# PARISONSAGROTECH (P) LTD. &ANR v. UNION OF INDIA & ORS - **Citation:** [2015] 10 S.C.R. 505 - **Court:** Supreme Court of India - **Decided:** 2015 - **Case number:** Civil Appeal No.4027 of 2009 - **Bench:** A.K. Sikri, R. F. Nariman - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/parisonsagrotech-p-ltd-anr-v-union-of-india-ors-30195 - **Pages:** 37 ## Headnote Foreign Trade (Development and Regulation) A<;t, 1992 A B - s. 5 rw s. 3 - Issuance of Notification whereby ban on importation of palm oil through all the ports of Kera/a - Validity C of the Notifications - Challenge to - Held: When a particular decision is taken in the interest of the farmers who are a marginalized section of the society, more so for their survival, this policy decision of the Central Government provides a D complete rational in support of the decision having nexus with the objective sought to be achieved- There is intelligible basis for issuing the impugned Notifications having rational nexus with the objectives sought to be achieved - There is a sufficient public good sought to be achieved by laying down E the exception banning the imports of crude palm oil through ports in Kera/a - s. 3(2) gives ample power to the Government to issue such Notifications in exceptional cases and instant case falls within those parameters - Thus, no error in the view taken by the High Court upholding the Notifications - F Constitution of India, 1950 -Article 14. Administrative law- Policy decision - Judicial ReviewPower of - Held: once it is found that there is sufficient material for taking a particular policy decision, bringing it within the G four comers of Article 14, power of judicial review would not extend to determine the correctness of such a policy decision or to indulge into the exercise of finding out whether there could be more appropriate or better alternatives- Constitution 505 H 506 SUPREME COURT REPORTS [2015] 10 S.C.R. A oflndia, 1950-Article 14. Dismissing the appeals, the Court HELD: 1.1 Since the import price of crude palm oil 8 has been much less than the price of coconut oil, the perception of Coconut growers in the State of Kerala was that it was affecting their livelihood. It is a matter of record that there are approximately 35 lakhs farmers in the State of Kerala who sustain their livelihood on c Coconut crop. Therefore, it becomes their life sustaining crop. The Coconut crop covers more than 9 lakhs hectares in Kerala and contributes to nearly 35% of the agricultural income of the State which is a sufficient evidence to indicate that it is not only·main but important o crop of the State. The Coconut growers are predominantly small and marginal with the average size of holding being only half an acre. The significant and marked difference between the price ofcoconut oil a.id palm oil was manifest the fact that percentage difference E between the two stood at 109% in the year 2004, reduced to 50% in December, 2006, to 12% in September 2007 and 0.6% in October 2007. The Board also observed that the import of palm oil in one particular year had a cascading downward impact on coconut oil prices in the F subsequent years. It is more than abundantly clear that the restriction is imposed keeping in view the welfare of 35 lakhs farmers in the State of Kerala. Matter was examined at the highest level. The Government had two alternatives before it, either to increase the custom duty G i.e. duty on the import of crude oil or to issue impugned Notification. Enhancing the import duty would have all India ramification, whereas the problem was Kerala specific. Therefore, instant step was taken. When a H particular decision is taken in the interest of the said farmers who are a marginalized section of the society, PARISONSAGROTECH (P) LTD. &ANR. v. UNION OF 507 INDIA&ORS. more so for their survival, this policy decision of the A Central Government provides a complete rational in support of the decision having nexus with the objective sought to be achieved. [Para 11] [519-H; 520-A-H] 1.2 The writ court has adequate power of judicial B review in respect of such decisions. However, once it is found that there is sufficient material for taking a particular policy decision, bringing it within the four corners of Article 14 of the Constitution, power of judicial review would not extend to determine the correctness C of ## Text _Characters 0–39,824 of 66,799. This is a partial read: ask again with offset=39824 for what follows._ [2015] 10 S.C.R. 505 PARISONSAGROTECH (P) LTD. &ANR. v. UNION OF INDIA & ORS. (Civil Appeal No.4027 of 2009) AUGUST21, 2015 [A.K. SIKRI AND R. F. NARIMAN, JJ.] Foreign Trade (Development and Regulation) A<;t, 1992 A B - s. 5 rw s. 3 - Issuance of Notification whereby ban on importation of palm oil through all the ports of Kera/a - Validity C of the Notifications - Challenge to - Held: When a particular decision is taken in the interest of the farmers who are a marginalized section of the society, more so for their survival, this policy decision of the Central Government provides a D complete rational in support of the decision having nexus with the objective sought to be achieved- There is intelligible basis for issuing the impugned Notifications having rational nexus with the objectives sought to be achieved - There is a sufficient public good sought to be achieved by laying down E the exception banning the imports of crude palm oil through ports in Kera/a - s. 3(2) gives ample power to the Government to issue such Notifications in exceptional cases and instant case falls within those parameters - Thus, no error in the view taken by the High Court upholding the Notifications - F Constitution of India, 1950 -Article 14. Administrative law- Policy decision - Judicial ReviewPower of - Held: once it is found that there is sufficient material for taking a particular policy decision, bringing it within the G four comers of Article 14, power of judicial review would not extend to determine the correctness of such a policy decision or to indulge into the exercise of finding out whether there could be more appropriate or better alternatives- Constitution 505 H 506 SUPREME COURT REPORTS [2015] 10 S.C.R. A oflndia, 1950-Article 14. Dismissing the appeals, the Court HELD: 1.1 Since the import price of crude palm oil 8 has been much less than the price of coconut oil, the perception of Coconut growers in the State of Kerala was that it was affecting their livelihood. It is a matter of record that there are approximately 35 lakhs farmers in the State of Kerala who sustain their livelihood on c Coconut crop. Therefore, it becomes their life sustaining crop. The Coconut crop covers more than 9 lakhs hectares in Kerala and contributes to nearly 35% of the agricultural income of the State which is a sufficient evidence to indicate that it is not only·main but important o crop of the State. The Coconut growers are predominantly small and marginal with the average size of holding being only half an acre. The significant and marked difference between the price ofcoconut oil a.id palm oil was manifest the fact that percentage difference E between the two stood at 109% in the year 2004, reduced to 50% in December, 2006, to 12% in September 2007 and 0.6% in October 2007. The Board also observed that the import of palm oil in one particular year had a cascading downward impact on coconut oil prices in the F subsequent years. It is more than abundantly clear that the restriction is imposed keeping in view the welfare of 35 lakhs farmers in the State of Kerala. Matter was examined at the highest level. The Government had two alternatives before it, either to increase the custom duty G i.e. duty on the import of crude oil or to issue impugned Notification. Enhancing the import duty would have all India ramification, whereas the problem was Kerala specific. Therefore, instant step was taken. When a H particular decision is taken in the interest of the said farmers who are a marginalized section of the society, PARISONSAGROTECH (P) LTD. &ANR. v. UNION OF 507 INDIA&ORS. more so for their survival, this policy decision of the A Central Government provides a complete rational in support of the decision having nexus with the objective sought to be achieved. [Para 11] [519-H; 520-A-H] 1.2 The writ court has adequate power of judicial B review in respect of such decisions. However, once it is found that there is sufficient material for taking a particular policy decision, bringing it within the four corners of Article 14 of the Constitution, power of judicial review would not extend to determine the correctness C of such a policy decision or to indulge into the exercise of finding out whether there could be more appropriate or better alternatives. Once the parameters of Article 14 are satisfied; there was due application of mind in arriving at the decision which is backed by cogent material; the D decision is not arbitrary or irrational and; it is taken in public interest, the Court has to respect such a decision of the Executive as policy making is the domain of the Executive and the decision in question has passed the test of judicial review. [Para 12] [521-A-D] E • 1.3 The respondents have been able to demonstrate intelligible basis for issuing the impugned Notifications having rational nexus with the objectives sought to be achieved. [Para 20] [532-C] F 1.4 The concern is with the interpretation of s. 3(2) of the Foreign Trade (Development and Regulation) Act, 1992. Sub-section (1) empowers the Central Government to make provision for the development as well as G regulation of foreign trade by facilitating imports and increasing exports. Thus, the Government is empowered to make provision insofar as they relate to the development of foreign trade and it has also empowered to regulate the foreign trade. The two key words here H 508 SUPREME COURT REPORTS [2015] 10 S.C.R. A are 'development' and 'regulation'. Such development and regulation is aimed at facilitating imports as well as increasing exports. [Para 24] (535-C-D] 1.5 The submissions by the appellant ignore the B crucial words appearing in sub-section (2) of Section 3, namely, provision for prohibiting, restricting or otherwise regulating, the import or export of goods etc. can be made "subject to such exceptions, if any, as may be made by or under the Order". These words are of wide C amplitude giving necessary powers to make such exceptions as the Central Government deems fit while issuing the Notifications or the Order in prohibiting, restricting or regulating import or export of goods etc. In the process, it can restrict the import of particular D goods through particular ports or disallow the import through specified ports. OJ course, such an action cannot be arbitrary or irrational and should be backed by sound reasons. (Para 27] [540-B-E] E 1.6 There is a sufficient public good sought to be achieved by laying down the exception banning the imports of crude palm oil through ports in Kerala. Subsection (2) of Section 3 of the Act gives ample power to the Government to issue such Notifications in F exceptional cases and instant case falls within those parameters. Therefore, there is no fault with the view taken by the High Court upholding the Notifications. [Para 28] [540-F, H; 541-A-B] G Kalindi Woolen Mills (P) Ltd. v. Union of India 1994 (74) ELT 827; Union of India v. Dinesh Engineering Corporation (2001) 8 SCC 491; Asif Hameed and Others. v. State of Jammu and Kashmir and Others 1989 Supp (2) SCC 364: H 1989 ( 3 ) SCR 19 ; State of Orissa and Others v. PARISONSAGROTECH (P) LTD. &ANR. v. UNION OF 509 INDIA&ORS. Gopinath Dash and Others (2005) 13 SCC 495: A 2005 (5) Suppl. SCR 89t; Gopal Narain v. State of Uttar Pradesh and another AIR 1964 SC 370: 1964 SCR 869; Premier Tyres Umited v. Kera/a State Road Transport COrporation 1993 Supp. 2 SCC 146; R.K. Galfl v. Union of India (1981) 4 B sec 675: 1982 (1) SCR 947; Balco Employees' Union (Regd.) v. Union of India and Others (2002) 2 sec 333: 2001 ( 5) Suppl. SCR 511; Abdul AzizAminudin v. State of Maharashtra (1964) 1 c SCR 830; Union of India v. Asian Food Industries (2006) 13 sec 542: 2008 (8 > suppl. scR 485; Bhatnagars & CO. Ltd. v. Union of India 1957 SCR 701 -referrecllo. Case Law Reference D 1994 (74) ELT 827 referred to. Para 10 (2001 > s sec 491 referred to. Para 12 1989 (3) SCR 19 referred to. Para 13 E 2005 (5) Suppl. SCR 699 referred to. Para 14 1964 SCR 869 referred to. Para 15 1993 supp. 2sec146 referred to. Para 16 F 1982 (1) SCR 947 referred to. Para 17 2001 (5) Suppl. SCR 511 referred to. Para 18 (1964) 1SCR830 referred to. Para 23 G 2006 (8 ) Suppl. SCR as referred to. Para 26 1957 SCR 701 . referred to. Para26 H 510 SUPREME COURT REPORTS [2015] 10 S.C.R. A CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4027 of 2009. From the Judgment and Order dated 21.10.2008 of the High Court of Kerala at Ernakulam in Dismissing W.A. No. B 642 of 2008. WITH C. A. NOS. 4028 and 4029 OF 2009. C Shekhar Naphade, Harish Beeran, Mushtaq Salim, R.S. Jena, Siddhartha Jha, V. K. Monga for the Appellants. Jaideep Gupta, A. K. Panda, G. Prakash, Jishme M.L., Ramesh Babu M.R., Ritesh Kumar, Sunita Rani Singh, B,K, D Prasad fortheRespondents. The Judgment of the Court was delivered by A.K. SIKRI, J. 1. Vide Notification No.39 (RE-2007)/20042009 dated 16.10.2007, the Central Government (respondent E No.1 herein) prohibited the import of palm oil through Kochi port in Kerala. It was fellowed by another Notification No.63 (RE-2007)/2004-2009 dated 24 .12 .2007 wher~by the import of palm oil has been prohibited through all the ports of Kerala. F These Notifications were issued by the Central Government in exercise of powers conferred by Section 5 read with Section 3 of The Foreign Trade (Development and Regulation) Act, 1992 (hereinafter referred to as the 'Act'). All the appellants filed separate writ petitions challenging the validity of these G Notifications on the ground that they were ultra vires the provisions of Section 3 of the Act and, in any case, unconstitutional as offending Article 14 of the Constitution of India. The writ petitions filed by them were dismissed by learned single Judge. Matter was carried in appeal before the H Division Bench of Kera la High Court, but ·unsuccessfully, as PARISONSAGROTECH (P) LTD. &ANR. v. UNION OF 511 INDIA & ORS. [AK. SIKRI, J.] these appeals have also been dismissed. It is clear from the above that the issue involved in all these appeals are identical. This was the reason for clubbing these appeals so that they could be heard analogously and decided A as one batch. However, for the sake of convenience, we will B be referring to the facts from Civil Appeal No.4027/2009 as well as the impugned judgment dated 21.10.2008 which is impugned in the said appeal. 2. The appellants are engaged in refining and c manufacture of ·edible oils, vanaspathi, bakery shortening, margarine etc. Their registered offices and the factories are in the State of Kerala. The main raw material used in the manufacture of RBD palm oil is crude palm oil. The appellants have been importing this raw material from other countries, o primarily from Indonesia and Malaysia. Before the issuance of the aforesaid Notifications, this import was through the ports of Kochi and Beypore from where it used to be transported by road to its main factories which are in Kozhikode and Malappuram, in the State of Kerala itself. The impugned E Notifications have prevented them from importing crude palm oil through the ports of Kochi and Beypore. Instead, they are forced to import this raw material through the ports outside Kerala. The effect thereof is that distance from the ports of · import to the factories of appellants in Kerala stands increased, F in contrast with the situation prevailing earlier. It has led to increased transportation cost for the appellants and that is precisely the cause of grievance. 3. As mentioned above, vide Notification No.39 (REG 2007)/2004-2009 dated 16.10.2007, certain items mentioned therein, which are all different varieties of crude palm oil, were not allowed to be imported through Kochi port. The Notification gives the description of the items and mentions the policy condition in respect thereof by stipulating: "import not permitted H 512 SUPREME COURT REPORTS (2015] 10 S.C.R. A through Kochi port": This Notification was amended thereafter with the issuance of Notification No.63 (RE-2007)/2004-2009 dated 24.12.2007 in respect of same items by enlarging the scope of restriction/prohibition with the stipulation: "import not B c D E permitted through any port in Kerala". 4. Again, as already pointed out above, these Notifications were challenged on two grounds, viz.: (i} The Notifications are issued purportedly in exercise of powers under Section 5 read with Section 3 of the Act, but these provisions do not confer any such power on the Central Government. Therefore, the Notifications are ultra viras the provisions of Section 3(5} of the Act; (ii} Imposition of selective restriction and confining the prohibition of import of crude ·palm oil to the ports in Kerala has not only resulted in invidious discrimination, such an action is manifestly arbitrary, irrational and unreasonable as well it is contended that there is no rational objective which is sought to be achieved with - such Notifications and, therefore, they offends the equality clause enshrined in Article 14 of the Constitution. F 5. Both these arguments have been repelled by the High Court which has found not only complete justification and rational in issuing such Notifications, it has also held that power for issuing such a Notification can be traced to the provisions of Section 3 oftheAct. Before us, the appellants have raised G the same arguments and in the process also, submitted that the High Court has not considered the aforesaid twin submissions of the appellants in proper perspective, and, on the contrary, rejected the same in perfunctory manner without dealing with these contentions in the manner they were placed H before the High Court. Before we record the arguments of Mr. PARISONSAGROTECH (P) LTD. &ANR. v. UNION OF 513 INDIA & ORS. [A.K. SIKRI, J.] Naphade, learned Senior Counsel who appeared for the A appellants (counsel appearing in other appeals adopted his arguments) in detail, it may be advisable to state the reasons which were given by the respondents in their counter affidavits in support of these Notifications. We would, however, like to record that in the impugned judgment the discussion on this B aspect is contained in detail as well. 6. State of Kerala is the largest producer of Coconut which is the raw material for the production of coconut oil. Coconut oil and palm oil are competing products. For production of C palm oil, crude palm oil is the raw material which is largely imported. Since the import price of crude palm oil is much less than the price of coconut oil, the price of coconut oil is higherthan that of the palm oil because of the aforesaid reason. It was adversely affecting the farmers in the State of Kerala D which led to repeated representations on their behalf to the Government for taking remedial measures. Having regard to ·the importance of this crop not only for the economy of the State but also livelihood of about 35 lakhs farmers, the State Government has constituted Coconut Development Board E (hereinafter referred to as the 'Board') which takes care of the interests of the farmers growing Coconut crop and also takes initiatives and steps for the development of this crop. 7. The significant and marked difference between the price F of coconut oil and palm oil manifested the fact that percentage difference between the two stood at 109% in the year 2004, reduced to 50% in December, 2006, to 12% in September 2007 and 0.6% in October 2007. The Board also observed that the import of palm oil in one particular year had a cascading G downward impact on coconut oil prices in the subsequent years. For example, the huge import of 1,53,513 tonnes of palm oil in 2004-05 had led to a price decline in coconut in 2005-06 and 2006-07. While the average price of coconut oil H is Rs.6, 155/- per quintal in 2004-05, in 2005-06, it declined 514 SUPREME COURT REPORTS [2015] 10 S.C.R. A sharply to Rs.4,978/- per quintal with further fall in 2006-07 when the price was Rs.4,459/- per quintal. This raised concern with the policy makers to protect the interest of huge number of small time farmers in the State of Kerala. Such concerns were raised by the Board as well as Union of Coconut Farmers B with the concerned authorities including Chief Minister, who in turn, took up the matter with the Central Government at the highest level. The narratives in this regard are stated in the impugned judgment of the High Court itself and the discussion goes, somewhat, in the following manner: c A letter dated 15.08.2005 was written by All Kerala Coconut Farmers' Union to increase minimum support price of copra and to restrict import of coconut oil and copra. In the letter, it is further stated that the steep fall in the prices of D coconut,· copra and coconut oil is in view of indiscriminate import of coconut and coconut oil from foreign countries. The reiteration of this request is made by yet another letter dated 15.12.2005. Sequel to these two letters, Ministry of Agriculture has written a letter dated 03.02.2006 to Joint Director of E General Foreign Trade (JDGFT) enclosing a copy of the letter from All Kerala Coconut Farmers Union, Thrissurto increase minimum support price of coconut oil and to cut import of coconut and coconut oil into the country and in that letter a F requestismadetoJDGFTtooffertheircomments, if any. The Chairperson of the Board by her letter dated 06.12.2006 addressed to Director General of Foreign Trade (DGFT) seeks restrictions/prohibition on the import of coconut oil and coconut oil cake and the reas