# UNION OF INDIA AND OTHERS v. AGRICAS LLP AND OTHERS ETC

- **Citation:** [2020] 14 S.C.R. 372
- **Court:** Supreme Court of India
- **Decided:** 2020-08-26
- **Bench:** A. M. Khanwilkar, Dinesh Maheshwari, Sanjiv Khanna
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/union-of-india-and-others-v-agricas-llp-and-others-etc-34401
- **Pages:** 73

## Headnote

Foreign Trade (Development and Regulation) Act, 1992 -
ss.3(2), 9A - Statutory Scheme of - Notifications, trade notices were
issued amending the import policy for peas, pulses shifting them
from free to restricted category requiring prior authorization for
import - Validity of - Held: There is no violation of s.3 in the issuance
of the impugned notifications or orders, which are intra vires and
not ultra vires - Further, implementation of GATT-1994, including
Article XI, is left to the Central Government by means of delegated
legislation - FTDR Act does not legislate and transform Article XI
of the GATT-1994 - Notwithstanding s.9A, the Central Government
continues and has authority to impose quantitative restrictions by
an order u/s.3(2) - Impugned notifications are valid as they are
issued in accordance with the power conferred in the Central
Government in terms of sub-section (2) to s.3 - International
Convention/Treaties - General Agreement on Tariff and Trade
(GATT), 1947; General Agreement on Tariff and Trade (GATT), 1994
- Articles XI and XIX - Constitution of India - Arts. 73, 77, 253,
Part XI- Chapter I - Government of India (Transaction of Business)
Rules, 1961 - Customs Act, 1962 - s.11 - Safeguard Measures
(Quantitative Restrictions) Rules, 2012 - Foreign Trade (Regulation)
Rules, 1993 - Doctrines/Principles - Principle of invocability or
justiciability; Act of transformation.
International Convention/Treaties - International treaty -
General Agreement on Tariff and Trade, 1994 (GATT-1994) - Effect
of on domestic law; Obligations of contracting party - Discussed.
International Convention/Treaties - International customary/
treaty law Applicability in domestic law - Theories - Dualism and
Monism - Discussed.
[2020] 14 S.C.R. 372
372
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Foreign Trade (Development and Regulation) Act, 1992 -
ss.3(4), 18A - Held: provisions of FTDR Act are in addition to, and
not in derogation of, the provisions of any other law for the time
being in force - This would be the correct way to harmoniously
read and interpret sub-section(4) to s.3 and s.18A.
Foreign Trade (Development and Regulation) Act, 1992 -
ss.3, 9A - Interpretation of - Discussed.
Maxims - Lex specialis derogat legi generali - When not
applicable - Discussed.
Words & Expressions - 'direct application' - Meaning of -
Held: It means and mandates that the treaty norms, either wholly or
to some extent, are directly treated as norms of domestic law and
enjoy the statutory law status by default in the domestic legal system
- International Convention/Treaties.
Disposing of the transfer petitions, the Court
HELD: 1.1 Discussion on challenge to the role and authority
of the Directorate General of Foreign Trade (DGFT) to issue the
Notifications and Trade Notice and interpretation of the words
"total quantity"
The importers have rightly not raised the contention that
the DGFT could not have notified the impugned notifications.
The notifications themselves record that they were published by
the Ministry of Commerce and Industry, Department of
Commerce, Directorate General of Foreign Trade. The first
paragraph of the notification states that they had been issued by
the Central Government in exercise of powers conferred under
Article 77 of the Constitution. Clearly, the notifications were
issued by the Central Government, and not the DGFT that had
performed the ministerial act of publication. The decision to
amend and issue the notification was of the Central Government.
Neither Section 3(2) nor Section 6(3) of the Foreign Trade
(Development and Regulation) Act, 1992 (FTDR) Act was violated.
Article 77 does not provide for delegation of any power, albeit
under sub-section (3) of Article 77, the President is to make Rules
for more convenient transaction of business and allocation of same
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amongst Ministers. Under the Government of India (Transaction
of Business) Rules

## Text

_Characters 0–39,992 of 173,472. This is a partial read: ask again with offset=39992 for what follows._

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UNION OF INDIA AND OTHERS
v.
AGRICAS LLP AND OTHERS ETC.
(Transfer Petition (Civil) Nos. 496-509 of 2020)
AUGUST 26, 2020
[A. M. KHANWILKAR, DINESH MAHESHWARI AND
SANJIV KHANNA, JJ.]
Foreign Trade (Development and Regulation) Act, 1992 -
ss.3(2), 9A - Statutory Scheme of - Notifications, trade notices were
issued amending the import policy for peas, pulses shifting them
from free to restricted category requiring prior authorization for
import - Validity of - Held: There is no violation of s.3 in the issuance
of the impugned notifications or orders, which are intra vires and
not ultra vires - Further, implementation of GATT-1994, including
Article XI, is left to the Central Government by means of delegated
legislation - FTDR Act does not legislate and transform Article XI
of the GATT-1994 - Notwithstanding s.9A, the Central Government
continues and has authority to impose quantitative restrictions by
an order u/s.3(2) - Impugned notifications are valid as they are
issued in accordance with the power conferred in the Central
Government in terms of sub-section (2) to s.3 - International
Convention/Treaties - General Agreement on Tariff and Trade
(GATT), 1947; General Agreement on Tariff and Trade (GATT), 1994
- Articles XI and XIX - Constitution of India - Arts. 73, 77, 253,
Part XI- Chapter I - Government of India (Transaction of Business)
Rules, 1961 - Customs Act, 1962 - s.11 - Safeguard Measures
(Quantitative Restrictions) Rules, 2012 - Foreign Trade (Regulation)
Rules, 1993 - Doctrines/Principles - Principle of invocability or
justiciability; Act of transformation.
International Convention/Treaties - International treaty -
General Agreement on Tariff and Trade, 1994 (GATT-1994) - Effect
of on domestic law; Obligations of contracting party - Discussed.
International Convention/Treaties - International customary/
treaty law Applicability in domestic law - Theories - Dualism and
Monism - Discussed.
[2020] 14 S.C.R. 372
372
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Foreign Trade (Development and Regulation) Act, 1992 -
ss.3(4), 18A - Held: provisions of FTDR Act are in addition to, and
not in derogation of, the provisions of any other law for the time
being in force - This would be the correct way to harmoniously
read and interpret sub-section(4) to s.3 and s.18A.
Foreign Trade (Development and Regulation) Act, 1992 -
ss.3, 9A - Interpretation of - Discussed.
Maxims - Lex specialis derogat legi generali - When not
applicable - Discussed.
Words & Expressions - 'direct application' - Meaning of -
Held: It means and mandates that the treaty norms, either wholly or
to some extent, are directly treated as norms of domestic law and
enjoy the statutory law status by default in the domestic legal system
- International Convention/Treaties.
Disposing of the transfer petitions, the Court
HELD: 1.1 Discussion on challenge to the role and authority
of the Directorate General of Foreign Trade (DGFT) to issue the
Notifications and Trade Notice and interpretation of the words
"total quantity"
The importers have rightly not raised the contention that
the DGFT could not have notified the impugned notifications.
The notifications themselves record that they were published by
the Ministry of Commerce and Industry, Department of
Commerce, Directorate General of Foreign Trade. The first
paragraph of the notification states that they had been issued by
the Central Government in exercise of powers conferred under
Article 77 of the Constitution. Clearly, the notifications were
issued by the Central Government, and not the DGFT that had
performed the ministerial act of publication. The decision to
amend and issue the notification was of the Central Government.
Neither Section 3(2) nor Section 6(3) of the Foreign Trade
(Development and Regulation) Act, 1992 (FTDR) Act was violated.
Article 77 does not provide for delegation of any power, albeit
under sub-section (3) of Article 77, the President is to make Rules
for more convenient transaction of business and allocation of same
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amongst Ministers. Under the Government of India (Transaction
of Business) Rules, 1961, the government business is divided
amongst Ministers and specific functions are allocated to different
Ministries. The Director General of Foreign Trade is an ex officio
Additional Secretary in the Government of India and is appointed
by the Central Government under sub-section (1) to Section 6 of
the FTDR Act to advise the Central Government in formulation
and carrying out the Foreign Trade Policy. Wherefore, even the
website of the Ministry of Commerce and Industry, Department
of Commerce, states that the DGFT is an agent of the Central
Government and attached office to it. Further, clause (2) of Article
77 provides that validity of an order or instrument made or
executed in the name of the President, authenticated in the
manner specified in the Rules made by the President, shall not
be called in question on the ground that it is not an order or an
instrument made or executed by the President. Therefore, the
contention of issuance of the impugned notification sans authority,
cannot be sustained. [Para 15][396-E-H; 397-A-E]
Delhi International Airport Limited v. International
Lease Finance Corporation and Others (2015) 8 SCC
446: [2015] 2 SCR 1040 - relied on.
1.2 FTDR Act vide Section 3(2) authorises the Central
Government to prohibit, restrict or otherwise regulate the import
or export of goods, by an order published in the Official Gazette.
FTDR Act vide Section 11(1) prohibits imports or exports of goods
in contravention of the FTDR Act, the rules and orders made
thereunder and the EXIM Policy. Section 5 of the FTDR Act
authorizes the Central Government to formulate and announce
the EXIM Policy by notification in the Official Gazette. Under
Section 11(2) of the FTDR Act, when a person makes or abets or
attempts to make any import or export in contravention of the
FTDR Act, any rule or order made thereunder or the EXIM policy,
he is liable to pay penalty upto Rs.10,000/- or five times the value
of the goods, services or technology, whichever is greater.
Section 11 of the Customs Act,1962 provides that the Central
Government may by a notification in the Official Gazette prohibit,
absolutely or subject to conditions as specified, import or export
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of any good. The listed purposes are wide and range from
conservation of foreign exchange and safeguarding of balance of
payments, avoiding shortage of goods, prevention of surplus of
any agricultural or fisheries product, prevention of serious injury
to domestic production, establishment of any industry and lastly
compendiously includes "any other purpose conducive to the
interest of the general public". Under clause (d) to Section 11 of
the Customs Act goods imported or exported (or attempted to
be imported or exported) contrary to any prohibition are liable to
confiscation. [Para 16][397-E-H; 398-A-C]
1.3 The contention raised by some of the importers that
the impugned notification is illegal because of vagueness or allows
restricted quantity of 1/1.5 lakh MT of Peas (Pisum Sativum)
including Yellow Peas, Green Peas, Dun Peas and Kaspa Peas as
against a licence, meaning thereby each licensee is allowed to
import the maximum quantity specified in the notification is
rejected. In other words, the total quantity specified in the
notification is per licensee and not for the total imports of the
commodity specified in the notification. The submission has no
merit as the notification expressly uses the expression 'total
quantity' of the commodity specified which could be imported.
There is no ambiguity or vagueness in the notifications. Even
otherwise the expression 'total quantity' cannot be construed as
quantity per licence issued as the number of licences issued
concerning the subject goods could be numerable (as per the
Union of India 2248,1016 and 2915 licences were issued in 201920 for import of Tur, Moong and Urad dals against restricted quota
of 4,1.5 and 4 lakh MT, respectively). If each licence holder is
allowed to import 1/1.5 lakh MT of Peas, the total import would
well exceed the total annual consumption after accounting for
the production within India. The plea and interpretation of the
importers if accepted will not only be contrary to the express
language of the notification but would frustrate the intent and
object of restricting the imports of the stated goods by prescribing
a quota. The legal effect of the notifications was to amend the
EXIM policy whereby the specified commodities would henceforth
not be 'free' (importable without restriction) but would fall in the
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restricted category. Once the commodities were shifted to the
restricted category, the requirement of licence would flow from
the mandate of Section 3 of the FTDR Act read with Rule 4 of the
Foreign Trade (Regulation) Rules, 1993. Further, the EXIM
Policy regulates the restricted goods under Paragraphs 2.04, 2.08
and 2.10 of Policy. [Paras 17, 18][398-C-G; 399-A-C]
1.4 The effect of the Notifications is to bring the specified
commodities from free to the restricted category and therefore
the imports in question would require a prior authorisation for
import. The requirement of licence is nothing but authorisation.
Therefore, in terms of paragraph 2.10, the imports of the specified
commodities would only be by the 'actual user', unless the 'actual
user' condition was specifically dispensed with or diluted by the
DGFT. The Directorate by specifying that the licence would be
issued to the miller or refiner has, therefore, just clarified that
the 'actual user' alone will be permitted to import the restricted
goods mentioned in the notification for which a prior authorisation
or licence is required. The importers are traders and it is not the
case of any of the importers that they are the 'actual users'.
Further, none of the importers have applied for a licence or
authorisation for import of the restricted commodities. Violation
of clause 9.03 of the EXIM Policy defining the expression 'Actual
User', is neither alleged nor argued. Paragraph 2.10 consists of
two parts. The first part relates to goods which are freely
importable without any licence and states that such goods that
can be imported by any person. The second part refers to such
imports which require authorisation and not the imports which
are freely importable without any restriction. 'Actual user'
condition, therefore, applies by default when imports require an
authorisation. However, the DGFT can specifically dispense with
or dilute the 'actual user' condition. [Paras 19, 20][400-C-F; 401A-C]
2.1 Section 9A of the FTDR Act and it's interpretation.
(i) General Agreement on Tariff and Trade - 1947 and 1994.
Conference at Bretton Woods, New Hampshire in 1944 lead
to establishment of the 'International Monetary Fund' and the
'World Bank', but the attempt to establish 'International Trade
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Organisation' to develop and coordinate international trade
faltered and was finally given up in 1950. However, multilateral
trade negotiations had continued with the objective to prepare a
multilateral treaty containing general principles of international
trade and a schedule of tariff reductions. By the end of 1947, the
work on the General Agreement on Tariff and Trade ('GATT'),
1947 and tariff reduction was finalised and agreed upon. On or
about 8th July 1947, Government of India became a signatory
and ratified GATT-1947. However, GATT-1947 is considered to
be a failure or at best had a limited impact. What followed was
several years of intense negotiations involving over 100 nations
that finally ended in 1994 at Marrakesh, Morocco, with a
multilateral international treaty of over 400 pages of basic text
with substantive rules and tariff schedules. The final act signed
exceeded 26,000 pages. This treaty popularly known as General
Agreement on Tariff and Trade (GATT-1994) was signed by 128
countries including India on 1st January 1995. On the same day,
the World Trade Organisation (WTO), an institution with a
secretariat and staff, replaced GATT and came into existence, as
the international organisation for overseeing and regulating
functioning of the multilateral trade system. GATT-1994 in
nutshell is a rule-oriented package consisting of multilateral trade
agreements annexed to a single document and works on the basis
of single undertaking approach whereby all agreements annexed
become binding on all the members as single body of law. The
main agreement consists of the preamble and XVI articles
establishing the WTO, four annexures and declarations, decisions
and understandings. Article XI prohibits quotas, import or export
licences and other non-tariff measures, with some exceptions.
Annexure 2 consists of the Understanding on Rules and
Procedures Governing Settlement of Disputes, referred to as the
Dispute Settlement Understanding, providing mechanism for
resolution of trade disputes among WTO members. Annexure 3
establishes the trade policy review mechanism, with procedure
for periodic review of compliance with the WTO agreement by
each member. Annexure 4 consists of plurilateral trade
agreements binding only on the parties that have accepted them.
GATT-1994 also has provisions that allow and permit exceptions.
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Article XIX is an exception and sometimes referred to as the
escape clause, that provides emergency action where serious
injury is caused or threatens domestic industry. The 'Marrakesh
Agreement' enacts and incorporates rules-oriented approach
regulating the conduct of the WTO members and are designed
to ensure that the tariff concessions and the multilateral trade
treaty works as intended and not undermined. Articles XXII
provides for sympathetic consideration and consultation and
satisfactory solution with respect to any matter affecting the
operation of GATT-1994. Article XXIII allows GATT contracting
party to make a complaint should it consider that another
contracting party is directly or indirectly nullifying, impairing the
GATT-1994 or otherwise impeding attainment of its objective:
(a) by failure in carrying out its obligations; (b) by measures, even
when they are not in conflict with GATT-1994; and (c) in any other
situation. These Articles XXII, XXIII emphasise on the need for
consultation, withdrawal of conflicting measures and mutual
satisfactory solution of the matter by the contracting parties
concerned, consistent with the GATT-1994. Albeit on failure to
reach a satisfactory adjustment within reasonable time or in case
of (c), the matter is to be referred to the Contracting Parties to
investigate and make recommendations to the offending party or
make a ruling on the matter, as appropriate. The dispute resolution
mechanism in Annexure 2 contains 27 Articles totalling about
143 paragraphs and four appendices. The WTO, at the top,
consists of Ministerial Conference which meets not less than
every two years. Next there are four councils, including the
General Council which has an overall supervising authority and
to carry out many functions of the Ministerial Conference. In
addition, there are Council for Trade Inputs, Council for Trade
and Services, and Council for Trade Related Aspects of
Intellectual Property Rights. The General Council, as per the
WTO Charter, discharges the responsibility of the Dispute
Settlement Body (DSB). Thus, the WTO Charter adopts a
legalistic and a rule-oriented approach for resolving issues relating
to violation of the GATT agreements. The DSB establishes
Panel(s) and on adoption of Panel (and the Appellate Body)
reports, provides for implementation of the recommendation and
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rulings, and can authorise action for failure to comply with the
recommendation(s) and ruling. The procedure adopted for the
dispute resolution mechanism is to facilitate prompt settlement
of situations with the objective and purpose that the 'Marrakesh
Agreement' is preserved and not nullified or impaired.
[Paras 21-24][401-C-F, G-H; 402-A-C, F, G-H; 403-A-C, D-E;
404-A-C; 405-A-B, E]
2.2 (ii) Obligations of the contracting party and effect of
international treaty, namely, GATT-1994 on the domestic law.
Two aspects relevant in the present case are; (i) applicability
of the international treaty in domestic law and (ii) 'invocability' of
the treaty in municipal law and before the municipal courts.
Breach of a stipulation in international law cannot be justified
by the State by referring to its domestic legal position. This rule
of international law is unexceptionable and prosaic, as the contra
view would permit the international obligations to be evaded by
the simple method of domestic legislation, executive action or
judicial decision. Contracting States are under an obligation to
act in conformity with the rules of international law and bear
responsibility for breaches whether committed by the legislature,
executive or even judiciary. In a way, therefore, international
treaties are constraint on sovereign activity, albeit voluntarily
agreed. For the purpose of GATT-1994, municipal laws are
evidences of fact, including evidence of conduct in violation of
the norms and objective of the treaty. At the same time, failure to
enact an internal domestic law in conformity with the international
obligation is not a breach of international law, unless there is
such requirement and obligation created by the international
treaty. In the absence of any such binding clause, breach arises
only when the State concerned fails to observe its obligation on a
specific occasion. Various theories have been put forward to
explain applicability of international customary and treaty law in
domestic law. The dualist position is that the international
municipal law operates separately and before any rule or principle
of international law can have effect within the domestic
jurisdiction, it must be expressly or specifically transformed into
municipal law by use of appropriate constitutional machinery.
Dualism stresses that international law and municipal law exist
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separately and cannot have effect on or overrule the other.
Consequently, the municipal laws and international laws can
operate simultaneously as they regulate different subject matters.
International law is between sovereign States, while the municipal
law applies within the State and regulates legal relationship
between the citizens/subjects inter se and the citizen/subject and
the State. Monistic legal systems include international treaties
in domestic law. Monism takes the form of assertion of the
supremacy of the international law even within the national
sphere, with the understanding and belief that an individual is a
subject of international law. International norms provide the basic
norms for the national legal order, and both are a part of the same
systems of norms. Most jurists draw distinction between 'direct
application' of treaties in domestic law, and national legal systems
that mandate and require 'act of transformation' for an
international treaty to apply and be a part of domestic law. 'Direct
application' means and mandates that the treaty norms, either
wholly or to some extent, are directly treated as norms of domestic
law and enjoy the statutory law status by default in the domestic
legal system. The term 'direct application' will also cover
situations in which government or different levels of government
utilise treaty norms as part of domestic jurisprudence and is not
limited to situations in which private parties can sue on the basis
of the treaty norms. There is distinction between direct application
and 'invocability'. 'Act of transformation' principle means and
implies that an international treaty is not directly applicable in
the domestic law system and requires provision in the domestic
rules before it is applied. 'Transformation' is a word of wide
amplitude and does not refer to mere implementation as it includes
the right of the country to adopt, amend or modify the treaty
language into domestic jurisprudence. The 'act of transformation'
is different from 'direct application' as in the former the treaty is
not received and treated as part of domestic jurisprudence until
it is published and made part of the domestic jurisdiction in the
same manner as other law. There is great diversity of national
constitutional systems regarding international treaty application.
[Paras 25, 27-30, 32][406-A, D-G; 407-A-H]
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2.3 It would be now appropriate to refer to the principle of
'invocation'. Invocability in simple terms refers to justiciability;
admissibility of a claim before the national courts. It is not
connected with the defence or merits of the defence. In case
where an 'act of transformation' is required, treaties may partially
or entirely become part of the domestic law. Where the treaty or
portion thereof become a part of the domestic law by 'act of
transformation', it is obvious that only the part incorporated or
transformed into domestic law is invocable and justiciable and
not the parts that are not codified into domestic law. However,
invocability can embrace several ideas which are intertwined and
is of specific concern in cases of constitutions allowing direct
application. Here 'invocability' is a generic term which means to
embrace a small inventory of means of judicial control over the
use in a particular law suit of the direct applicability of the treaty.
As in case of 'act of transformation', even in direct application
cases, some jurisdictions accept the principle of partial direct
application and, therefore, the treaty is directly applicable for some
purposes and not others. [Para 33][410-D-G]
Status of Treaties in Domestic Legal System; A Policy
Analysis Essay by Professor John H. Jackson -
referred to.
In re. Berubari Union (I) AIR 1960 SC 845:[1960] 3
SCR 250; Rai Sahib Ram Jawaya Kapur and Others v.
State of Pubjab AIR 1955 SC 549:[1955] 2 SCR 225;
Ram Kishore Sen and Others v. Union of India and
Others AIR 1966 SC 644: [1966] 1 SCR 430 - referred
to.
3. Legal position in India.
The law in India is not very different from other
Commonwealth Countries. Article 253 of the Constitution states
that notwithstanding anything in the foregoing provisions of this
Chapter, the Parliament has the power to make laws for the whole
or any part of the territory of India for implementing any treaty,
agreement or convention with any other country or countries or
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decisions made at any international conference, association or
body. [Para 34][411-C, E-F]
Maganbhai Ishwarbhai Patel Etc. v. Union of India
(1970) 3 SCC 400:[1969] 3 SCR 254 - followed.
4. Articles XI and XIX of GATT-1994 and the statutory
scheme vide Sections 3 and 9A of FTDR Act and the Safeguard
Measures (Quantitative Restriction) Rules, 2012.
Indian Parliament, two years prior to the signing of GATT1994, had enacted the FTDR Act which was enforced with effect
from 7th August 1992. Sections 11 to 14 of the FTDR Act came
into force immediately and other provisions came into force on
19th June 1992. The FTDR Act had repealed the Imports and
Exports (Control) Act, 1947 and the Foreign Trade (Development
and Regulation) Ordinance, 1992 with the stipulation that anything
done or any action taken under the Ordinance shall be deemed
to have been done or taken under the corresponding provisions
of the FTDR Act. The Statement of Objects and Reasons for
enacting the FTDR Act, as recorded, are to acknowledge that
foreign trade is the driving force of economic activity as this spurs
economic growth and there is increasing interdependence and
that the goals of the new policy were to increase productivity and
competitiveness by ensuring that the trade policies serve as an
instrument to create an environment that will provide a strong
impetus to exports, facilitate imports and render export activity
more profitable. Section 9A of the FTDR Act is the only section
in Chapter IIIA with the heading 'Quantitative Restrictions and
this section was inserted by Amendment Act 25 of 2010 with effect
from 27th August 2010. Subsequently, in exercise of powers
conferred by sub-section (3) to Section 9A of the FTDR Act, the
Central Government had published and notified the Safeguard
Measures (Quantitative Restrictions) Rules, 2012, which became
applicable on the date of their publication in the Gazette of India
dated 24th May 2012. [Paras 48, 50][424-D-G; 427-A-C]
Report of WTO Dispute Settlement Body's panel on
"India-Quantitative Restrictions on Imports of
Agricultural, Textile and Industrial Products" - referred
to.
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5.1 Discussion and interpretation of Sections 3 and 9A of
the FTDR Act.
Section 3 of the FTDR Act, as enacted, had undergone
amendments by addition of proviso to sub-section (2) and by
insertion of sub-section (4) vide Act 25 of 2010 with effect from
25th August 2010. Sub-section (1) of Section 3 states that the
Central Government may, by an Order published in the Official
Gazette, make provision for the development and regulation of
foreign trade by facilitating imports and increasing exports. It is
a general provision which has no reference to GATT-1994. It
authorises the Central Government to publish an order in the
Official Gazette for development and regulation of foreign trade,
i.e. imports and exports. Sub-section (2) states that the Central
Government can, by an order in the Official Gazette, make a
provision for prohibiting or restricting or otherwise regulating,
in all or specified cases and subject to such exceptions, if any,
the import or export of goods and after the amendment vide Act
25 of 2010, services or technology. Sub-section (2) to Section 3,
therefore, authorises the Central Government to, by an Order
published in the Official Gazette, make provisions restricting the
imports or exports. Imposition of quantitative restrictions on
imports or exports would clearly fall within sub-section (2) to
Section 3 of the FTDR Act. Sub-section (3) to Section 3 states
that where an order is passed under sub-section (2) whereby the
import or export of goods is prohibited, restricted or otherwise
regulated, the goods in question would be deemed to be prohibited
goods under Section 11 of the Customs Act, 1962 and accordingly
the provisions of the latter Act would apply. [Para 54][438-E-H;
439-A-B]
5.2 Sub-section (4) to Section 9A of the FTDR Act
introduced by Act 25 of 2010 with effect from 27th August 2010,
requires some elucidation. The sub-section on one hand states
that no permit or licence shall be necessary for imports or exports
of goods, nor any goods shall be prohibited from import or export,
except as may be required under the FTDR Act, or the rules or
orders made thereunder. At the same time, by using the phrase
'without prejudice to anything contained in any other law, rule,
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regulation, notification or order', it protects the operation of the
other law, rule, regulation, notification or order to the extent that
they do not directly or indirectly deal with the permit or licence
necessary for import or export of goods or prohibit import or
export of goods. Operation of such law, rule, regulation,
notification or order not dealing with the permit or licence
necessary for import or export on a prohibition of import of goods
is, therefore, protected and not overridden. Sub-section (4) to
Section 3 therefore gives limited primacy to the FTDR Act,
restricting it to the scope and subject matter of the FTDR Act,
and not to override other laws. This is also clear from Section
18A of the FTDR Act which was also enacted and inserted by Act
25 of 2010 with effect from 27th August 2010. The provisions of
FTDR Act, therefore, are in addition to, and not in derogation of,
the provisions of any other law for the time being in force. This
would be the correct way to harmoniously read and interpret subsection (4) to Section 3 and Section 18A of the FTDR Act. Subsection (4) to Section 3 of the FTDR Act, therefore, in the context
of import and exports or prohibition of imports or exports of goods
states that no permit or licence shall be necessary or required
except as may be required under the FTDR Act, rules or orders
made thereunder. The expression 'order', as per clause (h) to
Section (2) of the FTA means any Order made by the Central
Government under Section 3. It is therefore, clear that there is
no violation of Section 3 of the FTDR Act in the issuance of the
impugned notifications or orders, which are intra vires and not
ultra vires. [Para 55][439-B-E, F-G; 440-A-B]
5.3 Article XI of the GATT-1994 has not been statutorily
made a subject of 'act of transformation' and incorporated in the
domestic legislation, i.e. the FTDR Act. The FTDR Act does not
legislate and transform Article XI of the GATT-1994. Section 3
of the FTDR Act empowers and authorises the Central
Government, i.e. the Union of India to frame policy, rules or
regulations for import or export of goods. The policy is made
under Section 5 of the Act. Thus, the Central Government i.e.
the Union of India has been given the necessary discretion and
election with regard to framing of policies for import and export
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of goods, services and technology. Therefore, implementation of
GATT-1994, including Article XI, is left to the Central
Government by means of delegated legislation. Clause (2) of
Article XI of GATT-1994 states that provisions of paragraph (1)
shall not extend to three specified situations as stated in subclauses (a), (b) or (c). Clause (c) deals with import restrictions on
any agricultural or fisheries product, imported in any form
necessary for enforcement of governmental measures specified
therein. Similarly, Article XII of GATT-1994 states that
notwithstanding the provisions of paragraph (1) of Article XI, any
contracting party, in order to safeguard its external financial
position and its balance of payments, may restrict the quantity or
value of merchandise permitted to be imported, subject to the
provisions of paragraphs of that Article. Paragraph (1) to Article
XI is not an absolute rule. It is subject to exceptions in the form
of paragraph (2) to Article XI, Article XII and other provisions.
Of course, the conditions specified the respective Articles have
to be satisfied for a contracting party to be GATT-1994 compliant.
Reference to this position is necessary and required when Section
9A of the FTDR Act is interpreted which incorporates into the
domestic law Article XIX of GATT-1994, but neither Article XI
and nor all exceptions by implication. Consequently, Section 9A
for the FTDR Act, is to be understood an enabling provision
empowering imposition of 'quantitative restrictions' after following
the procedure in the situations referred to therein. However it
does not limit and restrict the expans and power of the Central
Government to prohibit, regulate or restrict imports of goods in
terms of Section 3(2) of the FTDR Act. As a sequitur, it has to be
held that notwithstanding Section 9A, the Central Government
continues and has authority to impose quantitative restrictions
by an order under Section 3(2) of the FTDR Act. Principle of Lex
specialis derogat legi generali, therefore, is not applicable to the
case in hand. [Paras 56-58][440-C-D, G-H; 441-A-F]
5.4 Section 9A of the FTA was enacted by Act 25 of 2010
pursuant to the recommendations of the Standing Committee.
Section 9A substantially incorporates, with some modifications,
provisions of Article XIX of GATT-1994. Rules made in 2012 are
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also in conformity with the provisions of the WTO Agreement on
Safeguards made in terms of Article XIX of GATT-1994. Subrule (3) to Rule 5 of the Safeguard Measures (Quantitative
Restrictions) Rules, 2012 states and sets out the conditions for
applicability of Rule 9A, which are: (i) increased imports; (ii)
serious injury or threat of serious injury; and (iii) a causal link
between increased imports and alleged serious injury or threat
of serious injury. The expression 'increased imports' has been
defined in terms of increased quantity to mean increase in imports
in absolute terms or relative to domestic production. The
expressions 'serious injury' and 'threat of serious injury' have
been defined in clauses (c) and (d) of sub-clause (4) to Section 9A
to mean injury causing significant overall impairment in the
position of a domestic industry and a clear and imminent danger
of serious injury respectively. The expression 'domestic industry'
has also been defined in clause (b) to sub-section (4) to Section
9A. Similarly, the expression 'interested party' has been defined
in sub-rule (d) to Rule 2 of the Safeguard Measures (Quantitative
Restriction) Rules, 2012 and includes exporter or foreign
producer or the importer of goods for the purposes of imposition
of safeguard quantitative restrictions on trade or business
association. It also includes the government of the exporting
country or producer of goods or directly competitive goods in
India or a trade or business association.The need to enact Section
9A arose from the obligations flowing from Article XIX, as
restriction in form of 'quantitative restriction', require a
procedure to be followed. Affected parties including exporters,
importers have to be heard. Consequently, 'act of transformation'
was required. Article XIX of GATT-1994 is an escape provision,
i.e. a provision which entitles a contracting state to escape from
the rigours of paragraph (1) of Article XI of GATT-1994. Similar
'acts of transformation' have been undertaken by enacting Custom
Valuation Rules, provision of antidumping, countervailing duty
etc. but the entire GATT-1994 does not stand transposed and
enacted by way of statutory law or delegated legislation. This
being the position, Section 9A has to be interpreted as an escape
provision when the Central Government i.e. the Union of India
may escape the rigours of paragraph (1) of Article XIX of GATT-
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1994. Section 9A is not a provision which incorporates or
transposes paragraph (1) of Article XI into the domestic law either
expressly or by necessary implication. To hold to the contrary, it
would be holding that the Central Government has no right and
power to impose 'quantitative restrictions' except under Section
9A of the FTDR Act. This would be contrary to the legislative
intent and objective. Section 9A of the FTDR Act does not elide
or negate the power of the Central Government to impose
restrictions on imports under sub-section (2) to Section 3 of the
FTDR Act. [Paras 59-61][441-F; 442-B-G; 443-A-C]
5.5 The impugned notifications would be valid as they have
been issued in accordance with the power conferred in the Central
Government in terms of sub-section (2) to Section 3 of the FTDR
Act. The powers of the Central Government by an order imposing
restriction on imports under sub-section (2) to Section 3 is,
therefore, not entirely curtailed by Section 9A of the FTDR Act.
[Para 62][443-D-E]
6. Conclusion
The impugned notifications and the trade notices are upheld
and the challenge made by the importers is rejected. The imports,
if any, made relying on interim order(s) would be held to be
contrary to the notifications and the trades notices issued under
the FTDR Act and would be so dealt with under the provisions of
the Customs Act 1962. The Writ Petitions subject matter of the
Transfer Petitions, subject to E in the judgment (What is not
decided) are dismissed. Writ Petitions filed by the intervenors
before the respective High Courts shall stand dismissed in terms
of this decision. [Para 67][444-F-G]
Raj Prakash Chemical v. Union of India (1986) 2 SCC
297: [1986] 1 SCR 448 - distinguished.
Gramophone Company of India Ltd. v. Birendra
Bahadur Pandey and Others (1984) 2 SCC 534: [1984]
2 SCR 664; Jolly George Varghese and Another v. The
Bank of Cochin (1980) 2 SCC 360 : [1980] 2 SCR 913;
Director General of Foreign Trade and Another v.
Kanak Exports and Another (2016) 2 SCC 226: [2015]
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15 SCR 287; Associated Cement Companies Ltd. v.
Commissioner of Customs (2001) 4 SCC 593: [2001] 1
SCR 608; State of Punjab and Another v. Devans
Modern Breweries Ltd. and Another (2004) 11 SCC 26:
[2003] 5 Suppl. SCR 930; S&S Enterprise v. Designated
Authority and Others (2005) 3 SCC 337: [2005] 2
SCR 255; Commissioner of Customs, Bangalore v. G.M.
Exports and Others (2016) 1 SCC 91: [2015] 14
SCR 848 ; Entertainment Network (India) limited and
Anr. v. Super Cassette Industries Ltd. and Ors (2008)
13 SCC 30: [2008] 9 SCR 165; His Holiness
Kesavananda Bharati Sripadagalvaru v. State of Kerala
and Another (1973) 4 SCC 225: [1973] Suppl. SCR 1;
Pratap Singh v. State of Jharkhand and Anr. (2005) 3
SCC 551:[2005] 1 SCR 1019 - referred to.
Karan Dileep Nevatia v. Union of India (2010) 1 Bom
CR 588 - referred to.
Maclaine Watson& Co. Ltd.v. Department of Trade and
Industry & Anr. (1989) 3 All ER 523; Lonrho Exports
v. ECGD [1983] 3 W.L.R. 394; The Eschersheim Anr v.
The Jade Erkowit And Anr. (1976) 1 All ER 920 (HL) -
referred to.
The World Trade Organization, law, practice and policy
Mitsuo Matsushita, Thomas J. Schoenbaum, Petros
C. Mavroidis, and Michael Hahn, 3rd Edition 2015 at
page Nos. 2 - 3, page No. 3 and page Nos. 33-40;
Status of Treaties in Domestic Legal Systems; a policy
analysis- Essay by Prof. John. H. Jackson - referred
to.
Case Law Reference
[2015] 15 SCR 287
referred to
Para 11 (c)
[2015] 2 SCR 1040
relied on
Para 15
[1969] 3 SCR 254
followed
Para 35
[1960] 3 SCR 250
referred to
Para 35
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C
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E
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[1955] 2 SCR 225
referred to
Para 35
[1966] 1 SCR 430
referred to
Para 35
[1984] 2 SCR 664
referred to
Para 38
[1980] 2 SCR 913
referred to
Para 39
[2001] 1 SCR 608
referred to
Para 41
[2003] 5 Suppl. SCR 930 referred to
Para 42
[2005] 2 SCR 255
referred to
Para 43
[2015] 14 SCR 848
referred to
Para 44
[2008] 9 SCR 165
referred to
Para 45
[1973] Suppl. SCR 1
referred to
Para 45
[2005] 1 SCR 1019
referred to
Para 45
[1986] 1 SCR 448
distinguished
Para 65
CIVIL ORIGINAL JURISDICTION: Transfer Petition (Civil)
Nos. 496-509 of 2020
(Petitions filed under Article 139A (1) with rule XL of Supreme
Court Rules, 2013)
With
T.P.(Civil) D.No. 8823 of 2020.
Tushar Mehta, SG, Aman Lekhi, ASG, Harish Salve, Arvind Datar,
Shyam Divan, Ravindra Shrivastava, Sr. Advs., Rajat Nair, Ms. Swati
Ghildiyal, Ms. Sunita Sharma, Mrs. Anil Katiyar, K. R. Sasiprabhu,
Aashish Chauhan, Aditya Shandilya, Kailash Pandey, Ranjeet Singh,
Gaichangpou Gangmei, Udayditya Bannerjee, K. Raghavachryulu, B.
Ramana Murthy, Udit Malik, Anshuman Shrivastava, Abhijeet
Shrivastava, Ms. Garima Tiwari, Karan Khanna, Mrs. Swarupama
Chaturvedi, Hitesh Jain, Aman Jha, Ashutosh Mohan, Atishay Jain,
Somiran Sharma, Aashish Chauhan, Ms. Swagoti Batchas, Saransh Saini,
Vivek Jain, Ms. Anshul Sharma, Bhrigu Sharma, Ms. Suchitra Kumbhat,
Nirvikar Singh, Ms. Anisha Upadhyay, Puneet Parihar, Bhrigu Sharma,
Ms. Vrinda Bhandari, Pranav Jain, Siddhant Buxy, Pradeep Aggarwal,
Ankit Sethi, Lal Pratap Singh, Umesh Pratap Singh, Arjun Aggarwal,
Ms. Ruchi Kohli, Nitin Mishra, Ms. Mitali Gupta, Advs. for the appearing
parties.
UNION OF INDIA AND OTHERS v.