# RAJ PRAKASH CHl!MICALS LTD. & ANR v. UNION OF INDIA & ORS

- **Citation:** [1986] 1 S.C.R. 448
- **Court:** Supreme Court of India
- **Decided:** 1986-03-05
- **Case number:** Civil Appeal No. 4978 of 1985
- **Bench:** D. Tulzapurkar; R.S. Pathak, Sabyasachi Mukharji
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/raj-prakash-chl-micals-ltd-anr-v-union-of-india-ors-9275
- **Pages:** 31

## Headnote

Practice & Procedure
Order of Court - Construction of - To be consistent with
c
principle that Court IJllJSt be presumed to have given effect to
the law.
The first appellant, a public limited company, engaged
in the manufacture of acrylic ester monOlll!rs (Butyl Acrylate,
Bthyl Acrylate, 2-Ethyl Hexyl Acrylate and Methyl Acrylate)
D
under
an
industrial
licence
granted in February
197 5.,,
cOlllllellCed ll&nllfacture in December 1980 and was until then the
only manufacturer in India. In the year 1981 a public sector
organisation also began to manufacture acrylic ester mo-ra •
.
In the period before 1980 in the absence ·of indigenous
E
manufacture of acrylic ester monomers, the Govenment of India
permitted the import of those iteus on Open General Licence.
Thereafter, in the Import Policy 1981-82, with a view to
protect indigenous industry and to conserve foreign exchange·
the Government of India placed acrylic ester monomers in
Appendix 5 (List of Restricted lte11S), and in July, 1981 Ethyl~
F
Acrylate wss taken from Appendix 5 to Appendix 3 (List of
Banned lteus). A public notice dated July 7, 1981 announced
that Export Houses which were eligible to import Ethyl
Acrylate would be allowed to import it only to the extent of
irrevocable Letters of Credit opened before the dste of the
notice.
G
H
Under Import Policy 1982-83, the tl01ll!llclature of the
headings of the Appendices wss altered, and the heading "Li&~
of Banned Items" of Appendix 3 was changed to "List of Limited
Permissible Items". Likewise, the heading "Absolutely Banned
List" of Appendix 4 was altered to "List of Non-permissible
RAJ PRAKASH v. u.o.I.
449
~tems (Banned)". And the heading "List of Restricted Ite1111" of
Appendix 5 became the "List of Automatic Permissible Ite1111".,
Ethyl Acrylate remained in Appendix 3 and all other acrylic
ester monomers remained in Appendix 5.
Under Import Policy 1983-84, the headings of Appendices
3, 4 and 5 remained as they were, and all four acrylic ester
monomers
were
placed
in Appendix
3
(List
of
Limited
"Permissible Items).
A
B
'Under Import Policy 1984-85 Appendix 2 Part A became the
"List of Banned Items" and Appendix 2 Part B became the "List
C
of Restricted Items". Appendix 3 continued to be the "List of
Limited Permissible Items". Appendix 5 was the "List of
Canalised Items". Appendix 6 mentioned the import of ite1111
under Open General Licence.
That nomenclature and arrangement was reflected again
D
-,.under Import Policy 1985-88, except that Appendix 4 was
deleted and the new Appendix 6 (the "Open General Licence"
List) contained Part II which listed items open to import
under Export House Additional Licence. Under both Import
Policies, 1984-85 and 1985-88 the four acrylic ester monomers
appeared at item 9 of Appendix 3 (List of Limited Permissible
E
Items).
,
Changes in the nomenclature of the headings of the
Appendices in the Import Policy 1982-83 and thereafter were
considered necessary to bridge the gap in India's balance of
-ipayment. The change in the nomenclature did not alter the
F
principle underlying the grouping of items under the various
heads. Each grouping was determined in acco.rdance with two
major objectives of import policy, the conserving of foreign
exchange
and
protecting
the
development
of
indigenous
industries.
by
limiting
the
import
of
corresponding
manufactured products. The items in Appendix 3 (List of
G
Limited Permissible Imports) were those whose import was not
'fp_ermissible
ordinarily
but
could
be
permitted
by
the
'Government if their import was necessary and justified, while
the import of ite1111 absolutely banned (and later simply
described as "Banned") was not permissible at all.
The Import Policy 1978-79 incorporated a scheme under
which Registered Exporters were eligible for the grant of
H
A
B
c
D
E
F
G
H
450
SUPREME COURT REPORTS
[1986] 1 S.C.R.
Export House Certificates on the basis of the exports actuall~
made in the three-year base period 1975-76, 1976-77 and .197778. Export Hous

## Text

_Characters 0–39,972 of 72,612. This is a partial read: ask again with offset=39972 for what follows._

448
A
RAJ PRAKASH CHl!MICALS LTD. & ANR,
v.
UNION OF INDIA & ORS,
MARCH 5, 1986
B
[V,D. TULZAPURKAR; R.S. PATHAK AND SABYASACHI MUKHARJI, JJ,]
Practice & Procedure
Order of Court - Construction of - To be consistent with
c
principle that Court IJllJSt be presumed to have given effect to
the law.
The first appellant, a public limited company, engaged
in the manufacture of acrylic ester monOlll!rs (Butyl Acrylate,
Bthyl Acrylate, 2-Ethyl Hexyl Acrylate and Methyl Acrylate)
D
under
an
industrial
licence
granted in February
197 5.,,
cOlllllellCed ll&nllfacture in December 1980 and was until then the
only manufacturer in India. In the year 1981 a public sector
organisation also began to manufacture acrylic ester mo-ra •
.
In the period before 1980 in the absence ·of indigenous
E
manufacture of acrylic ester monomers, the Govenment of India
permitted the import of those iteus on Open General Licence.
Thereafter, in the Import Policy 1981-82, with a view to
protect indigenous industry and to conserve foreign exchange·
the Government of India placed acrylic ester monomers in
Appendix 5 (List of Restricted lte11S), and in July, 1981 Ethyl~
F
Acrylate wss taken from Appendix 5 to Appendix 3 (List of
Banned lteus). A public notice dated July 7, 1981 announced
that Export Houses which were eligible to import Ethyl
Acrylate would be allowed to import it only to the extent of
irrevocable Letters of Credit opened before the dste of the
notice.
G
H
Under Import Policy 1982-83, the tl01ll!llclature of the
headings of the Appendices wss altered, and the heading "Li&~
of Banned Items" of Appendix 3 was changed to "List of Limited
Permissible Items". Likewise, the heading "Absolutely Banned
List" of Appendix 4 was altered to "List of Non-permissible
RAJ PRAKASH v. u.o.I.
449
~tems (Banned)". And the heading "List of Restricted Ite1111" of
Appendix 5 became the "List of Automatic Permissible Ite1111".,
Ethyl Acrylate remained in Appendix 3 and all other acrylic
ester monomers remained in Appendix 5.
Under Import Policy 1983-84, the headings of Appendices
3, 4 and 5 remained as they were, and all four acrylic ester
monomers
were
placed
in Appendix
3
(List
of
Limited
"Permissible Items).
A
B
'Under Import Policy 1984-85 Appendix 2 Part A became the
"List of Banned Items" and Appendix 2 Part B became the "List
C
of Restricted Items". Appendix 3 continued to be the "List of
Limited Permissible Items". Appendix 5 was the "List of
Canalised Items". Appendix 6 mentioned the import of ite1111
under Open General Licence.
That nomenclature and arrangement was reflected again
D
-,.under Import Policy 1985-88, except that Appendix 4 was
deleted and the new Appendix 6 (the "Open General Licence"
List) contained Part II which listed items open to import
under Export House Additional Licence. Under both Import
Policies, 1984-85 and 1985-88 the four acrylic ester monomers
appeared at item 9 of Appendix 3 (List of Limited Permissible
E
Items).
,
Changes in the nomenclature of the headings of the
Appendices in the Import Policy 1982-83 and thereafter were
considered necessary to bridge the gap in India's balance of
-ipayment. The change in the nomenclature did not alter the
F
principle underlying the grouping of items under the various
heads. Each grouping was determined in acco.rdance with two
major objectives of import policy, the conserving of foreign
exchange
and
protecting
the
development
of
indigenous
industries.
by
limiting
the
import
of
corresponding
manufactured products. The items in Appendix 3 (List of
G
Limited Permissible Imports) were those whose import was not
'fp_ermissible
ordinarily
but
could
be
permitted
by
the
'Government if their import was necessary and justified, while
the import of ite1111 absolutely banned (and later simply
described as "Banned") was not permissible at all.
The Import Policy 1978-79 incorporated a scheme under
which Registered Exporters were eligible for the grant of
H
A
B
c
D
E
F
G
H
450
SUPREME COURT REPORTS
[1986] 1 S.C.R.
Export House Certificates on the basis of the exports actuall~
made in the three-year base period 1975-76, 1976-77 and .197778. Export Houses were entitled to the following facilities:-
(i) Import replenishment licences'eligible to them
as registered Exporters,
(ii) Import replenishment licences transferred to
them by others.
.•
(Hi) Import of
items placed on Open General
Licence, and
(iv) Additional Licences.
Several
diamond
exporters
applied for Export House
Certificates and consequent Additional Licenc:es, which were
refused on the ground that they had not di11ersified · their
exports. A number of writ petitions were filed by these,,
diamond exporters in the High Court of Bombay and the High
Court of Delhi. The High Courts held that. the ground on which
the Export House Certificates had been refused was wholly
untenable and directed the issue of Export House Certificates
as well as the consequent Additional Licences, but while
defining the right of the diamond exporters to import items
under the Additional Licences they also took into account the
Import Policy prevailing at the time of import in regard to
the items which could not be imported. Appeals against the
orders of the High Courts were disposed of by this Court by
its order dated April 18, 1985. The authorities were directed~
to issue the necessary.Export House Certificates for the year
1978-79. It was further directed that "save and except items
which are specifically banned under the
p1~evalent illport
policy at the time of illlpOrt, the diamond exporters shall be
entitled to inport all other items whetheir canalised · or
otherwise in accordance with the relevant rules". Pursuant to
this order of the Court, the dismnd exporters were issued
Additional Licences which permit them to illlpOrt acrylic est~~
mono•rs.
Feeling aggrieved
by the grant of such Additional
Licences, the appellants filed a writ petitio11 under Art. 32
complaining that the order dated April 18, l 98S of this Court
RAJ PRAKASH v. u.o.I.
451
..Vas misinterpreted and, in consequence thereof the import of
acrylic ester monoaers was being allowed. This Court dismissed
.A
the writ petition with liberty to move the High Court of
Bombay. The appellants then filed a writ petition in the High
Court of Bombay which was dismissed by a Single Judge, and
B
this order was confirmed in· Appeal
by the Division Bench on
the ground that withdrawal or cancellation of the additional
endorsement made on the"Additional Licences
would conflict
'11th this Court's Order and would amount to modifying or
mlllifying it.
On the question as to what is the true meaning and scope
c
of the order dated April 18, 1985 made by this Court,
dismissing the appeal and writ petition,
llELD : 1. The meaning and scope of this Court's order
dated April 18, 1985 llllSt be discovered from the terms of the
High Court orders, because the language in which the order of
D
.this Court is couched bears close comparison with one or other
of the High Court orders. (471 F-G)
2. The Additional Licences to be issued to diamond
exporters entitled them to import ite1111 permissible to Export
Houses under such Licence under the Import Policy 1978-79
E
excluding those ite1111 which fell within Appendices 3 and 4 of
the Import Policy 1978-79 and also excluding items which fell
in Appendix 3 and Appendix 2 Part A of the Import Policy
1984-85. That is the meaning which lllUSt also be given to the
terms of the order dated April 18, 1985 of this Court. Where
~the Import Policy prevailing at the time of the import is the
F
Import Policy 1985-88, the ite1111 excluded are those enumerated
in the corresponding Appendix 3 and Appendix 2 Part A of that
Import Policy. That conclusion follows irresistibly on the
analysis attempted by this Court and in the context in which
the order was made. (473 A-C)
3. When the word "banned" was used, it was intended to
>t...ake in ite1111 which were banned altogether as well as ite1111
)which were banned for import by the holder of an Additional
Licence. The Court was concerned with the right· to import of
G
the holder of an Additional Licence. The holder of an
Additions! Licence was prohibited from importing ite1111 which
H
A
B
c
D
E
F
G
lI
452
SUPREME COURT REPORTS
[1986] 1 S.C.R.
were banned altogether and also ite!M which he, as the holder'-
of an Additional Licence, was banned from import:ing. [473 E-F)
4. This Court would be enlarging the sc.ope of relief
granted by the High Court if the more liberal interpretation
was given to the words "specifically banned" and such a
construction is clearly impermissible when no di8110nd exporter
had appealed against that order before this Court. When this
Court made the orders dated April 18, 1985, w'tien the lmpore•
Policy 1985-88 was in force, there were only two ite.. which
were absolutely banned, and they were anillal tallow and aninial
rennet. Thst was also substantially the posit:ion under the
Import Policy 1984-85. (473 G-H; 474 A]
5. The right of a di8110nd exporter to an Additional
Licence does not issue from paragraph 265 of the Import Policy,
1985-88.
Paragraph
265
enables the grant of Additional'
Licences to other Export Houses, and diamond exporters "are not
entitled to Additional Licences under that Import Policy. The'><
Export House Certificates granted to the diai10nd exporters
pursuant to the orders of the High Courta and of this Court
are those envisaged under the Import Policy 1978-79. But for
the purpose of granting relief in their favour the Courts took
into account the conditions prevailing at the time of import
and, therefore, the provisions of the Import Policy 1985-88
become
relevant.
They
are relevant for the purpose of
construing the ter!M in which relief has been granted by the
Courts. They do not constitute the source of those rights,
(474 D-F]
6. The di8110nd exporters on the construction placed by
this Court on its order dated April 18, 1985, cannot be
regarded as denying restitution. But the restitution available
to them has been reduced by the express direction of the Court
that they are not entitled to import itellil excluded under the
Import Policy prevailing at the time of import in addition to
those excluded under the Import Policy 1978-79. (474 H; 475 A]
7. The construction placed by this Court on the orde.d
dated April 18, 1985 is consistent with the priJ:Lciple that the·
Court 1111St be presumed to have given effect to t.he law. That.
presumption can be rebutted only upon evidence showing a clear
intention to the contrary, either expressly or by necessary
implication. There is no such evidence before the Court.
(475 D-E]
' ..
RAJ PRAKASH v. u.o.I.
453
8. Those di8110nd exporters who were granted Additional
Licences under the Import Policy 1978-79 and had opened and
established irrevocable Letters of Credit before October 18,
1985 should be pemitted, notwithstanding the construction
placed on the order dated April 18, 1985 of this Court, to
clear. the goods imported, or to be imported, by them pursuant
to such irrevocable Letters of Credit. (477 E-F)
9. All imports effected pursuant of such Letters of
Credit should be deemed to have been legally and properly
made, and should entail no adverse consequences whatsoever on
the basis of principles of justice, equity and fair play and
by the need to avoid undeserved hardship ignoring the legal
technicalities. (477 F-G)
10. The diamond exporters who pursuant to the issue of
Additional Licences under the lllpOrt Policy 1978-79 have
opened and established irrevocable Letters of Credit on or
.., after October 18, 1985 will not be entitled to the benefit of
' this order. (478 B-C)
Deputy .Autt. Iron • Steel Controller • Anr. v. L.
Jfanfctcti...,,, Proprietor, latrella lletal Corpa. Wra, (1972)
2 s.c.R. 1, relied upon.
Joint Qiief Controller of lqiorts & Eirporta, Madra v.
K/s. wM...,, "1tha etc., [1966) l s.c.R. 262, Union of Iadia
• Ora. v. K/s. lndo-Afgan Ageacies ~
•• (1968) 2 s.c.R. 366
and .JapnMth .Aggarw1 v. B.R. Datta, (Civil Appeal No.801 of
"'"
1.964 decided on January 10, 1967), referred to.
CIVIL APPELLATE JURISDICTION
Civil Appeal No. 4978 of
1985.
From the Judgment and Order dated 16.8.1985 of the
Bombay High Court in Appeal No. 726 of 1985.
V.M. Tarkunde and Rajiv Datta for the Appellants.
B. Datta, Additional Solicitor General, K.K. Venugopal,
Ashok H. Desai, A.K. Ganguli, R.N. Poddar, s. Ganesh, Anand
Bhatt,
Harish
Salve,
Raian
Karanjawala,
Mrs.
Manik
A
B
c
D
E
F
G
H
A
B
c
D
E
F
G
H
454
SUPREME COURT REPORTS
[1986] 1 S.C,R.
Karanjawala, G.E. Vahanvati, B.R. Agarwala, M.M. Jayakara and
~·
Miss V. Menon for the Respondents.
The Judgment of the Court was delivered by
PAl'llAK, J. This ~ppeal is directed against the judgment
and order dated August 16, 1985 of a Division Bench of the
High Court of Bombay summarily rejecting an app<!al filed by
the appellants against the dismissal of their writ petition by ,•
a learned Single Judge of that High Court.
The first appellant, Raj Parkash Chemicals Limited, is a
public limited company with its registered office at Bombay.
It is engaged in the manufacture of acrylic ester monomers
(Butyl Acrylate, Ethyl Acrylate, 2- Ethyl Hexyl Acrylate and
Methyl Acrylate) at its factory in Tarapur, Maharashtra. These
items
are
used
by
various
industries
engaged
in
the
manufacture of Binders required in textiles, leather paint and
paper
industries.
The
second appellant is the Managing .,
Director and a shareholder of the appellant company. In
February 1975, the appellants were granted an industrial
licence for manufacturing acrylic ester monomers
in a total
quantity of 3,000 tonnes per annum. The installed capacity of
the factory ~s, however, 1,000 tonnes per month. It commenced
manufacture in December 1980, and was until then the only
manufacturer in India of acrylic ester monomers. In the year
1981 the Indian Petrochemicals Corporation Limited, a public
sector organisation, also entered the market and began to
manufacture acrylic ester monomers at its factory at Baroda,
which possesses a capacity of 10,000 tonnes per y1!ar.
,.<
In the period before 1980 in the abs1mce of any
indigenous
manufacture
of
acrylic
ester
monomers,
the
Government of India permitted the import of those items on
Open General Licence. Thereafter in the Import Policy 1981-82,
with a view to protect indigenous industry and to
conserve
foreign exchange the Government of India placed acrylic ester
monomers in Appendix 5 (List of Restricted Items), and in Juiy -f
1981 Ethyl Acrylate was taken from Appendix 5 t.o Appendix y' ,
(List of Banned Items). A public notice dated July 7, 1981
announced that Export Houses which were eligible to import
Ethyl Acrylate would be allowed to import it only to the
extent of irrevocable Letters of Credit opened before the date
RAJ PRAKASH v. u.o.r. [PATHAK, J.]
455
. ...,
of the notice. Under Import Policy 1982-83, the nomenclature
of the headings of the Appendices was altered, and the heading
"List of Banned Item of Appendix 3 was changed to "List of
Limited Permissible Items". Likewise, the heading " Absolutely
Banned
List" of Appendix 4 was altered to "List of Nonpermissible Items (Banned)".
And the heading "List of Restricted Items" of App~ix 5 became the " List of Automatic
Permissible Items."
Ethyl Acrylate remained in Appendix 3,
~ and all other acrylic ester monomers remained in Appendix 5.
Under Import Policy 1983-84, the headings of Appendices 3,
4
and 5 remained as they wer:e, and all four acrylic ester
monomers
were
placed
in
Appendix
3
(List
of
Limited
Permissible Items). Under Import Policy 1984-85,
there was
another change in the nomenclature of the headings of the
Appendices. Appendix 2 Part A became the "List of Banned
Items" and Appendix 2 Part B became the "List of Restricted
Items". Appendix 3 continued to be the "List of Limited Permissible Items."· Appendix 5 was the "List of Canalised Items."
"
Appendix 6 mentioned the import of items under Open General
Licence. That nomenclature and arrangement was reflected again
under Import Policy 1985-88, except that Appendix 4 was deleted and the new Appendix 6 (the "Open General Licence" List)
contained Part II now which listed items open to import under
Export House Additional Licence. Under both Import Policies,
1984-85 and 1985-88 the four acrylic ester monomers appeared
at item 9 of Appendix 3 (List of Limited Permissible Items).
Changes in the nomenclature of the headings of the Appendices
in the Import Policy 1982-83 and thereafter were considered
necessary in the context of loans and financial assistance
,. received from international agencies to bridge the gap in
India's balance of payment, and because the Import Policy of
India is considered a vital document by foreign countries in
the for1111lation of their fiscal policies. The change in the
nomenclature did not alter the principle underlying the grouping of items under the various heads. Each grouping was determined and continued to be so determined in accordance with two
major objectives of import policy, the conserving of foreign
\ exchange by limiting the total imports to a level ensuring
r 'that payment for them could be met by the available foreign
exchange resources or by maintaining a minimum deficit in the
balance of trade, and the further objective of giving i8'>etus
to, and protecting, the development of indigenous industries
by limiting the import of corresponding manufactured products.
A
B
c
D
E
F
G
H
A
B
c
D
E
F
G
H
456
SUPREME COURT REPORTS
[1986 J 1 S.C.R.
The items in Appendix 3 (List of Limited Permissible Imports)
).. ,
were those whose import was not permissible ordinarily but
could be permitted by the Government if their import was
necessary and justified on the merits of the relevant consideration mentioned in the Import Policy, while the import of
items
Absolutely Banned
(and later simply
described as
"Banned") was not permissible at all.
The Import Policy 1978-79 incorporated a scheme under -
which Registered Exporters were registered as EKport Houses
and granted special facilities to strengthen their negotiating capacity in foreign trade and to build up a more enduring
relationship between them and their supporting manufacturers.
They were eligible for the grant of Export House Certificates
on the basis of the exports actually made in the three year
base period 1975-76, 1976-77 and 1977-78. Export Houses were
entitled to the following facilities :-
(i) Import replenishment licences elig;ible• to them ,.
as Registered Exporters,
(ii) Import replenishment licences transferred to
them by others,
(iii) Import of
items placed on
Open General
Licence , and
(iv) Additional Licences.
Replenishment Licences issued in the names of Export Houses,
,.._
or transferred to them by others, entitled th<!m to import
capital goods placed on Open General Licence subj<!ct to Actual
Users condition, and raw materials, components, and spares
placed on Open General Licence for Actual Users (Industrial).
The Additional Licence granted for 1978-79 would be valid for
the import of items appearing in Appendix 5 (List of Restricted Items) and Appendix 7 (Restricted List -
Iron and Steel
Items) excluding, however, the items appearing in Appendix 26'.--i'
An Additional Licence would also be valid for import of rlN '
materials, components
and spares placed on Open General
Licence for Actual Users (Industrial), the Export House being
obliged to dispose of the items so imported to eligible Actual
Users only.
,, ..
RAJ PRAKASH v. U.0.1. [PATHAK, J.]
457
,
Several diamond exporters including the fourth respondent, N. Nayan Kumar and Company, and the fifth respondent,
Rajnikant Brothers, applied for Export House Certificates and
consequent Additional Licences. Their applications were refused on the ground that they had not diversified their exports.
A number of writ petitions were filed in the High Court of
Bombay and in the High Court of Delhi, and in each case the
High Court held that the ground for rejecting the application
~ was invalid and directed the grant of an Export House Certificate and an Additional Licence to the applicant. As those
orders became the subject of corresponding appeals by the
Union of India in this Court which were disposed of by this
Court by its order dated April 18, 1985, the construction of
which is central to the controversy in this appeal, it would
be appropriate to refer to those orders at this point.
..,
Taking the orders seriatim passed by the High Court of
Bombay there is first the order dated November 26, 1982 by
Pendse, J, in Writ Petition No.
1458 of
1979 filed by
Natendra Mafatlal Mehta, whereby the learned Judge directed
the grant o.f an Export House Certificate under Import Policy
1978-79 to the petitio.ner, but while extending the time for
making application for an Additional Licence he held the pet~
tioner entitled to those facilities only which were provided
by paragraph 174 of that Import Policy. Thereafter the same
learned Judge passed an order dated November 11, 1983 in Writ
Petition No. 1293 of 1979 filed by D. Navinchandra & Co. in
which, while directing the grant of an Export House Certificate under the Import Policy 1978-79 to the petitioner,
,;.
Pendse, J. noted the objection on behalf of the Government
that some of the items which could have been imported under
the Import Policy 1978-79 could have been banned under the
Import Policy 1983·54, and the learned Judge observed that if
any item was banned \li:tder the Import Policy 1983-84 the petitioner would not be entitled to import that item even though
it was not banned under the Import Policy 1978-79. Another
objection by the Government that the petitioner should not be
.,
permitted to import items which were canalised items under .the
!''Import Policy 1983-84 was rejected by Pendse, J., and he observed that canalised items were not banned items·· and the
petitioner, should not be compelled to approach the canalising
agency for the import of items which were not canalised items
under the Import Policy 1978-79. He directed that the petiA
B
c
D
E
F
G
H
A
B
c
D
E
F
G
H
458
SUPREME COURT REPORTS
(1986] l S.C.R.
tioner would not be entitled to import only those' items which ,
were specifically banned under the Import
Pol.icy
1983-84
prevalent at the time of import. On December 23, 1983, Pendse,
J, passed an order in Writ Petition No. 761 of 1983 filed by
Messrs. N. Nayankumar and Company where he directed the issue
of an Export House Certificate to the petitioners under the
Import Policy 1978-79 and held the petitioners entitled to an
Additional Licence for the import of items in the same
terms
as was set forth in the order dated November 11, 1983 in the •
earlier case. The foruth order in the series
Wa!1
passed on
January 25, 1984 by Bharucha, J. in Writ Petition No. 1048 of
1983 filed by Messrs. Mehta Gems., and that lea med Judge
taking note of the orders passed earlier by Pendse, J. in
similar cases, also directed the issue of an Export House
Certificate to the petitioners and while granting time to the
petitioners for
applying
for
an
Additional
Licence
he
directed:-
"Save and except
items which are specifically
banned under the prevalent import policy at the ,.
time of import, the Petitioners shall be entitled .
to import all other items whether canalised or
otherwise."
Then followed the order dated January 30, 1985 passed by
Sawant, J. In Notice of Motion No.
1194 of 1984 in Writ
Petition No. 761 of 1983 filed by N. Nayankumar
.~ Co. and the
order directed :-
1. The Respondents should make
the
following '
endorsement on the licence in question :-
~
"This
licence is valid
for
import
of
items
permissible to
export houses
under additional
licence category as per paragraph 176 of the Import
and Export Policy for the period 1978·-79 excluding
those items which are banned for the period 1978-79
and which have been banned during the import policy
for the period · 1984-85. The additi.onal
licenc~4
category import allowed to be imported subject to ·
the provisions of paragraph 176 of the Import and
Export Policy for the Period 1978-79.
2. The banned items referred to abo"e mean items
which are "banned" and "absolutely banned".
RAJ PRAKASH v. U.O.I. [PATHAK, J.]
459
3. 'Ille Petitioners will take out a separate Motion
for Import Replenishment (REP) Licence transferred
to them by others , if any. ·
A
4. No other order on the present Motion and the
B
Motion stands disposed of as above with no order as
to costs.
•
Adverting to the orders passed by the High Court of Delhi
in the several Writ Petitions filed before it, we find that
the High Court by its order dated July 15, 1980 in Writ
Petition No. 250 of 1979 filed lTJ Jayantilal Mangalji Mehta
c
held the petitioner entitled to an Export House Certificate
under the Import Policy 1978-79, and observed that the Certificate would operate with effect· from the "original entitlement keeping in view the date of the application and the year
for which it was applied". On September 3, 1982 the High Court
directed in Civil Writ Petition No. 251 of 1979 filed by Vijay
D
Trading Company that an Export House Certificate for the year
.. 1978-79 should be issued to the petitioner and declared him
entitled to all the consequential Replenishment and Additional
Licences, and further directed, on a concession made by the
petitioner that he would be satisfied if he was permitted to
import those items only which were not banned in the year
E
1980-81, (as the case had originally come up for hearing on
July 15, 1980), that the Replenishment and Additional Licences
be issued in those terms. Tilereafter, on April 7, 1983 the
High Court, while disposing of Writ Petition No. 1501 of 1981
filed by Raj nikant Brothers, ordered the renewal of their
._ Export House Certificate for the Year 1978-79 and directed
F
that as they had filed the Writ Petition on May 11, 1981 they
would be entitled to the consequent licences for the import of
those items only which were open to import under the Import
Policy 1981-82. 'Ille High Court went on to observe :-
"It may be that some of the items, which were
G
permitted to be imported in the year 1981-82 may
now have been absolutely banned under the Policy
for the current year, i.e. 1983-84. In such a case
the petitioner, of course, cannot be permitted to
import those items. If, for example, an item which
could be freely imported under the Policy for the
H
year 1981-82 is now only canalised,
then the
A
B
c
D
E
F
G
H
460
SUPREME COURT REPORTS
[1986 l 1 s.c.R.
petitioner may still be entitled to import that ..
item because merely canalising an it.em cannot be "11111
regarded as import of that item being absolutely
banned."
It has been .mentioned earlier that the Un.ion of India
appealed against the orders of the High Court cif Bombay and
the High Court of Delhi, the appeals being Civil Appeal No.
1423 of 1984 (Union of India v. Rajnikant Brothers) and Civil •
Appeals Nos. 3232,3233 and 29020 to 29027
of 1984. A number
of Special Leave Petitions, being S.L.Ps. Nos. 13826 to 13829
of 1983,9161,9174,10868, 952 to 971, 7190,2892 to 2899, 8224
of 1984, 14471 of 1982 and 9338 of 1983 were also disposed of
along with the appeals. The order dated April 18,
1985
disposing of those cases reads as follows :-
''We have heard counsel for the parti.es and have
gone through the judgments of the High Courts of
Bombay and Delhi. We are unable to find, in the
facts and circumstances of the case, any require- "'
ment of diversification of exports as a condition
for the grant of Export House Certificates in the
Import Policy for the year 1978-79. While confirming the High Court's Judgment
quashing the order
impugned in the Writ Petitions in the High Court we
direct the appellants to issue the nec.essary Export
House Certificates for the year 1978-79. The Export
House Certificates shall be granted wl.thin 3 ioonths
from this date. Save and except items which are·
specifically 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 appeals are disposed of accordingly with
no order as to costs."
Pursuant to the orders of this Court and of the High
Court of Bombay and the High Court of Delhi, th.e diaioond exporters have been issued Additional Licences which permit them4
to import item such as acrylic ester monomers.
The
appellants are aggrieved by
the g1'.ant of such
Additional Licences and see in the import of items under those
RAJ PRAKASH v. U.O.I. [PATHAK, J,]
461
~Licences grave danger to their indigenous industry. Moreover,
they say, valuable foreign exchange will unnecessarily go out
A
of the country. In the circumstances, the appeJ.,lants filed
Writ Petition No. 11676
of 1985 in this Court complaining
that the order dated April 18, 1985 of this Court was being
misinterpreted and, in consequence,
the
impor~ of acrylic
B
ester monomers was being allowed. On August 1, 1985, this
Court
dismissed
the Writ Petition with liberty to the
;, appellants to move the High Court of Bombay. The
appellants
then filed Writ Petition No. 1549 of 1985 in the High Court
of Bo!llbay, but the writ petition was rejected in limine by
Pendse, J. on August 12, 1985. An appeal from that order,
being Appeal No. 726 of 1985, was dismissed by a Division
C
Bench on August 16, 1985. The appeal was dismissed on the
ground, inter alia, that the withdrawal or cancellation of the
additional endorsement made on the Additional Licences would
conflict with the order of this Court and would amount to
modifying or nullifying it. Thereafter, the appellant filed a
*special.leave petition in this Court,
and on special leave
D
being granted, this appeal is now before us.
It is admit~ed between the parties in this appeal that
the fundamental question for consideration is the true meaning
and scope of the order dated April 18, 1985 made by this
Court. There is no dispute that'the diamond exporters enjoying
E
the benefit of the order are entitled to the issue of Export
House Certificates under Import Policy 1978-79 and to the
facilities flowing from such grant. There can also be no dispute that the consideration whether the items sought to be
~ imported by such diamond exporters are canalised cannot act as
an impediment to the import directly by them.
The order
F
declares further that such diamond exporters shall be entitled
to import all items "save and except items which are specifically banned under the prevalent import policy at the time
of import." The controversy between the parties centres around
the meaning of the expression "specifically banned", specially
in the context of an Additional Licence granted to such
G
r
~iamond exporter.
Shri V .M. Tarkunde, counsel for the appellant company,
contends that under the aforesaid order dated April 18, 1985
Export Houses holding Additional Licences are prohibited under
the Import
Policy 1985-88 fro]jl importing items other than
H
A
B
c
D
E
F
G
H
•
462
SUPREME COURT REPORTS
[19861 1 s.c.R.
those appearing in Part II they are taken into account
the~
result would be the same. He points out that under the Import
Policy 1978-79 an Additional Licence was valid for the import
of raw materials placed on Open General Licence for Actual
Users (Industrial) and the relevant item 1 of Appendix 10
(List of Items on Open General Licence) excluded from import
the items under Appendix 3 (Banned List). As acrylic ester
monomers did not appear in that list nor were e~cluded by the
other terms of item 1 of Appendix 10 they could, under the,.
Import Policy 1978-79, be imported under Open General Licence
by
the holder of an Additional Licence,
who
was
under
paragraph 176 of the Import Policy, obliged to dispose them
off to Actual Users (Industrial) only. But now under the
Import Policy 1985-88, prevalent at the time of import, the
holder of an Additional Licence is no longer entitled to
import acrylic ester monomers because that item is now inserted in Appendix 3 Part A, which by a change of nomenclature, is
currently described as the List of Limited Permlssible Items•
Further, learned counsel contends, inasmuch as the purpose of~
issuing Additional Licences is to satisfy the ne1~ds of small
scale manufacturers who are unable to import directly the
small quantities of raw materials required by them, and therefore the holder of an Additional Licence is obl:lged to supply
the imported item to Actual Users (Industrial), regard must be
had to the circumstances that under the Import Policy 1985-88
even Actual Users are debarred from importing acrylic ester
monomers because this item has been placed in Appendix 3 Part
A. Item 1 of Appendix 6 of the Import Policy 1985-88, which
lists the items to be imported under Open General
Licence,
excludes the items appearing in Appendix 3 Part A from import >
by Actual Users (Industrial). Learned counsel urges that if
Actual
Users
(Industrial)
are
themselves
barred
from
importing that item the holder of an Additional Licence is
also barred from doing so because in the final analysis he
imports only to supply the item to Actual Users (Industrial).
The ban. has been imposed, it is pointed out, as part of a
policy to protect indigenous industry. Learned counsel urges
that when the orders of the High Courts and of this
Cour.~-j
directed the grant of an Export House Certificate under the ·
Import Policy 1978-79 to diamond exporters for use during the
operation of a subsequent Import Policy, it must be
regarded
as the grant of an exceptional right to them, beocause in all
the years after 1978-79 diamond exporters were not entitled to
RAJ PRAKASH v. u.o.I. [PATHAK, J,]
463
any Additional Licence. In the circwnstances, it is said, when
A
-1, construing the scope of those orders, regard must be had to
the observations of this Court in Deputy Asst. Iron & Steel
Controller & Anr. v. L. Man:lckclumd, Proprietor, Katrella
Metal Corpn. Madras, [1972] 3 s.c.R. 1.
The Union of India has made
common cause with the
B
appellant company, and Shri B. Datta, the learned Additional
i, Solicitor General of India, who appears on its behalf urges
that the Export House entitlement under the Import Policy
1978-79 has to be
reconciled
with
the
entitlement
and
facilities available under the Import Policy 1985-88, He urges
that the expression "specifically banned" in the order dated
April 18,
1985 of this Court must be given a meaning
c
consistent with the changed Import Policy now prevailing at
the time of import, and that what is impermissible for import
against Additional Licences under the current
Import Policy
cannot be allowed to be imported now. In the first place
learned counsel points out that the High Courts and this Court
>'have already permitted a departure from the current Import
D
Policy in holding the diamond exporters entitled to Export
House Certificates. Under paragraph 173 of the Import Policy
1978-79 an Export House Certificate is normally valid for
three years only. It would no longer be valid now. In the year
1978-79 due to the need for protecting export trade and
providing incentives to diamond exporters they became eligible
E
for a total import licence to the extent of Rs. 108 against an
export valued at Rs. 100. The Replenishment Licence entitled
them to import on an average of 75% of the F .O.B. value of
exports while Additional Licences entitled them to another
"- 33%. With the development of the national economy
and the
availability of indigenous products the policy was changed
F
from the year 1979-80 onwards, and for the prupose of calculating the entitlement fot an Additional Licence .the value of
exports of select products carrying an import replenishment
rate of more than 50% in Appendix 17 of the Import Policy
1979-80 was not to be taken into account, and the value of
such exports was not to be included by an Export House while
G
}-applying for an Additional Licences. In the result, the year
1978-79 was the only year for which diamond exporters could be
granted Additional Licences. Learned counsel emphasises the
need, in the circwnstances, to ensure that further departure
from the current Import Policy should not be permitted. He
H
A
464
SUPREME COURT REPORTS
[1986] 1 s.c.R.
invites our attention to paragraph 35(1) of the Import Policy~
1985-88
which
provides
that
Replenishment
Licences
and
Additional Licences held by Export Houses would cease to be
f
valid for the import of any item which could have been
imported under Open General Licence during the preceding
financial year or earlier but was no longer so under the
B
Import Policy l985-88.
Shri K.K. Venugopal appearing for the fourth respondent, '
N. Nayankumar & Company, opposes the confined construction
sought to be put by Shri V .M. Tarkunde, learned counsel for
the appellant company and Shri B. Datta, Additional Solicitor
C
General of India on the order dated April 18, l985 of this
Court, and urges that diamond exporters, who were entitled
under the orders of the High Courts to the issue of ExpoL c
Houses Certificates and consequently Additional Licences were
entitled under the terms of those orders to import all items
which could be imported under Open General Licence under the
D
Import Policy l 978-79 as well as all items w'1ich could be f..
imported under the Import Policy 1985-88, including items in
Appendix 3 Part A (List of Limited Permissible I~ems), but not
items absolutely banned under the Import Policy 1985-88. He
contends that the rights of such diamond exporters must be
considered in the context of the Import Policy l978-79 and not
E
of the Import Policy 1985-88. The applications for Export
House Certificates were made under the Import Policy 1978-79
and were denied by the Chief Controller of Imports on a wholly
untenable ground and consequently the intent of the orders of
the Courts was to entitle such diamond exporters to restitution. Such restitution could be effected only if the
diamond~
F
exporters could, notwithstanding the passage of time occasioned by the pendency of the proceeding in Court for releif
against the wrongful order, be placed back in the position
which they would have occupied had Export Hous·e Certificates
being granted. As regards the items which such diamond exporters were entitled to import, he has referred to material on
G
the record indicating how respondent 1 to 3 themselves understood the orders of the Court. Our attention has been invit<;sl~
to paragraph 5 of the counter affidavit of Dr. R.K. Dhawan, '
Deputy Chief Controller of Imports and Exports, filed on
behalf of respondents Nos. 1 to 3 which states :-
H
"5. In terms of the Court order the parties can
RAJ PRAKASH v. U,O,I. [PATHAK, J,]
465
import all the items which were under O.G.L. during
1978-79 except animal tallow and animal rennet
which were now banned under Appendix 2-A."
A
In this connection, reference may also be made to the
affidavit of Kanayalal J. Chellani, Deputy Chief Controller of
B
Imports and Exports, filed before the High Court of Bombay in
Writ Petition No. 1686 of 1985
(Reliance Industries Limited
J. v. Union of India), a copy of which has been included as
Exhibit 19 to the affidavit of N. Nayankumar and Company in
reply to Civil Miscellaneous Petition 43000 and 43001 of 1985
in Civil Appeal No. 3233 of 1985 (Union of India & Ors. v. N.
Nayanlnnnar & Ors.). Paragraph 9 states :-
C
"9. I say that it is significant to note that the
subject item has not been banned or restricted
(Appendix 2 of 1985-88 Policy. It has. only been
shifted from 0,G,L. to L.P.L. The petitioners after
receiving
a licence for import of the said item
D
can very well still import the item."
Shri Venugopal has attempted to demonstrate that there is need
for importing acrylic ester monomers and that in fact the
Government of India envisages such import notwithstanding that
the item is no longer on the O.G.L. list but finds place now
E
in Appendix 3 of the Import Policy 1985-88.