Export quota forfeiture and force majeure: ordinary power cuts did not justify relief, but enhancement without an appeal was impermissible.

In judicial review, ordinary power cuts were treated as a business hazard rather than force majeure, so interference with forfeiture for under-utilisation of export quota was declined. The policy's 10% tolerance for shortfall was upheld as a valid cut-off, and forfeiture for utilisation below the permissible margin was sustained, with proportionate adjustment already allowed. However, the second Appellate Committee could not enhance forfeiture in the absence of an appeal by the quota administering authority, because the governing policy conferred no such power. The enhanced forfeiture was therefore set aside, leaving the reduced forfeiture intact.

---

---

Issues: (i) Whether forfeiture of earnest money for under-utilization of export quota could be interfered with on the ground of power cuts and alleged force majeure. (ii) Whether marginal under-utilization of quota below 90% disentitled the respondents from imposing forfeiture. (iii) Whether the second Appellate Committee had power to enhance the amount of forfeiture in the absence of an appeal by the quota administering authority.

Issue (i): Whether forfeiture of earnest money for under-utilization of export quota could be interfered with on the ground of power cuts and alleged force majeure.

Analysis: The petitioners had admittedly failed to utilize the quota fully. The respondent authorities had considered the plea of unscheduled power cuts and rejected it on the footing that such power cuts were a normal business hazard in the locality and not a force majeure event warranting relief. In judicial review under Article 226 of the Constitution of India, the Court declined to reappreciate the merits or substitute its own view for that of the authorities when the findings were neither perverse nor arbitrary.

Conclusion: The challenge to forfeiture on the ground of power cuts failed.

Issue (ii): Whether marginal under-utilization of quota below 90% disentitled the respondents from imposing forfeiture.

Analysis: The policy contemplated non-forfeiture where under-utilization was 10% or less, and forfeiture where the shortfall exceeded that limit. The petitioners had accepted under-utilization, and the Court held that fixation of a cut-off necessarily creates marginal cases without resulting in discrimination or arbitrariness. The policy also provided for proportionate forfeiture in cases of substantial shortfall, and the petitioner had already been given the benefit of proportionate adjustment.

Conclusion: The forfeiture based on under-utilization above the permissible margin was upheld.

Issue (iii): Whether the second Appellate Committee had power to enhance the amount of forfeiture in the absence of an appeal by the quota administering authority.

Analysis: Clause 16(vii) of the Garment Export Entitlement Policy 2000-2004 allowed an exporter to appeal against the first appellate decision, but it conferred no right on the quota administering authority or any third party to seek enhancement before the second Appellate Committee. In the absence of any appeal by the authority seeking enhancement, the second Appellate Committee could not enlarge the forfeiture amount on its own.

Conclusion: The enhancement of forfeiture was unsustainable and was set aside in favour of the petitioner.

Final Conclusion: The writ petitions challenging forfeiture were rejected except to the limited extent that the enhancement of forfeiture by the second Appellate Committee was quashed, leaving the original reduced forfeiture intact.

Ratio Decidendi: In judicial review, a court will not interfere with a reasoned administrative finding that export quota shortfall caused by ordinary power cuts is not force majeure, but an appellate authority cannot enhance forfeiture beyond the scope of the appeal where the governing policy confers no such power.

---