Skip to content


General Films Distributors Ltd. Vs. Union of India and anr. - Court Judgment

LegalCrystal Citation
SubjectCustoms
CourtMumbai High Court
Decided On
Case NumberMisc Petition No. 1291 of 1973
Judge
Reported in1984(17)ELT68(Bom)
ActsConstitution of India - Article 299; Import license-Refusal to grant-Rules - Rule 6(1)
AppellantGeneral Films Distributors Ltd.
RespondentUnion of India and anr.
Appellant AdvocateV.J. Taraporewala, ;R.J. Joshi and ;F.H.J. Talyarkhan, Advs.
Respondent AdvocateM.I. Sethna and ;R.L. Mukherji, Advs.
Excerpt:
.....of distribution of british films in india - government granted permission to petitioners to import films on certain representations - subsequently respondent-government refused to grant import licence on ground that such import is only through stc - no total prohibition to grant import licence - respondent-government entered into contract with petitioners for import of films - not entitled to refuse licence under rule 6 (1) (c) - held, petitioners be granted relief in respect of import licence. - - the relevant portion is at page 407 where the supreme court has held that while construing the pleadings in proceedings on the original side of the high court, the rules of pleadings must be strictly adhered to as it is well-known that pleadings on the original side of this court..........is annexed as ex. c to the petition and it sets out that the terms of agreement will apply to all films imported from u.k. through m/s. crompton international films limited. the agreement between the petitioners and the union of india was to come into effect from january 18, 1971 and was to continue for a period of 4 years. the petitioners thereafter wrote a letter to the ministry concerned on february 12, 1971 requesting to inform the reserve bank of india of approval of the agreement between the petitioners and respondent no. 1. the ministry called upon the petitioners to secure an affidavit from m/s. crompton international films limited accepting the terms of agreement between the parties. after receipt of such approval from the british company evidenced by the resolution of m/s......
Judgment:

1. The petitioners are a Limited Company incorporated under the Indian Companies Act, 1913 and the petitioners, inter alia, carry on the business of distribution of British films in India. The petitioners are in this line for last over 30 years and their main activity has been the distribution of British feature films from United Kingdom.

2. On March 11, 1969, the petitioners entered into an agreement with Cromption Group Limited in England and by the said agreement, the British Company agreed to grant to the petitioners exclusive right to distribute British films. The petitioners were given the right to distribute the films for a period of 5 years from the date of delivery of first print. In the year 1969-70, the Government of India informed the petitioners that permission to import films will be granted provided all the shares of the petitioner Company are held by Indians. In pursuance of this direction from the Government on December 9, 1970, the petitioners converted entire share-holding and thereafter all the share-holders of the petitioner company are Indian citizens.

3. The Government of India declared its import policy for the year 1970-71 in respect of the exposed cinematograph films. The import of such films was allowed only through the S.T.C., New Delhi. The petitioners addressed a letter to the Joint Secretary, Ministry of Foreign Trade on December 24, 1970 for approval of agreement dated March 11, 1969 between the petitioners and the Crompton Group Limited and also sought permission to import feature films. The petitioners thereafter sent several reminders and ultimately on January 18, 1971, an agreement was arrived at between the petitioners and respondent No. 1 - the Union of India - in regard to the import of films by the petitioners. A copy of the agreement is annexed as Ex. C to the petition and it sets out that the terms of agreement will apply to all films imported from U.K. through M/s. Crompton International Films Limited. The agreement between the petitioners and the Union of India was to come into effect from January 18, 1971 and was to continue for a period of 4 years. The petitioners thereafter wrote a letter to the Ministry concerned on February 12, 1971 requesting to inform the Reserve Bank of India of approval of the agreement between the petitioners and respondent No. 1. The Ministry called upon the petitioners to secure an affidavit from M/s. Crompton International Films Limited accepting the terms of agreement between the parties. After receipt of such approval from the British Company evidenced by the resolution of M/s. Crompton International Films Limited dated November 25, 1971, the Ministry further called upon the petitioners to verify the name of Signatory to the agreement dated January 18, 1971. Ultimately, on April 29, 1971, the respondent No. 2 - The Joint Chief Controller of Imports and Exports - forwarded import licences to the petitioners. It is required to be stated that the item of exposed cinematograph films was a canalised item even prior to the agreement between the petitioners and the Union of India. The same policy of import through S.T.C. continued for subsequent years but the application for import licence made by the petitioners on June 10, 1971 was turned down by respondent No. 2 on February 9, 1972 on the ground that such import is only though S.T.C. and no licence can be issued to the petitioners. The subsequent application of the petitioners made on May 20, 1972 was also rejected by respondent No. 2 by an order dated July 6, 1972 on the ground that there is no provision for import of item of films during the relevant year. The ground given for rejecting this application is obviously wrong because the import policy even for the year 1972-73 was identical as in the previous years. The rejection of the two applications on February 9, 1972 and July 6, 1972 has led to the filing of the present proceedings under Article 226 of the Constitution of India. The petition was filed on December 20, 1973 after the petitioners sought relief from the authorities concerned by entering into a large number of correspondence.

4. The claim of the petitioners is that the petitioners have entered into an agreement with respondent No. 1 on certain representations and promises given by respondent No. 1 and by entering into such agreement dated January 18, 1971, the petitioners have altered their position. The petitioners claimed that the Government of India entered into an agreement in spite of the fact that on an earlier date, import policy regarding the cinematograph films was announced canalising the import of the films only through S.T.C. The petitioners contend that as the petitioners have altered their position, the Government of India is estopped by principles of promissory estoppel from refusing import licence during the subsistence of the agreement. The petitioners further claimed that the two orders rejecting their application give no ground save and except that the film can be imported only through S.T.C. and this fact was known to the respondents even prior to January 18, 1971 when the agreement was entered into.

5. In answer to the petition, a return has been filed sworn by P. Govinda Raju on April 11, 1979. It is claimed by the respondents that the petitioners are not entitled to enforce the contract by adopting the present proceedings under Article 226 of the Constitution of India. It is also claimed that the agreement entered into by respondent No. 1 with the petitioners was void the agreement entered into by respondent No. 1 with the petitioners was void being opposed to public policy. The respondents also claimed that Rule 6(1)(c) of the Import Trade Control Order prohibits grant of licence to an individual in respect of canalised items and as such the petitioners cannot by rely upon the doctrine or promissory estoppel and compel the respondents to act contrary to law. The respondents finally claimed that the petitioners have approached this Court after a considerable delay and that itself is sufficient to non-suit them.

6. Mr. Taraporewala, the learned counsel appearing in support of the petition, invited my attention to the averments in the petition to indicate that the petitioners have altered their position in view of the agreement between the parties entered into on January 18, 1971. The learned counsel relied upon the averments in paragraph 3 and in paragraph 17(g) of the petition. In paragraph 17(g) of the petition, the petitioners have claimed that they have taken certain steps believing that the respondents would implement the assurance given under the contract and would carry out the terms of the contract. It is pointed out by the petitioners that in view of the assurance of Respondent No. 1, the entire shareholding of the petitioner Company was transferred to the Indian citizens and the petitioners entered into an agreement with M/s. Crompton International Films Limited. The petitioners also claimed that but for the contract, they would have discontinued the entire staff and would not have incurred the large expenditure on the salaries of the staff and the maintenance of the office. All these averments are not specifically denied or controverted by the respondents in their return. The only statement in paragraph 16 of the return is that each and every contention is denied and submissions made in paragraph 17(g) of the petition are not correct. In my judgment, this vague denial is not sufficient to disprove the claim of the petitioners that they have altered the position in view of the contract between the parties. In this connection, Mr. Taraporewala rightly placed reliance upon the observations of the Supreme Court in a case reported in 66 Bombay Law Reporter 402 Badar and Company, Bombay v. East India Trading Company. The relevant portion is at page 407 where the Supreme Court has held that while construing the pleadings in proceedings on the Original Side of the High Court, the rules of pleadings must be strictly adhered to as it is well-known that pleadings on the Original Side of this Court are drafted by experienced counsel with due care. Mr. Taraporewala submits that in view of these observations of the Supreme Court, the mere denial by the respondents of the averments made in paragraph 17(g) of the petition is not sufficient to hold that the petitioners have not altered their position. I am satisfied from the material on record that the petitioners did after their position in view of the contract dated January 18, 1971.

7. Mr. Taraporewala then relied upon the decision of the Supreme Court in the case of M/s. Motilal Padampat Sugar Mills Company Ltd. v. The State of Uttar Pradesh and others - : [1979]118ITR326(SC) and claimed that the doctrine of promissory estoppel has been held to be applicable against the Government and the defence based on executive necessity has been categorically negatived. The learned counsel relied on the observations of the Supreme Court set out in head note (6) and especially the following observations :-

'The doctrine of promissory estoppel has also been applied against the Government and the defence based on executive necessity has been categorically negatived. Where the Government makes a promise and, in fact, the promisee, acting in reliance on it, alters this position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form a formal contract as required by Art. 299 of the constitution.

* * * * * The Government cannot claim to be immune from the applicability of the rule of promissory estoppel and repudiate a promise made by it on the ground that such promise may fetter its future executive action. If the Government does not want its freedom of executive action to be hampered or restricted, the Government need not make a promise knowing or intending that it would be acted on by the promises and the promises would alter his position relying upon it. But if the Government makes such a promise and the promisee acts in reliance upon it and alters his position, there is no reason why the Government should not be compelled to make good such promise like any other private individual.

* * * * * It would not be enough for the Government just to say that public interest requires that the Government should not be compelled to carry out the promise or that the public interest would suffer if the Government were required to honour it. The Government cannot claim to be exempt from the liability to carry out the promise on some indefinite and undisclosed ground of necessity or expediency, not can the Government claim to be the sole judge of its liability and repudiate it on an ex parte appraisement of the circumstances. If the Government wants to resist the liability, it will have to disclose to the Court what are the subsequent events on account of which the Government claims to be exempt from the liability and it would be for the Court to decide whether those events are such as to render it inequitable to enforce the liability against the Government. Mere claim of change of policy would not be sufficient to exonerate the Government from the liability : The Government would have to show what precisely is the changed policy and also its reason and justification so that the Court can judge for itself which way the public interest lies and what the equity of the case demands.'

Mr. Taraporewala relying upon this decision rightly contended that the doctrine of promissory estoppel clearly applies to the facts in the present case and the action of the respondents in denying the import-license to the petitioner is untenable. The submission of the learned counsel is correct and must be upheld. Mr. Sethna, the learned counsel appearing on behalf of the respondents, contended that the doctrine of promissory estoppel is not applicable to that facts of the present case and no relief should be granted to the petitioners because they have not altered their position. The submission has no merit and for the reasons mentioned hereinabove, in my judgment, the petitioners have altered their position and the principle of promissory estoppel clearly applies.

8. Mr. Taraporewala then invited my attention to the two orders passed by respondent No. 2 rejecting the applications for grant of import licences and pointed out that the reason given in the first order dated February 9, 1972 is that the licence is denied because the films were to be allowed through S.T.C., while the reason for passing the second order dated July 6, 1972 is that there is no provision for import of films during the current period. In respect of the first order, the reason is totally untenable as the Government of India had entered into a contract on January 18, 1971 is spite of the declaration of policy, earlier, directing that the import of films was to be made only through S.T.C. The respondent No. 2 had no authority to refuse import licence on this count. The reason for passing the second order is worse than the first. The reason that there is no provision for import of films during current period is totally incorrect and Mr. Sethna very rightly did not support the order, in view of import policy declared for the period of April 1972 to March 1973 unequivocally permitting import of the films but only through S.T.C. It is obvious that both the orders of respondent No. 2 are totally unsustainable and the relief was refused to the petitioners without any justifiable reason.

9. Mr. Sethna contended that the agreement between the parties arrived at on January 18, 1971 was void as it was opposed to public policy. In the return filed by the respondents, save and except alleging that contract was void as opposed to public policy, no facts are stated to substantiate the same. It hardly requires to be stated that a party desirous of contending that the contract is void must lay a proper foundation in support of the claim and mere statement that it is opposed to public policy is not sufficient. In fact, it is really unfortunate that the Government of India should take such stand when faced by a claim of the citizen based on a solemn agreement. In my judgment, the respondents should have taken more care before taking such defence in the return. Apart from this, is must be noticed that as per the contract between the parties, the respondents did grant import licence to the Petitioners on April 29, 1971. It is not stated as to when it dawned upon the respondents that the contract was void, being opposed to public policy. In my judgment, the defence in this connection was totally unworthy and unjustified.

10. Mr. Sethna then submitted that Rule 6(1)(c) of the Import Control Order prohibits the respondent No. 2 from grant of licence to an individual if the item of import is canalised. Rule 6(1)(c) of the Import Control Order reads as follows :

'6. Refusal of licence. - (1) The Central Government or the Chief Controller of Imports and Exports may refuse to grant a licence or direct any other licensing authority not to grant a licence :-

* * * * (c) if it has been decided to canalise imports and distribution thereof through special or specialised agencies or channels.'

Mr. Sethna contends that this Rule 6(1)(c) requires the respondent No. 2 to refuse import licence as the item of films was a canalised item. The submission has no merit and must be turned down. In the first instance, the item is not completely banned and Rule 6(1)(c) is merely regulatory or discretionary. There is no total prohibition to grant import licence. Moreover, what respondent No. 2 has clearly overlooked is that in spite of such canalisation of the item, the respondent No. 1 has entered into contract with the petitioners for import of films. It is futile for respondent No. 2, now, to urge that in spite of the contract, he is entitled to refuse import licence under Rule 6(1)(c) of the Import Control Order. Mr. Taraporewala is also right in contending that the rule is not a mandatory one but merely directory and the rule clearly sets out that respondent No. 2 may refuse the licence. In my judgment Rule 6(1)(c) of the Import Control Order is not a sufficient answer to the claim made by the petitioners.

11. Mr. Sethna then submitted that even assuming that the agreement between the parties is valid, Rule 6(1)(c) of the Import Control Order does not prohibit grant of Import licences and the docrtine of promissory estoppel is applicable to the facts of the case, still the petitioners should not be granted reliefs in these proceedings as writ of mandamus is not issued when the petitioners are enforcing their contractual rights. Mr. Sethna in support of his submission relied upon three decisions of the Supreme Court : (1962)ILLJ247SC Dr. Rai Shivendra Bahadur v. Governing Body of the Nalanda College, Bihar Sharif and others, : [1966]1SCR120 Lekhraj Sathramdas Lalvany v. N. M. Shah, Deputy Custodian-cum-Managing Officer, Bombay and others, and : [1975]3SCR254 Har Shankar and others etc. etc. v. The Deputy Excise and Taxation Commissioner and others etc.. In my judgment, neither of these decisions support the claim of Mr. Sethna that contractual obligations should never be enforced by resort to writ jurisdiction. In fact, in the last decision cited by Mr. Sethna, the Supreme Court has observed that where a concluded contract exists, the claim to impeach it should not be permitted in writ jurisdiction. In my judgment, this judgment of the Supreme Court really goes against the claim of the respondents that the agreement was void. In this connection, Mr. Taraporewala rightly placed reliance upon a decision of the Supreme Court in the case of Balu Sukhram Singh v. Ram Dular Singh and others reported in AIR 1973 S C 204. The relevant finding of the Supreme Court is in paragraph 4 of the judgment and it is as follows :-

'We are unable to hold that merely because the source of the right which the respondent claims was initially in a contract, for obtaining relief against any arbitrary and unlawful action on the part of a public authority he must resort to a suit and not to a petition by way of a writ. In view of the judgment of this Court in K. N. Guruswamy's case, : [1955]1SCR305 there can be no doubt that the petition was maintainable, even if the right to relief arose out of an alleged breach of contract, where the action challenged was of a public authority invested with statutory power.'

From these observations, it is clear that the petitioners can resort to a writ jurisdiction even if the right to relief arises out of an alleged breach of contract provided the action challenged was of a public authority invested with statutory power. It is not disputed that the orders which are challenged are of public authority invested with statutory powers and in view of this judgment. I have no hesitation in holding that the petition filed under Article 226 of the Constitution of India is perfectly maintainable.

12. It is not in dispute that even now the import of films is not a banned item and the petitioners can be granted relief in respect of that item. For the reasons stated hereinabove, in my judgment, the respondents have wrongful and illegally deprived the petitioners of their rights and the petitioners are entitled to the reliefs claimed in this petition.

13. In the result, the petition succeeds and the rule is made absolute in terms of prayer (b) of paragraph 23 of the petition. Mr. Taraporewala states that the respondents have refused to grant import licence even for the subsequent period for which the contract was subsisting and though the petitioners have not filed a separate petition challenging that order, still the petitioners should be given relief in that connection. As the petitioners have not even amended the petition claiming additional relief, I would not be justified in granting that relief but I have no doubt that the respondents would grant necessary reliefs to the petition. The respondents shall grant the import licences within a period of eight weeks from today.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //