1989 (1) TMI 316 - SC - Indian Laws

Court clarifies time limit for revalidation of OGL items for Export Houses with Imprest Licences

The court held that Export Houses with Imprest Licences are not subject to the strict time limit in clause (7) of paragraph 185 for revalidation and ... Interpretation of paragraph 185(4) of Import-Export Policy, 1982-83 (AM 1983) - application of paragraph 185(7) to imprest licences - beneficial construction of incentive provisions - delay and laches as bar to relief in writ jurisdiction under Article 226 - remand for consideration of prejudice and sufficiency of explanation for delayInterpretation of paragraph 185(4) of Import-Export Policy, 1982-83 (AM 1983) - application of paragraph 185(7) to imprest licences - beneficial construction of incentive provisions - Whether clause (7) of paragraph 185 applies to imprest licences under paragraph 185(4) so as to restrict revalidation and OGL endorsement to shipment within the earlier of 31.3.1983 or licence validity. - HELD THAT: - Paragraph 185(4) was enacted as a beneficial provision to afford Export Houses, who after discharging export obligations under advance/imprest licences, a facility for import of OGL items. Clause (7) on its plain wording imposes an outer time-limit for shipment. The appellants' submission that clauses (4) and (7) must be read together so as to apply clause (7) to imprest-licences is a possible construction on language alone. However, a harmonious construction that treats paragraph 185(4) as a special provision applicable to imprest-licences and not subject to the strict temporal restriction of clause (7) better promotes the object of the incentive and avoids rendering the beneficial provision illusory. The Court accepted the view, consistent with earlier High Court decisions and inaction on special leave in some related matters, that clause (7) conditions would not be attracted to Export Houses granted imprest licences under paragraph 185(4). Accordingly the contention that revalidation and endorsement must be denied because shipment could not be effected within the timetable in clause (7) was rejected. [Paras 9]Clause (7) of paragraph 185 does not apply so as to deny the benefit of revalidation and OGL endorsement to Export Houses holding imprest licences under paragraph 185(4); contention (a) is answered against the appellants.Delay and laches as bar to relief in writ jurisdiction under Article 226 - remand for consideration of prejudice and sufficiency of explanation for delay - Whether the writ petitions should be dismissed on the ground of inordinate and unexplained delay in filing, and whether the High Court erred in not adjudicating this plea. - HELD THAT: - Appellants raised a specific plea that respondents approached the High Court after inordinate and unexplained delays (approximately one and a half years in each case), which, particularly in matters affecting import licences and changing policy contexts, may disentitle litigants to equitable relief under Article 226. The High Court's short orders relied upon an earlier decision but did not expressly address the particular plea of delay in these petitions. Given that respondents succeeded below without being afforded an opportunity to explain the delay, it would be unfair to finally dispossess appellants of this ground. The Supreme Court therefore concluded that the objection to delay required fresh consideration by the Appellate Bench of the High Court, with an opportunity to the respondents to justify the delay; if the delay is satisfactorily explained the High Court may confirm the orders (subject to questions as to permissible importable items), otherwise the appeals may be allowed and the writ petitions dismissed. [Paras 10, 11]The question of disentitlement for delay is remitted to the Division Bench of the High Court for fresh consideration after affording the respondents an opportunity to satisfy the court on reasons and sufficiency of delay; appeals are set aside and remitted for early disposal.Final Conclusion: The Supreme Court upheld the High Court's interpretation that paragraph 185(4) confers a revalidation/OGL endorsement entitlement on Export Houses holding imprest licences without being defeated by clause (7)'s temporal restriction, but set aside the Division Bench judgments and remitted the appeals to the High Court to examine the appellants' specific plea of inordinate/unexplained delay; other controversies were treated as concluded in favour of the respondents and the High Court is directed to proceed promptly. Issues Involved:1. Entitlement to revalidation and endorsement for import of OGL items under paragraph 185(4) of the Import-Export Policy 1982-83.2. Inordinate and unexplained delay in filing the writ petitions.3. Permissibility of importable items as per pronouncements of the Supreme Court.Issue-wise Detailed Analysis:1. Entitlement to Revalidation and Endorsement for Import of OGL Items:The main contention revolves around whether the Export Houses, upon fulfilling their export obligations under the Imprest Licences, are entitled to revalidation and endorsement for import of OGL items under paragraph 185(4) of the Import-Export Policy 1982-83. The appellants argued that this entitlement is subject to the express limitation in clause (7) of paragraph 185, which mandates that the shipment of goods must occur within the validity of the OGL or the import licence, whichever is earlier. The respondents, however, contended that the nature of the transactions under Imprest Licences, which involve importing uncut and unset diamonds and then exporting cut and polished diamonds, inherently requires more time, making the strict application of clause (7) unreasonable.The court analyzed clauses (3), (4), (5), and (7) of paragraph 185, noting that while clause (7) sets a strict time limit, clause (4) provides a specific incentive to Export Houses with Imprest Licences. The court found that the High Court's interpretation, which harmonized these clauses by treating clause (4) as an exception to the general rule in clause (7), was reasonable and advanced the policy's objectives. Therefore, the court held that the conditions in clause (7) do not apply to Export Houses with Imprest Licences, thus rejecting the appellants' contention (a).2. Inordinate and Unexplained Delay in Filing the Writ Petitions:The appellants argued that the respondents had filed their writ petitions after an inordinate and unexplained delay of over one and a half years, which should bar them from relief. The court acknowledged that the High Court had not specifically addressed this plea of delay. The learned Single Judge had relied on an earlier decision, which considered a different aspect of delay (the delay in seeking revalidation and endorsement after the issue of the redemption certificate, not the delay in filing the writ petitions).The court emphasized that if the appellants had indeed raised the plea of delay, the High Court should have specifically dealt with it. Given the significant delays and the nature of the subject matter, the court found it necessary to remand the issue to the High Court for reconsideration. The High Court is to determine whether the delay is satisfactorily explained and, based on that determination, either confirm the orders of the learned Single Judge or dismiss the writ petitions.3. Permissibility of Importable Items:The court noted that the High Court had erred in brushing aside the argument regarding the limitation on the permissibility of importable items. The respondents conceded that the choice of items permissible for import would have to be determined and guided by the pronouncements of the Supreme Court in cases such as Rajprakash Chemicals Ltd. v. Union of India and D. Navinchandra & Co. v. Union of India. The court agreed that this issue becomes relevant at a stage subsequent to the revalidation and endorsement of the Imprest Licence. Therefore, the directions issued for OGL endorsement must be limited to items as defined by these pronouncements.Conclusion:The appellate judgments of the High Court were set aside, and the appeals were remitted to the High Court for reconsideration of the delay issue. The High Court is to determine whether the delay in filing the writ petitions is satisfactorily explained and then decide the appeals accordingly. The court also directed that the permissibility of importable items must be determined in light of relevant Supreme Court pronouncements. The appeals were disposed of with no order as to costs.