M/S NILESH TRADERS  Vs UNION OF INDIA, THROUGH REVENUE SECRETARY, MINISTRY OF FINANCE & ANR.

W.P.(C) 8668/2020 & connected matters Page 1 of 13$~14 to 19
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 11thJanuary, 2021
+ W.P.(C) 8668/2020
M/S AMRUT IMPEX ….. Petitioner
Through: Mr. Darpan Wadhwa, Sr. Advocate
with Mr. Shlok Chandra, Mr. Gaurav
Barathi & Ms. Mansie Jain,
Advocates. (M-9999670588)
versus
UNION OF INDIA & ANR. ….. Respondents
Through: Mr. Anil Soni, CGSC with Mr. Devesh
Dubey, Advocate for UOI.
15 WITH
+ W.P.(C) 8669/2020
M/S ASTRA BUILD TECH PRIVATE LIMITED THROUGH: M.B.
MATHUR, AUTHORIZED REPRESENTATIVE ….. Petitioner
Through: Mr. Darpan Wadhwa, Sr. Advocate
with Mr. Shlok Chandra, Mr. Gaurav
Barathi & Ms. Mansie Jain,
Advocates.
versus
UNION OF INDIA & ANR. ….. Respondents
Through: Mr. Vivek Goyal, CGSC for UOI.
16 WITH
+ W.P.(C) 8670/2020
M/S WHARTON ENGINEERS P AND DEVELOPERS PVT. LTD
THROUGH: M.B. MATHUR, AUTHORIZED
REPRESENTATIVE ….. Petitioner
Through: Mr. Darpan Wadhwa, Sr. Advocate
with Mr. Shlok Chandra, Mr. Gaurav
Barathi & Ms. Mansie Jain,
Advocates.
versus
UNION OF INDIA & ANR. …..Respondents
2021:DHC:100W.P.(C) 8668/2020 & connected matters Page 2 of 13Through: Mr. Vinod Diwakar, CGSC with Mr.
Vishal Kumar Singh, Adv. for R-1&2.
WITH
17
+ W.P.(C) 8671/2020
M/S AJIT EXIM ….. Petitioner
Through: Mr. Darpan Wadhwa, Sr. Advocate
with Mr. Shlok Chandra, Mr. Gaurav
Barathi & Ms. Mansie Jain,
Advocates.
versus
UNION OF INDIA & ANR. ….. Respondents
Through: Mr. Amit Mahajan, CGSC with Mr.
Kritagya Kumar Kait, Advocate.
18 WITH
+ W.P.(C) 8676/2020
M/S NILESH TRADERS ….. Petitioner
Through: Mr. Darpan Wadhwa, Sr. Advocate
with Mr. Shlok Chandra, Mr. Gaurav
Barathi & Ms. Mansie Jain,
Advocates.
versus
UNION OF INDIA, THROUGH: REVENUE SECRETARY,
MINISTRY OF FINANCE & ANR. …..Respondents
Through: Mr. Amit Mahajan, CGSC with Mr.
Kritagya Kumar Kait, Advocate.
19 AND
+ W.P.(C) 9625/2020
MAHARANI ENTERPRISES ….. Petitioner
Through: Mr. Pradeep Jain & Mr. Aakarsh
Srivastava, Advs. (M-9212023661)
versus
UNION OF INDIA & ORS. ….. Respondents
Through: Mr. Anil Soni, CGSC with Mr. Sahaj
Garg & Mr. Devesh Dubey, Advocates
for UOI.
2021:DHC:100W.P.(C) 8668/2020 & connected matters Page 3 of 13CORAM:
JUSTICE PRATHIBA M. SINGH
Prathiba M. Singh, J. (Oral)
1. This hearing has been done through video conferencing.
2. The Petitioners have approached this Court seeking grant of extension
of two months to enable them to complete the import of “poppy seeds”, for
which registration certificates have been issued by the Central Bureau of
Narcotics ( hereinafter, ‘CBN’ ). The Petitioners also pray for quashing and
setting aside the impugned order dated 21stOctober, 2020, passed by the
Director, Department of Revenue, Ministry of Finance, Government of India,
by which the representation of the Petitioners seeking an extension for
completing the imports was also rejected.
3. The brief background in these cases is that the Petitioners are importers
of “poppy seeds”. The Petitioners in W.P.(C) 8668/2020 ,W.P.(C) 8669/2020,
W.P.(C) 8670/2020, W.P.(C) 8671/2020 andW.P.(C) 8676/2020 had entered
into sales contracts for import of poppy seeds with one M/s Gansu Puankang
Pharmaceutical Co. Ltd., – a Chinese exporter. In terms of the contracts, the
importers have paid 80% of the consideration in advance in some petitions
and 30% advance in some petitions. Some portion of the goods have already
been imported. However, the entire quantum is yet to be imported. The details
of the sales contracts qua each of the Petitioners is set out in the table below:
Writ
Petition
No.Name of
the
CompanyType of
Poppy
SeedRegistration No. Quantity Advance
paidDate of
Impugned
Order
8670/2020 M/s
Wharton
Engineer &
Developers
Pvt. Ltd.White
Poppy
Seeds240/CBN/PS/2019-20 102 MT 80% 20.10.2020
2021:DHC:100W.P.(C) 8668/2020 & connected matters Page 4 of 138669/2020 M/s Astra
Build Tech
Pvt. LtdWhite
Poppy
Seeds242/CBN/PS/2019-20 102 MT 80% 20.10.2020
8676/2020 M/s Nilesh
TradersWhite
Poppy
Seeds236/CBN/PS/2019-20 170 MT Contract
complete21.10.2020
Yellow
Poppy
Seeds248/CBN/PS/2019-20 85MT 30%
8668/2020 M/s Amrut
ImpexWhite
Poppy
Seeds231/CBN/PS/2019-20 170 MT Contract
complete21.10.2020
Yellow
Poppy
Seeds247/CBN/PS/2019-20 85MT 30%
8671/2020 M/s Ajit
EximWhite
Poppy
Seeds235/CBN/PS/2019-20 170 MT Contract
complete21.10.2020
Yellow
Poppy
Seeds246/CBN/PS/2019-20 85MT 30%
4. The imports, in accordance with the sales contracts and the licenses
issued by the Respondents, were to be completed by 17thMarch, 2020.
However, the Chinese exporter informed the Petitioners, vide letters sent
around mid-February, that they would be unable to export the consignment,
in view of various problems caused due to the outbreak of the COVID-19
pandemic, including transportation issues, non-availability of labour and non-
availability of containers. The Chinese company sought time up till 30thJune,
2020, for fulfilling its obligations under the said sales contracts.
5. The Petitioners then wrote letters in the latter half of February, to the
Respondents, in view of the Chinese exporter’s letters, seeking extension of
the validity of the sales contracts, up to 30thJune, 2020. The Petitioners are
2021:DHC:100W.P.(C) 8668/2020 & connected matters Page 5 of 13stated to have received no replies to the same. The Petitioners, thereafter wrote
further letters in May, June, August and September, however no positive
response was forthcoming. During this period, the Chinese exporter also
continued to communicate with the Petitioners and repeatedly sought
instructions for shipping the consignment. Owing to the complete silence on
behalf of the Respondent- Government, the Petitioners had moved writ
petitions before this Court which were disposed off vide orders dated 25th
September, 28thSeptember, 2020 and 29thSeptember. In the said orders, this
Court had directed that the Union of India would give an opportunity of
hearing to the Petitioners, and decide their representation in accordance with
law. The operative portion of one of the said orders, is set out below:
“2. It is the case of the petitioner that the
registration granted to the petitioner under the
Guidelines dated 25.09.2019 was to expire on
17.03.2020. Due to the outbreak of COVID-19
Pandemic, the exporter in China expressed its
inability to make the supplies of the poppy seeds
within the time granted. The petitioner accordingly
filed an application seeking extension of the time for
import with the respondent no. 1. Such
representation is stated to be still pending with the
respondent no.1. On the other hand, the exporter
from China has now issued a communication dated
14.09.2020, informing the petitioner that in case the
petitioner is unable to get an extension of the
registration on or before 30.09.2020, it shall forfeit
the advance paid as also blacklist the petitioner
from future dealings.
3. Keeping in view the submissions made, the
respondent no. 1 is directed to grant an opportunity
of hearing to the petitioner on its application
seeking extension of the validity of the registration,
on 29.09.2020 at 12.30 noon. The Officer before
2021:DHC:100W.P.(C) 8668/2020 & connected matters Page 6 of 13whom the petitioner has to appear shall be informed
by the respondent no. 1 to the learned counsel for
the petitioner well in advance.
4. On hearing the petitioner, the Competent
Authority shall pass an order, in accordance with
law, within a period of two days and communicate
the same to the petitioner.”
Similar orders were passed by this court in all the other petitions as well.
6. Mr. Darpan Wadhwa, ld. Senior Counsel appearing for the Petitioners,
submits that the writ petitions which were filed earlier, having been treated as
representations, have now been rejected vide the impugned order dated 21st
October, 2020. He submits that the Central Government itself has issued
circulars, clearly recognizing the outbreak of the COVID- 19 pandemic as a
force majeure event. He further relies upon the office memorandum dated 19th
February, 2020, issued by the Ministry of Finance, to submit that disruptions
have been caused by the Pandemic and accordingly extensions may be sought
in lieu of the same, without financial repercussions on either side. Mr.
Wadhwa further submits that the impugned order, rejecting the extension of
time, fails to recognize that the COVID-19 pandemic had commenced
sometime around December-January in China and the date of the lockdown
in India is irrelevant to the outbreak in China. He submits that the Chinese
company having made it clear that it was unable to supply in February, despite
repeated requests for extensions by the Petitioners, the same was not granted.
Since the Petitioners have paid huge advances to the Chinese exporter, Mr.
Wadhwa submits that if the extension is not granted, apart from the financial
repercussions there is also a threat that the Petitioners may not be able to do
further business with the said Chinese company, which is the sole exporter of
poppy seeds from China, duly recognized by CBN. Reliance is placed upon,
2021:DHC:100W.P.(C) 8668/2020 & connected matters Page 7 of 13by ld. counsel, on the judgment of the Supreme Court in Indian Oil
Corporation v Shashi Prabha Shukla and Ors., (2018) 12 SCC 85.
7. Mr. Pradeep Jain, ld. Counsel appearing for the Petitioner in W.P.(C)
9625/2020 submits that in this petition, the import was to be done from a
foreign supplier of poppy seeds in Turkey, and more than 2/3rdof the
consignment amount has already been imported and only 1/3rdis outstanding.
The deadline for import of the same was June, 2020. It is also stated that the
Petitioner in this case, has also paid the entire amount of consideration to the
exporter.
8. On the other hand, Mr. Anil Soni, ld. CGSC, appearing for the
Government submits that the Government has considered the representations
of the Petitioners. A fair hearing has already been given and the reasoning of
the Government does not deserve interference inasmuch as poppy seeds are a
regulated commodity, and due to the import of the same being a controlled
measure, this would solely be a policy decision of the Government.
9. Mr. Amit Mahajan, ld. CGSC, appearing on behalf of the Respondents
submits that there are quotas which are usually fixed for importing of limited
quantities of poppy seeds, and any out of turn extension granted would
interfere with the quota which is already fixed. He submits that though the
affidavit already filed may not be satisfactory, he is willing to file a further
affidavit to explain this position. Mr. Mahajan finally submits that the
rationale adopted by the Government in regulating the import of poppy seeds
ought not be interfered with.
10. Heard counsels for the parties. A perusal of the impugned order dated
21stMay, 2020, shows that the Union of India has considered merely factual
circumstances to decide that in February, 2020, there was no outbreak of
2021:DHC:100W.P.(C) 8668/2020 & connected matters Page 8 of 13COVID-19 pandemic, and, therefore, the plea of extension in light of the
Chinese exporter being unable to supply the consignment, is not justified.
Further, the impugned order records that there was no obligation under the
guidelines to pay any advance for the said consignments and that making
advance payment is completely as per the convenience of the importers.
Hence, the payment of advances would not constitute a reason for any
extension to be granted. Finally, the reasoning that has been adopted in the
impugned order is that since 1802 metric tons out of 2499 metric tons had
already been imported by the end of February, 2020, there is no justification
to not have had imported the remaining portion of the said consignment. The
relevant portion of the impugned order is extracted below:
“3. The sales contract of the Petitioner was
registered on 18.11.2019 as such validity of sales
contracts was upto 17.03.2020 i.e., four months
from the date of registration as per the guidelines.
The petitioner has submitted that their Chinese
manufacturer/ supplier through their letter dated
11.02.2020 conveyed that they are not in position to
process poppy seed due to circumstances created by
COVID-19 pandemic. It may be seen that till
11.2.2020 also nearly three months of the validity of
sales contract was passed and mere 85 MT of
quantity of the applicant could not be processed by
the Chinese supplier. Therefore, the plea that
supplier could not process the poppy seed due to
COVID-19 pandemic does not appear justified by
the Chinese supplier. Therefore, the plea that the
supplier could not process the poppy seed due to
COVID-19 pandemic does not appear justified.
Moreover, Lockdown in India was imposed only
with effect from 24.03.2020 which is beyond the
date of expiry of registration of sales contract of
Petitioners therefore it also cannot be said that June
2021:DHC:100W.P.(C) 8668/2020 & connected matters Page 9 of 13to lockdown imposed by Government of lndia
import of poppy seed co1.1ld not take place. The
petitioner has pleaded that they have paid
substantial amount as an advance to their Chinese
supplier. However, it may be seen that as per
guidelines issued by Department it was not
obligatory for making advance payment for
registration of sales contract for import of poppy
seeds from China therefore the said arrangement
was made by importer and exporter as per their
convenience.
4. Further, it appears that there was adequate time
available to the petitioner to import the poppy seeds
from China even before impact of COVID- 19
Pandemic. It is further mentioned that 1802 MTs of
poppy seeds were imported by the various importers
by the end of Feb, 2020 out of registered quantity of
2499 MTs of Poppy seeds. Therefore, the reasons
attributed by petitioners for non import of poppy
seeds within validity period of four months i.e
17.03.2020, are not adequate. It is also not
obligatory on the part of Government of India to
extend the period of registration of sales contract
for import of poppy seed s.”
11. A perusal of the guidelines for the registration of sales contracts for
import of poppy seeds from China, issued on 25thSeptember, 2019, shows
that there is a country cap which is fixed by the Narcotics Commissioner on
the basis of the figures supplied by the respective competent authority in
China. However, what is important is that as per the guidelines, the only
recognized company for the supply of poppy seeds is M/s Gansu Puankang
Pharmaceutical Co. Ltd. The relevant portion of the guidelines is extracted
herein below:
2021:DHC:100W.P.(C) 8668/2020 & connected matters Page 10 of 13“I DETERMINATION OF COUNTRY CAP
The country cap should be fixed by the Narcotics
Commissioner on the basis of figures supplied by
the respective Competent Authority of China as
soon as the same are available.
II APPLICATION FOR REGISTRATION
OF SALES CONTRACT
xxx
(v) Applicant will have to produce sales contract
issued by Gansu Puankang Pharmaceutical Co.
ltdin original. In case the exporter in China is other
than Gansu Puankang Pharmaceutical Co. ltd. then
a letter of commitment from Gansu Puankang
Pharmaceutical Co. ltd. in original will have to be
annexed with the sales contract to the effect that
Gansu Puankang Pharmaceutical Co. ltd. agrees to
provide contracted quantity of poppy seeds so such
exporter within a maximum period of four months
from the date of registration of such sales contracts
by CBN.”
12. As per Clause IV of the said guidelines, the sales contracts are valid
only for a period of four months after registration and the penalty for non-
performance is that if a minimum of 50% is not imported, the company can
be disbarred from registration of sales contracts for a period of two years from
China. The said clause reads:
“IV VALIDITY OF SALES CONTRACT
REGISTERED
The sales contracts registered by the Narcotics
Commissioner shall be valid for a period of four (4)
months from the date of communication of such
registration to the applicants”
13. The Petitioners, in all these petitions, are registered importers. The
2021:DHC:100W.P.(C) 8668/2020 & connected matters Page 11 of 13outbreak of the pandemic around early 2020 is a matter of fact which cannot
be disputed. The period when the outbreak may have taken place in China, as
per the Chinese exporter’s letter, ought not be doubted in the manner in which
the impugned order doubts the same. It is a matter of which judicial notice
can be taken. The COVID-19 pandemic originated in China, and hence the
adverse effects and problems due to the outbreak could have been much
earlier in China, than in India. The Chinese exporter has repeatedly contacted
the Petitioners and has expressed its willingness to complete the contract and
to supply the product. However, despite repeated letters and reminders
requesting an extension by the Petitioners, the Government has not responded
to the same, leading to the filing of these writ petitions.
14. These are the second round of writ petitions which have been filed by
the Petitioners. The only reasoning which the impugned order provides is that
there is no justification for not having completed the supplies prior to March,
2020. This court is of the opinion that this reasoning is not acceptable, as it
seeks to completely ignore the fact that the outbreak had begun earlier in
China, as compared to India, and COVID-19 related problems were present
in China in February, leading to the non-supply of the said consignments.
15. The sales contracts in these petitions also show that substantial advance
amounts have been paid by the Petitioners to the Chinese exporter and the
total value of the contracts range between USD 106,250 – USD 273,700. The
Petitioners being Indian importers, who have paid huge sums of money to the
Chinese company, which is the only recognized company for the import of
poppy seeds from China, would be put to severe financial difficulties if the
extension is not granted. They may not be able to recover the advances paid.
Considering that the pandemic has had a debilitating effect on Indian
2021:DHC:100W.P.(C) 8668/2020 & connected matters Page 12 of 13businesses, including Indian importers and exporters, there seems to be no
rationale whatsoever to refuse extension. Moreover, the threat that the
Chinese company may not enter into further transactions with the Petitioners,
cannot be said to be devoid of merit. Even a reasonable apprehension that the
said Company may either refuse to export in future or impose stringent
conditions would be sufficient to consider the case for extension.
16. A perusal of the counter affidavit shows that the main reason for which
the non-grant of extension is stated to be justified is that the lock-down in
India was imposed from 24thMarch, 2020. The Government seeks to ignore
the fact that the lock-down and the impediments caused due to the outbreak,
could have been earlier in China and hence in the opinion of this Court, the
non-grant of extension is not tenable.
17. The Supreme Court in Indian Oil Corporation (supra) held as under:
“Jurisprudentially thus, as could be gleaned from
the above legal enunciations, a public authority in
its dealings has to be fair, objective, non-arbitrary,
transparent and non-discriminatory. The discretion
vested in such an authority, which is a concomitant
of its power is coupled with duty and can never be
unregulated or unbridled. Any decision or action
contrary to these functional precepts would be at
the pain of invalidation thereof. The State and its
instrumentalities, be it a public authority, either as
an individual or a collective has to essentially abide
by this inalienable and non-negotiable
prescriptions and cannot act in breach of the trust
reposed by the polity and on extraneous
considerations. In exercise of uncontrolled
discretion and power, it cannot resort to any act to
fritter, squander and emasculate any public
property, be it by way of State largesse or contracts
etc. Such outrages would clearly be
2021:DHC:100W.P.(C) 8668/2020 & connected matters Page 13 of 13unconstitutional and extinctive of the Rule of law
which forms the bedrock of the constitutional
order .”
Following, the above rationale of the Supreme Court, this court is of the
opinion that the impugned order is not rational or logical, and also completely
ignores the harsh realities of the commercial world, especially during the
pandemic.
18. The submission of the Respondents relating to limited quotas being
available for the import of poppy seeds is devoid of any merit inasmuch as no
such argument has been raised in the counter affidavit. Moreover, the quantity
sought to be imported is already part of the licensed quantities and not beyond
that. This is a case where the authorities have been completely oblivious to
the difficulties being faced by the importers in India.
19. Under these circumstances, this Court directs that the Petitioners, in all
these petitions, are permitted to import the permitted and licensed quantity of
poppy seeds in accordance with the guidelines on or before 31stMarch, 2021.
It is made clear that no further extension shall be granted.
20. The CBN is accordingly directed to validate the registration certificate
issued in favour of the Petitioners in order to ensure that the imports can be
executed and effected on or before 31stMarch, 2021. The said extension shall
be granted by 20thJanuary 2021. If there is any delay in grant of the validation
by CBN, liberty to approach the Court.
21. All the present petitions and applications are disposed of in these terms.
PRATHIBA M. SINGH
JUDGE
JANUARY 11, 2021/ Rahul/Ak
2021:DHC:100