Authorities to review TRQ allocation policy under India-UAE CEPA within four weeks, consider broader eligibility including first-time applicants

HC directed respondents to review the TRQ allocation policy under the India-UAE CEPA within four weeks, considering petitioners' grievances that eligibility should be broader. The court instructed authorities to consider extending allocations to applicants without substantial past turnover, including first-time applicants and those with significant networks, and permitted DGFT to introduce additional criteria if respondents accept these requests. Petitions were disposed of.

---

---

ISSUES PRESENTED AND CONSIDERED

1. Whether the imposition of a minimum average annual turnover threshold of Rs. 25 crore (over the preceding three financial years) as an eligibility condition for grant of Tariff Rate Quotas (TRQs) for gold imports under the India-UAE CEPA is arbitrary, disproportionate, or unsupported by rational policy considerations.

2. Whether the DGFT's policy of treating application fees as non-refundable where applications are examined but not allocated TRQ is legally sustainable.

3. Whether the blanket rejection or short allocation of applicants' TRQ requests without affording an opportunity of hearing violates principles of fairness, legitimate expectation or procedural due process.

4. Whether the allocation modalities adopted by the DGFT (as recorded in the Minutes of Meeting dated 29.04.2025) - including categorical exclusion of certain applicant classes, the specific quantitative allocation slabs, maintenance of buffer quota, and penal consequences for misrepresentation - fall within permissible administrative discretion exercised consistently with CEPA obligations and relevant domestic policy.

5. What relief, if any, is appropriate where allocation decisions affecting the TRQ for the financial year have not been finally effected and significant time of the financial year has elapsed.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Legality and rationality of the Rs. 25 crore turnover threshold

Legal framework: The allocation of TRQs is governed by CEPA commitments (Article 2.4(2) and Annexure 2A), DGFT notifications/public notices and the Handbook of Procedures/Foreign Trade Policy. Administrative action must comply with Wednesbury/constitutional standards of reasonableness and non-arbitrariness and be consistent with policy objectives of CEPA (value addition, domestic manufacturing, employment).

Precedent treatment: The Court referred to its earlier disposal in the prior batch (directions in W.P. (C) 16809/2024 and batch matters) which scrutinised allocation/re-allocation processes and required fresh consideration where criteria for review were unspecified. That precedent was applied as a supervisory guide requiring reasoned decision-making.

Interpretation and reasoning: The Minutes of Meeting recorded adoption of qualitative parameters including a turnover threshold, with the Committee invoking consistency with condition (g) of earlier Public Notice and an IFSCA regulatory benchmark for Qualified Jewellers. The Committee's rationale linked the threshold to ensuring proper utilisation, domestic value addition and regulatory manageability. The Court recognised that administratively rational criteria may be adopted in a phased manner given the "substantial expansion in scope" of applicants and utilisation patterns the previous year.

Ratio vs. Obiter: Ratio - the adoption of a turnover threshold as an eligibility criterion is an administrative policy choice permissible in principle where supported by intelligible differentia and legitimate policy objectives; however, such criterion must be applied after considering CEPA's broad objectives and potential impact on broad-basening allocation. Obiter - detailed endorsement of the specific Rs.25 crore quantum and its alignment with IFSCA benchmarks is treated as persuasive administrative reasoning rather than a final legal determination that the threshold is beyond challenge.

Conclusions: The Court did not strike down the turnover threshold categorically. Rather, it required the DGFT to examine grievances about the threshold in a fresh review, bearing in mind CEPA's objective to broaden allocations and the concerns of small/new entrants. The DGFT may retain or modify the threshold only after reasoned consideration consistent with law.

Issue 2 - Non-refundability of application fees where applications are examined but not allocated TRQ

Legal framework: Fees and their refundability arise under DGFT practice and public notice terms. Administrative action regarding fees must be reasonable and transparently applied.

Precedent treatment: No express precedent overruled or followed; the Court examined the Minutes which stated that fees would not be refunded because applications were "duly examined and processed."

Interpretation and reasoning: The DGFT's position that application fees will not be refunded when applications are processed and rejected rests on the proposition that consideration has been provided. The Court, while recording petitioners' grievance, did not record a final ruling invalidating the non-refund policy but directed that such grievance be considered in the fresh review.

Ratio vs. Obiter: Obiter - the question of mandatory refundability versus non-refundability was left open for administrative reassessment; the Court mandated consideration rather than pronounced a substantive legal rule on fees.

Conclusions: DGFT is directed to consider the fairness of the non-refund policy in the course of the mandated fresh review and to record reasons if it retains the non-refundable approach.

Issue 3 - Procedural fairness: opportunity of hearing before rejection/short allocation

Legal framework: Principles of natural justice (audi alteram partem) and legitimate expectation govern administrative denial without hearing where decision affects rights or interests. Earlier order in the prior batch required fresh decisions where decisions were made without affording an opportunity to be heard.

Precedent treatment: The Court relied on its prior directions (W.P. (C) 16809/2024 et al.) which emphasised the need for a hearing before final adverse re-allocations and the requirement that review criteria be specified and made known.

Interpretation and reasoning: Where decisions on allocation or re-allocation materially affect applicants, affording an opportunity to be heard is a minimum requirement unless reasons justify summary treatment. The Minutes indicated a review exercise and extensive criteria but petitioners assert they were excluded or short allocated without an opportunity to respond. Given that no final allocations had been implemented for the current year, the Court found supervisory intervention appropriate to ensure petitions' grievances are considered before final action.

Ratio vs. Obiter: Ratio - administrative decisions that produce adverse allocation outcomes must be preceded by adequate opportunity for affected parties to state their case unless such opportunity is impracticable and procedural fairness is necessarily curtailed with reasons; accordingly, the Court ordered a fresh review that takes into account petitioners' grievances and procedural fairness. Obiter - how exactly such hearing should be structured (oral/representation/documentary) was left to the DGFT's discretion consistent with fairness.

Conclusions: The DGFT is required to examine all issues raised by petitioners and afford appropriate procedural consideration during the fresh review prior to any final allocation, failure of which would invite supervisory relief.

Issue 4 - Validity of allocation modalities (categorical exclusions, slab allocations, buffer, penal provisions)

Legal framework: Allocation modalities must align with CEPA's tariff commitments, relevant notifications, and administrative law norms (reasoned decision-making, non-discrimination, proportionality).

Precedent treatment: The Court treated the Minutes as a policy exercise drawing on experience and industry feedback. Prior judicial guidance required transparency in review exercises and reasoned criteria when allocations are revised.

Interpretation and reasoning: The Committee's allocation slabs and categorical exclusions (e.g., banks, low turnover applicants) were explained by reference to operational manageability, prior utilisation patterns, and the aim to prioritize manufacturers for domestic value addition. Maintenance of a buffer and penal measures for misrepresentation were justified on governance and anti-fraud grounds. The Court recognised the legitimacy of adopting qualitative parameters in a phased manner but insisted the broad CEPA objective of broad-based access must be considered.

Ratio vs. Obiter: Obiter - the Court accepted that DGFT has a wide policy space to determine allocation modalities and to adopt measures like buffers and penal provisions; but the Court's insistence that the modalities be reconsidered in light of broad-based objectives and petitioners' grievances is a binding interlocutory directive in these petitions (ratio in context of relief granted).

Conclusions: The allocation modalities are not per se struck down; the DGFT may retain, amend or supplement them but must do so after a fresh, reasoned review that accounts for the CEPA's objectives and petitioners' concerns.

Issue 5 - Appropriate remedy and timeline when allocations for the financial year remain unmade

Legal framework: Supervisory jurisdiction of the Court to ensure administrative action proceeds lawfully and within a reasonable time; equitable remedies where rights/interests are affected by administrative delay.

Precedent treatment: The Court recalled its earlier order that directed maintenance of allocations pending review where re-allocations were challenged. That approach informed the need for timely administrative reconsideration.

Interpretation and reasoning: Given that no allocation for the current financial year had been made and half the year had elapsed, immediate review was necessary to operationalise CEPA entitlements. The Court directed the DGFT to undertake the review expeditiously (preferably within four weeks), to consider petitioners' grievances (including broadened access and first-time applicants), and permitted DGFT to introduce additional conditions if it chose to accept petitioners' requests.

Ratio vs. Obiter: Ratio - the Court's specific remedial direction that the DGFT conduct a fresh review within a prescribed short timeline and consider petitioners' grievances is the operative legal conclusion. Obiter - specific outcomes of that review (whether threshold retained/relaxed, refund policy altered, or allocation slabs changed) remain matters for the DGFT's reasoned decision.

Conclusions: The petitions were disposed on the footing that DGFT will carry out a fresh review within four weeks, consider the petitioners' concerns (including making allocation more broad-based and affording opportunity to new entrants), and may introduce additional conditions if accepting petitioners' requests; no final ruling was made on the substantive validity of the threshold, non-refund policy or slab allocations pending that review.

---