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National Plastic and Allied Industries, Lucknow Vs. Union of India (Uoi) and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtAllahabad High Court
Decided On
Case NumberCivil Misc. Writ Petn. No. 1065 of 1972
Judge
Reported inAIR1973All102
ActsImports Control Order, 1955 - Rule 10C
AppellantNational Plastic and Allied Industries, Lucknow
RespondentUnion of India (Uoi) and ors.
Appellant AdvocateKameshwar Prasad, Adv.
Respondent AdvocateT.N. Sapru, Adv.
Excerpt:
.....orders, and inasmuch as the various public sector agencies were not willing to purchase the goods, the controller should have in the exercise of his power under rule 10-c of the rules, granted permission to the petitioner to sell the goods in open market. (1) where, on the importation of any goods or at any time thereafter, the chief controller of imports and exports is satisfied, after giving a reasonable opportunity to the licensee of being heard in the matter, that such goods cannot be utilised for the purpose for which they were imported he may, by order, direct the licensee or any other person having possession or control of such goods to sell such goods to such person, within such time, at such price and in such manner as may be specified in the direction. the stand taken by..........certain conditions to the licence, inter alia in respect of disposal of goods covered by the licence. rule 5 (1) and (2) of the rules may be quoted:--'5. conditions of licences:-- (1) the licensing authority issuing a licence under this order may issue the same subject to one or more of the conditions stated below:-- (i) that the goods covered by the licence shall not be disposed of, except in the manner prescribed by the licensing authority, or otherwise dealt with, without the written permission of the licensing authority or any person duly authorised by it; (ii) that the goods covered by the licence on importation shall not be sold or distributed at a price exceeding that which may be specified in any directions attached to the licence; (iii) that the applicant for a licence.....
Judgment:
ORDER

C.S.P. Singh, J.

1. The petitioner is a firm, which used to cany on business of manufacturing plastic goods. The import of certain raw material used in the manufacturing process was subject to Import (Control) Order 1955 and administrative directions issued by the Central Government. The petitioner was granted two import licences, being actual users licence under the aforesaid rules and administrative orders, for importing certain quantities of Polythelene Moulding Powder. The petitioner utilised these licences and imported powder under the licence. Subsequently the petitioner had to close down his business, for certain reasons, and as such the entire quantity of powder imported by him could not be put to use.

2. The petitioner approached the Deputy Chief Controller of Imports and Exports Kanpur, for necessary directions for disposal of the surplus powder, and it transpires that the Controller advised the petitioner to approach the Director of Industries, U. P., Kanpur for arranging for its disposal. The petitioner applied to the Director of Industries U. P. by a letter dated 7th April, 1969. The Director of Industries by a letter dated 10th December, 1969, directed the District Industries Officer, Lucknow to make enquiries as to whether any industrial unit at Lucknow was willing to lift the material. The petitioner thereafter contacted the District Industries Officer and gave him details of the quantities of powder lying with him as also the total costs thereof. It seems that no progress in the matter was made, and thereafter, the Director of Industries (Raw Material Section) U. P., Kanpur, sent a letter on the 24th June, 1970 to the Deputy Chief Controller intimating him the amount and value of the powder lying with the petitioner, and also requesting him to take suitable action in respect thereof. The petitioner too by another letter of the 28th December, 1970,requested the Deputy Chief Controller to permit him to sell the material in the open market, and also informed him that the State Trading Corporation, New Delhi, one of the parties contacted for purchasing the powder Was not willing to take it A similar request on the same date was made to the Director of Industries, U. P., Kanpur. The Director of Industries by another letter of 31-12-1970 requested the Chief Controller of Import to grant permission to the petitioner to sell the goods in the open market, as the matter was already delayed and on account of the fact that the goods had been stored for a long time, there was danger of their deteriorating. The Deputy Chief Controller, thereafter, acting on this request, published a trade notice on 5th January, 1971, inviting applications from actual users for purchase of goods. In the notice, it was insisted that the application should be accompanied by the recommendation of the sponsoring authority concerned, and also an undertaking that the goods will be utilised in the purchaser's own factory and should be in terms of paragraph 94 of the Import Trade and Control Procedure Rules, 1970. One Messrs. Kumar Plastic Industries of Moradabad seems to have become interested in the purchase of this material as the Director of Industries wrote a letter to that firm in February 1971, intimating to it the procedure which it had to follow in case it wanted to make the purchase. It was stated in this letter that the procedure for purchase would be that which was laid down in paragraph 94 of the Import Trade and Control Procedure Rules 1970. After receipt of this letter, it appears that Messrs. Kumar Plastic Industries did not pursue the matter further. After a pause of nearly four months, the Director of Industries U. P., Kanpur by his letter of the 18th June, 1971, requested the Deputy Chief Controller to grant permission to the petitioner for sale of the goods as in spite of efforts made by him, he has not been able to get any actual user for purchase of the goods and further that the efforts of the firm had proved futile. A similar letter was sent by the Director of Industries to the Deputy Chief Controller on the 7th July, 1971, and the request for permission being granted to the petitioner for effecting a sale in the open market was repeated. It appears that at some stage thereafter, the U. P. Small Industries Corporation Ltd., Kanpur became interested in the purchase of the material and as such the petitioner by another letter of the 7th August, 1971, intimated to the Director of Industries that they were willing to sell the entire material at the rate of Rs. 6.35p. per kilogramme which was their cost price. This effort too subsequently proved to be futile, as the Corporation has not purchased the material.

3. The petitioner thereafer, filed the present writ petition, and has prayed for a mandamus directing the respondents Nos. 1 and 2 to permit him to sell the material in question in the open market.

4. The trade of export and import in goods is governed by the provisions of Imports and Exports (Control) Act, 1947. In exercise of powers conferred by Sections 3 and 4 (a) of that Act, the Government, of India has promulgated Imports (Control) Order 1955. Rule 5 of the Rules authorises the licensing authority to issue licences attaching certain conditions to the licence, inter alia in respect of disposal of goods covered by the licence. Rule 5 (1) and (2) of the Rules may be quoted:--

'5. Conditions of Licences:-- (1) The licensing authority issuing a licence under this Order may issue the same subject to one or more of the conditions stated below:--

(i) that the goods covered by the licence shall not be disposed of, except in the manner prescribed by the licensing authority, or otherwise dealt with, without the written permission of the licensing authority or any person duly authorised by it;

(ii) that the goods covered by the licence on importation shall not be sold or distributed at a price exceeding that which may be specified in any directions attached to the licence;

(iii) that the applicant for a licence shall execute a bond for complying with the terms subject to which a licence may be granted.

(2) A licence granted under this Order may contain such other conditions, not inconsistent with the Act or this Order, as the licensing authority may deem fit.'

5. Rule 10-C of the Rules empowers the Chief Controller of Imports and Exports to issue directions regarding the sale of such imported goods as cannot be utilised by the licensee for the purpose for which they were imported. Sub-clause (2) of this Rule empowers the Controller to fix the price of the goods after taking into consideration certain items of expenditure and the cost price. Apart from these two provisions, certain administrative directions by the Government of India, Ministry of Foreign Trade have been issued. One such is contained in paragraph 94 of the Manual directions. Under this paragraph if an actual user finds for any reason that he is not in a position to utilise the goods in accordance with the conditions of the licence, he can sell the goods to another actual user with the permission of the licensing authority, provided that the purchaser requires the goods in question for his own industrial unit. Sub-clause (2) of this paragraph permits the actual user to approach the State Director of Industries or the sponsoring authority concerned, for the sale of the goods in case he is not able to find a suitable and willing buyer. Sub-clause (7) of this paragraph permits the sale of imported goods to the State Trading Corporation, Minerals and Metals Trading Corporation, State Small Industries Corporation or other similar public sector agency.

6. Learned counsel for the petitioner has urged that inasmuch as after making all efforts that were possible, he had failed to find an actual user for the purchase of goods as contemplated by paragraph 94 (1) of the administrative orders, and inasmuch as the various public sector agencies were not willing to purchase the goods, the Controller should have in the exercise of his power under Rule 10-C of the Rules, granted permission to the petitioner to sell the goods in open market. It is further contended that insistence of the Controller on a purchaser complying with the conditions envisaged by paragraph 94 of the administrative order was in the circumstances an unreasonable restriction on the petitioner's right to dispose of his property, and also interfered with his right to carry on business. On the other side, it is contended that there was no obligation under the Rule or the Statute on public-sector agencies or the Controller to arrange for a buyer for the goods imported by the petitioner, and inasmuch as the petitioner had imported the goods on a licence which was governed by paragraph 94 of the administrative instructions, the petitioner could not insist on permission being granted for effecting a sale in the open market. In order to resolve this controversy, it has to be seen as to whether paragraph 94 of the instructions are exhaustive on the matter, or as to whether apart from this provision, the Controller has power under 10-C of the Rules to give directions which are not in strict compliance with paragraph 94 of the administrative instructions. It is settled law that a rule framed in the exercise of statutory power prevails over administrative orders on the subject. Rule 10-C has been framed in exercise of powers conferred on the Central Government by Sections 3 and 4-A of Imports and Exports (Control) Act, 1947. Rule 10-C gives power to the Controller to pass such orders as he may think fit, in respect of sales of imported items which are not utilised by the licensee. The scope of that power cannot be curtailed by referring to administrative instruction of the nature contained in paragraph 94. Rule 10-C may be profitably quoted-

'10-C. Power to make directions for the sale of imported goods in certain cases:

(1) Where, on the importation of any goods or at any time thereafter, the Chief Controller of Imports and Exports is satisfied, after giving a reasonable opportunity to the licensee of being heard in the matter, that such goods cannot be utilised for the purpose for which they were imported he may, by order, direct the licensee or any other person having possession or control of such goods to sell such goods to such person, within such time, at such price and in such manner as may be specified in the direction.

(2) The price that may be specified under Sub-clause (1) shall be the aggregate of the landed cost of the goods, clearing and transportation charges and such other incidentalcharges incurred in relation thereto as are considered reasonable in the circumstances of the case by the Chief Controller of Imports and Exports.

(2-A) Where goods are imported through the State Trading Corporation of India, the Minerals and Metals Trading Corporation of India or other similar institutions or agencies owned or controlled by the Government, or any other recognised agency, and such goods are allotted to any person, an opportunity of being heard in the matter shall be given to such person also.

(3) The licensee or the person to whom any direction has been made under Sub-clause (1) shall be bound to comply with such direction.'

7. A perusal of this rule makes It plain that the Controller while exercising powers under this Rule, is not bound by the conditions contained in paragraph 94 of the administrative instructions. He may pass an order directing the sale of the goods to any person whom he thinks fit. The person nominated by him need not be an actual user owning an industrial unit as contemplated by paragraph. 94 of the administrative instructions. It seems that the power which the Controller exercises under Rule 10-C is a general power conferred on him by the Rules to meet exigencies which have not been provided for in paragraph 94 of the administrative instruction. In paragraph 94 of the administrative instruction there is no provision for a contingency where the importer has not been able to find a purchaser who is an actual user owning an industrial unit, and where public undertakings are not willing to purchase the goods or to find an actual user for its purchase. To remedy the hardship arising from such a situation, the Controller can pass appropriate orders under Rule 10-C. In the counter-affidavit filed on behalf of the respondents, the main stand taken is that the sale could only be made to a person who would use the goods in his industrial unit, and further that such a purchaser should comply with the formalities of paragraph 94, before permission could be granted to the petitioner to effect the sale. The stand taken by the respondents appears to be erroneous, for paragraph 94 in my view does not at all apply to a situation like the one in the present petition. The Deputy Chief Controller who is seized of the matter should as such consider the application of the petitioner, as also the request of the Director of Industries U. P. for permitting the petitioner to effect the sale in open market, in this context. It is thus necessary that direction be issued to respondent No. 2 to dispose of the application or request of the petitioner for effecting a sale in the open market in the light of the observation made above.

8. The petition is partly allowed. The respondent No. 2 is directed to dispose of the application of the petitioner dated 28-12-1970 in accordance with law and the observation made in this judgment. Inasmuch as thematter has been pending since considerable length of time, it is necessary that the application should be disposed of within three months from today's date. The petitioner is entitled to his costs.


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