Set-off against genuine Exim Scrip claims is impermissible absent express statutory or contractual authority.

Payment on genuine Exim Scrips could not be withheld merely because earlier amounts had been received against cancelled scrips issued to other exporters, since the scheme was aimed at speedy negotiation of transferable incentive instruments and the present claims involved no fraud or irregularity. No statutory, contractual, or scheme-based authority was shown to permit adjustment or set-off of alleged recoveries from bogus scrips against later bona fide claims, and an undertaking linked to the earlier scrips did not extend to defeating the subsequent genuine claims. The administration could pursue recovery of amounts already paid on the cancelled scrips through available remedies, but it had to honour the valid scrip claims.

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Issues: (i) Whether the respondents could withhold payment of premium on genuine Exim Scrips on the ground that the petitioners had earlier received payment against cancelled scrips issued to other exporters. (ii) Whether any statutory or contractual authority existed to adjust alleged recoveries arising from bogus scrips against claims made on subsequent genuine scrips.

Issue (i): Whether the respondents could withhold payment of premium on genuine Exim Scrips on the ground that the petitioners had earlier received payment against cancelled scrips issued to other exporters.

Analysis: The Scheme was intended to facilitate quick negotiation of transferable Exim Scrips and to enable exporters to obtain incentives speedily. The petitioners' present claims related to genuine scrips about which there was no allegation of fraud or irregularity. The directions relied on by the respondents were directed against cancelled or bogus scrips and could not be used to disable payment on later genuine claims. The Court found that such a restriction would undermine the very object of the scheme.

Conclusion: The respondents could not lawfully refuse payment on genuine Exim Scrips merely because the petitioners had earlier obtained payment on cancelled scrips issued to other exporters.

Issue (ii): Whether any statutory or contractual authority existed to adjust alleged recoveries arising from bogus scrips against claims made on subsequent genuine scrips.

Analysis: No provision in the Import Control Order, the Import-Export Policy, the scheme itself, or any contractual term was shown to confer a right of adjustment or withholding against bona fide claims. Section 142 of the Customs Act was referred to as an example of an express adjustment power, but no similar authority was shown in the present regime. The refund undertaking given for the earlier bogus scrips did not extend to defeating claims under later genuine scrips.

Conclusion: No statutory or contractual basis existed to adjust the alleged recoveries against the petitioners' claims on genuine Exim Scrips.

Final Conclusion: The writ petitions succeeded, and the respondents were directed to honour the genuine Exim Scrip claims while remaining free to pursue recovery of amounts paid on the cancelled scrips through available remedies.

Ratio Decidendi: In the absence of express statutory or contractual authority, the administration cannot withhold or set off payment due on genuine transferable import incentive instruments merely because separate recovery claims exist in relation to cancelled or fraudulent instruments.

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