TaxTMI 
TaxTMI 
2020 (12) TMI 203
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....irectorate General of Foreign Trade, Ministry of Commerce and Industry, Union of India (for short 'DGFT'/2nd respondent). The background facts 2. The petitioner is a partnership firm based in Hyderabad. It is engaged in the business of purchasing Red Sanders wood in the auctions and exporting the same outside India. It also possesses a licence for storing Red Sanders wood issued under the Telangana Red Sanders Wood Possession Rules, 1989 and has its licenced godown at Plot No.6 and 7, Thoopranpet Village, Yadadri Bhuvanagiri District in the State of Telangana. 3. The then composite State of Andhra Pradesh, through its Forest Department, had invited global tenders vide Rc.No.35039/2008/V2 dt.02.08.2008 for sale of 2110.192 M.T of non-graded and graded Red Sanders wood both in round log form and value added form with a specific clause in the tender conditions that export of Red Sanders wood in round log form shall be permitted subject to approval by Government of India. 4. Petitioner submitted its tender/quotation for the purchase of Red Sanders wood and the then State of Andhra Pradesh agreed to allot 1067.786 M.T. of 'C' grade and non-grade Red Sanders wood vide G.O.Rt.....
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....19 passed therein 11. Since the petitioner's application for issuance of Certificate of Origin of the Red Sanders wood had not been disposed of by the respective Principal Chief Conservator of Forests of both these States, petitioner filed W.P.No.21397 of 2019 in this Court impleading only the State of Telangana, the Union of India and the Director General Foreign Trade, Ministry of Commerce and Industry, Government of India. 12. During the hearing of the said Writ Petition, the State of Telangana informed that it had addressed a letter dt.25.09.2019 to the Principal Chief Conservator of Forests (HoFF), Andhra Pradesh to verify the genuineness of the Red Sanders wood logs and its transportation through transit permits issued by the Andhra Pradesh Forest Department, and also the other details, and that the State of Telangana can act only if such verification is done. 13. The said Writ Petition was disposed of on 30.09.2019 by the High Court for the State of Telangana directing the State of Telangana to complete the process of verification and communicate the decision to the petitioner within four weeks. The order dt.26.10.2019 of the Principal Chief Conservator of Forest....
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....ended that Certificate of Origin has to be given by the State Forest Department under whose jurisdiction the stock is presently kept; and it is not for the Forest Departments of either State to decide whether the Red Sanders wood can be exported in the form of logs or value added product form, which decision has to be taken by the Union of India/DGFT. 18. Taking account of this plea of the petitioner, a Division Bench of this Court disposed of on 28.11.2019 (Ex.P-21), W.P.No.24532 of 2019 directing the Principal Chief Conservator of Forests, State of Andhra Pradesh to send his team of Officers for inspection to the State of Telangana on 02.12.2019; the State of Telangana was directed to ensure that the concerned Field Officers are ready to receive the team from the State of Andhra Pradesh; the petitioner was directed to ensure that his stock was kept in such a way that it would be easy for the inspecting team to identify and verify it; after completion of inspection, the Principal Chief Conservator of Forests (HoFF) of both States were directed to give an opportunity of hearing to the petitioner before deciding whether Certificate of Origin should be given to the petitioner or n....
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....ed by the Principal Chief Conservator of Forests (HoFF) of the States of Telangana and Andhra Pradesh, the present Writ Petition is filed. Events after filing of the Writ Petition The interim order dt.27.12.2019 23. Initially, in view of shortage of time in view of submission that the Government of India, through a Notification No.12/2015-2020 dt.29.07.2019, had fixed the last date for export of Red Sander wood as 31.12.2019, i.e., the impending deadline of 31.12.2019 for export of the stock fixed at that time, this Bench had passed an interim order on 27.12.2019 directing the Principal Chief Conservator of Forests (HoFF) of the States of Telangana and Andhra Pradesh to issue Certificate of Origin to the Writ Petition in respect of the stock of Red Sander wood available with the petitioner forthwith, so that petitioner would be able to export it in log form and earn valuable foreign exchange for the Country. I.A.No.2 of 2019 and I.A.No.1 of 2020 - applications to review the interim order dt.27.12.2019 24. To review the said order, I.A.No.2 of 2019 was filed by the State of Telangana and I.A.No.1 of 2020 was filed by the State of Andhra Pradesh. Contempt Case No.39....
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....rties and also consider the same simultaneously. Consideration by the Court 34. We shall first begin by stating that we are disposing of the Writ Petition itself on merits and we do not intend to pass any orders in I.A.No.2 of 2019 and I.A.No.1 of 2020, the Review applications filed by the State of Telangana and the State of Andhra Pradesh to review our interim order dt.27.12.2019, and the order passed in the Writ Petition shall be treated as the order in those applications as well. 35. Admittedly, vide G.O.Ms.No.544 EFS & T (FOR.III) Department dt.17.11.2007, the Government of Andhra Pradesh had issued orders permitting the Principal Chief Conservator Of Forests, Andhra Pradesh to call for global tender for disposal of 2022 M.T. of graded and non-graded Red Sanders Wood both in round log form and value added product form, with a specific clause in the tender conditions that export of Red Sanders in round log form shall be permitted subject to Government of India clearance. 36. But the Government of India initially did not agree for export of wood in log form vide proceedings F.No.5-2/2001-SU(Vol.3) dt.14.07.2009. 37. The allotments made to highest bidders by the Sta....
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.... export licence by Government of India, Ministry of Commerce; that the A.P. Forest Development Corporation Limited would then forward it to the Government of India and the petitioner should approach the Director General of Foreign Trade, New Delhi (DGFT) to secure export licence etc. Re: plea of the Union of India (1st respondent) 47. In the counter-affidavit filed by the Ministry of Environment and Forests, Union of India (1st respondent), it is stated that it deals with issues relating to export and import of wood and wood products including the Red Sanders wood and the State Governments and Union Territory Administrations are required to take appropriate action as per the existing Acts and Rules to protect Red Sanders wood. It states in para-6 that as per the existing Export Policy published by the Directorate General of Foreign Trade, Ministry of Commerce and Industries (2nd respondent), though the export of Red Sanders wood in any form, except value added products is prohibited, a one time relaxation had been granted to the Government of Andhra Pradesh and certain other Governments for export of Red Sanders wood in log form obtained out of confiscated/seized stock, ei....
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....2.2013 notifying quantity for export of 1998.5917 M.T. of Red Sanders wood in value added product form. This was filed as Annexure-III to its counter-affidavit. It went on to say that in 2016, this quota was revised to 8498.095 M.T. subsuming the earlier quantities of Red Sanders wood notified for Andhra Pradesh in both log form and value added product form with extended deadlines. 49. The above stand of the Union of India and DGFT in their counter affidavits thus explains why the condition that petitioner has to convert the log form Red Sanders wood purchased by it into value added product form was imposed in the agreement dt.18.03.2013 entered into by the petitioner with the A.P. Forest Development Corporation Limited i.e. that at that time, export of confiscated red Sanders wood in log form was not allowed by the DGFT/Central Government. But admittedly, from 24.10.2013, the DGFT had granted relaxation to the State of Andhra Pradesh vide Notification No.47 (RE-2013)/2009-14 dt.24.10.2013. Clause 2.1 of the said Notification states 'Government of Andhra Pradesh is hereby permitted to export 8587.1363 M.T. of Red Sanders wood in log form, either by itself or through any en....
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....e a condition or a warranty. (2) A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated. (3) A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damages but to a right to reject the goods and treat the contract as repudiated. (4) Whether a stipulation in a contract of sale is a condition or a warranty depends in each case on the construction of the contract. A stipulation may be a condition, though called a warranty in the contract." 53. Section 13 (1) speaks of a contract of sale which is subject to any condition to be fulfilled by the seller and enables the buyer to waive the condition or elect to treat the breach of the condition as a breach of warranty and not as a ground for treating the contract as repudiated. 54. The Sale of Goods Act, 1930 does not contemplate any condition which can be imposed by a seller akin to a condition, like in the instant case, requiring the buyer to convert the goods into a particular form to enable the buyer to resell/export the same. 55. Thus as....
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....icate of Origin, when the stock is in log form, would get an export licence from the DGFT/Union of India. 60. After all any sale by the petitioner of the Red Sanders Wood stock which it had purchased from the State of A.P. through its agent, the A.P. Forest Development Corporation on 18.03.2013, would undoubtedly earn foreign exchange to the nation. 61. That is a very important consideration which this Court cannot ignore and it is not for both the States to create impediments and prevent the Union of India from earning such valuable foreign exchange, if it chooses to permit the export of the Red Sanders wood by the petitioners in log form. 62. Issues of Foreign Trade Policy fall under entry 41 of List 1 of Schedule VII to the Constitution of India and are in the exclusive purview of the Union of India and its agency the Director General of Foreign Trade (DGFT). 63. Neither the State of Telangana nor the State of Andhra Pradesh have any business to intrude into the field occupied by the Union of India in relation to foreign trade and interfere with exercise of discretionary power by the Union of India and the Director General of Foreign Trade in matters of export policy....
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....ate of Telangana for export in log form of 90 M.T. 68. This was issued pursuant to proceedings Rc.No.63/2020/Prod.1 dt.13.11.2020 issued by the Principal Chief Conservator of Forests, State of Telangana wherein she took note that the applicant wanted to export Red Sanders wood in log form to Singapore and China, that Red Sanders wood had been allotted to it vide G.O.Rt.No.90 EFS&T (For.III) Department dt.09.03.2011 only for export in value added product form; that she had sought clarification from the DGFT whether the request of the firm for issuance of Certificate of Origin is to be considered in log form or value added product form since the firm is intending to export the Red Sanders wood in log form; that the DGFT vide letter dt.15.09.2020 informed that they have not yet received any application for export of 90 M.T. from the applicant and it is not possible to comment whether the request of the firm for issuance of Certificate of Origin is to be considered in log or value added product form; and it implies that the export of the Red Sanders wood whether as value added product form or log form shall be decided by the DGFT while issuing the export permission. After obtaini....
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.... committed. That authority must genuinely address itself to the matter before it; it must not act under the dictates of another body or disable itself from exercising discretion in each individual case. In the purported exercise of its discretion, it must not do what it has been forbidden to do, nor must it do what it has not been authorized to do. It must act in good faith, must have regard to all relevant considerations and must not be influenced by irrelevant considerations, must not seek to promote purposes alien to the letter or to the spirit of the legislation that gives it power to act, and must not act arbitrarily or capriciously. It declared: "13. One of the points that falls for determination is the scope for judicial interference in matters of administrative decisions. Administrative action is stated to be referable to the broad area of governmental activities in which the repositories of power may exercise every class of statutory function of executive, quasi-legislative and quasi-judicial nature. It is trite law that exercise of power, whether legislative or administrative, will be set aside if there is manifest error in the exercise of such power or the exerc....
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....cond "irrationality", and the third "procedural impropriety". These principles were highlighted by Lord Diplock in Council of Civil Service Unions v. Minister for the Civil Service (1984) 3 All.E.R. 935 (commonly known as CCSU case). If the power has been exercised on a non-consideration or non-application of mind to relevant factors, the exercise of power will be regarded as manifestly erroneous...." 75. The contention of the Principal Chief Conservator of Forest (HOFF), Andhra Pradesh that the petitioner cannot request for Certificate of Origin in log form is therefore rejected. 76. We also reject the plea of the Principal Chief Conservators of Forest (HOFF), Andhra Pradesh and the State of Telangana that: (i) petitioner cannot be allowed to take advantage of the change in policy of the Government of India/DGFT permitting export of Red Sanders Wood in log form after 2013; (ii) they had not usurped the jurisdiction of the DGFT, that they did not act in an arbitrary manner and that they have not taken into account irrelevant material and had come to a wrong conclusion. 77. As regards the plea of the Principal Chief Conservator of Forests, Andhra Pradesh t....
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....iscated origin" or "artificially propagated", must be issued by the Principal Chief Conservator of Forest of the State from where the export is to take place based on the documents of procurements and custody of stocks available with the applicant. The stock of Red Sanders Wood sold to the petitioner had been transferred by the petitioner and stored at Toopranpet Village, Yadadri Bhuvanagiri District of the State of Telangana, in the godown owned by the petitioner after obtaining valid transit permits from the respective forest departments of State of Andhra Pradesh in 2013, long before the bifurcation of the composite State of Andhra Pradesh and the creation of the new State of Telangana. Since the export is to take place from the State of Telangana, where the stock of Red Sanders purchased by the petitioner is stored, it has to issue the Certificate of Origin. Other than that, when the stock is genuine, its transport to the State of Telangana is validly made (as is admitted in para 18 of the impugned order dt.06.12.2019 by the Principal Chief Conservator of Forests of both States), the State of Telangana has no choice but to issue the Certificate of Origin. It cannot ....
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....s of the public and their indulgence in unwarranted litigation requires to be corrected. 6. This Court has repeatedly expressed the view that Governments and statutory authorities should be model or ideal litigants and should not put forth false, frivolous, vexatious, technical (but unjust) contentions to obstruct the path of justice. We may refer to some of the decisions in this behalf. 7. In Dilbagh Rai Jarry v. Union of India (1974) 3 SCC 554 this Court extracted with approval the following statement [from an earlier decision of the Kerala High Court (P.P. Abubacker case AIR 1972 KERALA 103): "25. ... '5. ... The State, under our Constitution, undertakes economic activities in a vast and widening public sector and inevitably gets involved in disputes with private individuals. But it must be remembered that the State is no ordinary party trying to win a case against one of its own citizens by hook or by crook; for the State's interest is to meet honest claims, vindicate a substantial defence and never to score a technical point or overreach a weaker party to avoid a just liability or secure an unfair advantage, simply because legal devices provide such ....