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M/s. Vitthal Agro Exports, Gurme Farm v/s The Union of India, through its Secretary Ministry of Agriculture Department & Others

    Writ Petition No. 1979 of 2011

    Decided On, 30 September 2016

    At, In the High Court of Bombay at Aurangabad

    By, THE HONOURABLE MR. JUSTICE S.V. GANGAPURWALA & THE HONOURABLE MR. JUSTICE K.K. SONAWANE

    For the Petitioner: V. D. Sapkal, Advocate. For the Respondents: R1 to R3, S.B. Deshpande, A.S.G, R4 to R6, S. S. Raut, A.G.P, R7, D.B. Thoke, R8, P.V. Barde, Advocates.



Judgment Text

S.V. Gangapurwala, J.

1. Present writ petitions are filed seeking directions against the respondents to provide assistance to the petitioners in view of Section 10 of the Agricultural and Processed Food Products Export Authority Act, 1985 (hereinafter referred as to the "Act of 1985" for the sake of brevity). So also seeking further directions against the respondents to deposit the amount of the loss sustained by petitioners.

2. The petitioners are producers of grapes. The petitioners had exported the grapes to the European Countries. The export consignment was rejected on the ground that the same did not confirm to the norms. The growth regulator was present, which was not permissible as per the norms of the country to which the grapes were exported.

3. Mr. Sapkal, the learned counsel for petitioners submits that, the petitioners in both these petitions are farmers, who have exported the grapes. The activity of the petitioners is controlled by the Agricultural and Processed Food Products Export Development Authority (for the sake of brevity hereinafter referred as to the "APEDA"). The grapes are scheduled product as defined in Section 2(1) of the Act of 1985. The said Act of 1985 lays down the duties and the measures to be taken by the APEDA. The measures for development and promotion are to be provided under the control of Central Government as per Section 10 of the Act of 1985. As per Section 10(2) (a) of the Act of 1985 financial assistance is required to be provided to the concerned agriculturists/farmers including subsidies. It is also the duty of the APEDA U/Sec. 10(2)(c) of the Act of 1985 to fix the standards and specifications for the scheduled products for the purpose of export. The petitioners are required to be registered as per Section 12 of the Act of 1985 as an exporter of the scheduled products. Section 16 of the Act of 1985 deals with the funds to be created by the APEDA for meeting the cost of measures referred to in Section 10 of the Act of 1985. Section 19 of the Act of 1985 provides for prohibition, restriction and control of the import and export of the scheduled products by the Central Government. The Central Government under the statute is empowered to have control over the export. APEDA is a body created for the purpose of having overall control from registration of firm till issuance of final Phyto Sanitary Certificate required and necessary for the export. The said statutory body is constituted U/Sec. 4 of the Act of 1985 and the said body had issued regulations on 28.12.2007, which are modified every year. As per Regulation No. 10, APEDA has overall control. Regulation No. 8.10 mandates that National Referral Laboratory shall update itself, so also the APEDA, State Government and the nominated laboratories with regard to the list of pesticides and minimum residual levels. As per regulation No. 6.2 the nominated laboratories are only permitted to test the samples. The said laboratories can test only the pesticides, fungicides and weedicides. The annexures to the regulations would show that specified pesticides are only provided.

4. The learned counsel further submits that, the petitioners have complied with each and every provision of the said regulations and the Act. The petitioners had also given a declaration that, they have not sprayed any kind of pesticides, insecticides, fungicides and weedicides excluding growth regulators. The learned counsel further submits that, after complying with each and every condition of the Act and regulations, the product of the petitioners i. e. grapes were exported. The petitioners had followed the instructions scrupulously as provided under the regulations and the statute. All necessary certificates from the State of Maharashtra and other authorities were given to petitioners after following due procedure. The certificates very categorically and specifically state that, the products of the petitioners confirm to all the norms laid down by the APEDA. Even the final Phyto Sanitary Certificate was taken before loading the grapes. The said export consignment was rejected only on the ground that the growth regulator i. e. Chlormequat Chloride was found in excess. The learned counsel submits that, no information was provided by the Central Government or APEDA, body constituted U/Sec. 4 of the Act of 1985 with regard to the said growth regulator. Even in none of the regulations the same was stated. The declaration with regard to the growth regulator was included by APEDA. The learned counsel submits that, even in the regulations, it was nowhere stated that N.R.L. is authorised to test growth regulator. It was the duty of the N.R.L., APEDA and the notified laboratories to get themselves updated. The petitioners could not have sent their products to any other laboratory other than nominated laboratory. When the N.R.L. and the nominated laboratories by the Central Government itself do not possess the necessary infrastructure, nor information with regard to the growth regulator, the petitioners cannot be faulted for the presence of growth regulator. The export of the said product was and is since beginning under control and supervision of the APEDA, the authority constituted under the Act of 1985. The petitioners are the agriculturists and farmers. For the rejection of the export consignment the fault lies with the APEDA and not with the petitioners. The regulations provided by the APEDA are required to be followed by all the authorities including the petitioners. The regulations provided by APEDA did not even whisper about the test with regard to growth regulator and the respondents had certified the product. After rejection of the said product, the respondent authorities and the institutions cannot turn around and deny their liability/responsibility. The petitioners have suffered huge loss because of the fault of the Central Government and its institutions. The whole consignment was rejected. Thereafter the Government directed consignment to be taken to other places. The grapes may have been rejected as per the standards of the European countries. However, the same were confirming to the norms as per Indian Standards, the petitioners could have sold the said product in India. The petitioners were even deprived of selling the said product in India. The learned counsel submits that, because of rejection of the consignment, huge loss has been sustained. The banks have initiated recovery proceedings against the petitioners and the petitioners are required to face all sorts of difficulties.

5. The learned counsel further submits that, in the wake of such eventualities, the legislature has provided remedy and measures in view of Section 10 of the Act of 1985. Sub Section 2 of Section 10 of the Act of 1985 mandates the authority to create the funds as per Section 16 of the Act of 1985. The Executive has miserably failed to abide by their obligations. The learned counsel submits that, the Legislature has made the law, but the Executive has failed to implement the same. It is submitted that, after the rejection of the consignment on the ground of presence of growth regulator, the amendments are carried out in the annexure by the APEDA and now they have provided test for growth regulator also. Till the consignment was rejected, no test was provided for growth regulator. The loss is on account of the negligence on the part of the Government institutions only. The petitioners are entitled for the compensation. The learned counsel submits that, the respondents be directed to provide compensation to petitioners and further be directed to take measures as laid down U/Sec. 10 of the Act of 1985. The learned counsel submits that, the affidavit filed by respondent Nos. 4 to 6 also specifically accepts that, the monitoring plan was prepared by APEDA in consultation with National Referral Laboratory, State Government, Grape Growers Organization, Exporters and implemented through APEDA in Maharashtra. Even according to the State Government, APEDA finalizes the residue monitoring plan document and accordingly, updated the grapenet software for export of grape to the European Union. The said affidavit further states that, the field officers are appointed to carry out inspection as per the procedure laid down in RMP document and the report is updated on the grapenet software designed by APEDA. All this would show that, it is the APEDA who is responsible authority.

6. Per contra Mr. Deshpande, the learned Assistant Solicitor General appearing for respondent Nos. 1 to 3 submits that, quantum of damages cannot be assessed in the writ petition. The respondents nowhere admit the liability as claimed by petitioners. There is no privity of contract. The respondents are not liable. The learned A. S. G. further submits that, after the consignment of the petitioners was rejected on account of presence of growth regulator i. e. Chlormaquat Chloride found in grapes in excess, the said containers were diverted to U.S.S.R. The petitioners must have received consideration of the grapes taken to Russia. The said fact is not disclosed in the petition. The learned A. S. G. submits that, the role of APEDA is only to promote and provide certain facilities to the exporters. The APEDA is only a facilitating body. The regulations were framed as per the Trade Notes dated 28th December, 2007. The role of District level agricultural officer is also spelt out. The procedure for sample and registration is also given. Clause 8.10 of the regulation deals with the responsibility of the National Referral Laboratory. The said regulation 8.10 very specifically also lays down that the exporters shall also update themselves about the changes in MRL values and inform the N.R.L. accordingly. As such it is reciprocal duty of the exporters to get themselves updated with the latest requirements. Even if provisions of regulation 8.10 are perused, no responsibility is cast on the APEDA. The responsibilities and duties at each level are specified. The regulations are developed in consultation with all the stakeholders. APEDA is not responsible for the unfortunate loss to the farmers.

7. The learned A.S.G. further submits that, Section 10 Sub Section 2 of the Act of 1985 may not be of any assistance to the petitioners. The provisions of Section 10(2) of the Act of 1985 are applicable for development of industries. Any financial assistance that is to be given is for the entire industry and individual cases cannot be considered under the said clause. Moreover, the financial assistance is for undertaking of the surveys of residues, studies, joint ventures and other reliefs and subsidy schemes and not to compensate the exporters for the loss which they may have sustained in business. The APEDA has formulated guidelines for providing financial assistance. Though the guidelines for providing financial assistance under agriculture export promotion plan scheme for XII plan came into effect from 01.04.2014, however, identical scheme was in operation during relevant period. The said guidelines are exhaustive and the same did not cover the loss sustained by the exporters. The list which was given by APEDA and National Research Centre for Grapes regarding pesticides recommended for control of various diseases, they would mention growth regulator. The APEDA cannot be faulted for not mentioning Chlormaquat Chloride in the list. The respondents have every sympathy for the farmers, however, they are not responsible for the loss. The learned A. S. G. submits that, no relief can be given to petitioners.

8. The learned Assistant Government Pleader states that, the State Government is concerned with the registration of grapes garden, inspection of grape garden and issuing Phyto Sanitary Certificate for export. The APEDA finalize the residue monitoring plan in consultation with European Union. The learned A.G.P. further states that, for inspection of registered grape garden, inspecting authorities are appointed to carry out the inspection as per the procedure. According to the learned A.G.P. after compliance of Residue Management Plan (RMP) and documents of grapenet system, phyto sanitary certificates were issued. If any issue is raised by the European Union, then it is to be dealt by the APEDA. The role of the State Government is very minimal and restricted only to the implementation of the procedure laid down by the APEDA. According to the learned A. G. P. the State Government is not responsible for the same.

9. We have considered the contentions canvassed by learned counsel for respective parties. Before we advert to the contentions of learned counsel for respective parties, it would be relevant to refer to the relevant provisions of law.

The Agriculture And Processed Food Products Export Development Authority Act, 1985

1. ............

2. ............

10. (1) It shall be the duty of the Authority to undertake, by such measures as it thinks fit, the development and promotion, under the control of the Central Government, of export of Scheduled products.

(2) Without prejudice to the generality of the provisions of sub-section (1), the measures referred to therein may provide for -

(a) the development of industries relating to the Scheduled products for export by way of providing financial assistance or otherwise for undertaking surveys and feasibility studies, participation in the equity capital through joint ventures and other reliefs and subsidy schemes;

(b) the registration of persons as exporters of the Scheduled products on payment of such fees as may be prescribed;

(c) the fixing of standards and specifications for the Scheduled products for the purposes of export;

(d) the carrying out of inspection of meat and meat products in any slaughterhouse, processing, plant, storage premises, conveyances or other places where such products are kept or handled for the purpose of ensuring the quality of such products;

(e) the improving of packaging of the Scheduled products;

(f) the improving of the marketing of the Scheduled products outside India;

(g) the promotion of export oriented production and development of the Scheduled products;

(h) the collection of statistics from the owners of factories or establishments engaged in the production, processing, packaging, marketing or export of the Scheduled products or from such other persons as may be prescribed on any matter relating to the Scheduled products; and the publication of the statistics so collected, or of any portions thereof or extracts therefrom;

(i) the training in various aspects of the industries connected with the Scheduled products;

(j) such other matters as may be prescribed.

16. (1) There shall be formed a Fund to be called the Agricultural and Processed Food Products Export Development Fund and there shall be credited thereto –

(a) any sums of money which the Central Government may, after due appropriation made by Parliament by law in this behalf provide from and out of the proceeds of the cess credited under section 4 of the Agricultural and Processed Food Products Export Cess Act, 1985, after deducting therefrom the expenses of collection of the cess and the amount, if any, refunded;

(b) all fees levied and collected in respect of registration and other matters under this Act or the rules made thereunder;

(c) any grants or loans that may be made by the Central Government for the purposes of this Act under section 15; and

(d) any grants or loans that may be made by any State Government, voluntary organization or other institution for the purposes of this Act:

Provided that no such grant, loan or donation shall be credited to the Fund except with the prior approval of the Central Government.

(2) The Fund shall be applied for -

(a) meeting the cost of the measures referred to in section 10

(b) meeting the salaries, allowances and other remuneration of the members, officers and other employees, as the case may be, of the Authority;

(c) meeting the other administrative expenses of the Authority and any other expenses authorised by or under this Act; and

(d) repayment of any loan.

Regulation for Export of Grapes

1. ..........

2. ..........

8.1 .........

8.10 The NRL shall update itself, APEDA, State Government and the nominated laboratories with regard to the list of pesticides and their MRLs.

However, the exporters shall also update themselves about the change in MRL values and inform the NRL. The NRL will also prescribe the method of sampling/testing/analysis and validation.

10. At the outset, we record our displeasure/anguish over the apathy with which the Union and the State have tried to tackle the problem of the petitioners and similarly situated farmers. It is a matter of fact that, the grapes consignments exported by the petitioners to the European Countries have been rejected on the sole ground of presence of growth regulator not permissible as per the norms of the countries to which grapes were exported.

11. Instead of finding a solution, the Union and the State in their affidavit in reply tried to absolve themselves by passing the buck to the other. The union and the APEDA came up with the plea that APEDA does not issue any report in the entire process of grapes export and does not have any control on the supply chain as registration of farmers and testing the grape sample are carried by State Government and testing laboratories. Whereas State Government in its affidavit submits that, the role of State Government is to implement the procedure laid down by APEDA and N.R.C. grapes. If any issue is raised by European union, then it is to be dealt by APEDA and at Government of India level. The role of State Government is limited and restricted only to implementation of procedure laid down by APEDA.

12. In fact, the respondents have dealt with the matter as if it is an adversarial litigation and none of them have any responsibilities to perform. The respondents have lost sight of the concept of welfare state. It is expected that, APEDA, NCR, NLR, State Government and its authorities function in unison and in cohesive manner. None of them can abdicate their duties entrusted to them under the Act and Regulations.

13. APEDA is an authority established and constituted under Section 4 of the Act of 1985. It has been entrusted with the duty to undertake such measures as it thinks fit for development and promotion under the control of Central Government for export of scheduled products.

14. Section 10(2) of the APEDA Act of 1985 lays down the measures which shall be taken by the authority for the development and promotion of the scheduled products. Amongst the other measures, it includes the development of industries relating to the scheduled products for export by way of providing financial assistance or otherwise for undertaking service and feasibility status. Participation in equity, through joint venture and other reliefs of subsidy schemes. The registration of person as exporter of the scheduled products.

15. The fixing of standards and specifications for the scheduled products for the purpose of export improvement and the marketing of the scheduled product out side India, the permission of export oriented production and development of scheduled products. Under Section 19 of the APEDA Act of 1985, the Central Government may by order published in the official Gazette make provisions for prohibiting, restricting or otherwise controlling import or export of scheduled products and any person contravening an order made under Sub Section 1 of Section 19 of the APEDA Act of 1985 is punishable with imprisonment which may extend to one year or with fine or with both. APEDA is answerable to the Central Government. Under the said Act and Rules framed thereunder an exporter is required to get himself registered with the APEDA and after compliance of all formalities, registration certificate is issued by the authority.

16. The Regulation of Exports of fresh grapes to the European Union through control of pesticide residue is also published by the APEDA. The regulations are issued with an objective to establish a system for controlling residue of pesticides in table exportable grapes at the farm and plot level and to monitor pesticide residue in soil and water at grape farms or plots and pack-houses. It also provides to establish a surveillance system for controlling residue of pesticides allowed/recommended by the National Research Centre for Grapes for cultivation of grapes as well as for traces of other pesticides, which might be found due to previous use on the land. The regulations are also issued to ensure that the grapes exported from India to the European Union do not test for pesticide residue in excess of the prescribed levels. It also provides a mechanism to provide for grade classification of table grapes through grant of a certificate of Agmark Grading. The said regulations also provide for procedure for registration of farms producing grapes for exports. The farmers who intend to export directly or supply fresh grapes to the exporter has to apply for registration of its farm and plots to the concerned District Superintending Agriculture/Horticulture Officer as per application form for registration of grape farms given in annexure 1. The farmer is required to maintain the registration and pesticide application and further procedure is laid down as to the manner of maintenance of record by the agriculture/horticulture officer. The registration number is given to each farm upto the plot level and which shall be under the charge of an Agriculture/Horticulture Officer, whose head quarter is near the farm. The said registration is valid for three years as per regulation No. 3.12. The registration certificate is issued as laid down under regulation No. 3.13. As per regulation No. 3.16 each farmer at the time of harvest has to give a declaration to the exporter in annexure 3 to the effect that pesticides, insecticides, fungicides, weedicides, etc. have not been sprayed/applied after drawal of samples for laboratory analysis. Under regulation No. 4.1 every Agriculture/Horticulture Officer is required to visit the farms/plots at least two times to inspect the farm prior to harvesting of the grapes. Even it lays down contingency under which additional inspection is to be made. The Government of Maharashtra, Karnataka and Andhra Pradesh are required to maintain plot registration data in the specified format as is laid down in Regulation No. 4.6. Even the said regulations cast duty upon the Agriculture/Horticulture Officer to carry out awareness programme to allow use of only registered/recommended pesticides for grapes as is laid down in Annexure 5. Even the procedure is laid down for trial of samples from the grape farms/plots for laboratory testing in regulation No. 5. The laboratory testing is to be done only from the nominated laboratories as per regulation No. 6. All nominated laboratories shall be accredited to the National Accreditation Board for testing and calibration Laboratories (NABL) and/or accredited to ISO/IEC17025. It also lays down that all the nominated laboratories shall have a valid APEDA recognition under its scheme for laboratory recognition. If the grape sample fails and an internal alert has been issued by the N.R.L., the farmer/exporter may choose to have resampling done at a later date. Regulation No. 7 lays down the complete procedure for grant of Certificate of Authorization and the Certificate of Agmark Grading (CAG) as set out in Annexure 11. The CAG is issued only after receipt of inspection report from the laboratories through email. The Phyto Sanitary Certificate (PSC) is issued only after the authorities and/or the labs are satisfied of the whole process been adhered to. Regulation No. 8 deals with the responsibility of the National Research Laboratory (N.R.L.). It has to monitor the work of nominated laboratories by conducting surveillance audit, to ascertain that they are following the criteria laid down under this monitoring system. Regulation No. 8.10 casts a duty on the NRL to update itself, so also the APEDA, State Governments and the nominated laboratories with regard to the list of pesticides and their MRLs. Even exporter is also expected to update himself about the changes in NRL values and inform the NRL. Regulation No. 10.1 states that, the export of grapes will take place only from registered farms/plots. Regulation No. 10.2 further mandates that export of grapes will take place only if these are processed and packed in pack-houses recognised by APEDA and have been duly subjected to test and grading and phyto sanitary inspection. Regulation No. 10.4 states that, APEDA will ensure that the control measures suggested by the NRL are implemented by all the concerned. In the event of the breach of regulations, Regulation No. 11 is penal provision. In the event of breach of the regulation for controlling pesticides residue in fresh grapes, APEDA may initiate action as per provisions of Section 19(3) of the APEDA Act of 1985 and in addition may cancel registration-cum-membership certificate of exporters, de-recognise pack-houses, so also, notifying to DGFT for cancellation of Import-Export Code No. allocated to such exporters.

17. Reading the regulations for export of grapes, it is abundantly and explicitly clear that, the grapes cannot be exported unless the samples are tested in the nominated laboratories and under the surveillance of NRL and overall control is of APEDA. The State Horticulture/Agriculture Officers are also required to carry out inspection from time to time, collect the samples and send it to the laboratories. The whole process from the stage of planting till the Phyto Sanitary Certificate is issued, involves Government machinery and it is only if the authorities clear the samples as fit for export, then only the export can take place. Even if the transaction of export between the farmer and the purchaser of the European Union may be a private transaction, the grapes are never exported without the exporter and its farm being registered with the authorities, the process being followed as laid down under the Regulations and until a certificate to that effect is issued. In the light of aforesaid, the respondents by any stretch are not entitled to take a plea that they are not at all responsible for consignments of grapes exported not conforming to the standards of European Union.

18. The nominated laboratories are required to check presence of pesticides, fungicides, weedicides, etc. as is laid down in the Annexure 5 to the regulation. At the relevant time the presence of growth regulator was not notified in the said annexure and the consignments of grapes of the petitioners were rejected by the European Union only on the count of presence of growth regulator, as according to their norms the same was not permissible. Neither APEDA, nor the nominated laboratories, nor NRL were aware of the same and they had tested the sample and issued certificates of the samples as conforming to all the norms. The said grapes certainly were withstanding the test as far as consumption in India are concerned, as the nominated laboratories have certified the same. After the export consignments being rejected by European Union on the ground of presence of growth regulator, it would be too late in the day for the respondents to come with the plea that they were not at all concerned or responsible for the rejection. It has been placed on record that, now the respondents have included the test of growth regulator also i. e. after the rejection of consignments on the said ground.

19. It is in this context, we have recorded our anguish about the callous and/or casual manner in which the issue is dealt by the respo

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ndents. They cannot now turn around and take the plea that it is the exporter only who is responsible for the rejection of the consignments. APEDA is an export promotion body set up under the APEDA Act of 1985 for the development and promotion of the export of agricultural and processed food products. As discussed above APEDA cannot say that, it is alien to the process of export of grapes and take a stand that APEDA has no control on the supply chain as registration of farmers and testing grapes are carried out by the State Government and its laboratories. APEDA does not dispute the petitioners are registered with it as manufacturers and exporters. APEDA has provided for regulation of export for fresh grapes to the European Union through "Control of Pesticides Residue". The same was developed with consultation of all stakeholders. APEDA is trying to enter into a verbal jugglery by saying that, it is only export facilitating body and not the export regulatory body. The stakeholders include APEDA, NRL, nominated laboratories and exporter. 20. The State Government and its authorities have also role to play in taking samples. However, their role is limited to the extent of collection of samples, sending it to the laboratories and carry out inspections and tests to confirm to the regulations. 21. It is stated that, after the export consignments were rejected by the European Union, the petitioners were directed to divert the said consignments to Russia. Nothing is forthcoming from the petitioners upon the said submissions made by the respondents, APEDA and the Union. 22. Heavy reliance is placed by petitioners on Sub-Section 2 of Section 10 of the APEDA Act 1985. The said provision is an enabling provision. It lays down the scheme about the measures to be undertaken for the development of industries by way of providing financial assistance or otherwise, the economic and feasible policy decisions pursuant to the said section vest with the authority under the statute. The manner of providing financial assistance is the domain of the authority. The said provision does not guarantee financial aid in a particular circumstance. The authority may consider the case of petitioners, if the same would come within the ambit of Section 10 of the APEDA Act. 23. As far as damages are concerned, statistics are not before the Court. The respondents have come with the case that, the petitioners were asked to divert the consignments to Russia. The petitioners have not come out with the case that same was not done and that it is a case of 100% loss. In absence of any statistical figure with proof of the same, it would not be possible for this Court to assess the damages. 24. Considering the limitations of this Court under Article 226 of the Constitution of India, directions as sought by petitioners would not be given. However, this Court would expect the respondent Nos. 1 to 3 to consider the grievance of petitioners and try to redress it as may be permissible. The writ petitions as such are disposed of. No costs. Rule discharged. Ordered Accordingly.
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