DARUKA & CO. versus UNION OF INDIA & ORS.

Citation: [1974] 1 S.C.R. 570 · Decided: 31-08-1973 · Supreme Court of India · Bench: A.N. RAY · Disposal: Dismissed
Cited by 5 judgment(s) · see the full citation network in Lexace
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Judgment (excerpt)

S70 
DARUKA & CO. 
f. 
UNION OF INDIA & ORS. 
August 31, 1973 
[A. N. RAY, C.J., D. G. PALUA:ll, Y. V. CifANDuCHUD, 
P. N. BHAGWATJ, V. R. KRISHNA IYElt, JI.] 
B 
Import and Exports Act 1941-S. 3 read with the Export Conlrol Ord<r 
1968-Export of Mica under the Scheme of Canalisation through the Ml11ttal1 
and Metals Trading Corporation of India Ltd. is violatfre ol Art. 14, 19(1 )(g) 
aitd 265 of the Constitution of India. 
S. 3 of the Imports and Exporl8 Act 1947, empowers !11• Governmeat lo 
issne orders making provisions for prohibiting restricting or otherwise control-
C 
ling ·the imi)ons and goods of special description and the Export Control Order 
1968, and provides that no person shall export goods of the descriptions •peci-
ti.ed in Schedule-I of the said order, except ilnder licence 
granled 
by 
the 
Central Government etc. 
Mica scrap and 1'1ica waste ate included in _·item 
No. 22(a) of Part B of Schedule-I of the 1968 order. 
The export of these 
items i:s alld~ on merits, ·or sribject to ceilings .or other conditions to be Speci· 
fled, from . time to. time. 
The Con_troller of Imports and Exports issued the 'impugned 
notice and 
under it, the export of Mica was decided to be under the scheme of canalisatioo 
through the Minerals and Metals Trading Corporation of India. The impugned 
notice further stated that this canalisation of export scheme would be effective 
from 24 January, 1972. 
With regard to .cases falling under. pre-canalisation 
commitment category, the Port Licensing :\uthorities might allow export if tke 
shipping documents produced by th~ eXporters were accompanied by documeRtl 
showing that the contracts were entered into with the foreign 
buyers before 
January 1972 i:>r telegraphic offer or acceptance were dated January 1972 and 
irrevocable Letter of Credit at site was opened in a Bank of India, or in the 
foreign country before the 24 January, 1972. 
The impugned notice further staled that the expo.rters who wished to avail 
themscJvcq of the prc--canalisation commitment category were to furnish parti-
culars, such. as name of buyers, quantity, delivery period etc., at the otlic.e of 
the Controller of Impcrts and Exports. 
The CorporatioP. further. issued a Press Note prescribing the procedure to 
be adopted by the exporters taking recourse to the canalisation scheme. Further, 
Che Corporation would realise from the local suppliers as Service Charges not 
exceeding I per cent of the F.A.S. value. The foreign buyers would have to 
open unrestricted Letters of Credit in favour of the Corporation. 
The Press Note further stated that where Letters of Credit had 1ieen opened 
on or after 24th January 1972 in the name of private agencies, foreign buyera 
would be requested so that tlie Letters of Credit were duly amended in the 
name of the Corporation and contracts linaliBed directly by shippers were .alao 
to be amended in favour. of the Corporation for the balance quantity. 
The 
payment due to the suppliers would be paid by cheque after realising the pro-
coedi of sale from the foreign buyers, after retaining the marginal 1 per -cent 
of the fl. A. S. valuo as Service. Charges of the Corporation. 
Afterwards, en representation from severa1 
exporters, 
the 
Government 
issued an Export clarification Circular that in respect of cases where Letter of 
CreJit was opened before 31 March 1972, but the period of shipment had 
expired, exports might be allowed in the name of private parties, provided the 
shipment is made not beyond 30 lune 1972. 
D 
E 
F 
G 
H 
.. 
.. 
DARIJKA Ii CO. V, UNION (Ray, C.J.) 
571 
A 
The petitioner challenged the canalisation of exports scheme, inttr a/la, 01> 
B 
c 
D 
E 
F 
G 
H 
the followiq lfOund& :-
( f) ·ft wu not a canof11a~on scheme. It was in fact a scheme 1<1 lrU&fcr 
the busineas of the petitioner and goOO'Will in favour of the Corpora· 
lion which Is outside the purview of the Act. 
(2) The ocheme was an lllll"easonable restriction and it 
violated Art. 
19(1)(9) of tho Constitution of India. 
(3) the ·sCJieme \liolatecl Art. 14 of the Constitution because there was 
dlscrilnination between the exporters of Mica Powder and Mica 
Scrap aild Mica Waste. 
(4) Fixing 24 January 1972 as the date for coming into force of 
thtt 
scheme was arbitrary. Letters of Credit had not reasonable relation 
to the objects of the Scheme. Therefore, fixing of the date of 24 
January 1972 violates Art. 19. The extension _of the date from 24 
January 1972 to 31st !
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