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 endorsement of OGL items, rejecting the appellants' contention. The issue of inordinate delay in filing writ petitions was remanded to the High Court for reconsideration, emphasizing the need to address this delay. The court directed that the permissibility of importable items must align with Supreme Court pronouncements. The appellate judgments were set aside, and the appeals were remitted for further consideration without costs.

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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.

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