Case Note & Summary
The petitioners, a bullion dealing company and its directors, filed a writ petition under Article 226 of the Constitution seeking to quash RBI Circulars dated 22 July 2013, 14 August 2013, and 21 May 2014, along with a show-cause notice dated 14 October 2014 and an order dated 14 January 2015. The petitioners claimed to be one of India’s largest bullion importers, recognized as a Premier Trading House and a Nominated Agency for importing precious metals under the Foreign Trade Policy. The dispute pertained to two consignments of gold, each 100 kg, shipped from UAE on 22 July 2013, before the RBI issued its circular imposing restrictions. The foreign supplier handed over the shipments to an international logistics company in UAE, and customs procedures were completed prior to the RBI circular’s upload time. Bills of entry were filed in India on 23 July 2013, and the goods were released by customs after verifying compliance. The petitioners argued that the circulars were issued under Sections 10(4) and 11(1) of FEMA, 1999, and that they could not apply retrospectively to consignments already in transit. The RBI circulars introduced a 20/80 principle requiring nominees to make 20% of imported gold available for exports. The petitioners challenged the legality of these circulars and the subsequent show-cause proceedings. The High Court admitted the petition, issued Rule, and with consent of parties, heard the matter finally. The judgment remained incomplete in the provided text.
Issue of Consideration
Whether the RBI Circulars dated 22 July 2013, 14 August 2013, and 21 May 2014 are legal and valid, and whether the consequent show-cause notice and order passed thereunder are sustainable
Law Points
- Validity of RBI circulars issued under FEMA
- import of gold by nominated agencies
- Foreign Trade Policy 20/80 principle
- retrospective application of administrative circulars
Case Details
2015 LawText (BOM) (12) 31
Writ Petition No. 10001 of 2014
S.C. Dharmadhikari, B.P. Colabawalla
I.M. Chagla, Prakash Shah, Riyaz Chagla, H.K. Sudhakara, Sanjay Agarwal, Neha Ahuja, Rafiq Dada, Pradeep S. Jetly, S.V. Bharucha, Kinshuk Kislaya
Riddhisiddhi Bullions Limited, Prithviraj S. Kothari, Bhawarlal S. Kothari, Mukesh M. Kothari
Union of India, Reserve Bank of India, Additional Director General of Foreign Trade
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Nature of Litigation
Writ Petition under Article 226 of the Constitution of India challenging the legality and validity of RBI circulars and consequent proceedings.
Remedy Sought
Quashing of RBI Circulars dated 22.07.2013, 14.08.2013, and 21.05.2014, the show-cause notice dated 14.10.2014, and the order dated 14.01.2015.
Filing Reason
Petitioners imported gold consignments and were subsequently issued show-cause notices and orders based on the impugned circulars.
Issues
Whether the RBI Circulars dated 22.07.2013, 14.08.2013, and 21.05.2014 are illegal, ultra vires, and liable to be quashed.
Whether the show-cause notice and order passed pursuant to the impugned circulars are valid.
Judgment Excerpts
The petitioners claim to be one of the largest bullion dealers and petitioner No.1 is an Associate Member of the London Bullion Market Association and a member of the Bombay Bullion Association.
The price for the shipment was fixed at “LONDON-AM-FIX” of 22nd July, 2013 on London Bullion Market Association at around 3.00 p.m. (10.30 a.m. London time) at US$ 1313.75 (London AM fixing rate for gold on 22nd July, 2013) + USD 0.25 (Fixing charges) + USD 2.50 (Supplier charges) = USD 1316.5 per ounce.
On the same day, the impugned Circular bearing No.15 dated 22.07.2013 was issued by the Reserve Bank of India (Respondent No.2) and was uploaded on the RBI website at 19.47 hrs.
The goods were released from the Customs Authorities. This release was after considering inapplicability of the RBI Circular dated 22nd July, 2013, in respect of these goods.
Procedural History
The Writ Petition was admitted, Rule was issued, and respondents waived service. By consent of both sides, the petition was taken up for final disposal.
Acts & Sections
- Foreign Trade (Development and Regulation) Act, 1992: Sections 3, 5, 6(3), 9(4), 11(2)
- Foreign Trade Regulation Rules, 1993: Rule 10, Rule 13(2)
- Foreign Exchange Management Act, 1999: Sections 10(4), 11(1)
