DET NORSKE VERITAS Vs. RESERVE BANK OF INDIA

JUDGEMENT

(1.) The petitioners are an international ship classification society and verification/certification authority founded in Norway in 1864. The petitioners have over 120 years expertise in the field of classification of ships, safety of men and machinery and equipment both at sea and on shore. They are a non-profit foundation and their entire income is used for research relating to shipping as well as industries both marine and land based. The petitioners have 236 sub-stations. They have two sub-stations in India, one at Bombay and one at Calcutta. The benefit of research and development from Norway is made available to their centres in India by the petitioners. The petitioners employ in India only one foreign national as against 18 Indians.

(2.) In 1972 the petitioners established a separate branch in Bombay for classification and certification of ships. The branch was established pursuant to an authorisation issued by the Director General of Shipping, Bombay. By a letter dated 26th July, 1972 the Reserve Bank of India granted permission to the petitioners to carry on such business for five years.

(3.) As from 1st January, 1974, the Foreign Exchange Regulation Act, 1973 came into operation. Under section 29 of this Act inter alia a person who is not a citizen of India or a company (other than banking company) which is not incorporated under any law in force in India or any branch of such company cannot carry on any activity of a trading, commercial or industrial nature without the permission of the Reserve Bank of India. Nor can it open or establish a branch or office in India for this purpose. The petitioners, therefore, made an application on 30th March, 1974 to the Reserve Bank of India (the respondent) for permission under section 29(2)(a) of the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as F.E.R.A.) to continue to carry on the activities of classification/certification of ships. This permission was granted on 31st January, 1976, subject to the condition that technical personal would be predominantly Indian and that no other activities would be undertaken without the prior permission of the Reserve Bank of India.