High Court Karnataka High Court

M/S Garments International Pvt … vs Union Of India on 18 March, 2008

Karnataka High Court
M/S Garments International Pvt … vs Union Of India on 18 March, 2008
Author: Ram Mohan Reddy
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" TEXTILE COMMSISIONER

 APPAREL EXPORT PROMUI'1C)N "OUNCiL
 NO 10. RAHEJA CHAMBERS
12, MUSEUM ROAD, BANGALORE
REP BY ADDITIONAL DIRECTOR
 RESPONDENTS

MB
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(BY SR1. N DEVHADASS, AGS FOR R1 85 2)” ff 9′
{By Sri: K SACHINDRA KARANTH, ADV FOR R3″-._) v ”

THIS wan’ PE’!’!’1′!QN IE-3 F1LI_=:DiJ1~:L1E:2 AR1F1cLEs«:e26LL

Area 227 09 THE CON-S’!’!”PUT!O!\!»._ QELENLDIAL pR;Av:rI’@ T9

DECLARE THAT zwnoszrson up ‘PEs’!ALTY ‘av
FORFEYFURE B’: RESPG UNQER

EXPGRT EN’i’I”i”LEMEi’V’T 1 9-:5-Vi9’9″%, I” V

EH’

LLLEGAL AND ULTRA ‘v’iR””S iii * EL-i=’g’i’iGI§i 1’0
OF THE l7’OREiGN TEASE Arias AGT’ 19+’-L” u-sunm
ACT), FURTHER DEC.l_.A–TtE ‘T’f1.4.’f*i_ ADJU’Di(3A”i”iGiw’
PROCEEDINGS ADOFFED ,BYRéi1;&. 2%-‘._1’ah BE ILLEGAL Aim
ULTRA VIRES IN, TERMs,LoF.VsECTI0N 1310:”-‘ FTDRA 1992,
DELCARING THAT THE’ ‘~COLLEC’l’l€)N OF ILLEGAL
PENALTY mr %_REf.3.E~ONi3E!éI1’S FROM’ I-‘FJTTIONERS TO THE
c….s, .:r.§A’1’Ep*..I?t;.31~IL:; lI~i’,I_Jr!A To BE ILLEGAL AND

I
LTRA

‘!lII|I

;1n1SAT’:’3£’T:-T}’FEIf\}§’*$, “C-G}v1§.G 0}.’ F0}? FREE.-IMENARY

“E’Rii1’G*– iii? .’B”GR(}E}F,a’FHlS DA’! THE SOUR’? MARE THE-
“F’CVL’ “W ‘ ‘ ‘

‘ effected 7′.i3% 0″ the éflfi’!iéTu’t”:i’lt. resii1″‘f’g iii the

V% V. ._..}\ppa1ve1 Export Promotion Council, “tsangaiore (‘AEF-C” for

short), forfeiting Rs.1.82.856/- by order dated 23-10-1997

.A…n_…I;1m-“A” which wlzgcm in appeal befine the First
\..

_|}*’\

V’

‘J.’£ ..

Annellate Committee, was confirmed by order .

Appellate Comniittee. ‘rienoe,7i:Zi_s i ‘ A

2. Petition is opposed ‘Statement-of.aibjections

dated 20-02-2005 of tlie 3-“l’:1:s_1;-fiortdentlsnd Statement of

objwthns a…:..,;31-o5«2.oo55;_::eggpa;:1;a§i:. 1 and 2.

3. Iii. of Respondent Nos. 1

and     of textiles and clothing
from    agreements entered into

between (loveinznent and Governments of developed

” V’ ~.undei4 ‘ a..gLs _.f the erstwhi_le Multi Fibie

4…: ..£’.._……-..I

i.he”yea:r ‘i’:*._’_:”4. The Textile i1npoi”lii1f; oounmes ‘T: r u

to ss~.”lQ§1ota countries” who have placed restraints on import

‘0 lC_” not “specified textile categories ‘Quota items” within the

levels prescribed in the bilateml agreement and that

the coming into force of the World Trade Organisation (WTO)

in 1995, quantitative iestrictions known as “Import quotas:

Utx

in the bilateral agreements were ehangw undertake’ T

relating to Agreement on Texfiies C1ottim??”_ {A’I’–o_»}.’–

— —– -1? -u..u-tal-In”‘l:\.lq

quotas also known as export gentitieinents are ”

einenget in exporters, ‘Vi%n’V’t»whieh.__e’to.s;yatemW ‘f
ail-“wati.en of qv-.1.-t___ is an tie…’ to the

expoi’ re’v”‘nne in t…e %….fi_{ iiiteiest_.o_f It is

stated that f’%~tt£f;ff*n’c-;:ef =.=.a;;1.d~..;;z_1;V,’nt1VgeiGovez’nment of

India es “Export
EnfiflementVi'[Qn}’)ta)’Aiioiiéiqggs of quote… we
mainly ciflne., nn.der”‘foiIe«yvi11g “‘teg”*r”*s in ea-.% of

_ –_””U

meadvmade

., _Va}_Viv”Fi”J%vz’«quota new en pest mrform_e_noe of the

the Past Perfonnanoe entitiement
[Ptifiijsze

A. , _bl*’1′.5% quota based on new investments matte for

modernization of maelttem I.1__d_er the New

!I’.’.”£’.-1SiI¥..’!1’S_I Entitlement (ME), ‘to encourage

investments in industry;

C} 5% under “en-qu..f.a. (NQE) entitlement to

_ _ “*3.

encourage diversification of exports to “on–‘”‘ota
‘ !\

oounilie;

d) 10% on First Come ‘irst ‘”‘ Ive to

–:1′-L1-I.-IIFI-:’I’I’:+’:.B(l ‘1”! D I-‘II”‘I’Il’\

nu-u-u

Value Realisation.

The framing of poiiciea. it istts’.-a.;ij.;ci~,.>is
conferred under Secfion titof (Deveiopment
and Regulation) Act. 1992 Land Item No.8 of
Appendixd .¢jetSS?tfit$hfi0n of Export
and Import the Import policy. It
is the P0150)’. an
Apparel…’ ._ Council (AEPC) headed by

Director ‘Ge_”ne1ja1V’ ie’ as Quota Adm1n1′ ‘stenn’ g

_ on of the Government. responsible for

V. ézquota in terms of the policy. The availability of

ttquote, Z; i;~vs.;.-;L.t.;=i.ia.st1y over ships the demand and in View of

the xeetneted ava..ab1!ity, ….r..ur.:I.§.-……e a pyegum Mmor
V of ‘uaextrde ‘_’ar'”ent.s being the quota ….I.I…….e5, 1t 1..

t’ . ‘essenfiai to ensure quotas; are may “‘.’d are not

to go waste due to specuiative ti”adiT1g u

unscrupulous elements and therefore, the policy envisages

utziliation of the quota by 30″‘ September of the relevant

\mt
U\

year and failure to do so, the K

surrender the quota and seek

quota aflocet;-d iu the eate@r.ies,7- the ? bmgnner aixdd

reievant year is in the CI” El nxeu
deposit receipt o’r;[I_iem£l_11d peiicy in operation
till the __ve1=r’r4’V2′{)_’u’-‘.(§’,”” ‘=«~1e1~3’ ‘gum the amount of EMD

hv a, dated cheques. The

\4\.I.I..l\.l.Il..:\.’r1J £\n-Ifiunlnl-I-I – n…’ …11

3
3′
3
S
1,
0
3′
E-k
3

3.
5.1.

§
1-!’

shafi be”ze1eased~ 111 case of i.iti1isafi’n “pets 75% “‘

‘ feet’ mp\’d;:1g:’items and upto .’T~0% in case of siow moving

‘itee1s.VV’VE’2uNiD forfeited in pm_port1on’ to the sl1ort1a’ 11” of

If an exporter is agglieved by any order of

3 1. mm ms-it-1.:.=-.;. ».a__ ne 2 to mg Appellate

–.._..’_…__

“-4 ‘.:1*.erea’.*..er m a §&nd fir-=1 * C mmitt 1::

n.

‘ CII..l.\.l.

-“The Fxppeila” Cae*_*”‘r.ee-3 rjected €11″ c’..=…..-“‘-‘- ef

ibme-majeuxe in the a’bsen_ cc of Ieievant mafenafi’

constituting substantial legal evidence of the fact that
a_ mi

J_J’\

to fulfil the export obligation was due to acts _

control of the exporter.

4. The Statement of objectioii.-s__ 2

raises almost identical contentions as by V

Respondent Nos.1 and of it objections. In
addition. it is contendediiitliat taken the
benefit of the policy by
furnishil-‘I8 failed to export
__”cif_ ” provided. cannot be
to It is stated that the
pefitionef is that no amount could

be fo;ffeit’ed. The contention of the 3*.” iespondent is

did not place relevant mateiial in support

‘of its of force-majeuie.

teamed counsel for the petitioner advances the

A ” it contentions:

a) that the ‘Policy’ providing for forfeiture of the

“niest nioney deposit, in its entiiety. for exports iess than

it

75% and proportionate thrfeitaie for e_x}_H..irLs between 75%

{wk

o

I-lull-I

11′ flan urn-rnn11n.I-n nuuflsnuulhr -II-‘-51.1 in –, ‘V
“1 “I”1″‘-“”‘3″” ‘3″ ‘_.l.Il. I15 I -.1-I1’ ‘

I-l..I.’|J_l .1L_y Jr-‘u

considering the documentary <ev.idenc:e-._ by the %
pefifioner in support of the claim' of fome~–mq_ while"
directing 17c_!rfeit.l.l_'m -1' t.h.«,=. " " " "

(1! fhnf "111: 1\.ni'1'I-:.n1-us-an 1;':-'.\.rVIl':-IA-or nan;—'u.-'.'….d'-.'.;.-'.i.':…..V:_._……….d…. –…A….
'*1 "nib I-uv yyuuvuun lv.«lI£h'l,'VJ.l-I5 \.g»J$!.£'\JlVl?..€'.~._g_i.l.l.l.l.lC~.I1l-Ii l.lpI.D

76.1396 of the entitltemelifi; fhénonéfiflfiflment was not

.1.-..-. 1…… -…2'I'Il.'.-I l."._.!L.__._?'_.L"4__I_'._ ;__).'_A_!_ "1 ; 1- 1 –
uuc uu VVl.l.l1ll.I::i:I.il .; ,1;l.l1 _A DII.C1'–.Dut»IOI' reasons ncyonu

its control. t'

A' flni"Hn;r'- nu-|.-n.n-Jn -{gnu-ul-:3-nan -3.-I.;_.-.4-2…-.'I
, 1&4'-7 \'.-nu-.1\_»-I .\§uw.–Jnr;'\a:.:r_'.I u_I uyywulw :.I..lV\.,Il.Vll.Iu .I|-lK'a'.l.Il..IlJlI.I

issues »- facts, the authorities having

.-…..-…….4…._: 4.1.- ..,1"..:__ ;_.:.–f1.-.._.;._ #4-.-_____ _____.,4 ,,,.:,,,, . .
tlUl.Jl?1Jl-E?-.n»l.l.k.lC Llliflll U1 1UlU.':"ll.ll:l,]CllJfl=. CXIIIIOIC ICIUSC II) 8008])!

" "the petifionefs — in the fact situation of

2

L’ learned Senior counsel Sui. 9.1.. Rawal

.«,_’for Resyondent No.3 contends that the challenge to the

” is unavailable to the pefitioner as the g;n;v’r..r1..n.–..
Hrnurtnd F II In -rt f hp nnnfn nlln t In 1+ uni 1’11. + n 1-…”

:’ —‘—- O’-V-H! —–I–‘— ”0 Inn-V-I I-_lva1-rut-4| nI.l.l.\JI-IAr\.|. III: II: VVIMI-I-I-lulu Inl-III lit!-I.l\IloI
fliéflilllafnrl I-15 I-11’ (‘5.-5-.nu-c.-…-……. …-…._-.__’I .2…
wutaulnwvu 1:\.»\.r\.u\.u.u uu I.l..l.G 1.6!.’-lI..I.I.R.l D6 1 UULIII. 1,
‘ma.-crust: AL’ 4.]… ………’I.’…_….. 4.1.- __A.:.|.:_____._ __..__. 1.1- _ ____-__ _1- AI__

.u.ua U]. I: punt-y, 1.11 l.II.IU 1 W B Iuuy BWHIB 01 [[10

M1
gu\

KID

}’i'”v’ii”.qT_;’ “-“pied th’ *'”i:2s of fofiE:it11re.”‘ii: is a1*gIV:e€i,.oa.11not.’

1.- ‘l____._’I 4.. ____4,___ ,1 AI 4 ;| A-V” V – –
uc ucam 11 (1 mat me so large n. relegtes to

fori’ei’mre is either
Senior counsel further oonterlchg contention
over the validity 9,-t\ in the case of
GOKALDAS ” V§’§.§:”v-:»UNION 012′ INDIA, a
learned of Delhi, rejected the

plea in tlie 2007 (.7) 3112 347 rose,’

Learned Semer eoI_1.13_g.e_L ran a.d.d1_.-.11, or_arI.t…..s t…;=-.- i.’….,.
peu.__::er 11- v1.rI.g z!:1e-am- mater-..:=..! eo1:e*.1..:*.ing
.eu…ei*.~.n…:=-.. .egal e’.’:’…e:.-ace of a “‘-=”- w fem-e=majeu:*e, the

__’I A.’I_._A. 4’L,_

ndeu ma. I we petitioner having expofiseci

ii]3fD 76.13% of the export entitlement, the

aguiftiotiiies were jusizified in directing forfeiture of the

‘amounts from out of the bank guarantee, in proportion, to

” ” “the extent of unfulfilled quota.

N
»-u\

10

7. Sri. Devadass, learned Senior é

Respondents 1 and 2 contends that the petitiorreri _

secured an allotment of a quota to :, A’

the policy, without questioning the -1;§;1’Il1S 0151

fiorieiture. cannot be permitted to appgubgw 1 spmm
by calling in question the tlirrauti. _shor’r
of garments. Aooordirrg to quota
for export of ‘ooee it is
presumed that its obligation to
export. and in order to
ensure sue-lir gemviding for forfeiture of

the amolrrrts out-. oi–‘. t’.heV bank guarantee as stated

be as eitlrr irrational or
I.i.’z.i.-….V-… ..- – – .. _-m-r co-I.I.._..-1 ..a_t._:-s t. and_ t____-

g;’.._–.._ ….. …..1 .. ……I’I -…:a.I…… 4… ….L4 4… ………:.-‘I- 1:’..-
5.3%: U! Uuuuisci, B W 11 l|.l..ll.I..l ta .1 1|. luuvruc r 1

,, ‘I’\,,,,!s A,–._o….A_J.A- .__. 4.- _____ _… 2.11 __

of file uanrc guarantee, so as ID ensure run ri

11

has been done.

8. Having heanfl the 1eamed..__eouii.~:e1d for V

perused the pleadings. there can nyorret {hat in
terms of the “Policy”, the “for and secured

e_xpt_1rt entifle_&,gts-,A _ jgerments and

-…I.rL..g .3-.’_-_ t a the AEPC

nnnn 3 figr 1′ g11_____ __.9_l___.____ :_a___ :13
why act-L-333*’ _V:V”.:ef:’*i.’3n.”…:1 the memes .’…1.11
out *1 bank g”*”‘”aij:£ee~.,_»which was Ia:-3″”-“dw m by “*9
pe” “-1. ‘d’i”}.’-e frt be””g “”h”‘fit-:~r1 Wit}: the

turn 11!” ,,1 _,’I L_..’I PA-

‘VVe::1Jla1ieiio;1.Aoii’e1ed,”‘ii3rfiéited Rs. 1,uz,ua6i -, cmcuuéiwu in

of non-exported quota, from out

of the bank guarantee, by order dated ’23- 10-

199’? w -“A”. This older when in appeal

“the l;’irst Appellate Committee. was confirmed by order

__”‘«dafe;1b'(§1-10-2000 Annexule-“C”, and the Second Apgellate

” dismissed the appeal by order dated 14-09-2004

1. J1

H.A…ne.::1..:.r:-.-“!3″‘; 1 wk

UL] \

ehgqnscicusiyh aglc the terms of the forfeiture’ that if lt

g.-I
ED

9, In the admitted facts noticed supra, the que:_§’tion<§V' "" 'h

a) whether the challenge to the palm if

relates to forfeiture, ii’)? fififirffiifiihfiéf ‘cf t1*u-=-peseyczt

obligation within the time etipuieted is seeaeieaezgee h

1:) Whether the AEPC :’1?_::’}ifiia?1t;e~–.fCo-uum'”‘ttees
were justified in 1ejecfingyt11e7″pefi1;icz1er’s*Vc1aim of
fomc.;najeuIe’?” V’ ” VV ‘ 2

10. V. erefifiement q”c”s
allotted was ‘to permit it to
export gannehts and fumisheti a
bank gumahtee. that in case of failure
toj”m1fin chfigetio . in its entirety, wouid be

subje4ct=etc” clause of the ‘%}icy’. ‘The petitioner

_ ente beyond upto 90% of the export

eeeeemeee. weum be liable I-for proportionate forfeiture and

ifletssii 75%. forfeiture would he in from out of the

in the Bank guarantee. The consent of the

.aH.””‘pet.;it:ioner to be subjected to the terms of the poiicy. relating

to forfeitumc in the event of to» ‘ the expo. rt

fleet
U\

13

entitlement, in the circumstances cannot be ~

nnnig 1′ . n .1′) 13;;

arr; –.-..–.u —–_v. ..–yl—.—-

11. The centfinficn that the “1-“‘?*=e of *?””T’.”‘*i’ t1*e.’=–4n”r==A V

:_ ‘gm. .. ._:.___
Lane «uuu

irrationai and un1’ea'”T1aule
pale of consideration. efifixejaoficy of
ailutting quotas is with the jmrpoaee ” eufirttenfing

exchange, whieh tat’ for country and as

‘Al

the ufiiiaafion’ of ‘iiiéé

…’l.1…-

_.__, ‘puuuy fix V’.:ll’.Il’$’l ii “uzuuu nu

forfeiture. Ctenira1″Ge”vemment entitled to ibI::’n1ua'””‘t;e a

‘hbaeednt ‘”e-1.1.. _____ H1311’-Cise timing and manner of

»imp1ementat.t_cin __of the quota to achieve a particular objective,

: Viti-1’ra”a–_A in the matters of bilateral tzlade, in my

weii Wmun its 1*-

‘ “- *u ”rr”‘- ‘7

– ”._u v_ –

opmmn,-Abu..g fin…” .. …. .. ….. -, -. ..-…-.____ _..

‘ ‘ ‘* “ts tr: “‘r”v*1rle tor iwte-at.’uu. auu .1”-..m,m:e,

“came “int he termed as either irrationai or u11oon'”‘1:’u til. it

” ~-must be borne in mind that there must be free piay the

Government in matters of economic policies which are not

eubje..t. L. jI.I…ir.r;:3.1 Leview, unless demonstrated to be
t . ID

\ Y”\

U

\

-1 ,-_J,1,___e inepnsiateiit gi-esifiqixe. _ A’

—- – _— L4

fitiazy s”‘t”mI_’y’ pix:-“‘s’6r.s er the %ns*.=§…:1.1’.c.=:ig. ‘i€. ‘i*.s;_ ‘ -1-

weii settied ism that coufis. exér”v*’:-rse oi’t1-1-i1f’jii1*é*}”.h€;”o:1–._
,,, I£A_# _’l

not hansgmss into the fieid of as

are equipped to adjudicate oil-..__a mg: %

court, no-doubt has a duty to see the’ of
a dwisign. no law is
Tights not ‘the extent

1 I

12. circuiinstahoes. a leanica Siir I’:

‘ A ‘find-t

-Judge of %”zms. Acag of Goimiras nvmus –

I

LIMITED vs.VVv’E–.II§li{)l§ViV’ -§)4VF._v1l’§!i3iIA in W.P.No.8539]2003 and

.f;ie’ti1i91;s. bjr order dated 12-03-2003.

that the policy providing for foxfeitum

_..11..’— for non-fulfillment of the obligation

-I.;._.d– uLh..[ qmaa, cguld be challenged by an exporter

” –1_—–_

the “”n9’fi_. 9f 5 nnl-invv, {-hllmninn the deciflicll

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an G””i~a. V’. flmn (if }”c’.”” ad Others 1*:-.-…-5.. an A…
1996 SC; “46′ , 13:1 fir firt”r ‘f 1ii’ut:”1″1″erenc*’ ‘0″ wnt ce’ar*=

Eng’ ” .

iaes ”

ion, . ~

temcitai lhewpol
In-inn annli

nnn;;’:_ag___:;g _h1_’1_.3 ng vested riaht to have?’ ”

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..m.W .. u ._m .9 .5 e n. 1. A .4″ ._w _m m n M e .M
. ..m . .3 _… v . an .0… . t_ . . …… “I H?

.w fiii ea pub 1. k ;@m?m zmvm
aw nu _ _.. _ .e .w .n _.a . 5 e …P….& s .1 w m.
S. _m…mm 3 Mwiwf. mm,
fr .y _ . .s .,_… 5 .. v _ T
Mafia mmmmmmmm wmmmmmwsmw
H .3” _P,wn…_._a 0…. s u a i …. ..

15

13. In yet another decision ofa learned *

the High Com’: of Delhi in Gokaldas-V Images

2007(7) STR 347(0EC) took the v1ew’ thatii gauges;

being peculiar in its nature of -“be-iilgi
1*.-.-vi_-et:l _for each country. the AGoif’emnient .was’_yAIvei}:§ within

its right t… .’r.1n1m1_I_mte is ._and maximum

. -0 I

‘tit’i1i””i.’i\’iIi of t.’1e”quot.9,-1.’-.f1a.eL1 c,;1____t’v.he”v,.iote1ie1ed with.

Having lead “::’fV’ug*i:€%e~$’*:*tt’r:1’t.l*_i!.: jiudweizt, I fi.11d_ __o stood
reason to §_1evi~a.ie Endmgs and amclusions

arrived sat by j

_14. ;1″i1e of existence of fame-majeure

” ‘~ L. ‘delay. in delivery of fabric. defects in fabric

“’16 ~ .exeess’«v®ns-_…-=np!i..n of iiibzie during pmduotion of

~–‘5j=”g9,?”:it*;’g w short s..ip…..-..t 1.1..– ..a_11cellation of

..eons_ideived. is without any inefit. E “3’ w bee.-ause, an

Aexajilination of the onilers impugned discloses app1iea'”‘*i1 1

V’ ‘ d and consideiafion of relevant material, leading to the

conclusion that men: fact of delay in delivery of fabxic or

defective fabrics or excess consumption of fabrics during

Li
U’\

1’7

production cannot be termed in be fortne-mfieu;”euw’:’;{li5.*;.*=r;.

In my opinion, no exception can befiaketi’ fodihe’

of the authorities.

cases. were not %f’¥”f*,”‘is also without
any merit. force-‘””‘=1:.re is
dependantjv ‘based on
.d=.r-Ld.-:44… of such conditions. The
…»”.i’£i{“;fi€51T_ has ‘ ‘£z’1;ile to show that in identical

s”””c§e3, the ai’.t}iorit§,’ anmmmpted. the of tome-

‘dbeing dependant upon the theta q….’='”‘

oizpumstanoee and material on would in a case, it

.1_1_1_1_: samg that any decision rendered in that case.

not, u-.1ess_= and oimumstanoes me shown to be

\ 1
i€1″1_!’l”.-l”””, have ap”‘.iw.;o:1. ‘ Vi

L) \

18

Writ petition is without merit and is

dismissed. —

Imige