Article 226 jurisdiction and customs duty-free import benefits cannot be extended to private traders contrary to the statutory scheme.

Territorial jurisdiction under Article 226 may arise where the impugned act produces legal injury within the forum State, even if the clearance occurred elsewhere. The associate distributors were not necessary parties, and the petitioners had locus standi to challenge the alleged unequal treatment. On the customs scheme, the duty-free import privilege attached only to the State Trading Corporation; it could not be extended by contract to associate distributors who, in substance, answered the description of importers under the Customs Act, 1962. The resulting duty-free clearance was treated as illegal. Delay was not treated as fatal where the grievance involved continuing infringement of Article 14 and fundamental rights.

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Issues: (i) Whether the High Court had territorial jurisdiction under Article 226 of the Constitution of India on the facts pleaded and proved; (ii) whether the writ petition was liable to fail for non-joinder of the associate distributors as necessary parties and for want of locus standi; (iii) whether the State Trading Corporation could lawfully extend the benefit of duty-free import under the customs exemption notification to its associate distributors, and whether the customs authorities were justified in clearing the goods without duty; (iv) whether the writ petition was barred by delay.

Issue (i): Whether the High Court had territorial jurisdiction under Article 226 of the Constitution of India on the facts pleaded and proved

Analysis: Territorial jurisdiction under Article 226 depends on the presence of the respondent within jurisdiction or the arising of cause of action wholly or in part within the territorial limits. The alleged illegal clearance outside West Bengal was held not to be the end of the matter, because the duty-free goods entering the petitioners' market created the adverse consequence complained of. That intrusion into the petitioners' field of business was treated as part of the cause of action within West Bengal.

Conclusion: The Court held that it had territorial jurisdiction.

Issue (ii): Whether the writ petition was liable to fail for non-joinder of the associate distributors as necessary parties and for want of locus standi

Analysis: The principal challenge was directed against the customs authorities and the State Trading Corporation, whose acts were said to be illegal and unconstitutional. The associate distributors were treated only as persons claiming through the principal and not as parties against whom independent relief was sought. After individual manufacturers were added as co-petitioners, the challenge was no longer merely associative in character and the affected manufacturers were entitled to complain of unequal treatment.

Conclusion: The Court held that the associate distributors were not necessary parties and that the petitioners had locus standi.

Issue (iii): Whether the State Trading Corporation could lawfully extend the benefit of duty-free import under the customs exemption notification to its associate distributors, and whether the customs authorities were justified in clearing the goods without duty

Analysis: Section 2(26) of the Customs Act, 1962 was applied to the import contracts and the notification regime. On the terms of the contracts, the associate distributors paid the price and service charge, obtained sale documents before the goods crossed the customs frontier, and bore the customs liabilities. They therefore answered the description of importers in substance, while the State Trading Corporation neither owned the goods at importation nor held itself out as importer. The notification making the State Trading Corporation the sole import agency was construed purposively, but not so as to permit it to transfer the benefit to private traders in a manner that defeated the statutory scheme and created hostile discrimination.

Conclusion: The Court held that the duty-free benefit was available only to the State Trading Corporation and not to its associate distributors, and that the customs clearance without duty was illegal.

Issue (iv): Whether the writ petition was barred by delay

Analysis: The Court treated the grievance as arising when the illegal import benefits began to operate in the petitioners' market and affect their rights. Since the complaint was grounded in infringement of Article 14 of the Constitution of India, delay was not treated as fatal. The Court also reiterated that fundamental rights cannot be waived by inaction in the manner suggested by the respondents.

Conclusion: The Court held that the petition was not barred by delay.

Final Conclusion: Relief was granted to restrain the extension of duty-free import benefits to the associate distributors and to require duty to be recovered in accordance with law, thereby vindicating the petitioners' challenge to the unequal and unauthorized import arrangement.

Ratio Decidendi: For territorial jurisdiction under Article 226, a cause of action arises where the impugned act produces legal injury within the forum State; a public notification conferring a limited import privilege cannot be stretched by contract to confer the same benefit on private traders who answer the statutory description of importers and thereby defeat the statutory scheme and equality guarantees.

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