TaxTMI 
TaxTMI 
2011 (1) TMI 707
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....t bring about such classification. Consequently, the further prayer is made for a direction to the Union of India ('UOI') through Ministry of Textiles ('MoT'), Respondent No. 1 herein to ensure that the election to the Executive Committee ('EC') of the AEPC is held again after rectification of the electoral register of the AEPC by permitting all registered exporters to cast their votes in the elections to the EC. The other prayers are for declaring elections to the EC of the AEPC for the year 1998-99 to be invalid. Position of membership of the AEPC under the Exim Policy 2. The Petitioner No. 1 in the writ petition is the All India Garment Exporters Common Cause Guild. The Petitioner No. 2 is the President of Petitioner No. 1 and Petitioner No. 3 is an exporter registered with the AEPC. 3. The AEPC was incorporated on 22nd February 1978 under Section 25 of the Companies Act, 1956 ('CA') It was registered as a company limited by guarantee and is sponsored by the MoT. The object of the AEPC is to promote and develop export of all types of ready-made garments and to allocate and distribute quotas/entitlements for exports and to, inter alia, implement the government policy....
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....l be granted forthwith Registration-cum-Membership Certificate (RCMC) of the EPC concerned, subject to such terms and conditions as may be specified in this behalf." 7. Volume 1 of the HBP 1997-2002 sets out, inter alia, the procedure for obtaining the RCMC. Para 13.2 of the HBP reads as under : "13.2 Authorities issuing RCMC An exporter desiring to obtain a Registration-cum-Membership Certificate (RCMC) shall declare his main line of business in the application which shall be made to the Export Promotion Council (EPC) relating to that line of business. However, an exporter who holds Export Hours/Trading house/Star Trading House/Super Star Trading House Certificate has the option to obtain RCMC from Federation of Indian Exporters Organization (FIEO). In addition, an exporter may obtain an RCMC from FIEO or any other EPC, if the products exported by him relate to those EPC's. If the export product is such that it is not covered by any EPC, RCMC in respect thereof may be issued by the regional licensing authority concerned. In case of units in EHTP/STP, RCMC may be obtained from the concerned Administrative authorities of such units." 8. The HBP 1997-2002 specifies the....
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.... is otherwise interested in the actual interest of export is eligible to become a member subject to complying with the requirements of the Act, Articles and Bye-laws and/or Regulations. Under Article 6(a), an admission fee of Rs. 1,000/- has to be paid apart from the annual subscription by every member of the AEPC. Article 19 of the AOA provides for holding of Annual General Meeting by the AEPC. Article 24 provides for the appointment of the Chairman of the EC from amongst its members. Under Article 42(a), the EC shall consist of not more than 30 members including the Chairman and Vice-Chairman, excluding the government nominees. It further provides that there shall be four government nominees on the EC. Article 44 of the AOA provides for the eligibility to contest the election to the EC. Article 48 provides that only such members who have paid subscription for the year in which the elections are held and remain so on the day of election, shall be eligible to stand for election to the EC and/or propose and/or second and/or vote for such election. The EC is given powers to administer the affairs of the AEPC. Under Article 100, no change, alteration or modification in any of the arti....
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....ter' if : "(a) he is not a citizen of India; (b) he is less than 18 years of age; (c) he has been adjudicated insolvent by a competent court of law; (d) he has been convicted of an offence involving misconduct of moral turpitude." 16. Further, under Regulation 1(iii) (b), the AEPC will have the right to register an applicant if: "(i) he has done minimum export/local turnover of Rs. 50 lakhs at the time of submitting the application OR (ii) if the party is Member/Registered Exporter of AEPC/Any other EP Council for more than 2 years. OR (iii) if Member/Registered Exporter has been recognized as Export House/Trading House by the Government of India" 17. A separate set of Regulations have been framed as regards the Membership. Under Regulation 1 of the Regulations of Membership, an applicant is not entitled to become a member of the AEPC if ; "(a) he is not a citizen of India; (b) he is less than 21 years of age; (c) he has been registered with the Council as a Registered Exporter for less than three years; (d) his export performance of garments during any of the three previous years or in the year he applied to become Member of the Co....
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....e Companies Act, 1956 and the Articles of Association of the Council." It is submitted that the artificial distinction between the two classes of members of the AEPC into voting and nonvoting members was struck down by this Court in Pramod Chopra v. Apparels Export Promotion Council. It cannot, therefore, be allowed to be reintroduced by the Membership Regulations, in particular Regulation 1(d), by mandating that in order to become a member of the AEPC a registered exporter has to have an export performance of not less than Rs. 20 lakhs in any of the previous three years. Mr. Dutt pointed out that in the counter-affidavit filed on behalf of the AEPC, it is acknowledged that the number of members of the EC of the AEPC was increased on account of the larger number of exporters. It was further acknowledged that the number of member exporters however came down from 10,000 in 1984 to 3,771 in 1998. In other words, a majority of the registered exporters were kept out of the electorate for choosing members to be on the EC of the AEPC. It is submitted that apart from being contrary to the ratio of the decision of this Court in Pramod Chopra, Regulation 1(d) is ultra vires the Exim Policy u....
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....er to become a member of the AEPC. The relationship with the AEPC was contractual and the exporter who was an applicant for the grant of an RCMC agreed to abide by the Regulations framed by the AEPC. Fourthly, it was submitted that the classification of exporters, registered with the AEPC, for the purposes of eligibility to become members of the AEPC was based on an intelligible differentia and meant to ensure that only those exporters with a proven track record of performance would become members of AEPC with voting rights. It is submitted that this was neither arbitrary nor irrational. Fifthly, Mr. Rawal submitted that the Petitioners were misreading the ratio of the decision in Pramod Chopra and that case did not deal with the validity of Regulation 1(d) of the Membership Regulations at all. Is AEPC amenable to the jurisdiction under Article 226 of the Constitution? 23. The preliminary objection as to the maintainability of the writ petition against the AEPC is without merit in view of the observations of the Supreme Court in Zee Telefilms Limited. The question before the Supreme Court in the said case was whether the Board of Control for Cricket in India (BCCI) was amena....
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....y. The duty must be judged in the light of positive obligation owed by the person or authority to the affected party, no matter by what means, the duty is imposed. If a positive obligation exists mandamus cannot be denied." 24. As far as the AEPC is concerned, even if it were presumed that it is not a State within the meaning of Article 12 of the Constitution, as long as AEPC exercises public functions, it is amenable to the jurisdiction of the High Court under Article 226 of the Constitution. This is evident from the following observations in Zee Telefilms (SCC@ pp. 682-83) : "33. Thus, it is clear that when a private body exercises its public functions even if it is not a State, the aggrieved person has a remedy not only under the ordinary law but also under the Constitution, by way of a writ petition under Article 226." 25. Applying the ratio of the judgment in Zee Telefilms to the present case, it is apparent that the AEPC exercises an important public function of ensuring the implementation of the Exim Policy. Further in terms of Chapter 13 of the Exim Policy, which is a statutory document made in terms of Section 5 of the FTDR Act, the AEPC is a monopolistic....
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....icy. In order to appreciate these contentions, the relevant clauses of the AOA are required to be referred to. 28. Clause 5(a) of the AOA defines eligibility as under : "5. Eligibility. (a) Any person who is an exporter of garments whether manufacturer exporter or merchant exporter or otherwise interested in the actual export of garments shall be eligible to become Member provided, such person, otherwise comply with other requirements in terms of the Act, the Articles and the bye-laws and/or regulations." 29. It is on the strength of the above clause that the AEPC has made regulations defining the eligibility for an exporter to become its member. The Membership Regulations, which are the bone of contention, have already been extracted hereinbefore. 30. In the view of this Court, although the AEPC is a company limited by guarantee incorporated under Section 25 CA, it is not merely that. The AEPC owes its very existence to the Exim Policy, The AEPC has to mandatorily be registered in terms of para 13.4 of the Exim Policy either under the CA or the Societies Registration Act. The AEPC is expected to strictly abide by the Exim Policy. Its very name, i.e. "Export....
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....r becomes a member of the AEPC. The word 'member' in Para 13.8 means just that. There cannot be one member for the purposes of the Exim Policy and another for the purposes of the CA. Once registered under the Exim Policy, a right inheres in the exporter to become a member of the AEPC. That cannot be taken away by means of Membership Regulations made under the AOA of the AEPC. The note appended at the bottom of the RCMC issued by the AEPC to the effect that the RCMC did not confer "any membership rights as per the provisions of the Companies Act, 1956 and the Articles of Association of the Council" is without legal basis and is ultra vires the Exim Policy to which the AEPC owes its existence. 32. It was submitted by Mr. Rawal that in terms of Para 13.2 of the HBP, an exporter could obtain an RCMC even from the Federation of Indian Exporters Organisation (FIEO) and, therefore, the question of 'membership' of such exporter of a particular EPC became redundant. According to Mr. Rawal, this showed that the issuance of an RCMC and becoming a member of the EPC were two different things. 33. The above submission is outside the context of the present petition which is not concer....