UNION OF INDIA & ORS. versus M/S. INDO-AFGHAN AGENCIES LTD.

Citation: [1968] 2 S.C.R. 366 · Decided: 22-11-1967 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Dismissed

Cited by 23 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

UNION OF INDIA & ORS. 
v. 
M/S. INDO-AFGHAN AGENCIES LTD. 
November 22. J 967 
[J. C. SHAH, S. M. SIKRI AND J. M. SHEi.AT, JJ.J 
Imports and Exports (Control) Act (18 of 1947), 3. 3-Import Trade 
Policy-Notific111ions undtr-lf utcutivt instructions-Whether enforce-
ablt-RtprtstntDlion to uporters that they wUl bt given ctrti{icatts to 
import mattrial tqual to 100% of tht valut of tht exporrs-Whtn quan· 
tum in import cerri{icatt can b1 rtductd-C/aim of uporttrs if foundtd 
on tquity. 
Section 3 of the Jmpons and Expons (Control) Act, 1947, authorises 
the Central Government to make, by order, provisions for prohibiting, 
restricting or otherwise controlling impon, export, carriage etc. of goods 
of specified description: 
In exercise of this power, the Central Govern-
ment issued the Imports (Control) Order. 1955, and other orders setting 
out the policy governing the grant of import and export licences. 
The 
Central Government also evolved an Import Trade Policy to facilitate 
the mechanism of the Act and lhe orders issued thereunder. and it was 
modified from time to time by issuin~ fresh Schemes in respect of new 
commodities. 
Jn 1962, the Central Government promulgaied the Export 
Promotion Scheme providing incentives l<' exporters of woollen 
textile~ 
and goods. 
It provided for the grant to on exponer, certificates to im-
pon raw materials of a total amount equal to 100% of the F.0.B. value 
of his export<. Clause 10 of the Scheme provided that the Textile Com-
missioner could grant an import certificate fo; a lesser a.mount if he ic; 
satisfied, after holding an enquiry. that the <.~clared value of the goods 
exported is hlgber than the real value of the goods. The Scheme was ex· 
tended to export:-. of \\-·oollen textiles and goods to Afghanistan. 
The respondents exported woollen goods to Afghaoisian and 
wero 
i'5ued an Import Entitlement Ccnificate by the Textile Commissioner n01 
for the full F.0.ll. value of the goods exponed. but for 
a reduced 
amount. 
In doin.2 c;o, th-.: l'extilc Commissioner collected evidence ex 
oarte and actini.; UL1on the report of 
a Committee apooinled by him 
·passed orders without informing the respondents or 
giving 
them 
an 
opportunity to explain the materials on the basis of which the 'imporl 
entitlement' of the respondents was reduced. Some of the exporters had 
appeared before the Committee and explained the circurnstances in which 
they made the exports, but the report of the Committee -.:as not made 
available to them. 
The respondents made representations tQ the Central 
Government but the Government 
confirmed the orders. The rCsPon-
dents then filed writ petitions in the. High Court. 
The High Coun set 
aside the orders of the Textile Commissioner and Government, and held 
that the respondents '\1.;ere entitled under the Scheme to 
obtain 
import 
licences for an amount equal to 100% of the F.O.B. value of their ex-
pons, unles.< it was found on enquiry duly made under cl. IO of the 
Scheme that the respondents had by 'over-invoicing' the goods disentitled 
themselves to the import licences of the full value; and that the Textile 
Commissioner without making any such enquiry. proceeded 
upon 
ht< 
'subiectivc satisfaction' that the respondents had 
'over 
invoiced' 
the 
good.c; cxportedi. and that Government also acted in a similar -manner in 
dealing with the representation of the respondents. 
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UNION V. INDO·AFGHAN AGENCIES 
:i67 
In appeal to this Court, it was contended : 
( 1) 
that the Export 
Promotion Scheme was administrative in character, that it contained mere 
executive instructions issued by the Central Government to the Textile 
Commissioner, and created no enforceable rights in the exporters who 
exported their goods in purauance of the Scheme and .that it imposed no 
obligations upon the Government to issue import certificates, (2) that the 
Textile Commissioner was the sole judge of the reasons for reducing the 
import entitlement, that the Scheme did not require him to set out the 
reasons for reducing the import entitlement, or to give an opportunity to 
the respondents because, the exercise of the power to reduce, conferred 
upon the Textile Commissioner, was not limited by the terms of cl. 10 of 
the Scheme, and was not, except on proof of mala fide exercise, open to 
judicial review; ( 3) that the Government on grounds of 'executive neces-
sity' was the sole judge of the validity of its ac

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