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Next Generation Business Power Systems Limited v/s Union of India

    Civil Writ Appeal No. 5753 of 2000

    Decided On, 29 July 2002

    At, High Court of Delhi

    By, THE HONOURABLE MR. JUSTICE MANMOHAN SARIN

    For the Appearing Parties: Jayant Bhushan, Sudhir Nandrajog, V.S. Ravat, Advocates.



Judgment Text

MANMOHAN SARIN, J.


(1) RULE. WITH the consent of the parties, writ petition was taken up for hearing on 15. 7. 2002. Counsel for the parties were heard and judgment was reserved.


(2) THE petitioner by this petition seeks quashing of the impugned order/letter dated 13/25. 4. 2000, by which the respondents rejected the petitioner's request for waiver of 1% penalty for extension of the export obligation period, in the Special Impress License No. P/l/0090716 dated 22. 4. 1998. Petitioner also seeks a direction to the respondents to revalidate the Special Impress license No. P/l/0090716, without charging any composition fee or penalty. Petitioner, in addition, seeks extension of the stipulated time for the performance of the deemed export obligation under the license. The prayer is also made to direct the respondents to treat the period, during 16. 4. 1998 to 17. 9. 1999, when the stay order passed by this Court was operational, as not applicable for calculating the period of 18 months granted under the license for the performance of the deemed obligations.


(3) THE facts of the case may be briefly stated. Bids had been invited by Syndicate Bank for the supply of UPS systems under world Bank, aided project for computerization of the nationalized banks. The petitioner was declared the successful bidder and was awarded the contract for supply of 33nos. UPS systems. Petitioner applied for and was granted the Special Impress License no. P/l/0090716, under the Exim Policy for importing components of the aforesaid UPS system without payment of Customs Duty. The supplies of UPS systems were required to be completed before 21. 10. 1999. Petitioner by August 1998, offered for inspection 21 UPS sets to Syndicate Bank for whom the goods had been imported. One M/s Vinitec electronics Private Ltd. (hereinafter referred to as M/s Vinitec) questioned and challenged the award of contract to the petitioner in writ petition bearing No. 1769/1998 filed in this Court. The petitioner as well as the Union of India, were imp leaded as respondents in the said writ petition. By an interim order dated 16. 4. 1998, the parties to the petition were directed to maintain status quo. The order appears at page 21 of the paper book. The writ petition was eventually dismissed on 19. 8. 1999. The Court while dismissing the petition noted that the petitioner in the said writ petition, namely, M/s Vinitec had not challenged the letter by which its bid or tender was rejected. Rather the challenge was made to the award of contract to the present petitioner i. e. M/s. Next Generation Business Power Systems ltd. , on the ground that it was the highest bidder and was a company incorporated only two years before the relevant date without any manufacturing facility. The Court repelled the contention that the present petitioner did not meet the eligibility conditions. The activity of the petitioner in assembling the CKD's with value additions, was held to be "manufacture" within the meaning of the bid. Rather the Court dismissed the said petition also on the ground that the petitioner therein i. e. M/s. Vinitec had failed to challenge rejection of its bid and hence did not have the locus to question the award of the contract to the present petitioner.


(4) MR. SUDHIR Nandrajog, learned counsel for the petitioner, submits that petitioner was prevented only on account of the order of status quo granted by this Court from executing the contract. The order remained in operation from 16. 4. 1998 to 19. 8. 1999. It is a well settled principle of law that no individual should suffer on account of the act of the Court. M/s. Next Generation Business power Systems Ltd. , had the means and had taken all steps for supply of the UPS systems but could not do so because of the status quo order granted by this Court. He makes a fervent plea that the petitioner should not be made to suffer or subjected to any penalty or composition fee as is sought to be imposed by the respondents as a pre-condition for grant of extension of period of export Obligation or for revalidating period of impress license.


(5) MR. SUDHIR Nandrajog with a view to make good his plea of the bona fides of the petitioner states that the petitioner had completed supply of all the remaining four UPS Systems, within five months of the vacation of the stay order i. e. by December, 1999.


(6) IT may be pertinent at this stage to notice the provisions of the Handbook of Procedures as are applicable for extension of the period of Export Obligation as also the relevant portion of EXIM policy at paras 7. 22 and 4. 14 setting out the circumstances and conditions in which a party could be exempted from the provisions of the policy and procedure;


"7. 22 The period of fulfillment of export obligation under an Advance License shall commence from the date of issuance of license. The export obligation shall be fulfilled within a period of 18 months except in the case of supplied under Advance License or deemed Exports/advance License to the projects/turnkey projects in India/abroad, where the export obligation must be fulfilled during the contracted duration of execution of the project/turnkey project. The request for extension in export obligation period may be made in the form given in appendix-12. The regional licensing authority shall grant one extension for a period of six months from the date of expiry of the original export obligation period, to the license subject to payment of composition fee of 1% on the unfulfilled FOB value of export obligation with reference to CIF value of imports made for which extension being sought. Request for further extension may be considered by the regional licensing authorities subject to payment of composition fee 5% on the unfulfilled FOB value of export obligation with reference to the CIF value of imports made for which extension is being sought. Such extension shall, however, not exceed a period of six months from the date of expiry of earlier extension. 4. 14 Exemption from Policy/procedure. Any request for relaxation of the provisions of the policy or of any procedure, on the ground that there is genuine hardship to the applicant or that a strict application of the Policy or the procedure is likely to have an adverse impact on trade may be made to the Directorate General of Foreign Trade for such relief as may be necessary. The Director general of Foreign Trade may pass such orders or grant such relaxation or relief as he may deem fit and proper. The Director General of foreign may, in public interest, exempt any person or class or category of persons from any provision of this policy or any procedure any may, while granting such exemption, impose such conditions as he may deem fit. Such request may be considered only after consulting ALC if the request is in respect of a provision of Chapter 7 of the policy/procedure. However, any such request in respect of a provision other than Chapter 7, may be considered only after consulting policy Relaxation Committee. "


(7) MR. JAYANT Bhushan, standing counsel of union of India, opposing the writ petition submitted that considering the delay entailed on account of the stay granted by the Court, an extension of six months in accordance with para 7. 22 of the hand book of procedure 1997-2002 was granted. A composition fee only of 1 per cent of FOB value of unfulfilled export obligation with reference to the CIE value of import was levied. Respondent/union of India granted extension in accordance with the policy, subject to payment of 1 per cent of composition fee, which was a pre-condition for extension. Mr. Jayant Bhushan submitted that the penalty/composition fee levied was quite reasonable, considering the total contract value and the delay entailed. He submitted that if the petitioner felt aggrieved by the action of M/s. Vinitec or loss being inflicted on account of acts of m/s. Vinitec, it was for the petitioner to seek restitution. There was no reason for Union of india to be subjected to loss of revenue or grant an exemption not warranted by the terms of policy. Mr. Bhushan next urged that the power to grant waiver of penalty or composition fee was a discretionary power of the respondent and had been so exercised. Respondent has in its discretion declined to extend period of license without imposition of composition fee or penalty and no interference in writ jurisdiction was called for.


(8) IT would be pertinent, at this stage, to consider the reasons given by the respondent, while rejecting the petitioner's request for waiver of 1 per cent penalty/composition fee. The relevant portion of the letter dated 13th/25th april, 2000 of Directorate General of Foreign trade is as under:-


"letter dated 13th/15th April, 2000 to, m/s. Next Generation Business Power Systems Ltd 1765, Gautam Nagar, gulmohar Park Club Road, new Delhi-110049. Sub:- Request for waiver of 1% penalty for extension in E. O. period of the Special impress License No. P/l/0090716 dated 22. 04. 1998. Gentlemen, please refer to your letter dated 08. 03. 2000 on the subject mentioned above. You are informed that your case has been considered by the ALC Meeting No. 01/01. dated 04. 04. 2000 and "it has been decided to reject the same since the DGFT Organisation was not a party and no directions have been given by the How?ll Court for waiving the penalty amount. Yours faithfully"


(9) MR. NANDRAJOG, counsel for the petitioner, has rightly assailed the said rejection, as being on untenable grounds. Union of India was a party in the writ proceedings that had been instituted by M/s. Vinitec to reject the same by saying that the Directorate General of Foreign Trade was not a party is wholly untenable and mis-conceived. The Directorate General of Foreign Trade being a department of the Ministry of Commerce is part of union of India. Secondly, to reject the prayer for waiver of penalty on the ground that no directions have been given by the Court in the said writ petition for waiver is also untenable. The subject matter or the lis before the Court in cw. No. 1769/98 was the challenge by M/s. Vinitec to the award of contract in favor of the petitioner. The subject matter of the writ petition was not a request for waiver of the composition fee or penalty. As such there was no occasion for the court to determine the said issue or pronounce on it. Petitioner has applied to the respondent for waiver of composition fee or penalty in accordance with the provisions of their policy. The provisions of the policy, as noted above, in para 4. 14 vest the respondent with discretion to grant exemption from even the application of the provisions of the policy in cases of hardship and to grant waiver of penalty. In the instant case, it is the admitted position that the petitioner could not perform its contractual

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obligation on account of the stay granted in the writ petition. Furthermore, it completed the supplies with expedition within a period of four months, upon the stay being vacated. (10) IN the present case, the Union of India itself was a party to the writ petition and as noted in para 9 the petitioner fulfilled all its contractual obligations as soon as the stay was vacated. The petitioner having done all that it could do within its power, relief as admissible under the policy ought not to be denied on the plea that petitioner should seek restitution or proceed against M/s Vinitec. (11) IN view of the foregoing discussion, the letter dated 13th/25th April, 2000, is set aside as being based on untenable grounds and vitiated by non-application of mind. Respondents are directed to consider the matter afresh and take a decision within a period of 2 months on the application of the petitioner for waiver of 1% penalty and extension of the Export obligation period of the Special Impress License No. P/l/0090716 dated 22. 4. 1998 and its revalidation, considering all the relevant material and the observations made by this Court. The writ petition is disposed of in the above terms.
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