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Nepal Knitting and Weaving Mills Pvt. Ltd. Vs. Union of India and ors. - Court Judgment

SooperKanoon Citation
SubjectCustoms
CourtDelhi High Court
Decided On
Case NumberCivil Writ Appeal No. 508 of 1972
Judge
Reported in9(1973)DLT168
ActsImport Trade Control Hand Book Rules, 1969; Indian Tarriff Act, 1934 - Sections 2A(2); Additional Duty Rules, 1969; Constitution of India - Articles 14, 19, 31, 232 and 253; Imports and Exports (Control) Act, 1947 - Sections 3; Customs Act, 1962 - Sections 2(33), 46, 47 and 124
AppellantNepal Knitting and Weaving Mills Pvt. Ltd.
RespondentUnion of India and ors.
Advocates: B.R. Iyengar,; A.K. Verma,; J.N. Aggarwal,;
Cases ReferredPatel v. Union of India
Excerpt:
.....not owned by directors of company - article 31 not applicable as foreign company not deprived of goods - goods in possession of company - nothing to show government discriminated against petitioners - held, government's action not vocative of articles 14, 19 and 31. - - india and nepal entered into a treaty of trade and transit in 1960 for a period of five years which was renewed for a further period of five years till october 1970 and was then extended till december 1970. article 14 of the said treaty is as follows :subject to such exceptions as may be mutually agreed upon goods originating in either country and intended for consumption in the territory of the other shall be exempt from the customs duly and other equivalent charges as well as from quantative restrictions. -..........parliament has to legislate under article 253 of the constitution of india for implementing any treaty, agreement or convention with any other country or any decision made at any international conference, association or other body private persons are not subjects of international law. treaties between sovereign stales cannot, thereforee, be enforced at the instance of private persons. in civilian war claimants association, ltd v the king, the house of lords had to decide the question whether article 232 of the treaty of versailles under which germany paid compensation to the allied powers including great britain, created a right in a person who had suffered loss or damage due to the german aggression during the war and for whose benefit the compensation had been paid by germany to.....
Judgment:

V.S. Deshpande, J.

(1) The first petitioners in this and the connected writ petition (C. W 509 of 1972) are foreign companies registered in Nepal. The second petitioners in both of them are directors of these companies who are Indian citizens. India and Nepal entered into a treaty of trade and transit in 1960 for a period of five years which was renewed for a further period of five years till October 1970 and was then extended till December 1970. Article 14 of the said Treaty is as follows :-

'Subject to such exceptions as may be mutually agreed upon goods originating in either country and intended for consumption in the territory of the other shall be exempt from the customs duly and other equivalent charges as well as from quantative restrictions.'

After the Treaty, the two Governments had further trade talks which were incorporated in the Memorandum of Understanding. Clause 12 thereof was as follows :-

'The two Delegations consulted with each other in regard to the difficulties experienced by Nepalese exporters in the export of Nepalese manufactures to India. The arrangements agreed upon (or resolving these difficulties are contained in Annexure Ii to this Memorandum. * * * Annexture Ii With reference to paragraph 12 of the Memorandum, it is agreed that the ' additional duly ' which is livable on imports from Nepal will be waived in respect of such imports of Nepalese products as fulfilll the conditions set out in the succeeding paragraphs. 2 The product in question is based principally on Nepalese raw materials. '

(2) Thereafter there was a further discussion between the high contracting parties, the minutes of which were recorded on 15th November 1968 by which the delegation of Nepal agreed to take the following steps with immediate effect in the case of synthetic yarn fabrics and stainless steel manufactures:

(A)to regulate the export of these products to India with a view to limit the exports by Napalese manufacturers in quantity and value to the level of 1967-68 '.

(3) On 19th May 1969 the Government of India. Ministry of Foreign Trade and Supply, Import Trade Control, issued the following public notice No. 72. ITC(PN)/69 on the subject of 'import of fabrics made out of synthetic yarns and stainless steel manufactures from Nepal during the year 1969-70':-

'WITHreference to paragraph 176 of Chapter Vii of the Import Trade Control Hand Book of Rules and Procedure 1969, it is notified that import of synthetic fabrics and stainless steel manufactures from Nepal will be allowed only in accordance with the export regulatory arrangements agreed to between the Government of India and His Majesty's Government of Nepal in November 1958 '.

(4) The intimation of this notification is said to have reached the checkposts by 24th May 1969. The petitioners were not allowed thereafter to import the synthetic fabrics manufactured by them in Nepal into India even though export licenses had been issued to them by the Government of Nepal. On 2nd July 1969 the Government of India, Ministry of Finance, acting under sub-section (2) of section 2A of the Indian Tarriff Act, 1934, notified that fabrics containing more than 10 per cent by weight of synthetic fibre or yarn and stainless steel manufactures for household use would be liable to additional duty as may be determined in accordance with the Additional Duty Rules, 1969. On 22nd July 1969 the Assistant Collector, Patna informed the petitioners as follows: -

'I am to inform you that the quota fixed in terms of the Agreement for November, 1968 was exceeded. No import could, thereforee, be allowed of the consignment under reference '.

(5) Again on 1st November 1969 the Superintendent of Customs, Jogbani, informed the petitioners that their consignments of stainless steel manufactures/synthetic fabrics lying at Jogbani had not been reexported by them. The petitioners were, thereforee, asked to take back the goods to Nepal failing which the department would cease to share any responsibility involved therein. Finally on 17th May 1971 the petitioners were informed by the Superintendent, Customs, Raxaul, that all the detained terylene shirting un-processed cloth/synthetic fabrics shirting un-processed cloth/stainless steel utencils detained in May 1969 at Customs Border Checkpost, Raxaul, are ordered to be released to the parties concerned and they should take the goods to Nepal under Customs supervision.

(6) The petitioners say that their right to import into India the synthetic fabrics manufactured in Nepal ' flow from the Treaty, the Memorandum of Understanding, the notification and the subsequent conduct of the Government of India'. They say that 'the action of the Government of India is vocative of Articles 14, 19 and 31 of the Constitution of India '.

(7) The question for decision, thereforee, is whether the petitioners were entitled to import into India the synthetic fabrics manufactured by them in Nepal around 24th May 1969 on any of the grounds averred by them above. Let us examine these grounds Serialtim. The Treaty, Memorandum of Understatding and the Minutes of Discussion on 15th November 1968 between the high contracting parties :- Nepal and India are sovereign states. They are subjects of international law. Treaties, agreements and understandings between them are acts of State outside the sphere of domestic law. Unlike in the United States, such treaties and agreements are not a part of the domestic law in India On the contrary. Parliament has to legislate under Article 253 of the Constitution of India for implementing any treaty, agreement or convention with any other country or any decision made at any international conference, association or other body Private persons are not subjects of international law. Treaties between sovereign stales cannot, thereforee, be enforced at the instance of private persons. In Civilian War Claimants Association, Ltd v The King, the House of Lords had to decide the question whether Article 232 of the Treaty of Versailles under which Germany paid compensation to the Allied Powers including Great Britain, created a right in a person who had suffered loss or damage due to the German aggression during the War and for whose benefit the compensation had been paid by Germany to Great Britain. The Government of Great Britain had issued a proclamation on 7th September, 1916 asking such persons to prefer their claims and had set up a machinery for the scrutiny of such claims In Article 232 of the Treaty, Germany had undertaken and the Allied Governments had required that Germany shall pay compensation for all damage done to the civilian population of the Allied countries. Nevertheless, the appellant's claim to compensation was rejected by the House of Lords relying upon Rustomjee v. The Queen. The Government of Great Britain was not held to be an agent or a trustee for the claimants and could not be liable to the claimants for money had and received for the use of the claimants. It was held that the claim did not disclose any ground cognizable by a court of law.

(8) The hardship of this rule has been recognised and progressive thinkers have advocated that private persons should have rights against foreign states for compensation. One exception to the above rule referred to by Hidayatullah, C.J., in H H. Maharajadhiraja Madhav Rao Scindia Bahadur v. Union of India, is when the intention of the high contracting parties is that the parties shall adopt some definite rules creating indidual rights and obligations enforceable by national courts (in the matter of Railway Officials in Danzing, Advisory Opinion of the Permanent Court of International Justice, Advisory Opinion No. 15, Series B). No such intention can be read in the Treaties. Agreements and Discussions which took place between the Government of India and the Government of Nepal referred to above in the present case. The rule has, thereforee, to be followed.

(9) In Universal Imports Agency v. The Chief Controller of Imports and Exports, the question was whether the petitioners were liable to pay customs duty for import of goods into Pondicherry after the said territory was ceded to India by France in pursuance of an international agreement and in terms of clause 6 of the statutory order which had been issued by the Government of India. The construction of clause 6 by the majority of the Court speaking through Subba Rao, J., showed that the petitioners were not so liable. In paragraph 21 Subba Rao, J., observed as follows:-

'THISconclusion is also reinforced by the terms of the Indo-French Agreement. It is common case that the terms of the said Agreement cannot, be enforced in a municipal court in India. We are only referring to it as the terms thereof throw some light on the proper understanding of the saving clause.'

In French India Importing Corporation, Delhi v. The Chief Controller of Imports & Exports, at 430, Das Gupta, J., referred to the agrument that clause 17 of the Indo-French Agreement should be taken into account in applying the saving provisions of the order in notification No S. R. O. 3315 and observed as follows :-

'WEare unable to persuade ourselves that there is any justification in reading into the order S. R. O. 3315 anything to the contrary that might have been expressed in the Indo-French Agreement. It is true that the provisions of this paragraph of the Indo-French Agreement were referred to in the majority judgment in the Universal imports Agency case and it was said that the conclusion already reached wera reinforced by what appeared in paragraph 17 It is one thing however for a court to consider that conclusion reached on legal principles is in keeping with the intention expressed in a document between high contracting parties, it is quite another thing to say that the conclusion reached on legal principales should be departed from because it seems to be at variance with what has been said in such a document'.

In Padam Kumar Agrawalla v. The Additional Collector of Customs, proceedings were taken against the appellant by the Customs authorities for alleged contravention of the terms of the Indo-Nepalese Treaty of 1960 The legality of these proceedings could be viewed from two points of view, namely :- (a) That the Treaty was not law and just as it did not confer a right on a private person similarly it did not impose any obligation on such a person with the result that no one can be proceeded against under law for its contravention; or (b) That in fact there was no contravention of the Treaty by the appellant and, thereforee, the question whether a person could be penalised for the contravention of such a Treaty did not arise at all. The Supreme Court choose the latter alternative and left the former one open in the following words in paragraph 6 of the decision :-

'WErefrain from going to the larger question whether the contravention of the provisions of a treaty entered into between two high contracting parties can itself be made a ground for taking penal action against the contravener'.

(10) It is, thereforee, clear that contrary to the contention of the petitioners, no right in their favor can flow from the Treaty, Agreement or Discussions which have taken place between the two high contracting parties. The notification dated 19th May 1969 : Shri B. R. L. Iyengar for the petitioners contended that this notification is law and is enforceable against the Union of India by the petitioners. The notification was issued with reference to paragraph 176 of Chapter Vii of the Import Trade Control Hand Book of Rules and Procedure 1969. The said Hand Book contains various things including instructions for the Government officials as also information for the public. The nature of a similar Hand Book, namely, the Import Trade Control Policy, was considered by the Supreme Court in the Union of India v. Indo-Afghan Agencies,. In pragraph 12, their Lordships observed as follows:-

'ITcannot be assumed merely because the Imports Trade Policy is general in terms and deals with the grant of licenses for import of goods and related matters, it is statutory in character-Even granting that the Import Trade Policy notifications were issued in exercise of the power under section 3 of the Imports and Exports (Control) Act 1947, the order (Import Trade Control Order) as already observed authorised the making of executive or administrative instructions as well as legislative directions. It is not the form of the order, the method of its publication or the source of its authority, but its substance, which deteremines its true character Granting that it is executive in character, this Court has held that the Courts have the power in appropriate cases to compel performance of the obligations imposed by the Schemes upon the departmental authorities'.

It follows, thereforee, that while the Treaties and Agreements between India and Nepal are not enforceable, the notification of 19th May 1969 is enforceable at the instance of the petitioners. But this conclusion is a bare consolation to the petitioners. For, the Government of India have sworn affidavits stating that as per the agreement between the two Governments reached in November 1968 the exports from Nepal into India of synthetic fabrics were to be regulated in quantity and value to the level of 1967-68. up to 24th May 1969 the figures collected from the checkposts for the period from 1st July 1968 were approximately 31 lakhs sq metres of synthetic fabrics which had already entered into India. The export of Nepalese manufactures including the petitioners in 1967-68 of synthetic fabrics into India was approximately 24 lakhs sq. metres. By 24th May 1968, thereforee, the quantity of synthetic fabrics exported from Nepal to India had already exceeded he agreed quantity of 24 lakhs sq. metres. The value of synthetic fabrics exprted from Nepal to India just in one month of April 1969 and 24 days of May 1969 exceeded rupees one crore eighteen lakhs as against the value of the total exports of synthetic fabrics from Nepal to India from April 1967 to March 1968 which was only rupees one crore and twelve lakhs. Telegraphic instructions were, thereforee, issued by the Government on 22nd May 1969 and mailed instructions were issued by them on 24th May 1969 to the checkposts not to allow any further imports of synthetic fabrics from Nepal to India as by 19th May 1969 quantities exported from Nepal to India had already reached above the level of 1967.68 in value and quantity.

(11) The relevant procedure for the clearance of imported goods is laid down in sections 46 and 47 of the Customs Act, 1962 The importer has to present a bill of entry for home consumption under section 46. Under section 47, the proper officer has to be satisfied that any goods entered for home consumption are not prohibited goods. If so satisfied, be would make an order permitting the clearance of goods for home consumption. The definition of 'prohibited goods' in section 2(33) of the Act is 'any goods the import or export of which is subject to any prohibition under this Act or any other law for the time being in force but does not include any such goods in respect of which the conditions subject to which the goods are permitted to be imported or exported have been complied with'. The stand taken by the officers at the Customs checkpost was communicated to the petitioners on 22nd July 1969, namely, that 'the quota fixed in terms of the Agreement for November 1968 was exceeded ; no import could, thereforee, be allowed of the consignment under reference'. Under the notification dated 19th May 1969 the import was to be allowed 'only in accordance with the export regulatory arrangements agreed to between the Government of India and His Majesty's Government of Nepal in November 1968'. The notification of 19th May 1969 can thus be split into two parts. namely:-

(1)the notification proper which can be enforced by this Court; and (2) the export regulatory arrangements between Nepal and India which are contained in the agreement between these two countries and which are not enforceable by this Court at the instance of the petitioners.

The notification is not self-contained. It is incomplete in itself. It cannot be enforced unless the agreement between the two countries is scrutinised and interpreted.

(12) It is only if two conditions were satisfied that the terms of the Treaty or the Agreement between the high contracting parties regarding the quantity and value of the goods to be exported from Nepal to India at the level attained in 1967-68 could be enforced by this Court at the instance of the petitioners. Firstly, as under the United States Constitution, such a Treaty or Agreement between two sovereign countries should have been the law of the land like a statute of alegislature. Secondly, the notification of 19th May 1969 itself should have been a statute of a legislature. It is only then that it could be contended by the petitioners that a statute of legislature has incorporated another statute within itself by referring to it and, thereforee, the former statute is enforceable as if the latter is incorporated into it. But none of these two conditions are fulfillled in the present case. The notification of 19th May 1969 does not really give any rights to the petitioners. It was, on the other hand, issued by the Government of India to stop the exports from Nepal to India after the Government had come to know that the 1967-68 level had already been exceeded by that time. The notification really means that the level having been exceeded no further exports could be allowed. It would be surprising, thereforee if the petitioners could take this notification to mean that it gives them any right to export goods from Nepal to India. The concession was granted by India to Nepal as one between two sovereign countries. That was subject to a condition agreed to between them. It is for them to determine it the condition had been fulfillled or not and if any further export from Nepal to India could be allowed or not. Neither the officers of the Government of India nor the petitioners could decide this question.

(13) The agreement between two sovereign countries is not enforceable by this Court at the instance of the petitioners. The agreement ilself is liable to be construed in different ways. For instance. there is no agreement between the petitioners and the Government of India as to what 1967-68 level means and from what date the period begins and when it ends. In their replication, the petitioners have contested the interpretation of the agreement by the Government of India and have advanced their own interpretation. This precisely is the question which this Court cannot determine. The petitioners have also raised disputed questions of fact as to the quantity and the value of the goods which had been exported from Nepal into India from 1967-68. Firstly, the question how much quantity was imported from Nepal into India under the agreement was for the Government of India and Government of Nepal to decide bilaterally between themselves. The Government of India have decided it in a particular way and sworn affidavits of their decision. Such a decision can be contested only by the Government of Nepal by diplomatic negotiatons The patitioners cannot contest it. Secondly, if there is any disputed question of fact of such a nature where figures from all the checkposts would have to be collected. scrutinised and the parties concerned would have to be heard before a decision can be arrived at, this Court. would decline to take such evidence on a disputed question of fact in a writ petition. The proper forum for it is the civil court by way of a suit..

(14) The petitioners have complained in the writ petitions that the Customs Collettor did not issue any notices to the petitioners under section 124. Such a notice would have been issued only if the Customs authorities wanted to confiscate the goods of the petitioners. Such confiscation would have been effected only if the petitioners have contravened some provisions of the Customs Act But the Customs authorities knew from the Government of India that the right of the petitioners to import such goods from Nepal into India has to be determined by the Government of India (and by the Government of Nepal) only in terms of the Treaty and Agreement between them and not under any law relating to Import Control. This is why the Customs authorities have wisely treated these imports by the petitioners as outside the ordinary Import Control law but to be regulated by the two sovereign countries in terms of their Treaty and Agreement 15 Shri lyengar for the petitioners insisted that the Customs authorities must adjudicate on the dispute between the petitioners and the Government of India. He has not, however, shown under which particular provision of the Customs Act such a dispule could be adjudicated upon by the Customs authorities On the contrary, the Customs authorities have correctly chosen not to act against the petitioners under the Customs Act They have simply told the petitioners to take back their goods to Nepal inasmuch as they have been instructed by the Government of India not to allow these imports. The decision is thus of the Government of India in a sovereign caoacity and not of the Customs authorities under the Customs Act It follows, thereforee, that the rules of natural justice such as hearing me petitioners before giving a finding against them did not have to be followed by the customs authorities. Hearing would have been necessary if the Customs authorities would have intended to give any decision against the petitioners. Conduct of ihe Government of India : A Treaty, even if it is not law, is meant to be complied I with by the high contracting parties as printed out by Hidayitullah. C.J , in Maganbhai lshwarbhai Patel v. Union of India ',. The Government of India have, therfore, implemented their pan of the Treaty. Exports from Nepal into India have thereforee been allowed up tothe limit fixed by the Treaty and the Agreements modifying the Treaty. The conduct of ihe Government of India was a representation nude to the Government of Nepal, It was not a representation made to any other person like the petitioners Further, the representation, if any, was only that the Government of India would allow the exports from Nepal into India only up to the limit fixed by the level of exports of 1967-68. There was no representation by the Government of India that such exports could be allowed even beyond that limit The petitioners cannot, thereforee, say that they relied on any representation by the Government of India that such exports would be allowed beyond the limit fixed by the level of of 1967-68. As the Government of India has fulfillled the representation no question of their being estopped from denying the representation or its fulfilllment arises at all. The question is only one of fact, namely whether the quota of exports has been already crossed or it is still not complete. This question of fact arises between the two Governments and no between the Government of India and the petitioners. Even if it were to so arise, thenthe proper forum for its determination is a civil court by way of a suit and not this Court under its writ jurisdiction. Nor could the Customs Officer at a particular checkpost determine this question inasmuch as exports from Nepal into India cross more than one such check-posts. Delay: It is because the petitioners realised that the matter was governed by the Treaty and the Agreements under it which were not enforceable in a court of law that they have advisedly desisted from taking any action against the Government of India in a court of law. Their exports were prevented from crossing into India by the Customs authority on 24th May 1969. These writ petitions were filed on 26th May 1972, that is, more than three years after the cause of action, if any, arose in favor of the petitioners The petitioners say that they were making representations to the various authorities and, thereforee, the petitions were delayed. But such representations were only administrative and informal. There were no statutory proceedings such as appeals, etc, under the Customs Act. While in a proper case even an administrative representation may be a good Explanationn for delay, in the present case it is not so. For, there was no question of administrative representation by the petitioners to the Government of India inasmuch as the matter was entirely between the Governments of India and Nepal. The delay in filing the writ petitions is, thereforee, fatal to the subject of these writ petitions which are, thereforee, liable to be dismissed on that ground alone. Fairness '. The petitioners could have paid the additional duty imposed by the Government of India and taken these goods into India if they wanted to do so. They acted unreasonably in not paying the duly. The Customs authorities have acted correctly in returning the goods to the petitioners which are now kept in the godowns of the petitioners. The petioneis cannot, thereforee, complain against the Customs authorities or the Government of India in any way. Furdomental rights:- The goods are owned by foreign companies which are not entitled to the benefit of Article 19 of the Constitution They are not owned by the directors of these companies. Article 31 of the Constitution is not attracted inasmuch as there is no deprivation of the property of these foreign companies. The goods are in their own possession. Nor do I see how Article 14 is attracted to this case. There is neither any arbitrariness in the action of the Government of India nor any discrimination against the petitioners. The Government of India has acted according to the Treaty and Agreements between Nepal and India. There is no allegation that in doing so, the Government of India has discriminated against the petitioners.

(15) For the above reasons, the writ petitions (C. Ws, 508 and 509 of 1972) are dismissed but without any order as to costs.


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