Case Note & Summary
The Supreme Court of India dealt with a writ petition under Article 32 of the Constitution filed by an association of glass chatons importers and users along with two merchants. The petitioners challenged the constitutional validity of Para 6(h) of the Imports (Control) Order, 1955 and the enabling provision in Section 3 of the Import and Export Control Act, 1947. Glass chatons, used as raw material for manufacturing glass bangles and similar articles, could be imported only under licences granted by licensing authorities. From 1955, the Imports (Control) Order regulated imports. For the period January 1957 to March 1958, import of glass chatons was totally prohibited. From April 1958, import was permitted only under the Export Promotion Scheme. Licences were issued in favour of the State Trading Corporation for specified values during April-September 1958 and October 1958-March 1959. The petitioners, however, did not apply for any import licences in 1957 or thereafter. They filed the writ petition on April 27, 1959, seeking directions that the Union of India and Chief Controller of Imports forbear from giving preference to the State Trading Corporation, not create a monopoly in its favour, cancel import permits already granted to it, and restrain the Corporation from importing on existing licences. The court noted that the periods of the already granted import permits had expired and that since the petitioners had made no applications for licences, there could be no question of preference. The petitioners' counsel nevertheless argued that Para 6(h), which allowed refusal of licence if the licensing authority decided to canalise imports through special or specialised agencies, was void as contravening Articles 19(1)(f), 19(1)(g) and 31, and that Section 3 of the Act was bad to that extent. The court held that canalisation of imports through special agencies is a reasonable restriction in the interest of the general public. It reasoned that if a decision has been made that imports shall be by particular agencies, granting licences to outsiders would frustrate that decision. The court emphasised that import policy is an integral part of general economic policy, involving internal and international trade, monetary policy, development of agriculture and industries, and even political considerations. Consequently, the burden on a person challenging the policy as not in public interest is very heavy, and the court proceeds on the assumption that the government's decision is in public interest unless the contrary is clearly shown. The court clarified that while the decision to canalise may be difficult to challenge, the selection of a particular channel or agency could be challenged under Article 14 or other fundamental rights, but no such question was raised in the present case. The court rejected the Article 31 argument, holding that refusal of a licence does not amount to acquisition of any right; successful canalising agencies do not acquire the trade right of unsuccessful applicants. On Article 14, the court held that since the petitioners had not applied for licences under the Export Promotion Scheme, there was no scope for arguing that they had been discriminated against. Accordingly, the Supreme Court dismissed the petition with costs, holding that Para 6(h) of the Imports (Control) Order, 1955 and Section 3 of the Import and Export Control Act, 1947 are valid and do not contravene Articles 14, 19(1)(f), 19(1)(g) or 31 of the Constitution.
Headnote
A) Constitutional Law - Reasonable Restrictions on Trade and Property - Article 19(1)(f) and Article 19(1)(g) - Import and Export Control Act, 1947, Section 3; Imports (Control) Order, 1955, Para 6(h) - Canalisation of imports through special or specialised agencies is a reasonable restriction in the interest of the general public - The court held that if a decision has been made that imports shall be by particular agencies or channels, the granting of licence to any applicant outside the agency would frustrate that decision; therefore, if canalisation is in the public interest, refusal of licences to outsiders must also be in the public interest - Held that Para 6(h) and Section 3 are valid and do not contravene Articles 19(1)(f) and 19(1)(g) (Paras 1-5). B) Constitutional Law - Acquisition of Property - Article 31 - Refusal of import licence under Para 6(h) does not amount to acquisition of right to carry on trade - The court reasoned that when a licence is refused, the applicant can no longer carry on trade in the goods; when licence is granted to canalising agencies, those agencies do not acquire the unsuccessful applicant's right to carry on trade - Held that Article 31 has no application because no acquisition of any right arises by refusal of a licence (Paras 1-5). C) Constitutional Law - Equality Before Law - Article 14 - Preference to State Trading Corporation not discriminatory when petitioners did not apply for licences - The court noted that though it was open to the petitioners to apply for licences under the Export Promotion Scheme, they made no such application; therefore there was no scope for argument that they were discriminated against - Held that no denial of equal protection arose, but selection of a particular agency could be challenged under Article 14 in an appropriate case (Paras 1-5). D) Constitutional Law - Judicial Review of Economic Policy - Import Canalisation - Courts presume government decision on canalisation is in public interest - The court observed that import policy is an integral part of general economic policy involving internal and international trade, monetary policy, agricultural and industrial development, and even political considerations; it may be difficult for any court to have adequate materials to decide whether a particular policy is in general public interest, and more than one view may be possible - Held that the burden on the person challenging the policy is very heavy and the court will proceed on the assumption that the decision is in public interest unless the contrary is clearly shown (Paras 1-5).
Issue of Consideration
Whether Para 6(h) of the Imports (Control) Order, 1955 and Section 3 of the Import and Export Control Act, 1947 violate Articles 14, 19(1)(f), 19(1)(g) and 31 of the Constitution of India; whether canalisation of imports through special or specialised agencies is an unreasonable restriction on the right to carry on trade and acquire property; whether refusal of import licence amounts to acquisition of the right to carry on trade; whether preference to State Trading Corporation without the petitioners having applied for licences violates equal protection under Article 14
Final Decision
The Supreme Court dismissed the writ petition with costs. The court held that Para 6(h) of the Imports (Control) Order, 1955 and Section 3 of the Import and Export Control Act, 1947 are valid and do not contravene Articles 14, 19(1)(f), 19(1)(g) or 31 of the Constitution. No relief under Article 32 was granted.
Law Points
- Canalisation of imports through special or specialised agencies is a reasonable restriction in the interest of the general public under Articles 19(1)(f) and 19(1)(g) of the Constitution of India
- refusal of import licence under Para 6(h) of Imports (Control) Order
- 1955 does not amount to acquisition of property or right to carry on trade under Article 31
- courts presume that a government decision to canalise a particular commodity's import is in the interest of the general public unless the contrary is clearly shown
- selection of a particular agency for canalisation may be challenged under Article 14 but no such question was raised
- no denial of equal protection under Article 14 when petitioners did not apply for import licences under the Export Promotion Scheme
- burden on person challenging import policy as unreasonable is very heavy because more than one view can be taken on economic policy
