. Vakaria & Sons, Govardhandas Iswardass
International Trading Agency, Agwarwla Brothers
and Calcutta Silk M<tnufacturing Co., Ltd. Rates
vary from Rs. 3.87 to Rs. 3.92. x x xx neither the
purchase vouchers nor the export invoices contain
any description nor give any idea as to whether
the material was Nylon, Rayon, Nynon, etc."
The committee also observed that the petitioners were "not able to produce adequate justification of the prices of Art Silk Bush Shirting Cloth.
Samples cannot be linked with the relative purchase vouchers or export invoices." They then
pointed out that the correspondence with M/s. Abdul
--.
_ Razak & Company did not give any "justification
nor contained any description to link the goods
with the materials sent," and in the light of these
findindgs, the Committee recommended that the
value of bush shirt cloth for the purposes of import
licence be calculated at the rate of Re. I. 50 nP. per
· yard. It is somewhat unfortunate that the Com-
·mittee have not stated in the reasons given by them
,i, · that Re. I. 50 nP. was the prevailing market rate in
respect of Bush Shirt Cloth at the time of the
-export in the Indian market. But in paragrabh 22
of the respondents' affidavit, it is stated that "the
petitioner tjrm has been ~ranted licence e~ual tc;>
1961
M /•- l?ciinchand
Jag!idi~J, .Chan·/
.v:· .
Un£o'ii.'of. India
-shah J.
1961
lif/8. Rarnchan.Z
Jaaadish Chand
....
SUPREME COURT REPORTS
[1962]
.. 100% of the value which has been . arrived at as
reasonable value of the exports effected by the
firm."
·
·
l}nio·1~ of IndirJ --,~-
7
-
•
\
The petitioners alleged that the decision of
. the Committee was arbitrary ; the licensing authority contends that the decision was made after
Shah J.
ascertaining the reasonable value in the Indian
: market at the material time of the goods exported
py the
petitioners.
The petitioners have not
placed before the court any independent evidence
. to.show that the current market rate of "bush shirt
cloth"
which
was
exported,.
substtmtially
exceeded the rate of Re. 1. 50 nP. per yard of 36"
width; In the circumstances, we would not be
justified in assuming that the - Committee made an
arbitrary decision in arriving at the value of the
hush shirt cloth exported for the purpose of recommending· the grant of import licence.
.
The contention that the order passed by I.he
Controller granting a .licence only for45% of the
value of the goods .exported infringes the fundamental right, of the petitioners under"·~rt. 19 (1) (g)
by imposing -an · unreasonable restriction cannot
therefore be sustained.
Does the_ fact that the petitioners have been
granted licence approximately for 45% of the total
value of the goods exported amount to discrimi-
. nation entitling them to protection of Art. 14 of
the Constitution ? Under the Export Promotion
.. Scheme, the petitioners have exported artsilk goods
of the value of Rs. 7,07,709.55 nP. and may in the
normal course have been entitled to import licence
for ,100% of the value of the goods exported unless
. there was a reduction in the value of the licence
.for imports on account of certain circumstances
. such as general deterioration of the foreign exchange
position or necessity to conserve a particular
. currency
or
other
circumstances justifying a
. departure :from the maxima set out in cl. 2 of
•
-
-
-
3 S.d.R.
· SUPREME dOURT REPORTS
85
"
appendix 42 of the Export Promotion Scheme.
The reduction may also be justified on grounds
> personal to the petitioners or to a group to which
they belonged.
Any malpractice or under-hand
dealing may warrant such a reduction.
It was the case of the respondents that many
exporters were guilty of malpractices and with
a view either to speculate in artsilk goods or to
repatriate unlawfully foreign assets, the valmi of
the goods exported was unduly inflated. In th<'
order passed by the Committee appointed by the
Government of India, dealing with the case of the
petitioners, it was observed that the petitioners had
business relations with certain firms and that the
rates at which bush shirt cloth were purchased
varied from Rs. 3.87 to Rs. 3.92 nP. The Committee
was not satisfied that the documentary evidence
produced by the petitioners related to the goods
exported by them.
These findings disclosed that,
in the view of the Committee, thP.re was reason to
believe that the claim of the petitioners that they
had purchased goods approximately for the priCeo;
at which they were exported, was not made out.
The Committee accordingly recommended that
the value of "bush shirt cloth" should be computed
at the rate of Rs. 1.50 nP. per yard. It is trut>
that there is no definite evidence on the record
indicating that that was the current market rate,
but the court may be justified in holding that
the members of the Committee who were vitally
concerned with the trade in artsilk goods were
conversant with the current market rates of the
. cloth which was exported by the petitioners.
Counsel for the Union has placed before us
in the course of the hearing the report of the
Committee in respect of seven out of the eight
exporters who the petitioners claimed had been
given import lictmce_ for . t):i{) full value_ of the
export1> •. The,r_Q;pQJ'J;:,0f, t~c QlJ_i;nrojtte«. with_~~g~rq __ to
M/s. E,ajastban. ·Expo~.ters:and _Importe~!j, .C~l011tta
/961
.ill /s .. Rarnchand
J agaditJh . Chand
v.
Un1'on of ~nd1·a
Shah J.
-·
!JfA" ·Ratt\Chand
.lagttd1.ih Chand
v.
r1tii1tn of 11ttf.Ui
Shah J.
StJ1.>REME COGRT ItEPORTS
[ 1962]
is not placed before us on tho pica that it·
is not immediately available.
On a perusal of
the report of the Committee with regard to tho
other exportNs, it may b<' stak<l tlmt the claim
of th<' petitioners that H.aghunath Rai Piyarilal
wero gi\·en import licence for the full value of the
goods exported is not correct.
It appears. from
the r<·cord that only 40% of the .F.O.B. value
was to be taken
for
"Glass Nylon dyed"
exported in respect of application No. 36.
Similarly, in respect of application Xo. 35, 40% of
the F.O.B. value was to bo taken for the purpose
of granting import licenceR.
It is true that in
tho cases of the other importers . Premsukhdass
Sitaram, Indian Exporters and Imporkrs Corporation,
M/s.
Univc111al 'Vatch Emporium, M/s.
,Jawahar Knitting Hosiery, M/s. Va~tralaya Ltd.
and t.l/s. Agarwala Trading Co., Ltd., the Committee
have recommended acceptance of the purchase prices
submitted by the <'Xport-0rs in granting import
licences.
It may, therefore, be assumed
that
thegc import-0rs were gi\·en Jicencc for 100% of
the export value of the goods.
But the Committee
have given reasons which appear to be rrima facie
good
for accepting the daim:; (\f tlwsc expor.
ters.
ff, on tho materials placed before them,
the Committee were satisfied that there was some
misconduct or under-hand dealing on the part of
the petitioners, or that the evidence led before
them justified the Gomm it tee in holding that tho
goods exported were not of the value claimed by the
petitioners in their invoicc8, an order recommending that import licence may be granted for the
value of bush shirt cloth computed on the basis of
Re.1.50 nP. per yard clocs not amount to discriminatory treatment of the petitioners.
Article 14
confers a guarant{m of the equal protection of the
law-a guarantee against arbitrary discrimination
between persons similarly circumstanced.. On the
materials placed before the Committee, there was
evidence to show that the rooord produced by the
.. .
I -
.•
• >
-
3 S.C.R.
SUPREME COURT REPORTS
81·
petitioners was unsatisfactory ; they were not
satisfied that the prices which the petitioners said
they had paid for purchasing the goods were in
truth paid. If there was evidence to ·show that
in respect of other persons who were. in the opinion
of the Committee found also to have··· iμflated the
prices in the manner adopted by :l;he petitioners
and still the Controller had granted import lic!Jnces
to those persons for the full ariioμnt of. the export
value or a percentage substantially ·hi· exce$s .. of.
the percentage for which import : licence w:as
granted to the petitioners, a case of discrimination
could have been made out ; but· in :the· absence
of such evidence, we do not think that any case
of discrimhiation is made out.
The petition fails and is dismissed with costs.
The application filed by Mf s. M. Shaams and
Company for intervention is dismissed, because
Miscell11neous Application No. 264 of 1960 which
was filed by the applicants in the High Court of
Judic11ture at Bombay for a writ of mandamus,
direction or order under Art. 226 of the Constitu'
tion has been di8missed by the High Court and
the remedy applicants is to file an appeal to this
Court.
Petitwn dismissed.
Jll!JJ.
JII /•. Rlr"'ellcrn ,
Jagadiah Chand
v.
Union of India
Shah J.