UNION OF INDIA Vs. KAVITA EXPORTS PVT LTD

JUDGEMENT

(1.) THE respondent No. 1 is a Company and is exporter of stainless steel castings. On March 19, 1984, the respondents were issued two REP licences of the value of Rs. 1,54,400/- and Rs. 1,65,600/- respectively. The licences were valid for a period of 12 months from the date of issue and the policy then prevalent permitted an additional grace period of two months. The respondent No. 1, in pursuance of the grant of licences, opened letter of credit on December 13, 1984 and the credit were furnished by Laxmi Bank. The Bank was in financial difficulty and for the period between April 27, 1985 and August 23, 1985, the Reserve Bank declared a moratorium. The Bank thereupon informed foreign supplier on May 16, 1985 the Bank's inability to honour letter of credit. The respondent No. 1 thereupon requested the appellants to revalidate the licences for a further period. The request was not granted on the ground that there is no power to revalidate the licences. The refusal to revalidate gave rise to the filing of the petition under Article 226 of the Constitution of India on the Original Side of this Court.

(2.) THE learned Single Judge by impugned judgment dated April 10, 1989 held that the claim of the appellants that there is no power to revalidate REP Licences is entirely incorrect. The learned judge also held that the Clauses in the Hand Book of Import and Export Policy for April 1985 -March 1988 confers wide powers upon the appellants to revalidate the licences. In view of this conclusion, the learned Judge granted the petition and directed the appellants to revalidate the two licences for a period of six months from the date of intimation of the revalidation. The order of the learned Single Judge is under challenge.

(3.) SHRI Mehta, learned counsel appearing on behalf of the appellants, reiterated the same contention which was urged before the learned Single Judge. Shri Mehta contended that there is no power under the Import Policy to revalidate the REP licences. The submission is not correct. Clause 80 of the Policy sets out that on certain occasions such as dockyard strike in the country of shipment when the importers face genuine difficulties and the goods cannot be shipped in time, the Chief Controller of Imports and Exports may by a general authorisation extend the period of validity of any licence on an ad hoc basis for a specific period. The learned Single judge was, therefore, justified in holding that in case of genuine difficulties, it is open for the appellants to extend the period of validity. On the facts of the present case, the extension was sought for because the Bank which had opened letter of credit could not honour the same due to moratorium. The extension was sought not because of any fault of respondent No. 1. In these circumstances, the order of the learned Single Judge does not suffer from any infirmity and the appeal must fail.