Skip to content


Union of India and ors. Vs. Bharat Barrel and Drum Manufacturing Co. Private Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectConstitution
CourtDelhi High Court
Decided On
Case NumberLetter Patent Appeal No. 300 of 1971
Judge
Reported inILR1972Delhi397
ActsIndustries (Development & Regulation) Act, 1951; Imports & Exports (Control) Act, 1947 - Sections 3; Sugar Control Order, 1963; Constitution of India - Articles 19, 301, 302 and 305; Essential Commodities Act, 1955 - Sections 3
AppellantUnion of India and ors.
RespondentBharat Barrel and Drum Manufacturing Co. Private Ltd. and ors.
Advocates: D. Mukherjee,; R.M. Mehta,; A.K. Sen and;
Cases ReferredThe Deputy Assistant Iron & Steel Controller and Another v. Mailikchand
Excerpt:
(i) imports & exports (control) act--import license--grant of--considerations for--whether import policy and/or public notices issued create a right to--handbook for the year 1969-70 para 75(4).; that the grant of import licenses is a matter of policy which takes into consideration very many factors like the ones enunciated in paragraph 75(4) of the handbook for the year 1969-70. if the central government as a matter of policy felt that the foreign exchange availability and other relevant factors permitted the issue of licenses only so far as the same were sponsored by the ministry of petroleum and chemicals and in that particular period the need of bitumen drums of the oil companies alone should be taken into consideration and not of fabricators other than oil companies or those.....prakash narain, j. (1) this appeal under clause 10 of the letters patent is directed against the judgment of hon'ble mr. justice t. v. r. tatachari issuing a writ quashing communication dated 28th june, 1969 from the director-general of technical development, government, of india to the deputy iron & steel controller (exhibit l) recommending for rejection the application of respondent no. 1 for grant of an import license, the order dated 4th august, 1969 issued to espondent no.. i rejecting the import license application ex. m), the communication dated 21st april, 1970 from the director-general of ' technical development to the deputy iron & stesi controller recommending for rejection the application of respondent no. 1 for grant of an import license (exhibit f), the order thereon dated.....
Judgment:

Prakash Narain, J.

(1) This appeal under Clause 10 of the Letters Patent is directed against the judgment of Hon'ble Mr. Justice T. v. R. Tatachari issuing a writ quashing communication dated 28th June, 1969 from the Director-General of Technical Development, Government, of India to the Deputy Iron & Steel Controller (Exhibit L) recommending for rejection the application of respondent No. 1 for grant of an import license, the order dated 4th August, 1969 issued to espondent No.. I rejecting the import license application Ex. M), the communication dated 21st April, 1970 from the Director-General of ' Technical Development to the Deputy Iron & Stesi Controller recommending for rejection the application of respondent No. 1 for grant of an import license (Exhibit F), the order thereon dated 22nd June, 1970 (Exhibit G) rejecting the application for grant of import license, and the appellate order dated 24th November, 1970 (Exhibit 1); and the direction to the Director-General oS Technical Development to sponsor the application of respondent No. 1 for import licenses for import of 24G steel sheets for fabrication off bitumen drums for the first six months of each of the periods April, 1968 to March, 1969, April, 1969 to March, 1970 and April, 1970 to March, 1971 and a direction to the Union of India, Chief Controller of Imports & Exports, the Assistant Iron & Steel Controller and Shri Sukumar Ghosh, Deputy Assistant Iron & Steel Controller to reconsider the applications of respondent No. I for the grant of import licenses prayed for therein to respondent No. I; and the direction to the Director-General of Technical Development to sponsor the application, if filed by respondent No. 1 company, within one month of the judgment, for import license for import of 24G steel sheets for fabrication of bitumen drums for the second six months of each of the aforesaid period April, 1968 to March, 1969, April, 1969 to March, 1970 and April, 1970 to March, 1971 with a direction that the aforesaid governmental authorities shall consider the application for the grant of import license prayed for therein to respondent No. 1-company in accordance with law and in the light of the observations made in the judgment of the learned Single Judge.

(2) The writ petition was filed by M/s Bharat Barrel & Drum Manufacturing Company Private Limited, having its registered office at Bombay, respondent No. 1 herein, and Laxmi Prasad Goenka, a Direcor and shareholder of the said company, respondent No. 2 herein. The respondents in the writ petition were Union of India, through the Secretary, Ministry of Foreign Trade, the Chief Controller of Exports & Imports, the Director-General of Technical Development, the Directorate General of Technical Development, the Assistant Iron & Steel Controller, Faridabad. Shri Sukumar Ghosh, Deputy Assistant Iron & Steel Controller. Faridabad, and Shri Ramamurthi Sharma. Joint Chief Fontrollei- of Imports & Exports (Central Licensing Area). Respondents 3 to 6 in the present appeal were the intervenors in the writ petition.

(3) The writ having been issued by the learned Single Judge, as noticed above, the respondents in the writ petition have preferred the present appeal against M/S Bharat Barrel & Drum Manufacturing Company Private Limited, Shri Laxmi Prasad Goenka and the four intervenors.

(4) Respondent No. 1 company has two factories, one a Bombay and the other at Calcutta for manufacturing barrels and drums. Its factories are equipped, inter alia, for manufacturing drums of 35/45 gallon capacity which are used amongst others for packing bitumen. The present case is concerned with the import license requisite for import of 24G steel sheets required for fabricating what are commonly known as bitumen drums. The complaint of respondent No. 1 is that contrary to the import policy declared by the Government of India and in. spite of the factories of respondent No. 1 being equipped and licensed for manufacturing bitumen drums, import license for import of 24G steel sheets has been refused to respondent No. 1 for collateral reasons in- eluding favor shown to the four intervenors. Inasmuch as import of 24G steel sheets for manufacture of bitumen drums has been allowed only to the oil companies operating in India though, it is alleged, only one of the oil companies has its own fabricating unit for bitumen drums and the others get the same fabricated from other fabricators like res- pondent No. 1. not all the other fabricators being even licensed to fabri- cate bitumen drums.

(5) The Industries (Development & Regulation) Act, 1951 has been made applicable to the drum and barrel industries since 1953. Under this Act the Central Government took under its control various industries as specified in the schedule to the said Act which are called scheduled industries. Respondent No. 1-Company is licensed under the said Act and the Rules framsd there under for carrying on the business of manufacturing and fabricating various types of steel barrels and drums. It was not disputed: that respondent No. 1 is licensed for manufacturing of bitumen drums. It was also not in dispute that respondent No. 1-Comoany had the capacity to manufacture and fabricate 8/10,000/4-5 gaallon capacity drums and 3600 drums of 40/45 gallon capacity on a single shift basis at Bombay. A small part of the drum manufacturing capacity of respondent No. 1 was transferred to Calcutta in 1959. Earlier in 1957 respondent No. 1 had been. issued import licenses of the value of Rs. 26.11 lacs for modernisation, rehabilitation and replacement of their plant in the Bombay factory. Thus, it. was never in dispute that respondent No. 1 was not only equipped but had the capacity to manufacture bitumen drums and for that purpose, also had a license from the Director-General of Technical Development. The capacity o.f respondent No. 1 to manufacture bitliman drums was certified from time to time but at, the relevant time it was not in dispute that respondent No. 1 did have the capacity and certification to manufacture of bitumen drums as one of the biggest fabricators in the country.

(6) What the situation regarding imports was prior to 1967 was neither agilated nor brought on record, but it was said that raw material in the form of steel sheets for the manufacture of barrels and drums used procured from indigenous sources. Since April, 1967 the bulk of raw material requirements for fabrication of bitumen drums had to be imported. Accordingly, respondent No. 1 anolied for grant of import, license. For the three relevant licensing periods it was granted import licenses for 18G (1.25 mm. thick) steel sheets and 24G (.63 mm. thick) steel sheets for the manufacture of 40/45 gallon barrels and 4/5 gallon small drums. Respondent No. 1 had not applied for a import licenc.e for 24G steel sheets for their bitumen drum plant for the period April, 1967 to March, 1968 but for the subsequent three periods its applications were rejected. These had been challenged, as noticed earlier, and the writ petition was accepted.

(7) The import policy of the Government is published every year in what is popularly known as the Red Book. The Government also publishes for purposes of Import Trade Control a handbook of rules and procedure popularly known as the 'Handbook'. Although in the Red Book origally published for the licensing period April, 1968 to March, 1969 there was no import policy laid down for the import of steel sheets yet by a public notice dated 21st May, 1968 published in the Gazette, the import policy turn import of iron and steel items and ferro-alloys for this period was, also announced. The relevant, portions of this were filed as Exhibit J. Inter alia, this notice mentioned that applications for import of steel and ferro-alloys will be considered from actual users only and that no import will be allowed for the established importers. This led respondent No. 1 to submit an application dated 28th March, 1969, addressed to the Deputy Iron & Steel Controller, Faridabad, for grant of an import, license for Rs. 72 lacs for import of 24G steel sheets for the period April, 1968 to March, 1969. A copy of this application was sent to Director-General of Technical Development for the application for import license of a scheduled industry having a license under the Industries (Development & Regulation) Act, 1951 had to be sponsored by the Director-General of Technical Development (hereinafter referred to as D.G.T.D.). The application, as already noticed above, was recommended for rejection by the D.G.T.D. and was finally rejected.

(8) It was alleged in the writ petition that for the period April, 1968 to March. 1969, Burmah-Shell Refinery Ltd. was granted an import license worth Rs. I crore 70 lacs for import of 24G steel sheets for fabrication of bitumen drums while respondent No. 1-Company was not granted any import license for it would have been entitled to prorata allocation of import license worth Rs. I Crore 33.28 lacs turn import of 24G steel sheets for the fabrication of bitumen drums. Respondent No. 1 had not made an application for the subsequent six months of the period April, 1968 to March, 1969 because even its application for the first six months had been refused.

(9) For the next year i.e. the period April, 1969 to March, 1970 the Government of India published a Red Book and a Handbook laying down the Import Trade Control Policy and the procedure to be followed for obtaining import licenses. In this period also 24G steel sheets for fabrication of bitumen drums could be imported only by actual users against licenses issued by the Controller of Imports and Exports on the applications of, the actual users being sponsored by the respective sponsoring authorities. Paragraph 69 of the Handbook defined 'actual users (industrial)' as those who require raw material, components, accessories, machinery and spare parts for their own use in an industrial manufacturing process. Actual users were classified into three categories, namely, (i) scheduled industries borne on the registers of the Directorate General of Technical Development, (ii) Scheduled industries not borne on the registers of the D.G.T.D. and non- scheduled industries other than small scale industries and (iii) small scale industries. Different procedures were provided for the aforesaid three categories of actual users. The scheduled industries borne on the registers of the D.G.T.D. were further sub-divided into priority industries and industries other than priority industries. Respondent No. I-Company fell into the category of a non-priority industry borne on the registers of D.G.T.D. The procedure being thus laid down respondent No. 1 had to apply for grant of import license through the D.G.T.D. It will be advantageous here to read paragraph 75(4) and (8) of the Handbook for the year 1969-70 which deal with the basis of the recommendation by the sponsoring authority and intimation by the licensing authority to the sponsoring authority respectively. In paragraph 75(4) it is stated that the recommendations for the grant or refusal of licenses will be made by the D.G.T.D. on the basis of:-

(I)foreign exchange availability or availability of other monetary ceilings, (ii) availiability of the goods applied for from indigenous sources or other commercial channels, (iii) essentiality of the goods applied for, (iv) stocks in hand and expected arrivals, (v) past imports and past consumption of the items in question by the applicant, (vi) actual production, (during the preceding period) (vii) estimated production, (viii) policy in respect of items sought to be imported, and (ix) other factors considered relevant and necessary in terms of the policy in force. Paragraph 75(8) provided that where the licensing authority does not, for any reason, accept the advice/recommendation of the D.G.T.D. in its entirety. necessary intimation to that effect should be given to the D.G.T.D.

(10) According to the Red Book for the year 1969-70 as well as 1968-69 laying down the import policy of the Governmerit applications for import of steel and ferro-alloys could be considered from actual users only. Respondent No, I fell into that category. On 31st, July, 1969, a publc notice was issued by the Ministry of Foreign Trade and Supply, Import Trade Control, Government of India, stating that the import policy in respect of certain items was reviewed and that it was decided to make certain amendments in the import trade control policy (Red Book Volume 1) for the period April, 1969 to March, 1970. The amendments sought to be made were set out in the said notice. The relevant amendment, in the present case was as under :-

____________________________________________________________________________ 'Page No. of the Red Book Reference Details of amendments. (Vol. 1) 387 Section V The following new paragraph 18 Appendix 41 may be deemed to have been inserted. 'Import of sheets for manufacture of drumsarrels for Oil indus try. 18. Import of drums and barrels sheets for oil industry, whose requirements are sponsored by the Department of Petrolum in the Ministry of Petroleum and Chemicals and Mines & Metals will normally be canalised through the Minerals and Metals Trading Corporation of India Limiteed who will import the sheets ardallocate them to actual use only.' ____________________________________________________________________________

(11) On 22nd October, 1969 by another public notice certain further amendments were made in the Red Book which read as under:-

____________________________________________________________________________ 'Page No. of the Red Book Reference Details of amendments. (Vol. 1) 387 Section Ii The existing paragraph may be Appendix 41 deemed to have been substituted Paragraph 18 by the following paragraph: 'Import of drums and barrels sheets for Oil Companies, whose requirements are sponsored by the Department of Petroleum and Chemicals will normally be canalised through MMTC. Mmtc will allocate these to such oil companies as have fabricating plants of their own as actual users. Those Oil Companies who do not have fabricating units of their own. will, on the basis of the allocation made by the Department of Petroleum and Chemicals advise the Mmtc to release to their fabricators for fulfillling contracts entered into.' ____________________________________________________________________________

(12) Yet another amendment was made by public notice dated 3rd November, 1969 in the Red Book which read as under :-

____________________________________________________________________________ 'Page No. of the Red Book. Reference Details of amendments (Vol. 1) 387 Section V The existing paragraph as amend Appendix41 edvide Public Notice No. 171- Paragraph Itc (PN)/69 dated 22-10-1969 may be deemed to have been substituted by the following paragraph:- 'Import of drums and barrels sheets for Oil Companies, whose re- quirements are sponsored by the department of Petroleum and Chemicals will normally be canalised through MMTC. Mmtc will allocate these to such oil Companies as have fabricating plants of their own as actual users. Those Oil Companies who do not have fabricating units of their own, will, on the basis of the allocation made by the department of Petroleum and Chemicals, advise the Mmtc who will import on their behalf to release to their fabricators on conversion basis.' ____________________________________________________________________________

(13) Respondent No.1-Company submitted an application for import of 24G steel sheets for fabrication of bitumen drums for the period April, 1969 to March, 1970 on 25/28-3-70 to the Assistant Iron & Steel Controller, Faridabad and sent a copy of the same to the U.G.T.D. as a sponsoring authority. This application also met with the same fate as for the earlier period. An appeal was then preferred by respondent No, 1 to the Joint Chief Controller of Imports &- Exports. Respondent No. 1 was given a personal hearing, but the appeal was rejected by an order dated 24th November, 1970.

(14) For the licensing period April, 1970 to March, 1971 the import policy for the import of steel sheets for fabrication of barrels and drums was substantially the same as was for the previous period barring slight modifications. The only substantial change in the Red Book was as follows:-

'21.Import of drums and barrels sheets for oil companies, whose requirements are sponsored by the Department of Petroleum and Chemicals will normally be canalised through a public sector agency. The public sector agency will allocate these to such oil companies as have fabricating plants of their own as actual users. Those oil companies who do not have fabricating units of their own, will on the basis of allocation made by the Department of Petroleum and Chemicals, advise the Agency concerned who will import on their behalf, to release to their fabricators on conversion basis.'

(15) The public sector agency, for the purpose of importing steel sheets after 1st April, 1970 was Hindustan Steel Limited, which is a Government of India Undertaking. Respondent No. 1 submitted an application dated 5th October. 1970 to the Assistant Iron & Steel Controller Faridabad for an import license for Rs. 3,06,00,000.00 for the import of 240 steel sheets for its bitumen drums plant for the first six month of the licensing period April, 1970 to March, 1971. Before any reply could be received either from the sponsoring authority D.G.T.D. or the Controller of Imports and Exports the writ petition was filed in this court.

(16) The learned Single Judge has issued the writ on the following grounds:-

(A)Respondent No. 1-Company was an actual user within the meaning of the term used in the Handbook and in the Red Book and the D.G.T.D. declined to certify the essentiality for the import and to sponsor the application of the respondent-Company for reasons foreign to the grounds set out in paragraph 75(4) of the Handbook. (b) That the Ministry of Petroleum and Chemicals was releasing bitumen drum sheets to Oil Companies could not be a ground for not sponsoring the application of respondent No. 1. (c) That respondent No. 1-being on the registers of D.G.T.D. and being an actual user with a licensed capacity to manufacture bitumen drums the D.G.T.D. was bound to sponsor the application of the respondent- company and the Company was entitled to have its application considered for grant of license. (d) That the amendments made in the Red Book by the three public notices. Exhibits B, C, and D related only to Oil Companies whose requirerments were to be sponsored by the Department of Petroleum and Chemicals and inasmuch as the Oil Companies stood on a footing different from the other fabricators like respondent No. 1-Company the issue of import licenses to the oil companies could not be a material consideration for refusal of import license to the respondent- company. (e) That even the subsequent canalisation of. import through the M.M.T.C. or any other Government of India Undertaking was restricted to the requirements of the Oil Companies and did not, affect the right of the respondent-Company to have its application considered as an actual user for grant of an import license for 24G steel sheets.

(17) Aggrieved against the writ issued by the learned Single Judge, as noticed above, the six respondents in the original writ petition have come up ill appeal.

(18) The learned Single Judge found it convenient to deal with the contentions of the petitioners in the writ petition separately for each of the licensing periods. For the period April, 1968 to March, 1969 the relevant letter which has: been struck down is a letter at D.G.T.D. dated 28th June, 1969 (Exhibit L), addressed to the Deputy Iron Steel Controller, Faridabad. This letter reads as under:-

'SUBJECT: Application for import license for import, of 24 Gauge B.P. Sheets for the manufacture of Bitumen Drums, Period April 1968/March 1969. Dear Sir, Enclosed please find import application B/571/69 dated the 28th March, 1969 along with other connected papers as received from M/s Bharat Barrel & Drum ., Bombay. The firm is borne on the list of Directorate Geneial of Technical Development for the manufacture of Bitumen Drums. Essentiality for the import is not certified and import application is recommended for rejection. At present Ministry of Petroleum and Cnemicals releases Bitumen Drum Sheets to Oil Companies for meeting their actual Bitumen packing requirements and the D.G.T.D. are not sponsoring any requirements of steel sheets for production of Bitumen Drums.'

(19) What seems to have weighed with the learned Single Judge was that the D.G.T.D. declined to certify the essentiality for the import and re- commended the application of respondent No. 1 for rejection on the ground that Ministry of Petroleum and Chemicals was releasing Bitumen Drum sheets to oil companies and this fact could not be a valid reason for refusing to certify the essentiality for the import of Bitumen Drum Sheets by respondent No. 1, particularly because the Import. Policy as laid down in the Public Notice dated 21st May, 1969 (Exhibit J) which brought about, the amendment in the Import Licensing Policy for that year, did not state that the import licenses would be granted only to oil companies and not to other fabricator companies like respondent No. 1. The learned Judge was of the opinion that release of Bitumen Drum Sheets to oil companies by the Ministry of Pertoleum and Chemicals could not in law be a valid ground for the refusal by the D.G.T.D. to recommend the application of respondent No. 1 for rejection or for the rejection of the application for import license. It was observed that the recommendation and the rejection was contrary to the Import. Policy laid down by the Government and it was not open to the D.G.T.D. or the Iron & Steel Controller to act in contravention of the Import Policy laid down by the Government. Inasmuch as the said authorities declined to perform their functions on an erroneous interpretation of the Import Policy laid down by the Government the communication dated 28th June, 1969 (Exhibit L) and the order of rejection of the application dated 4th August, 1969 (Exhibit M) were illegal and liable, to be quashed. In our opinion the reasons which found favor with the learned Single Judge in quashing the said two communications cannot be upheld. A reading of the communication dated 28th June, 1969 (Exhibit L) does not show that the application of respondent No. 1 was recommended for rejection by the D.G.T.D. on the ground that the Ministry of Petroleum and Chemicals releases Bitumen Drum Sheets to oil companies for meeting the actual Bitumen packing requirements and so, only the D.G.T.D. were not sponsoring any requirement of steel sheets for production of Bitumen Drums by either fabricators. The essentiality for the import was not certified and the import application was recommended for rejection by the D.G.T.D. The mention of Ministry to Petroleum and Chemical releasing Bitumen Drum Sheets to oil companies' was merely incidental. It cannot be urged nor indeed it was urged that every actual user was entitled to get an import license or to have its essentiality for import certified as of right by the sponsoring authority. Bitumen, as is well-known, is primarily a by-product of crude oil which is refined by petroleum companies. By and large the greatest demand for bitumen drums is for packing Bitumen so obtained. It was not in dispute that at least one of the oil companies was fabricating Bitumen Drums produced by it. The other oil companies also require Bitumen Drums which they could fabricate either themselves or get them fabricated. Mr. A, K. Sen. the learned counsel for respondent No. 1 urged that actual users of Bitumen Drums would be different from actual users of the steel sheets for fabrication of Bitumen Drums. In that view of the matter he contended the oil companies were really users of Bitumen Drums and not actual users of the steel sheets for fabrication of Bitumen Drums. In the latter category fell actual users, of the steel sheets like respondent No. 1 and possibly one of the oil companies which had its own fabricating unit. In our view this hair-splitting is not warranted. The primary requirement, for Bitumen Drums was oil the oil companies arid if the oil companies had arrangement to fabricate Bitumen Drums they would flail under the category of actual users of the steel sheets. The grant of import licenses is a matter of policy which takes into consideration very many factors like the ones enunciated in paragraph75(4) of the Handbook for the year 1969-70. If the Central Government as a matter of policy felt that the foreign exchange availability and other relevant factors permitted the issue of licenses only so far as the same were sponsored by the Ministry of Petroleum and Chemials and in that particular period the need of Bitumen Drums of the oil companies alone should be taken into consideration and not of fabricators other than oil companies or those employed by the oil companies, it could justifiably restrict the issue of import licenses to only applications sponsored and recommended for acceptance by the Ministry of Petroleum and Chemicals and the essentiality for import by other fabricators may not be certified. On a careful reading of the sommunication .dated 28th June, 1969 (Exhibit L) and dated 4th August, 1969 (Exhibit M) this is what appears to have happened. The application of respondent No. 1 was recommended for rejection by the D.G.T.D. and was rejected by the Iron & Steel Controller, the licensing authority, not on the ground that the Ministry of Petroleum and Chemicals alone can release Bitumen Drum Sheets but on the ground that in the circumstances then prevailing essentiality for the import of Bitumen Drum Sheets by respondent No. 1 could not. be certified. We cannot persuade ourselves to agree with the learned Single Judge that in terms of the Public Notice dated 21st May, 1968 (Exhibit J) fabricators like respondent No. 1 and the fabricator oil companies like Burmah-Shell Refinery being all actual users, none of them could be excluded by the appellants and the applications of all of them had to be certified for essentiality of import and import licenses had to be granted to all.

(20) Mr. A. K. Sen strongly urged that the real crux of the matter is to find out what is meant by the words 'actual users' who alone were entitled to apply for issue of an import .license of 24G steel sheets under the Import Policy in force at the relevant time and having found that out to reconcile and harmonise the provisions of Industrial Development Act on the one hand and the Import and Export. Control Act and the Rules and orders made there under on the other. As we have already observed and in this we are in good company with the learned Single Judge the expression 'actual users' includes not only the actual fabricators of Bitumen Drums like respondent No. 1 and fabricator oil companies like Burmah-Shell Refinery Ltd. but also the non-fabricator oil companies like the interveners in the present case. The actual users are persons who fabricate Bitumen Drums or have arrangement for fabrication of Bitumen Drums which are solely needed for their by-product. Merely because respondent No, 1 is recognised as an industry under the Industrial Development. Act and is also admittedly an actual user of steel sheets for fabrication of barrels and drums does not mean that merely by virtue of the existence of these two factors it. can claim that being one of the actual users within the meaning of the Import Control Policy it can claim as of right to the issue of an import license or to have its essentiality for import certified. As the very words 'certifying essentiality of import' connote the essentiality has to be determined by taking an overall view of the economy of the country and weighing the relative importance of imports by one or other type of industry keeping in view the various factors like availability of foreign exchange, impact of imports of other items of relatively greater priority in the larger interest of the overall economy of the country, the need to conserve and utilise foreign exchange and the requirements of the country to give precedence to one industry or the other in the overall economic development for the benefit of the people. As already observed by us earlier it is. for the authority granting licenses for import to weigh these various factors even if the same have not been specified in any administrative order or an order issued under the Imports & Exports Control Act. If all these factors are there in the essentiality certificate not being given or a license not being issued the aggrieved party cannot complain for he has no absolute vested right to an import license in terms of the policy in force at the time of his application. We are fortified in taking this view by a recent decision dated 5th January, 1972 of the Supreme Court in Civil Appeal No. 1053 of 1971. The Deputy Assistant Iron & Steel Controller and Another v. Mailikchand, Proprietor, Katrelly Metal Corporation, Madras, indeed no matarial was placed to show that any collateral reasons weighed with either the D.G.T.D. or the Iron & Steel Controller in respectively recommending the application of respondent No. 1 for rejection and its ultimately being rejected. That the various criteria laid down in paragraph 75(5) of the Handbook for 1969-70 were not there in 1968-69 is no reason to hold that any collateral considerations' weighed with the authorities concerned.

(21) It was urged on behalf of respondent No. 1 that petroleum companies alone cannot be regarded as actual users of Bitumen Drums for these are required by other industries also like tar and dye producers. The contention was that Bitumen is a by-product of dye & tar also and the oil companies could use steel-sheets only for manufacturing Bitumen Drums for Bitumen produced by them but respondent No. 1 would be producing Bitumen Drums for others also. In our opinion the contention has no force. Apart from the fact that there is no material placed on the record to show if or whether any such industry needs Bitumen Drums or that such industries were supplied drums by respondent No. 1. as already observed earlier, the priority of industries whose needs have to be cared for is a matter which has to be decided by the appropriate authorities keeping in view the overall needs of the economy of the country. thereforee, even if respondent No. I can be assumed to be a fabricator who would be supplying Bitumen Drums to other industries it. cannot be said that the need of those other industries had necessarily to be kept in view in deciding which industries should in that year be issued import licenses for import of 24G Steel Sheets. This brings us to another matter agitated by Mr. A. K. Sen and that was that respondent No. 1 admittedly being one of the biggest fabricators of drums and barrels was being put out of business by the import license refused to it and that too after it had made special arrangements for fabrication of Bitumen Drums and had spent considerable amount of money, including monevs spent on import of machinery etc. for renovating and rehabilitating its plant. This contention also. in our view, is not relevant to the issues before us. As: admitted by respondent No. 1 it manufactures various types of drums and barrels and it is not the case of respondent No. 1 that all its business activity had been stopped. It is only one particular type of drums which respondent No. 1could not fabricate by import of 24G steel sheets. If that was not allowed to be done in the larger interest of the country, the complaint of respondent No. I loses all force. Accordingly, we are of the view that the orders of the learned Single Judge issuing a direction to the D.G.T.D. to certify essentiality for the imports and to sponsor the application of respondent No. 1 by recommending acceptance of the issue of an import license and the direction to the Iron & Steel Controller to issue such a license to respondent No. 1 for the period April 1968 to March, 1960 and Quashing the communications dated 28th June, 1969 (ExhibitL) and order dated 4th August, 1969 (Exhibit M) cannot be upheld and the same are held to be perfectly legal and effective.

(22) During the licensing period April 1969 to March. 1970. as usual, the Government published its Import Control Policy .in the Red Book for that vear and also issued the Handbook giving the licensing procedure. The policy and the licensing procedure were to operate in keeping with the Imports Control Order, 1955 issued under Section. 3 of the Imports & Exports (Control) Act, 1947. During this year also licenses for import of 24G steel sheets could be applied for by actual users 'industrial' and there is no dispute that respondent No. 1 fell into this category. As in the previous year during this year also the sponsoring authority for respondent No. 1 was the D.G.T.D. and the applications for grant of import license had to be made on a half-yearly basis. According to paragraphs 75(4) of the Handbook for this period the factors which the D.G.T.D. had to take into consideration in recommending an application for import license for acceptance or rejection were as follows :-

'(4)Basis of recommendation : The recommendations for grant or refusal of licenses will be made by the Directorate General of Technical Development on the basis of (i) foreign exchange availability or availability of other monetary ceilings (ii) availability of the goods applied for from indigenous sources or other commercial channels, (iii) essentiality of the goods applied for, (iv) stocks in hand and expected arrivals, (v)ast imports and past consumption of the item(s), in Question, by the applicant; (vi) actual production during the preceding period, (vii) estimated production, (viii) policy in respect, of items sought to be imported, and (ix) other factors considered relevant and necessary, in terms of the policy in force.'

(23) Subsequent to the issue and publication of the Red Book and the Hand Book the Government also issued three Public Notices dated 31st July, 1969, 22nd October, 1969 and 3rd November, 1969, Exhibits B, C, and D respectively to the writ petition. By Exhibit 'B' dated 31st July, 1969 paragraph 18 was added to Appendix 41 in the Red Book which was modified 'by the second and third public notices, These show that the import of steel sheets for fabrication of drums .and barrels for oil companies which were to be sponsored by the Department of Petroleum and Chemicals would normally by canalised through the Minerals & Metals Trading Corporation, a Government of India Undertaking. Thus', the new paragraph 18 related only to oil companies whose requirements were to be sponsored by the Department of Petroleum and Chemicals. We are in agreement with the observations of the learned Single Judge that in this way the oil companies stood on a footing different from that of fabricators like respondent No.1. The essentiality for import of the oil companies was to be certified by the Department of Petroleum and Chemicals while of other actual users was to be certified by other Departments of the Government of India. Respondent No. 1, as already noticed, had to apply through the D.G.T.D. Accordingly, respondent No. 1 applied for issue of an import license turn six months on 25th March, 1970 (Exhibit E) through the D.G.T.D. and the D.G.T.D. by its letter dated 21st April, 1970 (Exhibit F) forwarded the application of respondent No. 1. inter alia, with the following remarks :-

'THEfirm is borne on the list of Directorate General of Technical Development for the manufacture of Bitumen Drums. Essentiality for the imoprt is not certified and import application is recommended for rejection. At present Ministry of Petroleum & Chemicals releases Bitumen Drum Sheets to Oil Companies for meeting their actual Bitumen packing requirements and the D.G.T.D. are not sponsoring any requirements of steel sheets for production of Bitumen Drums. T.R. not submitted by the party.'

(24) On the basis of the said recommendation the application of respondent No. 1 was rejected by an order dated 22nd June, 1970 (Exhibit G). The learned Single Judge quashed the recommendation dated 21st April, 1970., made by the D.G.T.D. as well as the order of rejection dated 22nd June, 1970 for the reason that, the learned Single Judge found it difficult to understand how the fact that the Ministry of Pertoleum & Chemicals was releasing Bitumen Drum Sheets to oil companies could be a reason for not certifying the essentiality for the import of Bitumen Drum sheets for the use of respondent No. 1 or for rejection of the application of respondent. No. 1 on that ground. The learned Single Judge also noticed the counter affidavit filed by Shri K. Raman in which it was; stated that the declared policy of the Government was that, imports could be made only for the oil companies or refineries and no commercial fabricator was directly given any actual user license for import of 24G steel sheets. This statement was found to be incorrect as in paragraph 18 introduced by the aforesaid three Public Notices did not state that imports would be allowed to be made only by oil companies. It is correct that paragraph 18 introduced by the said Public Notices did not apply to actual users like respondent No. 1 and the canalisation through the M.M.T.C. mentioned in that paragraph was only in respect of imports for oil companies but the certification for essentiality was obviously made in view of the principles laid down in paragraph 75(4) of the Hand Book which have already been reproduced earlier. The Import Policy of the Government is worked out, we may well presume in a coordinated manner and not in water tight compartment by the various Departments which are sponsoring authorities. As already observed, with regard to the earlier licensing period the overall needs of the economy of the country, the priorities to be observed keeping in view the availability of foreign exchange etc. have to be kept in view in certifying essentiality for import by a particular industry of raw material from abroad. The nine criteria set. out in paragraph 75(4) not only take into account the need of a particular industry in the country and the declared policy in respect of items sought to be imported but also other factors considered relevant and necessary in terms of the policy force. Since Bitumen Drum Sheets are primarily required for fabricating Bitumen Drums to pack a necessary by-product produced by oil comanies, in our view, cogent and relevant reasons were stated by both the D.G.T.D. and the licensing authority in respectively not. certifying the essentiality for import of 24G steel sheets by respondent No. 1 and in refusing the issue of license. Indeed a reading of the impugned recommendation and order shows that in view of the demand of raw material by and the neccssity for importing it for use by the oil companies whose applications were being sponsored by the Ministry of Petroleum and Chemicals had to be kept in view by the D.G.T.D. and the licensing authority for respectively not sponsoring any requirement of the steel sheets for production of Bitumen Drums by other fabricators and in refusing licenses to them for the import of the said item. We are in respectful disagreement with the finding of the learned Single Judge that the only reason for rejection of the application of respondent No. 1 was that, the Ministry of Petroleum and Chemicals was sponsoring the applications of the oil companies. As already noticed the reason for the application of respondent No. 1 being not recommended or granted was not that the Ministry of Petroleum and Chemicals was sponsoring the applications of the oil companies thereby excluding recommendations by other sponsoring authorities. The reason for rejection obviously was the priorities to be given to the various industries The crux of the matter is that it isthe for import of a raw material in India by a particular actual user that has to be certified and not the need of the actual user to carry on his business.

(25) Mr. A. K. Sen, the learned counsel for the respondents urged that if the above view was to be taken it virtually amounted tothe creation of a monopoly in favor of oil companies by an executive order inasmuch actual users other than the oil companies could not import 24G steel sheets and the trade of fabrication of Bitumen Drums would become a monopoly of the oil companies. He relied on the decision of the Supreme Court in the District Collector of Hyderabad and others v. M/s Ibrahim and Co. etc. : [1970]3SCR498 That was a case in which the respondents dealers in sugar and other commodities carrying on business in the cities of Hyderabad and Secunderabad challenged an order dated 30th December, 1964 issued by the State Government by which the sugar quota allocated to the twin cities of Hyderabad and Secunderabad was to be given in its entirety to the greater Hyderabad Consumer Central Stores Ltd. as a result of which the respondents who held licenses under the Andhra Pradesh Sugar Dealers Licensing Order for distribution of sugar and were recognised dealers under the Sugar Control Order, 1963 were prevented from carrying on their business in sugar. It was contended that the Government could not do so by an executive fiat. The order was struck down by the Supreme Court which observed as under:-

'THEfreedom declared by Article 301 is in widest terms and applies to all forms of trade, commerce and intercourse, but it is subject to certain restrictions specified in Articles 302 to 305. These provisions clearly show that the guarantee under Article 301 cannot be taken away by executive action. The guarantee under Articleained in Article 19. The mere proclamation of emergency could not save the order as it was contrary to the statutory provisions contained in the AndhrPradesh Sugar Dealers Licensing Order and the Sugar Control Order. In our view the decision does not help respondent No. 1 at all. Paragraph 75(4) which has already been read above is not challenged by respondent No. 1 as vocative of ' any fundamental rights and clause (ix) is a factor in which the overall import requirements and conditions of the country could form basis of the impugned rejections. That respondent No. 1 could not fabricate Bitumen Drums did not amount to putting it out of business completely when admittedly it could and did continue to manufacure other types of drums and barrels. The import control order issued under Section 3 of the Import & Exports Act gave statutory sanction to the considerations enumerated in paragraph 75(4) and the rejection of the application of respondent No. 1 or the essentiality of import by it of a particular rawmaterial which was allowed to be imported by others cannot be regarded as attracting principles enunciated in the above noted case of Hyderabad Sugar Dealers.


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