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R.K. Manufacturers and ors. Vs. Minerals and Metals Trading Corporation of India Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Reported in(1973)2MLJ389
AppellantR.K. Manufacturers and ors.
RespondentMinerals and Metals Trading Corporation of India Ltd. and ors.
Cases ReferredIn John H. Reagan v. Farmers Loan Trust Company
Excerpt:
- ordert. ramaprasada rao, j.1. in this batch of writ petitions a writ of mandamus is prayed for directing the union of india (2nd respondent) to fix the price of stainless steel sheets at which the minerals and metals trading corporation of india limited (1st respondent) can sell to the petitioners as per the release orders already issued by the 1st respondent. during the pendency of the writ petitions the lapsing of the sale notes issued in favour of the writ petitioners by the 1st respondent has been stayed. the common but general facts in all these writ petitions are as follows.2. the petitioners are manufacturers of hospital and surgical equipments and are small scale industrial units classified as actual users which is a common terminology used under the laws, rules and regulations.....
Judgment:
ORDER

T. Ramaprasada Rao, J.

1. In this batch of writ petitions a writ of mandamus is prayed for directing the Union of India (2nd respondent) to fix the price of stainless steel sheets at which the Minerals and Metals Trading Corporation of India Limited (1st respondent) can sell to the petitioners as per the release orders already issued by the 1st respondent. During the pendency of the writ petitions the lapsing of the sale notes issued in favour of the writ petitioners by the 1st respondent has been stayed. The common but general facts in all these writ petitions are as follows.

2. The petitioners are manufacturers of hospital and surgical equipments and are small scale industrial units classified as actual users which is a common terminology used under the laws, rules and regulations governing import trade control and import licensing. The petitioners secured their last licence for the import of stainless steel sheets for the year 1969. For the financial year 1970-71, the import policy was changed due to the canalisation of such imports through the 1st respondent. Under the memorandum and articles of association of the 1st respondent it is provided that the 1st respondent should undertake such imports at the instance of the Union Government with a view to stabilising prices and rationalising distribution. The petitioners therefore claim that the 1st respondent is virtually an agent of the petitioners as it has to respect the interests of the petitioners as traders. The price of stainless steel sheets is determined from time to time in accordance with the pricing policy generally agreed upon between the 1st and the 2nd respondents. The sub-committee which is ordained by administrative convenience to fix the price of such canalised commodities consists of the Economic Adviser to the Government of India, Joint Secretary of the Ministry of Finance, Joint Secretary of Steel, General Manager of the 1st respondent, Chief Controller of Imports and Exports, etc. On an intelligent discussion as between themselves touching upon the various factors which are to be generally taken into consideration in fixing the prices of canalised commodities, the price structure is agreed upon and the pricing policy is arrived at. The petitioners' complaint is that whilst the ruling price so fixed during the quarter July to September, 1971 was Rs. 19-32 per Kg. for the quarter October to December, 1971 it was fixed at Rs. 28.00 per Kg. The petitioners' complaint is that the increase in price was abnormal and without any relation to reality and can hardly be described as a fair or equitable price. But the petitioners, by reason of the release orders issued to them by the 1st respondent were to purchase the commodity at the re-fixed arbitrary price. The attack is therefore on the methodology adopted in the course of the fixation of the price of stainless steel sheets. Generally the grounds of attack are that the price fixed is arbitrary and unsupportable by any law or logic, that there is a discrimination in the fixation of such price as between the petitioners who are actual users and those who are known in the trade as export houses or export manufacturing houses. It is said that the concession in price is given to the export houses or export manufacturing houses. It is said that the concession in price given to the export houses to the very commodity in question is violative of Article 14 of the Constitution of India. The exorbitant price fixed is not in the nature of regulation of a trade, but is practically a policy which would totally annihilate the industry. It is also claimed that the 2nd respondent is under a public duty to fix the price, whereas they have abdicated their duty to the 1st respondent which is but the agent of the petitioners. In those circumstances the relief is asked for.

3. The 1st respondent has filed counters and supplementary counters which resulted in rejoinders and supplementary rejoinders being filed by the petitioners. The 1st respondent says that the pricing policy was fixed at two meetings held on 28th July, 1971 and 17th September, 1971, the former of which was called by the Ministry of Foreign Trade, Government of India, and the latter of which was the Review Committee which on an overall appreciation of the situation and following the guidelines fixed by the Ministry of Foreign Trade came to a decision regarding the price of stainless steel. At the outset, the objection of the 1st respondent is that there is no provision of law compelling the 1st respondent or the 2nd respondent to fix the selling price of stainless steel sheets. The Red Book (The Import Policy Book) for the licensing period April, 1971 to March, 1972 had not imposed any statutory duty on the respondents in the direction as sought by the petitioners. The 2nd respondent is mainly intended to guide the 1st respondent in the matter of the setting up of the pricing policy of any canalising agency and such a discretionary administrative power cannot be the subject-matter of a writ of mandamus under Article 226. The principle behind the canalisation of imports of stainless steel through the 1 st respondent is only intended to conserve foreign exchange by making bulk imports through one agency and having regard to large scale abuses with regard to the import, sale and usage of stainless steel. In order to set right the wide disparity between the ruling price in the domestic market regarding stainless steel, a general policy decision had to be taken by the Government in conjunction with the 1st respondent. The price of stainless steel has been fixed with reference to various factors. The imports are not made with reference to the release orders issued from time to time by the 1st respondent. The 1st respondent is granted a bulk licence to import such canalised goods and the quantum of the licence depends upon the international prices and the foreign exchange resources allocation. The price of the imported goods are reviewed periodically and the persons to whom release orders were issued are notified about such price. Whilst fixing the price, the 1st respondent as well as the 2nd respondent bore in mind the selling price of indigenous stainless steel produced by Hindustan Steel Ltd. Fixing of a price without reference to the local price prevailing for such or similar commodities produced in India would result in industrial imbalance. In order to be rational not only in the matter of distribution of specially imported goods and for getting the scale of price stable and reasonable, regard is shown to the price of similar steel produced in our country by the Hindustan Steel Ltd. The pricing policy is not violative of Articles 14 and 19 of the Constitution of India and the price fixed is fair and reasonable and it is not open to the petitioners to contend that it is not so. The instructions given in the Import Trade Control Policy Book, known as the Red Book, are purely administrative in character without any statutory force. The price of Rs. 28 per kilogram has been fixed having regard to the high price obtaining the open market and the price of indigenously produced stainless steel. With a view to promote exports and to increase foreign exchange earnings, the export oriented units were supplied with raw materials at international prices, so that the exported products became competitive in international markets. It is in that light the merchandising export houses and manufacturing export houses were given certain concessions for keeping the growth of export trade involving competition in international market. It was this objective that was responsble for a slight deviation in the matter of price fixation for the class of export houses and cannot be treated equally in the matter of price fixation. As a policy, no stainless steel is released at international price to anyone unless such stainless steel sheets are utilised for manufacture of goods for export or for fostering indigeneous machine-building industries referred to in the counter affidavit. There is therefore no violation of Article 14 of the Constitution. The argument that the price fixed for stainless steel is irrational because the price of stainless steel strips is Rs. 10-55 Per kilo is met by stating that these two commodities are different and even the import duty of stainless steel strips is far less. Whilst setting out the method of distribution, the 1st respondent says that the supply of the material in time depends upon the availability of the materials. The release orders are issued by the Government and the 1st respondent in turn, strictly in the order of receipt of the release orders by them, issues the sale note prescribing a period of 30 days for lifting the material within the period, and hence there cannot be any complaint as such release orders reflect the prices fixed for the commodity in each quarter when the release is made. The release orders do not stand in the same position of an import licence, for, in the year 1971-72 no one can import stainless steel and no import licence was issued in this behalf except to the canalising agency. There is therefore no vested right to a person favoured with a release order. The 1st respondent has disclosed enough data in the records on the basis of which the price of stainless steel sheets is fixed.

4. In the counter-affidavit filed by the Union of India it is said that the relief asked for is misconceived in law and is not maintainable. There is no public or statutory duty cast on the 2nd respondent to fix the price of stainless steel sheets. The Red Book (paragraphs 66 and 67 of Vol. I) contains instructions which are purely administrative and are advisory in character and they do not confer any statutory or public duty either on the 1st or the 2nd respondent. The essence of the instructions in the Red Book is that a discretionary administrative power is given to the 2nd respondent to guide or generally control the fixation of prices and such a power cannot be the subject-matter of Article 226 of the Constitution. There is no vested or enforceable right available to the petitioners to procure stainless steel sheets at any particular price or to compel the respondents to fix prices at a particular level or rate. Factually it is said that at the meeting held on 28 th July, 1971 2nd respondent set guidelines to the Review Committee which later met on 17th September, 1971 and fixed the price for stainless steel sheets. The contention that the pricing policy is violative of Article 14 of the Constitution on the ground that export-houses are being supplied with steel sheets at a concessional rate is denied. The petitioners belong to the class of actual users whilst the registered exporters and export-houses are classified differently.

5. While setting out the features of the Import Trade Control Policy of the Union Government of India regarding the import of stainless steel, the following factors are brought out. The policy of the Government is to conserve foreign exchange while at the same time advancing industrialisation and expanding exports consistent with the fulfilment of Government's socio-economic objectives. It is with this object a class known as manufacturers-exporters and merchant-exporters have been created and they are given certain concessions so that they could compete in the international market. In both the cases of manufacturing export-houses and merchandising export houses, there is a minimum export obligation of Rs. 25 lakhs per annum of non-traditional products set out in the counter-affidavit. In the case of manufacturing export-houses they should export at least 5 lakhs of non-traditional products manufactured by others, which quantum they have to increase year after year so as. to reach the minimum export obligation of 25 lakhs over a period of five years. The export-houses are different from actual users like the petitioners, who are concerned mainly with the manufacture of articles for domestic, consumption. For expanding the export trade, export-houses are allowed to import certain permissible items of goods. In addition to the items permitted for import against the export-products, export-houses are permitted to ask for inclusion of any other item like stainless steel sheets, even though those items were not ingredients of products exported by them. Even this concession to export-houses to import such sensitive items like stainless steel sheets is subject to certain restrictions and conditions imposed. They are set out in paragraph 7 (e) of the common counter-affidavit of the 2nd respondent. Regarding the canalisation policy of the Government with reference to stainless steel sheets, the 2nd respondent after tracing the history of such policies in the past, states that with effect from the licensing period April, 1969 to March, 1970, the Chief Controller of Imports and Exports took over the licensing of iron and steel items including stainless steel sheets. During the licensing period April, 1970 to March, 1971, certain units called priority-units received direct import licences while the non-priority units were given release orders for supply of stainless steel sheets through the 1st respondent through whom the item had been practically canalised for the non-priority industries. During the licensing period, 1971-72 the Government decided to make the canalisation of stainless steel sheets through the 1st respondent absolute and total having regard to the large scale abuses being indulged in with regard to import, sale and usage of stainless steel sheets and also with a view to conserve foreign exchange by making bulk imports only through one agency. Therefore the impression of the petitioners that the object of canalisation is to make raw materials available to actual users at reasonable rates is countermanded. It is denied that the 1st respondent imports stainless steel on the basis of the release orders issued by the 2nd respondent to the actual users. The licencee is the 1st respondent and the imports depend on the strength of the import licence so obtained by the 1st respondent and the very grant of such licences depends upon various factors such as foreign exchange resources, competitiveness of the international price, etc. The decision regarding fixation of price is taken by the 1st respondent as a commercial organisation depending not only upon the item only and also taking into account various other relevant factors. Notwithstanding the fact the pricing policy is reviewed periodically by the 2nd respondent, it is the Review Committee and the 1st respondent who fix the price after noticing useful hypothesis and therefore the price fixed is neither arbitrary nor unreasonable. The respondents always bear in mind the prevailing domestic market price of stainless steel and particularly the price offered by Messrs. Hindustan Steel Ltd., and that was one of the many guidelines adopted for the purpose of fixing the price. Ultimately it is said that the pricing policy springs from the exercise of administrative power and the advice given by the 2nd respondent which is expected to be acted upon by the 1st respondent are purely chamber instructions and have no statutory force. There is no violation of any public duty on the part of this respondent for it to. be directed to refix a price which has already been done. The petitioners cannot complain of infringement of fundamental rights, because they are unable to procure raw materials at prices desired by them or because they are unable to realise expected profits. It is not correct testate that the duty of reviewing the pricing policy has been abdicated by this respondent. The issue of release orders by themselves do not create any right and the prices specified in the sale note are subject to review from time to time. If sale note is issued by the 1st respondent in a particular quarter, the supply is made to the holder of the release order at the price fixed for the quarter in which the sale note is issued.

6. In the course of the hearing, one of the petitioners filed a further affidavit, apparently to sustain his contention that export-houses who obtain stainless steel at a concessional rate do not manufacture articles out of the said steel either by themselves or through others, nor do-they export such manufactured articles to-earn foreign exchange. They gave a few examples in proof of the same. It is said that even Hindustan Steel at Durgapur do not maintain a relatively constant price for their goods. It is. said that they sold in March 1972 stainless steel at Rs. 23,000 per metric tonne, whilst in May, 1972 they sold it at Rs. 20,365. Thus it is said that Hindustan Steel have sold stainless steel, at prices far below Rs. 30 per kg. Therefore it is said that the present price fixed is again arbitrary.

7. In answer to the above, the Union of India has filed a further counter-affidavit stating that the illustrations given by the petitioners are not admissible in evidence at that stage when the matter was part-heard. Even otherwise it is said that if any export-house committed any irregularity, proper action would be taken against them. But in any event, assuming without admitting that the examples cited are those of supplies made to actual users like the petitioners, a stray violation of the export obligation imposed on the export-house would not render the classification itself bad in law. In answering a new contention raised that a discrimination is thought of as between the petitioners on the one hand and the manufacturers of dairy and chemical equipment on the other, it is said that there is no such discrimination. These manufacturers are manufacturers of capital equipments and, they were thought of for being given the privilege of concessional price at the meeting of the Price Review Committee held on 17th September, 1971. The expression 'so called export-houses' used in relation to dairy and chemical equipment manufacturers is characterised as a motivated approach.

8. In a supplementary counter-affidavit filed by the 1st respondent it is brought out that the ruling market price of 26 gauge stainless steel manufactured by Hindustan Steel Ltd. has gone up considerably as is seen from the publications in the newspaper of date 1st March, 1973. Comparing the price adopted by the Hindustan Steel Ltd. as above, the pricing of stainless steel by the 1st respondent is sustained to be reasonable.

9. In another affidavit filed by the 2nd respondent it is made clear that Hindustan Steel Alloy Plant manufactures stainless steel of a thicker gauge. It is pointed out that stainless steel of thinner gauge is costlier than steel of a thicker gauge. In these circumstance it is said that the price of Rs. 28,000 per metric tonne fixed by the 1st respondent for the imported material, which is of a superior quality than that manufactured in India by Hindustan Steel Ltd. and which is priced at Rs. 30,000 per metric tonne is from every angle reasonable and not arbitrary. It is denied that the Essential Commodities Act applies to the facts of . the case. The contention that there is a discrimination between the petitioners on the one hand and dairy and chemical equipment manufacturers on the other is a new contention and cannot therefore be raised at the stage of arguments. Even otherwise it is said that there is now no such discrimination between the said two classes of persons.

10. Again the Government explains as to why manufacturing export-houses, the dairy equipment manufacturers and refrigerator manufacturers and other capital equipment manufacturers are given a privilege of a concessional price. It is said that the manufacturers of machineries in the fields of chemicals, pharmaceuticals textiles, etc., including the dairy equipment manufacturers, fall within Clause (b) of the decision of the Review Committee dated 17th September, 1971. The reason for supplying stainless steel at a concessional price to this category of persons is in pursuance of the Government's policy to increase industrial production and to follow a policy of import substitution. This policy is intended to serve those who are engaged in machine building activities and who contribute to the industrialisation of the country by producing machines and thus being instrumental in reducing the import bill of the country, thereby saving foreign exchange by indigenous production of machineries that would otherwise have to be imported. Such manufacturers of machineries who play a significant role in the conservation of foreign exchange and in the matter of import substitution fall into a separate and distinct category of 'manufacturers of capital equipments'. It was within that category the dairy equipment manufacturers were originally classified. But for reasons already set out, the dairy equipment manufacturers have since been grouped from October, 1972 as belonging to the same class as hospital equipment manufacturers. Thus it is said that manufacturers of capital equipments, refrigeration equipment and equipments for other such industries are persons who are totally different from actual users and therefore the contention as to discrimination has to fa 1. Even so, the concessions in favour of registered exporters are maintained on the ground that the nation should earn foreign exchange.

11. The 1st respondent also adopts a similar reasoning in relation to the attack against the price originally fixed for dairy equipment manufacturers and also the concessional price availed by the manufacturers of capital equipment. In effect it is said that if any concession is given to any manufacturer, it is with an avowed purpose and basically intended to promote exports and to encourage large scale heavy equipment industries to flourish in a developing country like ours.

12. Before I consider the pleadings and deal with the contentions of parties, Mr. M.K. Nambiar appearing for the Ist respondent has raised a preliminary objection regarding the maintainability of the writ petitions and the grant of relief as asked for. I shall consider this in the first instance.

13. No doubt, the prayer is to direct the Central Government to either fix the price of stainless steel sheets or cause the fixation of price to be done once again by the Ist respondent. The objection is that as in the circumstances of this case, the Government is not the authority either statutory or otherwise to fix the price, no direction under Article 226 can equally issue. In any event as the pricing policy is not done under any law, the petitions are misconceived. In answer it is said that the price fixed is a nullity since it was done in violation of prescribed guidelines in the Red Book, which according to the petitioners have the force of law. As writs can issue if even a discretionary power, though springing from executive direction, is misapplied and is in wanton disregard of relevant considerations, it is urged that the writs are maintainable.

14. Lord Campbel in Ex parte Nash (1850) 15 Q.B.D. 92, said 'We grant a writ of mandamus when that has not been done which a statute orders to be done but not for the purpose of undoing what has been done. Again the invocation of the remedy to compel the performance of administrative, ministerial and non-judicial duties imposed by law on public officers is by far the conspicuous breach of the jurisdiction in mandamus. A mandamus is normally a remedy for official inaction by compelling the performance of a public duty, which has not been performed or refused to be done. But what is sought here is a remedy in the nature of mandamus but in advance of cuiorari. The contention of Mr. Raman is that what has been done by either or both of the respondents in the matter of fixation of price for the stainless steel sheets is a nullity which ought to be ignored. My attention is drawn to Regina v. Paddington Valuation Officer Ex parte Peachery Property Corporation Ltd. (1966) 1 Q.B.D. 380, where both writs of mandamus and certhrari were issued by the Queen's Bench. No doubt, if an authority or public officer has the legal authority to determine questions affecting rights of citizens, then he has to necessarily act judicially and both the rules might in certain circumstances issue. Mr. M. K. Nambiar on the other hand forcibly says that the price-fixing authority is not dealing with rights of parties and there is no obligation to act judicially. To appreciate this, the facts have to be fully understood and thereafter a decision arrived at. The preliminary objection cannot at this stage be upheld. Further, even if the price has been fixed in an administrative capacity, redress by way of mandamus has been given ' for misapplication of the discretionary power itself.' When a relief by way of mandamus is sought, a collateral attack on the order or situation with which the aggrieved person is confronted is also possible. As stated by Amnon Rubinstein in his book 'Jurisdiction and Illegality'' at page 102:

The order will issue not only where the body concerned has in fact decided the issue but also where the exercise of its discretion has been improper or defective, as where it has been exercised unreasonably, maliciously, capriciously, or for an improper purpose, or where the authority has failed to consider all relevant factors, or has considered irrelevant factors, or has failed to decide the precise issue submitted to it.

Here again the Court cannot, on a bare reading of the pleadings and the opening of the case, decide one way or the other on the preliminary question as to maintainability. The Court has to acquaint itself with the real facts in the case and the hypothesis on which the impugned pricing formula has been arrived at. The possibility is it can remove the unsustainable order and concurrently or in advance issue a mandamus or act otherwise. As pointed out by S.A. de Smith, in his treatise on 'Judicial Review of Administrative Action' Second Edition at page 568:

The exact relationship between certiorari and mandamus as methods of reviewing the exercise of statutory jurisdiction and discretion remains somewhat indeterminate. It is probably true to say that mandamus retains a greater degree of flexibility, but there seems to be no immediate prospect of seeing its ambit enlarged to the point reached in India and in some American State jurisdictions, where it became ' certiorarified ' and has ousted certiorari from its status as the leading administrative law remedy.

It would be too premature to dismiss the petitions by accepting the preliminary objection as to maintainability.

15. Another limb of the argument of Mr. M. K. Nambiar is that no writ or direction against the 1st respondent can issue as it is an incorporate corporation. But by march of time the separatist existence of a corporate body has been pierced through by lifting its veil. As the Supreme Court said in Tata Engineering and Locomotive Company Ltd. v. State of Bihar : [1964]6SCR885 .

The doctrine of the lifting of the veil thus marks a change in the attitude that law had originally adopted towards the concept of the separate entity or personality of the corporation. As a result of the impact of the complexity of economic factors, judicial decisions have sometimes recognised exceptions to the rule about the juristic personality of the corporation. It may be that in course of time these exceptions may grow in number and to meet the requirements of different economic problems, the theory about the personality of the corporation may be confined more and more.

So one cannot hurriedly predicate whether in the instant case there are compelling reasons to lift or not to lift the veil and scrutinise the decision of the 1st respondent in the matter of fixation of the disputed price. In the absence of a full appraisal and understanding of the weight of the pleadings in the case and the merits of the arguments to be addressed, I am unable to uphold the preliminary objections prematurely.

16. It is in the wake of the pleadings as above that the price fixed by the Review Committee on 17th September, 1961, has to be adjudged as reasonable or unreason, able, constitutional or unconstitutional. For purposes of ready reference the relevant guidelines thought of by the subcommittee on pricing policy for canalising agencies held on 28th July, 1971 and the decisions arrived at the meeting of the Review Committee as regards the pricing of imported materials may be extracted.

The first meeting of the Sub-Committee on Pricing Policy for canalising agency was held yesterday (28th July, 1971) in the Economic Adviser's room when Shri M. M. Sen, CCI & E., Shri S. Venkatesan, J.S. (M. of E.T.), Shri Maheshwar Prasad, J.S. (Steel), Shri D.W. Telang, Director (M. of Finance), Shri J. Banerjee, Director (M. of I.T.), Dr. N. C. B. Nath, Director, S : T.C. and other officers of the S.T.C., Shri H.R. S. Rao and Shri R. B. Patnaik of H.S.D., Director (R.), Shri Ramachandran and myself from, M.M.T.C. and several other officers of the Ministries concerned were present:

2. The confidential note circulated by the Economic Adviser was discussed at great length and suggestions therein were carefully considered.

3. The consensus of opinion in respect of items to be handled by M.M.T.C was as follows:

(i) Separate pricing formula should be adopted for non-ferrous metals and steel items including stainless steel.

(ii) Different sets of pricing formula should be considered for speculative items like copper, stainless steel and grain oriented electrical sheets on which items the principle of maximisation of profits should be applied.

(iii) Suppliers of raw-materials to actual users engaged in exports should be at the lowest international prices procured against free foreign exchange allocations. The service charges of the canalising agency for the exporting units should be minimum.

4. Having regard to the aforesaid broad decisions, it was decided that a 3-tier pricing policy for non-ferrous metals and 2-tier pricing policy for steel items to service release order holders falling into the category of REP. AUP and AU should be formulated. While working out the selling prices of raw materials to cater to the requirements of REP and AUP release order holders, raw materials procured against free foreign exchange at the lowest international prices should be taken into account and also that the service charges should be calculated on the C.I.F. cost and other expenses should be added thereon at actuals as per details given below:

Steel Items:

REP Category:

I. High Seas delivery:

(i) C.I.F. cost.+

(ii) 2 % service charge.

II. Ex-jetty delivery:

(i) C.I.F. cost.+

(ii) 2% service charge

(iii) Customs duty

(iv) Port charges

(v) Wagon indenting charge (all direct charges incurred).

III. Ex-godown /Stockyard:

(i) C.I.F. cost

(ii) 5% service charges

(iii) Customs duty+,

(iv) Port charges

(v) All other actual expenses excluding godown rent and interest on blocked capital in the godown.

AU (P) and AU Categories:

1. Highseas delivery:

(i) C.I.F. cost+

(ii) 4% service charge

II. Ex-jetty delivery

(i) C.I.F. cost+

(ii) 4% service charges+

(iii) Customs duty+

(iv) Port charges-+

(v) Wagon indenting charges (All direct charges incurred).

III. Ex-godovonstockyard:

(i) C.I.F. cost+

(ii) 7 1/2 % service charges+.

(iii) Customs duty

(iv) Port charges

(v) All other actual expenses excluding (a) godown rent and

(b) Interest on blocked capital on stocks in the godown.

5. The pricing formula for copper, stainless steel and grain oriented electrical sheets will be decided in the meeting to be held on 6th August, 1971 (Sd.) (C.R. DAS) 29-7-1971.

The relevant portions of the minutes of the meeting of the Review Committee may be re-produced:

The consensus of opinion in the meeting held in the room of Economic Adviser on 28th July, 1971, in respect of the items handled by M.M.T.C. was as follows:

(i) Separate pricing formula should be adopted for non-ferrous metals and steel items including stainless steel.

(ii) Different pricing formula should be considered for items like copper, stainless steel and grain oriented electrical sheets. In respect of stainless steel required for uses other than manufacture of chemical machinery etc., maximisation of profits should be applied. For copper and SEGO sheets, some intermediate formula could be considered, so as to both keep down the costs of industry and yet mop up profits which are not passed on to the final consumer by manufacturers.

(iii) Supplies of raw materials to actual users under the policy for registered exporters should be at the lowest international prices of the required items against free foreign exchange.

(iv) The service charges of the canalising agency for the goods supplied to units for export production should be kept as the minimum.

2. Having regard to the above views, it was decided that a three-tier pricing policy for non-ferrous metals and two-tier pricing policy for steel items to service release order holders falling in the category of REP, AU (P), and AU should be formulated. While working out the selling prices of raw materials to cater to the requirements of REP release order holders, raw materials procured against free foreign exchange at the lowest international prices should be taken into account. For AU (P) release order holders, an intermediate formula would be necessary. Service charges should also be calculated at GIF cost and other expenses may be added thereon at the actuals as indicated below:

1. ***

Steel items:

(i) R.E.F. Category:

(i) GIF cost+

(ii) 1-1/2 % service charges+

(iii) Customs duty+

(iv) Port charges+,

(all direct charges incurred)

Ex- godown Stock yard:

(i) CIF cost+

(ii) 5 % service charges+

(iii) Customs duty+,

(iv) Port charges

(v) All other actual expenses including godown rent and

(vi) interest on blocked capital in the godown.

(ii) AU (P) & A U Categories:

High Seas delivery:

(i) CIF cost

(ii) 4% service charges.

Ex-Jetty Delivery:

(i) CIF cost+

(ii) 4% service charges

(iii) Customs duty+,

(iv) Port charges

(All direct charges incurred)

Ex-godown/Stockyard:

(i) CIF cost+,

(ii) 74% service charges

(iii) Customs duty

(iv) Port charges+

(v) All other expenses excluding

(a) godown rent and

(b) interest on blocked capital on stocks in the godown.

3. The pricing formula for copper, stainless steel, grain-oriented electrical sheets and other speculative items was discussed in this meeting and the following decisions were taken tentatively:

Stainless steel sheets of 26 gauges required for manufacture of hospital equipments and appliances.

(a) R.E.P. Order holders:

(i) G.I.F.. landed cost

(ii)5%

Documents may be delivered on high seas basis.

(b) Category of. consumers: Manufacturers of Capital' Equipment such as manufacturers of chemicals and Pharmaceuticals textile machineries, machines and tools etc.

(i) CIF landed cost

(ii) 5%

(c) Actual user (Non-priority) release order holders:

Having regard to the selling prices of stainless steel sheets produced by Durgapur Alloy Steel Plant fixed at Rs. 30,000 per m. tonne, the selling price for 26 gauge stainless steel sheets/ coils should be fixed at the level of the prices charged by Durgapur Alloy Steel Plant ex-MMTG's godowns at Bombay, Madras and Calcutta. These prices would apply to all except to manufacturers of chemical plant and machinery (covered under (b) above).

***

It is useful to extract the relevant portion of the minutes of the meeting of the Review Committee held on 9th October, 1972 as well:

***

'Steel and Stainless Steel:

7. The Pricing Committee reviewed the sale price of stainless steel. It was decided that the current selling price of Rs. 28,000 per tonne ex-godown for 9-5 mm sheets required for the manufacture of hospital equipments and appliances for actual users categories may continue. It was also decided that the ad hoc selling price of Rs. 28,000 per tonne should be made applicable in respect of end-use of dairy equipment and machine tools. In respect of actual users engaged in the automobile ancillaries, according to the current import policy only stainless steel strips are to be allowed. It was decided by the Committee that for these types of end-uses the width of strips should be restricted to 100 mm. and below. This decision has been taken to avoid strips of a width of 125 mm being diverted for making smaller items of utensils.

8. The Committee also fixed ah ad hoc selling price for 0-5 mm strips in the width of 125 mm and above at Rs. 21,000 per tonne applicable for sale to manufacturers of hospital equipments and appliances, machine tools and dairy-equipments. This has been worked out in the same ratio as worked out between the ad hoc selling price of Rs. 28,000-on the landed cost of 0-5 mm stainless-steel sheets.

9. The present pricing formula for stainless steel in respect of actual users engaged in the manufacture of machineries such as chemical and pharmaceuticals, dairy machinery where mainly plates and sheets thicker than 0-5 mm are used, textile machinery, etc., would continue. It was also decided that the existing pricing formula would continue in respect of sales to RE P and AU (P) categories of users.

17. I shall now proceed to deal with the-contentions raised by the Counsel for the petitioners. It is said that iron and steel are items enumerated as essential commodities under the Essential Commodities Act, 1955, and therefore the pricing of that article could only be under the stated provisions contained in the said enactment and no other statutory authority other than the one functioning under the Essential Commodities Act could fix the price for the same. It is no doubt true that iron and steel including manufactured products of iron and steel are enumerated in Section 2 (vi) of the Act. But under Section 3, the power to control production, supply, distribution, etc., of essential commodities is vested in the Central Government. Section 3 (1) of the Essential Commodities Act says:

If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices or for securing any essential commodity for the Defence of India or the efficient conduct of military operations, it may, by order, provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.

Without prejudice to the generality of powers conferred by Sub-section (1), Sub-section (2) therein says that an order made thereunder may provide inter alia for controlling the price at which any essential commodity may be bought or sold. It is this sub-section that is pressed into service to support the argument. When a statute prescribes a particular method of action, then it is incumbent on the statutory functionary to act accordingly and cannot deviate therefrom. Under Section 3 (1) the Central Government should form an honest opinion that it is necessary and expedient to bring into the fold and field of activity under the Essential Commodities Act, a particular essential commodity for purposes of being dealt with by them so as to ensure equitable distribution at fair price. Until the Central Government forms such an opinion and makes an order and notifies the same in the official gazette and follows the prescribed procedure laid down in the said Act, there is no obligation on the part of the Central Government to fix the price of steel as if it has been accepted and acknowledged to be an essential commodity. Though the Central Government is the repository of power to act under the Essential Commodities Act, the right to exercise it is conditioned upon the circumstances enumerated above and until the Central Government assumes such a power in the manner indicated, it cannot be said that there has been an avoidance of a public duty. There may be various and myriad reasons which might not prompt the Central Government to act under the Essential Commodities Act, 1955- No statutory body, be it the Central Government, can be compelled to express an opinion under Section 3 (1) if it is not otherwise inclined to do so. Prima facie there is no obligation on the part of the Central Government or of their delegate as is provided for elsewhere in the Act, to fix the price of the steel under that Act. Mr. Parasaran also raised, and in my view rightly, the objection that the plea as such has not been raised in the pleadings and so cannot be mooted in the argument stage. Even otherwise, he would impress on the Court that as the Central Government has not formed any opinion regarding the inclusion of the commodity as an essential commodity and as no steps have been taken to officially' gazette an inclusion for the said purpose and place it before the Parliament as required in the Act, the Government has not deliberately departed from any of their stated and known public duties. I am inclined to agree with this contention. Prima facie it does not appear that fixing the price of steel sheets could only be done under the Essential Commodities Act.

18. The next contention which is rather important is that the Import Trade Control Policy, as reflected in what is known as Volumes I and II for the year April, 1971 to March, 1972 (Red Book) and the Hand book of Rules and Procedure, 1971 regarding Import Trade Control, do set out rules which have statutory force.. Whilst the petitioners maintain that the Rules and the various paragraphs set out in the Red Book and Handbook are enforceable in a Court of law, the contention of the respondents is that the Red Book contains only administrative instructions and they have no force of law. The relevant. paragraphs in the Red Book may be noticed immediately to appreciate the contention. In paragraphs 51. 52 and 53, under the head of 'Import through Public Sector Agencies', it is. provided thus:

Canalisation of Imports.

51. Import of certain items will be arranged only through public sector agencies. The list of such items with the names of canalising agencies appears in Section 3. In respect of certain other items also listed in Section 3, the public sector agencies will arrange bulk imports to meet the requirements of units in certain specified industries only.

52. The canalising agency will apply for bulk allocation of foreign exchange and for imports in order to enable it to organise efficient procurement of imported materials for distribution to actual users.

Manner of allotment of imported materials.

53. In respect of items listed in Section 3, allotment of imported materials to actual users will be made in the following manner:

(i) by release orders to be issued on applications made to the licensing authorities concerned, or

(ii) by release orders to be issued on applications made to the sponsoring authorities concerned, or

(iii) by direct allotments to be made by the canalising agency concerned.

The manner of allotment has been indicated against each item in Section 3. The detailed procedure for submission of applications for allotments of these items is given in the Import Trade Control Hand Book of Rules and Procedure, 1971.

Paragraphs 66 and 67 under the head of pricing' may be usefully referred to:

66. Sale prices for distribution of goods to actual users will be determined by the public sector agency concerned subject to the guidance and general control of the Ministry of Foreign Trade.

Review of arrangements of imports through public sector agencies .

67. The working of public sector agencies in regard to procurement, pricing, distribution of imported materials and other procedures will be reviewed every quarter by a committee in the Ministry of Foreign Trade presided over by Additional Secretary and consisting of Economic Adviser in the Ministry of Industrial Development and Internal Trade, Development Commissioner (Small Scale Industries), Director General of Technical Development, Chief Controller of Imports and Exports and representatives of the Department of Economic Affairs and Ministry of Foreign Trade, as members, Representatives of the public sector agencies concerned and sponsoring authorities concerned and user authorities will be invited to participate in the discussions on items concerning them.

19. Great stress is, therefore, laid upon the text of these paragraphs and it is contended that the above rules, though stated to be the policy of the Government, are virtually rules having the force of law.

20. The Imports and Exports (Control) Act, 1947, is an Act to prohibit or control imports and exports. Under Section 3(1) therein, the Central Government may, by order published in the Official Gazette, make provisions for prohibiting, restricting or otherwise controlling in all cases or in specified classes of cases, and subject to such exceptions if any as may be made by or under the order, the import, export ... .of goods of any specified description.. In exercise of the powers conferred by the said section and under Section 4-A therein, the Central Government made what is known as Imports (Control) Order, 1955. To this order a schedule is attached and under clause 3 of the said order certain restrictions are imposed on the import of certain goods specified in the schedules to the order. This order also prescribes the various forms of licences, fees on application for licences, the conditions of licences, grounds on which a licence could be refused, etc. It is for consideration whether the Red Book or the Handbook is in any way relatable to the Imports (Control) Order, 1955 or could it be said that the Red Book and the Handbook are orders issued by the statutory authority under Section 3 (1) of the Imports and Exports (Control) Act, 1947. The contents of the Red Book are given public notice of and the preamble to the said public notice with which we are concerned runs thus:

MINISTRY OF FOREIGN TRADEPublic Notice.Import Trade ControlMew Delhi, the 30th April, 1971.Subject: Import Policy for April, 1971- March, 1972.

No. 44.-ITG (PN) 71.-The Import Policy and Procedure for the year April, 1971-March, 1972 is contained in Volumes I and II annexed to this Public Notice.

2. The procedure for submission of import applications and for the grant of replenishment licences pertaining to the registered exporters is given in Volume

3. The Import Trade Control Handbook of Rules and Procedure, 19 71 will be issued shortly. Meanwhile, applications for licences can be made in the form and manner prescribed in the Import Trade Control Handbook of Rules and Procedure, 1970, as amended by the provisions contained in Volumes I and II of the Import Trade Policy (Red Book) for April, 1971-March, 1972. P.K. Samal,Chief Controller of Imports and Exports

Pursuant to this public notice, Volumes I and II of the Red Book, as also the Handbook, are printed and sold to the public. Ex facie the public notice as above is not equable to an order made by the statutory authority, namely, the Central Government, under Section 3 (1) of the Imports and Exports (Control) Act, 1947; apart from the fact that it does not expressly say so, the contents of the Red Book and the Handbook deal only with certain aspects which are more in the nature of executive instructions for the furtherance of the avowed objects of the Legislature as contained in the Imports and Exports (Control) Act, 1947 and the Imports (Control) Order, 1955.

21. In East India Commercial Company Limited, Calcutta v. Collector of Customs, Calcutta : 1983(13)ELT1342(SC) , a similar public notice issued by the Government of India on the 26th of July, 1948 containing the principles governing the issue of import licences came up for consideration. There the Supreme Court accepted the contention that such a public notice is not an order under Section 3 (1) of the Imports and Exports (Control) Act, 1947. The Supreme Court said:

Orders made under Section 3 of the Act have statutory force, whereas public notices are policy statements administratively made by the Government for public information.

Reference may also be made to the foreword in the Handbook which says that the Handbook is a supplement to the Red Book and embodies the procedures, rules and regulations governing the submission of applications, grant of licences, their validity and utilisation and other matters relating to Import Trade Control. The Supreme Court had no hesitation in holding that the public notice considered by them cannot be deemed to be an order issued under Section 3 of the Imports and Exports (Control) Act.

22. In Joint Chief Controller of Imports and Exports, Madras v. Aminchand Mutha etc. : [1966]1SCR262 , the Supreme Court whilst reiterating the accepted principle that no person has a right to import a foreign commodity into India, the import of which is prohibited unless otherwise relaxed, observed as follows:

But even then he must comply fully with the requirements specified in the Control Order and make the application in the prescribed form. The instructions contained in the Handbook and the Red Book...are meant for the guidance of the Licensing Authority and cannot be put higher than administrative instructions. It would follow, therefore, that such instructions would not confer a legal right upon an exporter....

Even on the assumption that the Red Book has statutory force, there is no guideline in the Red Book or Handbook which requires the Government to fix the price at which the 1st respondent should sell stainless steel. Mr. Nambiar, contends that if reliance is placed on paragraphs 66 and 67 of Volume I of the Red Book, then the requirements of these paragraphs have already been complied with by the Government or the Review Committee and in this sense no more rule in the nature of mandamus can issue. This contention is also well-founded. Even otherwise, paragraphs 66 and 67 project only discretionary powers and they enable the 2nd respondent to act as a guide to the 1st respondent and generally exercise control over' the determination of the sale price of steel by the 1st respondent. This again is a subject-matter which cannot be dealt with by a rule of mandamus so as to compel the Central Government to exercise such discretionary administrative power in a particular manner as called for by the petitioners.

23. In a case where the Government refused to exercise their power under the Industrial Disputes Act to refer a dispute for adjudication, when the subject came up for judicial scrutiny by our High Court, our Court, though it differed from the Government's view, did not refer the subject-matter directly to the Industrial Tribunal for adjudication, but issued only a direction to the Government to refer the dispute to the Tribunal. In State of Madras v. Swadesamitran Printers Labour Union : (1951)2MLJ619 , Rajamannar, C.J., said:

Where the Judge holds that the Government had failed to discharge the duty enjoined on them by Section 12 (5) of the Act, what the Judge, should do is to have directed the Government by a writ of mandamus to discharge their duty, namely, to consider the respective report made by the Conciliation Officer .... To straightaway direct the Government to make a reference to Industrial Tribunal would be tantamount to usurping a power or jurisdiction conferred on and vested in the Government by the statute.

Similarly in the instant case when the Government have already associated themselves with the 1st respondent in the matter of fixing the price, no special directions in the nature of mandamus can issue from this Court compelling the Government to act in a particular way to the satisfaction of the aggrieved party. That would be virtually usurpation of power, though it may be a discretionary power which is vested in the Central Government. Again Halsbury, Lord Simond's Edition, Volume 11, in paragraphs 187, 188 and 192 reiterates the proposition that the Court will refuse to interfere by mandamus with the decision of Tribunals on a matter which is decided in the exercise of their discretion and would not compel such authorities to exercise a power which is merely permissive and which does not impose an obligation. If paragraphs 66 and 67 of the Red Book are merely administrative instructions or guidelines and therefore permissive in nature, then no more direction in the nature of mandamus is possible from this Court if such a permissive power though not in the nature of an obligation has been exercised and the Review Committee which fixed the price in the instant case had. the co-ordination of the Government or their officials when fixing such a price. Mr. Chellaswami, however, strongly relies upon the decision in Union of India v. Anglo-Afghan Agencies : [1968]2SCR366 In that case the Textile Commissioner published a scheme called the Export Promotion Scheme providing incentives to exporters of woollen goods. The exporters were invited to get themselves registered to avail themselves of the benefits of the scheme. The Textile Commissioner expressly represented that the exporters will be entitled to import raw materials of the total amount equal to 100 per cent, of the f.o.b. value of the exports. Therefore whether the said scheme was statutory or administrative did not directly come up for consideration. Granting that it was executive in character the Court was of the view that the executive necessity does not release the Government from honouring its solemn promises relying on which citizens have acted to their detriment. When an attempt was made by the Textile Commissioner to reduce the amount of the value of the imports to which the petitioner in that case was entitled to, the Supreme Court held that even though Section 115 of the Evidence Act was not strictly applicable, it was still open to a party who had acted on a representation made by the Govern--ment to claim that the Government shall be bound to carry out the promise made by it, even though the promise was not recorded in the form of a formal contract as required by Article 299 of the Constitution. That case, therefore, did not touch upon the matter in issue in the instant case, whether the rules contained in the Handbook and in the Red Book are legislative directions or administrative instructions. But certain observations made therein are torn out of the context to gain ground that the rules contained in the policy book are statutory. Shah, J., speaking for the Supreme Court, in paragraph 13 of the said judgment said! thus:

The question whether the Import Trade Policy is legislative in character has not been expressly dealt with in any decision of this Court. It appears to have been assumed in certain cases, that it is executive in character, but even so it had been held that when it is declared under an export policy that a citizen exporting goods shall be entitled to certain import facilities, in appropriate cases the Courts have the power to direct the concerned authority to make that facility available to the citizen who has acted to his prejudice acting upon the representation in the policy and has been denied that facility.

It is apparent that the decisions in Joint 'Chief Controller of Imports and Exports, Madras v. Aminchand Mutha etc : [1966]1SCR262 . and East India Commercial Company, Calcutta v. Collector of Customs, Calcutta, were not brought to the notice of the Court when it decided the case in Union of India v. Anglo-Afghan Agencies : [1968]2SCR366 . Even so, I am of the view that the ratio decidendi in this decision rests upon the acknowledged force of the proposition that a person cannot approbate and reprobate and that person would include also the State or its representative.

24. Some other decisions of the Supreme Court in which Union of India v. Anglo-Afghan Agencies : 1983(13)ELT1342(SC) , has been cited with approval are again referred to. But, as I said, all those decisions adopted the principle of juridical estoppel laid down and accepted by the Supreme Court in Union of India v. Anglo-Afghan Agencies : [1966]1SCR262 . Therefore, I am of the view that the various instructions contained in the Red Book and Handbook have no statutory force, but are only administrative instructions. I may incidentally add that no plea of estoppel has been raised in the instant case and, therefore the petitioners cannot rest their case on that doctrine. Also from the very fact that the petitioners intend resting their contention on a plea of estoppel it follows that the rules in the Red Book and Handbook are non-statutory in character 'because there cannot be any estoppel against statute.

25. Alternatively it is suggested that even if the Red Book and Handbook contain executive and administrative instructions, the petitioners having secured a vested right by reason ~ of the issuance of the release order, such rights cannot be affected either administratively or excessively. Reliance was placed upon certain observations of the Supreme Court in Bennett Coleman and Company v. Union of India : [1973]2SCR757 . In that case a reference is made to State of Madhya Pradesh v. Thakur Bharat Singh : [1967]2SCR454 . That was a case where the State Government made an order under the Madhya Pradesh Public Security Act, 1959, directing a person to remain in a named town. The Court held that the order imposed an unreasonable restriction, offended Article 13 by taking away or abridging the rights conferred by Part III of the Constitution, and further held that all executive action which operates to the prejudice of any person must have the authority of law to support it. The Court was noticing a statutory provision and not an administrative instruction. In the same case, in paragraph 93, the Supreme Court said:

What is termed 'policy' can become justiciable when it exhibits itself in the shape of even purported 'law'. According to Article 13 (3) (a) of the Constitution, 'law' includes 'any Ordinance, order, bye-law, rule, regulation, notification, custom or usage having in the territory of India the force of law'. So long as policy remains in the realm of even rules framed for the guidance of executive and administrative authorities it may bind those authorities as declarations of what they are expected to do under it. But, it cannot bind citizens unless the impugned policy is shown to have acquired the force of 'law'. Mr. Nambiar, appearing for the Hindu Newspaper, has, therefore, assailed the impugned items of the newsprint control policy on the ground, inter alia, that the fundamental rights of the petitioners represented by him cannot be curtailed by anything less than 'law'.

Mr. Chellaswami, when he quoted this decision was again begging the question. It is no doubt fundamental that rights of citizens cannot be curtailed by anything else than law. But executive and administrative instructions which bind those who are expected to act under them cannot be questioned by the citizen when such instructions are given effect to by the appropriate authorities.

26. It should not however be forgotten that no one has a right to import an article if such importation is against the accredited policy of the country. As the Supreme Court said in Deputy Assistant Iron and Steel Controller, Madras v. Katralla Metal Corporation, Madras : [1972]3SCR1 .

In granting licences for imports, the authority concerned has to keep in view various factors which may have impact on imports of other items of relatively greater priority in the larger interest of the overall economy of the country which has to be the supreme consideration, and an applicant has no absolute vested right to an import licence in terms of the policy in force at the time of his application because from the very nature of things at the time of granting the licence the authority concerned may often be in a better position to have a clearer overall picture of the various factors having an important impact on the final decision....

The same principle is reiterated differently in Glass Chatons Importers and Users' Association v. Union of India : [1962]1SCR862 .

A policy as regards imports forms an integral part of the general economic policy of a country which is to have due regard not only to its impact on the internal or international trade of the country but also on monetary policy, the development of agriculture and industries and even on the political policies of the country involving questions of friendship, neutrality or hostility with other countries.

27. Thus it is seen that Import Trade Control Policy, is a peculiar policy decision of the Government having regard to various factors of general public interest and national economy. It is not a policy which a citizen can expect to be always the same or similar. It has to vary according to exigencies and circumstances. The impact of the socialistic policy, to which our country is wedded, the trend of the developing industries and its need, the cause for prohibition of certain items from being imported to help indigenous and local causes are all matters which enter into the computation while enumerating Import Trade Control Policy. A fortiori therefore the administrative instructions contained in the Red Book cannot by themselves be the hypothesis or the basis for the projection of a right; Ultimately the Government, which is the sole organ to decide about the necessity to import or the compulsiveness to ban certain items from import or regulate them, can decide on material noticed and acted upon by it,

28. In the instant case what is said is-that by reason of the release order, the & petitioners acquired a right. This may be so in ordinary mercantile law. But this aspect read in conjunction with the superimposed policy of canalisation-might not confer on the same citizen a right to secure his goods at a price to be named by him. No purchaser can dictate his price to the seller. Canalisation of imports is no longer open to attack (See Glass Chatons Importers and Users' Association v. Union of India : [1962]1SCR862 If stainless steel, therefore, has been so-canalised through the 1st respondent, then it is the 1st respondent who has secured the entire stock for equitable distribution amongst traders in the country by issuing release orders. But in so far as the price of such imported article is concerned, it has the right to fix it having regard to various factors which would concern the importer at or about the time when he actually sells the goods. It is with this object that a quarterly review of the price is undertaken by the Review Committee. The price so fixed by the Committee, unless it is capricious and hopelessly arbitrary and avowedly discriminatory as between one trader and another, cannot easily be the subject of attack before a Court exercising visitorial jurisdiction under Article 226 of the Constitution. The Review Committee undoubtedly exercises its discretion whether it is administrative or executive and such a discretion is conferred not by law, but once again by executive instructions. So long as the attack is not based on bias, malice or upon discrimination, the price fixed by the Review Committee cannot easily be dislodged at the instance of the buyer.

29. It is then said that the price has been arbitrarily fixed by the 1st respondent and the 2nd respondent did not exercise its mind while the price was settled. I have perused the file relating to pricing for canalising agencies and do not find that the objection is acceptable. The 2nd respondent acts through responsible officers in the Ministry of Foreign Trade, Ministry of Steel, Ministry of Finance, the Chief Controller of imports and Exports, the Economic Advisor of India, the Principal Officers of the Canalising Agency and other Officers of the Concerned Ministries. The constitution of the Review Committee is in accord with the guidelines prescribed in paragraphs 66 and 67 of the Red Book. Once the imports are canalised and the goods imported are thus the stock in trade of the....canalising agency, it is for that agency to fix up the price of the goods paid for by it. Because of various economic conditions and public national interests, free imports of steel is not allowed, though even now some specified and notified products are importable on special permits or licences. In so far as those commodities canalised through corporate agencies are concerned, a procedure is prescribed to secure them to an ordinary trader who requires it. He has to approach the agency, in this case the first respondent, and await its orders for release. The release order is made by the first respondent bearing in mind the available stock, the principle of equitable distribution and is given to those who deserve it. The entire policy based on several cross sections of socio-welfare needs is intended to serve the community at large. This policy cannot be lightly interfered with by Courts in exercise of their jurisdiction under Article 226 of the Constitution. When the release order is issued and the price of the commodity is fixed by the supplier, it is strange that the buyer (petitioner) should question the authority of the seller (respondents) to fix their price. It is absurd to contend that the trade has not been consulted when the price was fixed. Such a consultation besides being unnecessary is not even envisaged in the Red Book. Prior to the meeting of the Review Committee the Sub-Committee consisting of the above well informed officers make also policy decisions and set down guidelines to work out the selling price of raw materials to cater to the requirement of registered exporters manufacturing houses, actual users, etc. Thereafter the price Review Committee meets and computes the selling price of such imported materials. Thus, expertise is brought to bear upon the pattern of pricing and in this process the 2nd. respondent also played at the appropriate time its prominent part. The minutes of the two Committees already extracted lend support to this view. The 2nd respondent has not abdicated or disassociated itself in the process of fixing the fair price for the commodity in question. At every possible stage the 2nd respondent through its officers in the various Ministries extended their guidance and arm of experience under the umbrage of which the price was ultimately fixed. It is clear from record that there-was co-ordination between the first and the 2nd respondents when the Review Committee arrived at the price of the goods. All elements necessary to fix a fair price have been taken into consideration. No irrelevant' data or inadmissible material has entered into the computation. In fact, the pattern of pricing has an intelligent nexus with the object with which the special importation has been made through a canalised agency and that object is national interest and economic well-balancing. There is no element of caprice, rashness, arbitrariness or unreasonableness in the process of fixing the prices. Therefore, the complaint against the pricing system as a whole is without foundation.

30. The next ground of attack on the pricing policy is that the entire system offends Article 14 of the Constitution of India. It is urged that equals are treated unequally and different standards are deployed for persons similarly placed resulting in discrimination. It is argued, that even if the rules in the Red Book are considered as executive or administrative instructions, yet while applying the same citizens of the same class should not be treated differently.

31. In the pricing schedule the price for stainless steel sheets of 26 gauge required for manufacture of hospital equipments and appliances is noted differently for three different categories of persons. We have already extracted the three ?categories. The first category is the R. E. P. order holders, the prices for whom are fixed at c.i.f landed costs plus 5 per cent. The second category includes many categories of consumers. They are manufacturers of capital equipment, such as manufacturers of chemicals and Pharmaceuticals, machineries, machines and tools etc. Here also the cost is c. i. f. landed cost plus 5 per cent. The third category is the actual user (non priority release order holders). The price of Stainless steel sheets released to actual users under this category is fixed having regard to the price of similar sheets produced by Durgapur Alloy Steel Plant.

32. I may at once deal with one group of consumers covered by the second category as above. Prior to the quarter, October to December, 1972, the consumers coming within the group of dairy and chemical manufacturers were treated concessionally. On and from the quarter beginning from October, 1972, the price at which the sheets were supplied to them is the same as the petitioners who are manufacturers of hospital equipments and appliances. An argument is made on the withdrawal of concession to the dairy and chemical manufacturers. It is said that the concession was taken away because of the filing of the writ petitions. But the respondents would explain and it is also borne by record that the privilege given to dairy manufacturers was taken away because of misuse by the allottees, who were diverting the supplies received for one purpose to a different purpose to wit the manufacture of utensils. It was also found that stainless steel sheets of a particular gauge obtained by traders were both used for the manufacture of products which they obliged themselves to produce. As a matter of fact, the 2nd respondent would state that the manufacturers of machineries in the fields of chemicals, pharmaceuticals, textiles etc., including dairy equipment manufacturers fell under the second category laid down by the Review Committee in its meeting dated 17th September, 1971. It is also said that the industrial and commercial refrigerator equipment manufacturers also fall within that category. The reason for supplying stainless steel at a concessional price to this category of persons is in pursuance of the Government's policy to increase industrial production and to follow a policy of import substitution. This policy is also intended to serve those who are engaged in machine building activities and who contribute to the industrialisation of the country by producing machines and thus being instrumental in reducing the import bill of the country thereby saving foreign exchange by indigenous production of machineries that would otherwise have to be imported. As these manufactures played a significant roll in the conservation of foreign exchange and in the matter of import substitution they were treated differently and were favoured with a concessional price in so far as the supply of stainless steel sheets were concerned. It was in those circumstances that the price was reviewed and revised and now the price of the commodity which a dairy manufacturer or a chemical manufacturer should pay is the same as that to be paid by a hospital equipment manufacturer like the petitioners.

33. The Review Committee exists only for reviewing the price, if the exigencies and needs of the community require. They are not expected to keep the prince static even if circumstances do not warrant such a situation. The vague contention is that this has been done purposely to avoid the rigour of the attack in these writ petitions. It is not necessary to go into the motive behind the withdrawal of the concession to dairy equipment manufacturers etc. It is been revised because certain material was noticed by the Committee which compelled them to act and withdraw the concessional treatment. If the argument of the petitioners is to be accepted, then, it would virtually mean that the Court should direct the Review Committee to re-introduce the concession or uniformly adopt the same for all. This direction cannot be given by the Court, as it has no power to do so. In any event, the sense of the argument appears to be purely vilificatory in scope and it does not serve any purpose to the petitioners. This has to be discountenanced.

34. But the gravamen of the charge is that there is a patent discrimination in the pricing system adopted because of the differential treatment between the manufacturing houses or export houses on the one hand and the petitioners as actual users on the other.

35. Before I consider the import of the arguments certain general observations are necessary. Under the Red Book the price has to be fixed by the first respondent. This has to be done in consultation with the 2nd respondent. Even if the Central Government is assumed to exercise control over the 1st respondent in the matter of fixing of price, such a control by itself would not be sufficient to make the entire process an act of State. I have already expressed the view that the first respondent is not acting under any accepted law but is per force obliged to follow certain administrative instructions issued by the State in the name of national interest and balanced economy. All such acts and the resultant decisions taken in the process cannot be characterised as acts of State. Thus understood the pricing pattern is a peculiar system adopted by the respondents in the general interest of the community at large. No doubt there are administrative orders which confer rights and impose duties'. It is only in cases where administrative orders take away the rights of citizens that Courts have examined the situation to find that such an order should satisfy the essential principles adumbrated in the Constitution such as avoidance of discrimination, adherence to the principles of natural justice, etc. In the instant case the administrative order resulting in the fixation of a price does not create any right in the petitioners. Even assuming it does, it should be seen whether by fixing a different price to two distinct categories of traders, the principles of equality before law and equal protection of laws are violated. No doubt, it is true that the principles of equal protection of laws is like a golden thread running through the fabric of our entire setup of a socialistic pattern of society. But in the very nature of things a classification is inherent in the application of laws. If the classification made in the exercise of power conferred by law is reasonable and if the differentia is intelligible and bears a nexus to the object of the system, then such a differential treatment which is involved in the classification is never understood as discriminatory. It is always accepted that a doctrinaire approach in the matter of construction and elucidation of Article 14 of the Constitution has to be avoided. Again, as a selective quality is generally present even in executive acts, sometimes the Courts may be obliged to judicially examine even such executive actions to find out whether such actions resulted in discrimination amongst persons equally circumstanced.

36. The three tier division recommended by the Review Committee during the process of fixing the fair price for the committee is no doubt intricately connected with the object of the policy, namely, fair distribution and public interest. The categorisation obviously serves three different national needs. The first category by their trading activity, namely, exportation, earns foreign exchange. The second category by their manufacturing activities conserves foreign exchange. The third activity involves no foreign exchange at all. But for the free exports indulged in by the first category of persons probably foreign exchange may not be available to import stainless steel sheets for distribution to the commerce in India including the petitioners. Thus, the categories are differently but intelligently and objectively classified.

37. Mr. V.P. Raman, brought out certain irregularities committed by certain export houses or manufacturing houses belonging to the second category. No doubt, this information was given at a very late stage in the course of the arguments. Such stray or sporadic instances cannot be generalised and the entire scheme attacked on the basis of discrimination. If manufacturing-houses or exporters have misused their licences or status, it is for the appropriate authority to take note of it and initiate action against him. An instance or instances of breach of law or administrative instructions which creates quasi rights in a trader cannot be the substratum for the contention that there is denial of equal protection of law in the application of the law or the executive instruction. On the assumption that the petitioner has a right or a quasi-right by virtue of the paragraphs in the Red Book, it cannot be said that the violation indulged in by one particular trader in the second category who secured certain privileges under the pricing policy should be generalised and a case for discrimination or denial of equal protection of Jaws made out for the other traders in the same field. The petitioner cannot plead that because the concession as to price given to a particular manufacturing house or exporter has been misused, the concession should not at all be given to honest and innocent members of that class and further there should be no such concession at all to the prejudice of the petitioners.

38. I shall take up the merits on which the argument of discrimination is based. I have already dealt with the basis on which the concessional treatment was meted out to manufacturers of capital equipments coming within the second category of the pricing scheme. In so far as the export houses are concerned the facts as found in the record are as follows. It is no doubt true that the export houses are supplied with stainless steel at Rs. 15-40 per kilo. With a view to promote exports and to increase foreign exchange earnings export-oriented units are supplied with raw materials at international prices so that their products would compete in the international market. Export houses are generally classified into two groups, merchandising export houses and manufacturing export houses. In both the cases there is an immediate export obligation of Rs. 25 lakhs per annum of non-traditional products. However, in the latter cases, the export houses should export at least Rs. 5 lakhs of non-traditional products manufactured by others. An additional obligation of increasing the exports of non-traditional items produced by other manufacturers at the rate of Rs. 5 lakhs per annum has also been imposed on manufacturing export houses. The actual users on the other hand fall under the third category in the pricing pattern to which class the petitioners belong. They have nothing to do with either gaining of foreign exchange or conservation of foreign exchange. They are expected to use goods for manufacturing certain equipments for local consumption in the country.

39. The above broad-based division between the first and the second categories on the one hand and the third category on the other, appears, to be justified. Export houses form altogether a different class from the actual users like the petitioners who are concerned mainly with the manufacture of articles for domestic consumption. In order to encourage export trade which is the avowed object of our economists, it is necessary that raw materials such as stainless steel sheets should be supplied to export houses at international prices in order to sustain or expand exports for earning foreign exchange. This intend-ment behind the concession is based on the substratum of public policy and economic development. Export houses primarily are interested in international markets, whilst the petitioners manufacture goods intended for home consumption. It is also made clear that every export house to whom stainless steel-sheets are allotted is in duty bound to manufacture stainless steel products themselves for export or to have the same manufactured on their account in the manufacturing establishments owned by others. To make it clear if the export houses are merchandising export houses, they will have to give the steel to others for the purpose of manufacturing their end-product for export. The respondents are emphatic and there is no evidence to the contrary that no stainless steel is released at international prices to any one unless such stainless steel sheets are utilised for manufacture of goods for export or for fostering indigenous machine building industries already referred to. In the light of such facts which are not disputed, I am unable to accept the argument of the learned Counsel for the petitioners that the petitioners have been discriminated whilst the pricing pattern was settled by the Review Committee.

40. It is by now well-established that the real test to be applied to find out whether a particular provision whether legislative or executive is discriminatory is to see whether there is any tendency or scope for discrimination in its ultimate operation. No doubt ''equal protection of the laws is a pledge of the protection of equal laws.' It requires that persons subject to a piece of legislation shall be treated alike both in respect of the privilege conferred and liabilities imposed. The salutary principle impregnated in Article 14 of the Constitution aims at the establishment of an equality of status in citizens or traders, who are similarly circumstanced and placed. In the facts and circumstances of this case it is impossible to hold that the petitioners have been discriminated against in an atmosphere of equality. Different considerations were responsible for showing a concession to the first and second categories of merchants and the power even though it is executive or administrative has been bona fide exercised in a reasonable manner for the designed end of either conserving or securing foreign exchange which is a vital necessity for the economic uplift of a developing country.

41. One other argument which is closely allied with the above contentions of the petitioners is that the selling price of stainless steel sheets which has been fixed in the instant case at Rs. 28,000 per metric tonne is based on irrelevant considerations. In particular, reliance upon the selling price of stainless steel sheets produced by Durgapur Alloy Steel Plants, which sells its end-product at Rs. 30,000 per metric tonne is said to be totally extraneous. It is in this context the learned Counsel for the petitioners urged that an element of caprice has entered into the working of the prices. According to the petitioners the 1st respondent in its memorandum of association has obliged itself to stabilise prices and rationalise the distribution of metals including iron and steel. Furthering this objection of the first respondent it is contended that the first respondent is the agent of the petitioners and it is bound to protect the principal's interest,

42. I may at once reject the contention that the first respondent is the agent of the petitioners. The First respondent is the seller and the petitioners are the buyers. In mercantile practice it is impossible to forge the jural relationship of principal and agent as between a seller and a buyer. The obligations which under contract or in law the seller has to face, are totally different from the obligations thrust upon an agent by law or otherwise. An agent is a reflection of the principal: he undertakes the duties of his principal by reason of some authority given to him to so act. The terms of the agency are determined by mutual contract or understanding. An agent is bound to render an account to the principal of what all acts he has done. The principal has the right to ratify or not the acts of his agent if he is of the view that such acts were not authorised either expressly or by necessary implication by him.

43. All these elements which go to create the relationship of principal and agent under the law of contracts are absent in the instant case. The first respondent is a creature of a statute. It functions independently as a corporate body with a seal of its own. Compulsive public interest mandates it to get guidance in the matter of its working from the Central Government. It cannot literally be chracterised as a department of Government. It is a separate juristic person acting in its own right but controlled in certain matters by the Central Government. The first respondent, there-fore, is not a subordinate or a wing of the Central Government. A fortiori the first respondent cannot be said to be the agent of the petitioners. The petitioners have not founded the first respondent for its activities. As a matter of fact, the petitioners look to the first respondent, for a release order and, therefore, the petitioners are not the persons who could dictate to the fist respondent or demand performance of a thing in a particular manner. The first respondent is an agency created in national interest and it is not an agent of the petitioners.

44. If, therefore, the first respondent is not to act at the dictates of the petitioners, then the only point that remains for consideration under this head of discussion is whether the reliance placed upon the price of the goods by Durgapur Alloy Steel Plant is valid. In John H. Reagan v. Farmers Loan Trust Company 38 Lawyer's Edition, p. 1014, , the Court said:

Although the formation of a tariff of charges for transportation on a common carrier is a legislative or ministerial rather than a judicial function, the Court may decide whether or not such rates are unjust and unreasonable and as such would work a partial destruction of rights to property and if found so to be may restrain their operation.

The Court was also of the view that the fixing and enforcement of a rail/road commission of unjust and unreasonable rates for transportation of a rail/road company is unconstitutional and denial of the equal protection of the laws. Therefore, the point is whether in the instant case the hypothesis considered by the Review Committee has resulted in an unreasonaable or oppressive price,' in so far as the petitioners are concerned. The respondents would contend that the price charged by Durgapur Alloy Steel Plant was taken as one of the guidelines because the accredited policy of the Government is that the canalisation policy should not affect any indigenous production. Durgapur Alloy Steel Plant, was selling its products at Rs. 30,000 per metric tonne. In the counter-affidavit it is stated that the prevailing domestic market price of stainless steel sheets was found to be in the range of Rs. 38,000 to Rs. 40,000. This information was gathered from certain invoices and certificates issued by Chartered Accountants in support of the applications made by the petitioners as actual users. The prevailing price of stainless steel sheets indigenously produced by Hindustan Steel Limited, was also taken into consideration. It is not as if all such hypotheses considered by the Review Committee are extraneous for consideration. As a matter of fact, they are all relevant material for a public body like the first respondent who is expected to fix a fair price to go into and to ultimately decide as to what ought to be the price at which the imported goods should be released and equitably distributed. The statement in the counter-affidavit of the first respondent that it took a decision like any other trading organisation which functions in the interests of good business and with a view to balance its object in such a manner that loss incurred in exports are counter-balanced by the sale of imported goods which command a high premium, and also bore in mind the internal market rates and particularly all steel products in India by indigenous manufacturers is a statement which commends itself to me. As a matter of fact, the price of steel produced by the Durgapur Mills is higher and the products therein manufactured is of a lower gauge whereas the products imported are of a higher gauge and of a beter quality and priced less by the Review Committee.

45. Taking all the circumstances into consideration this is not a case where the first or the second respondents are claiming infallibility in themselves. Various cross-sections of administrative necessity and national interest were taken into consideration by the respondents when they fixed the price, as was done in the instant case. There is no unreasonableness or unfairness either in the pricing pattern or ultimate decision whereunder the price was fixed. I am unable, therefore, to uphold the objection that the petitioners have been discriminated against in the matter of fixing of the price of stainless steel by the first respondent with the assistance of the second respondent.

46. The last contention which remains to be considered is whether the relief as as asked for by the petitioners should be granted.

47. I have already expressed that the pricing policy for canalising agencies is a process which is undertaken by the respondents in their executive or administrative capacity. So long as there is no malice, caprice or arbitrariness in the process, no citizen can be aggrieved by the decision of such a public body. A price has already been fixed in exercise of such administrative power. It, therefore, follows that a writ of mandamus directing such a body to refix a price cannot be issued unless the price is for all purposes one which is unreasonable, unfair and hopelessly discriminatory. As the petitioners have not established to my satisfaction this the price fixed in the administrative jurisdiction of either or both of the respondents cannot in the circumstances be said to be unreasonable or discriminatory and as according to me, the instructions set in the Red Book and Hand Book are only executive instructions having no force of law, I am unable to find any violation of any public duty on the part of either of the respondents for me to issue a rule in the nature of mandamus. No doubt no writ is asked for against the first respondent, but a direction to the second respondent is sought in respect of such fixation of price of stainless steel sheets. On the ground that the price has already been fixed and also on the ground that there is no public duty on the part of the second respondent in presenti or in accordance with any rule of law or even administrative instructions to once again prompt the first respondent to refix the price of stainless steel sheets, these writ petitions have to fail. Accordingly they are dismissed. There will be no order as costs.


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