Holding

NAFED’s allocation of Niger seed export quotas contravened the government’s export instruction and Trade Notice, and the petitioners’ relief under Article 136 was granted.

Summary

In 1982 the Chief Controller of Imports and Exports issued Export Instruction No. 59/82 allowing export of up to 10,000 tonnes of Niger seeds through NAFED on a first‑come‑first‑served basis, subject to a minimum price and irrevocable letters of credit. The petitioners entered into a contract for 1,000 tonnes, obtained a letter of credit and applied to NAFED for quota registration, but NAFED ignored the instruction, selected other applicants, gave them time to produce letters of credit and allegedly favoured higher‑priced bids. The petitioners challenged NAFED’s conduct before the Delhi High Court under Art 226, which dismissed the petition, and then filed a Special Leave Petition under Art 136. The Supreme Court examined the export instruction, the Trade Notice, and the affidavits filed by NAFED, finding that NAFED’s allocation was not on a first‑come‑first‑served basis, that some selected applicants lacked the required letters of credit and that NAFED’s affidavit contained false statements. Consequently, the Court held that NAFED had contravened the government’s export policy and that the petitioners were entitled to relief. The petition was allowed and costs were awarded against NAFED.

Issues considered

Whether NAFED’s allocation of export quotas violated Export Instruction No. 59/82 and the Trade Notice issued by the Government of India.
Whether the false statements made by NAFED in its affidavit justify granting relief under Article 136 of the Constitution.
Whether the selection criteria adopted by NAFED (price advantage and delayed submission of letters of credit) are permissible under the export policy.
Whether the petitioners are entitled to a quota allocation and relief against NAFED’s actions.

Subjects

public sector undertakingexport policyNAFEDTrade Noticefirst‑come‑first‑servedletters of creditArticle 136quota allocationfalse affidavit

Judgment

A

AJOOMAL LILARAM AND ANOTHER

'·
UNION OF INDIA AND OTHERS B
December 13, 1982

•• [0. CHlNNAPPA RBDDY AND V. BALAK:RISHNA ERADI, JJ.]

Con1titution of India-Art. 136-Public sector undtrtaking-Wrong
stattmtnts made in affidavits.filed-Government's instructions di1regarded-Reliej·
c
• iranted to petitioners.

In Jone 1982 the Chief Controller of Imports and Exports issued export
instructions on the subject of Export Policy of Niger Seeds daring 1982-83.
Paragraphs 2 •nd 3 of·tbe instructions stated that the Government had decided to
allo'Y export of Niger Seeds within an overall ceiling of 10,000 metric tonnes D
tbro~gh the National Agricu1twal ·Cooperative Marketing Federation of.India
(NAFED) subject to a minimum export price of Rs. 8,500 per metric tonne. In
addition to NAFED, private exporters who registered their contracts with
NAFED were also allowed to export the seeds on the basis of fir9t come first
... Served, agaipst firm commitments backed by irrevocable letters of credit, subject
to availability of cei!in"g. It was also stated that the N APED would be-responsible
to monitor the ceiling and ensure that export of the seeds did not exceed the
overall quantity of 10;000 metric tonnes during the year. A· Trade Notice on
these lines was issued by thcf Joint Chief Controller of Imports and Exports.
•
On. the faith of the trade notice the petitioner entered into contract with
a foreign-QUyer who opened a firm irrevocable letter of credit in favour of the
petitioner. The petitioner thereupon requested the NAFED to register the
con'tract and that one thousand tonnes of seed might be reserved for him for F
export. About six weeks later the petitioner reminded the NAFED by Jetter and
telegram about his request for allotment of the quota.

In the meanwhile the NAFED wrote to the Government of India, Ministry
of Coinmerce that it was for_ NAFED and its Boar-1 of Directors to formulate
guidelines regarding the release and modalities of export of the seeds and it for-
warded two statements-one showing names of 22 applicants whose requests for G
8.Hotmerit of quotas· were said to be backed by letters of credit aad the other
containing list ~f 34 names of applicants whose contracts werC' not backed by
letters of credit. The petitioner's name was included in the first list.

Reiterating the earlier instructions the Government wrote to the NAFED
that the allotment of quotas should be in conformity with the instructions and
the Trade Notj~9 an~ that it wai not f()r th~ N,O,FI)!? t9 i~Jue another Trade
:Notic~.
2 SUPREME COURT JlllPORTS (1983) 2 !.C.R.

A In disregard of the instructions the NAFED selected certain applicants
and gave time to them to produce letters of credit.. The petitioners were not in
this list.

The Delhi High Court dismissed in limine the petitiOncrs' petition under
Art. 226 of the Constitution.

"B The petitioners thereupon filed their petition under Art. 136 of tho
Constitution.

Allowing the petition,

HELD : While the petitioners aatisfy all tho requirements of the Trade
N otico some of tho applicants chosen by the NAFED· for allotment of quota did
"•.
.c not furnish the letters of credit and the NAFED's action in giving them time for
their production was not in accordance with the terms stipulated by the Trade
Notice. [6 HJ •

Tho file produced by the Government of India .. posed tho statement made
in the NAFED's affidavit that . the petitioners were not in tho list of 22 as false.
Its counsel was misled and wrongly instructed to argue that the petitiOners were
·o not included in that list. But the petitioners in fact figured in the itatement
entitled "enquiries received from private parties backed by letters of credit for
export of Niger seeds" prepared by tho NAFBD and sent to the Government of
India. [7 E]

Even if the claim of NAFED that the selected applicants had secured a
higher price and that that would help to earn more foreign.exchange is correct,
E they were not eligible for registration firstly because . t~eir eontracts were not
backed by !otters of credit in terms of the Trade Notice and· secondly because
the ceilin~ had atre•dy b•en roachod. [7 OJ

Tho counter-affidavit filed by the Government of India fully •ubstlintiates
,.
-~

the claim of the petitioners that tho NAFED bad disregarded the tr'iiile instruc.
tions issued by the Government of Iridia as well as the Trade Notice which was
F
issued pursuant to the trade instructions. [8 A]

CIVIL APPEALLTE JURISDICTION: Civil ApPCal Nos. 3741-42
of 1982.

G From the Judgment and Order dated the 22nd October, 1982
of the Delhi High Court in C.W. Nos. 3577 and 3575 of 1982.

V.M. Tarkunde, K.K. Venugopal, F.S. Nariman, Rajiv Datta
and A.:N. Bhanot for the Appellants.
H
M;K. Banerjee, Additional Solicitor General 1114 Miu A.
{>ubhashini fo~ the Respondent,
AJOOMAL V, UNION (Chinn lppl Reddv, J) 3

M.C. Bhandare and S. Bhanthre for the Respondent. A

The Order of the Court was delivered by

. CHINNAPPA REDDY, J. It transpires from the f acts which we
shall presently set out that the National Agricultural Cooperative
B
Marketing Federation of India, NAFED for short, is a law unto
itself and its officers are not unduly concerned either about carrying
out the Export Trade Instructions issued by the Government of
India or about filing truthful affidavits in the Su preme Court of
India.
c
On June 23, 1982, the Chief Contrn Iler of Imports and
l Exports, Ministry of Commerce, Government of India, issued Export
Instruction No. 59 of 1982 on the subject of Export Policy of Niger
Seeds during 1982-83. Paragraphs 2 and 3 of the Instruction are
important and may be fully set out. They are as follows : -
D
"On a review of the position it has been decided to
allow export of Niger Seeds within an overall ceiling
of 10,000 (Ten thousand) tonnes through . the canalising
'

>
agency, viz. The National Agricultural Cooperative
Marketing Federation of India Ltd. (NAFED) subject to B
minimum export price of Rs.8,500/- ( Rupees eight thousand
five hundred) per metric tonne. While the NAFED can
continue to undertake exports themselves, private parties
will also be allowed to export Niger Seeds as Associates of
NAFED against firm commitments backed by irrevocable
Letter of Credit subject to availability of ceiling . Export F
by private parties will be allowed on first come, first-served
basis. For this purpose, the exporters should register
their contracts with the NAFED. The NAFED will stop
registration of contracts as soon as the ceiling is exhausted.

The NAFED will be responsible io monitor the
G
ceiling and ensure that export of Niger Seeds not exceeding
the overall quantity of 10,000 M.T. during 1982·83. In
''-'·
other words, the export will be all owed only against the
balance quantity left unutilised out of the ceiling of
H
10,000 tonnes released vide. Export Instruction No. 15/82
dated 7.4.1982."
4 SUPllEME COURT REPORTS ( 1983I 2 s.c.a.

A Pursuant to the Trade Instruction, a Trade Notice was
published by the Joint Chief Controller of Imports and Exports on
the same lines. We may mention here that out of the 10,000 tonnes,
export of which was to be allowed, the NAFED reserved to itself the
right to export 5,000 tonnes and decided to allow its associates to
export the remaini.ng 5,000 tonnes.
8
On the faith of the Trade Notice, the petitioner in Special
.
Leave Petition No. 10230 of 1982 entered into a contract with M/s.
Curtis (Confirmers) Limited of London on · 7.7.82 for the sale
and export of 1,000 metric tonnes of Indian Niger Seeds at the
a price of Rs. 8,560 per metric tonne, f.o.b. at any Indian Port.
Shipment of 200 metric tonne was to be by October, 1982, 300
metric tonnes by February, 1983 and 500 metric tonnes by March, \
1983 at buyer's option with one month's clear notice. The pay
ment was to be by 'firm, irrevocable credit, to be opened through
first class bank for 10% value now and for balance 90% to be
D · opened 15 days prior to shipment'. The petitioner forwarded the
contract to NAFED on 22.7.82 with a request that the contract may
be registered and promising to send the letter of credit in two or
three days. An Irrevocable Documentary Letter of Credit was duly'
opened by the Banque Nationale de Paris on behalf of the foreign
buyer in favour of the petitioner for the amount of Rs. 8,56,000
B being 10% of the total value of the goods. The letter of credit also
stipulated that within 15 days before each shipment, 'the credit value
was to be increased to cover the amount of each shipment and that
would be advised as an amendment to the credit'. Letter of Credit
was forwarded to the NAFED by the petitioner on 26.7.82 with a
request that the quantity of one thousand metric tonnes might be
' reserved for him for export. The NAFED seat a reply on 6. 8. 82.
"We will revert in the matter shortly". On 3.9.82 the petitioner
reminded the NA FED both by letter and telegram about his request
for allotment of quota The petitioner also seat a telegram to the
Government of India that matters were unduly delayed though be bad
G completed all the . formalities. 1t appears that meanwhile, ·the
NAFED wrote to the Ministry of Commerce, Government of India,
on 17.9.82 informing the Government of India that it
was for the NAFED and its Board of Directors to formulate
guidelines regarding release and modalities of export. A . copy of
H the guidelines formulated by the NAFED on 16.9.82 was enclosed.
Two statements conta.ining the names of the !ipplicams for quotas
A!OOMAL v. UNION (Chinnappa Reddy, J.)

A
and other particulars were also enclosed. The first statement
showed the names of 22 applicants whose requests for allotment
of quotas were said to be backed by Letters of Credit. The
appellants in the appeals before us are included in this
list though this was · denied in the counter affidavit filed
'
on behalf of the NAFED. More about it later. The second B
statement contained a list of 34 names of applicants whose con
tracts were not backed by any Letters of Credit. On receipt of
this letter the Government of India 'l>y their letter dated
30.9.82 objected to the guidelines said to have been approved
by the NAFED as they were contrary to the guidelines issued by
the Government of India. It was pointed out that according to the C
instructions of the Government of India the allotment bad to be
made on first come first served basis whereas according to the
guidelines prepared by the NAFED the quotas were to be allotted by
a committee consisting of the Chairman and officials of the NAFED,
the Government and the trade, after considering all the applications
received within a certain specified period. In fact the guidelines D
issued ·by the Government of India required that registration of ·
applications should be stopped as soon as the ceiling limit was
reached on a first come first served basis. Further, the guide-
lines prepared by the NAFED provided that Letters of Credit would
have to be submitted within three weeks after allotment and this
was again contrary to the guidelines issued by the Government of
E
India. which required that the Letters of Credit should be made
available for registration of the requests for allotment of quotas.
The letter of the Government again and again emphasised that
quotas should be allotted on first come first served basis to ex-
porters against firm commitments, backed by irrevocable Letters of F
Cre<ljt, subject to availability of ceiling. The Government asked
the NAFED to refet to the fact that the letter of the NAFED itself
showed that there were 22 parties who bad registered their con-
tracts for export, whose requests for allotment were backed by
Letters of Credit and that the total of their requests came to 4,859
tonnes. On the other hand, it was P!linted out, the requests of the G
other 34 parties for quotas were not backed by Letters of Credit.
The Gpvernment of India finally instructed the NAFED to ensure
that exports of Niger Seeds were undertaken in conformity with
the instructions issued by the Government of India in E.I. No. 59/82
dated 23.6.82. The NAFED was reminded that while the NAFED · H
6 J 1983] 2 s.C.F.

A was only a canalising agency for export of Niger Seeds, the export
would have to be undertaken by them only within the policy as laid
down by the Government. The NAFED was further told that a
Trade Notice had already been issued by tbe Joint Controller of
Imports and Exports and that it was not for the NAFED to issue
another Trade Notice as proposed by it.
B
The instructions of the Government of India reiterated by
their letter dated 30.9.82 fell on deaf ears. The NAFED ignored
the instructions of the Government of India and persisted in the
error of its ways. At a meeting held on 16.10.82 the NAFED
purported to select applicants for export quotas neither on a first
c come first served basis as originally announced in the Trade Notice
nor only from among applicants whose contracts were backed by
Letters of Credit. They proposed to give time to the selected
applicants to produce Letters of Credit. \.

The petitioners moved the Delhi High Court under Article
D
226 of the Constitution for redress hut their Writ Petitions were
dismissed in limine. They have come to this Court under Article
136 of the Constitution.. As we were told that the applicants who had
been selected for allotment of quotas bad been able to secure a
higher price from their buyers and, therefore, allotment of quotas
to the petitioners would result in considerable loss of foreign ex
B
change, we were anxious to know the present attitude of the
Government of India in the matter. The Government of India
has now appeared before us through the learned Additional Solici
tor General and a counter affidavit has been filed on their behalf ·

by a Deputy Secretary in the Ministry of Commerce.
'
The NAFED has no clear or definite answer to the petitianers'
claim. First, it was said that the letter of Credit furnished by
the petitioner did not conform to the requirement of the Trade
Notice, but the argument was not pursued as it was seen from the
file produced by the Government of India that the Letters of
G Credit furnished by such of the selected applicants for quotas as
did furnish Letters of Credit were all similar to those produced by
the petitioners. In fact, some of· the chosen ones furnished no
Letters of Credit and it was proposed to give them time for the
production of Letters of Credit. This, of course, was not in accor
H . dance with t�e terms stipulated by the Trade Notice. It is also
clear from the letters �bich the NAFED addressed to the Govern-
A.IOOMAi. v. UNION (Chinnappa Reddy. i.)

ment orindia that it wlls never for a moment doubted by' anyone·
A
that the Letters of Credit produced by the petitioners conformed
to the requirements of the Trade Notice. The present stand•is .a•
clear after·thought and a pretence. In the counter affidavit filed
on behalf of the NAFED it was stated that 22 applicants for
allotment claimed that they had firm contracts backed by Letters B
of Credit for full vlllue. The total quantity covered by these
applications was 4,859 tonnes. It was asserted that the petitioners
did not fall ib this category. It was stated that the petitioners came
in the category of those who had secured a price of Rs. 8;600
per tonne but whose contracts were not backed by Letters of
contract. The Learned Counsel who a1>peared for the NAFED' c
also submitted before us, on instructions, that the petitioners were
not among the 22 applicants whose contracts were considered by
the NAFED as backed by Letters of Credit. But a perusal of the
file produced by the Government of India exposed the statement
made in the affidavit filed on behalf of the. NAFBD as false. The
NAFED had itself prepared a statement showing "Enquiries D
received from private par_ties backed by Letters of Credit for export
of Niger Seeds". This statement was sent to the Government
of India along with its letter dated 17 .9.82 and it contains a list of
twenty two names. Both the appellants in the appeals figure .in it.
It is clear to us that the statement in the counter affidavit is false.
It is also clear to us that the Learned Counsel was misled and
wrongly instructed to argue before us that the appellants were not
included in the list of twenty two.

It appeared to us that a copy of the letter dated 17.9.82 of the
NAFBD to the Government of India was not made available even
to th-; Learned Counsel. We repeatedly asked for it and we could
ultimately get it from the file produced by the Government of India,
F

u.,
.. One of the submissions made to was that the select-
ed applicants had secured a higher price per tonne and that
would help to earn more foreign exchange. Io the first place their G
coptracts are not backed by Letters of Creclit as stipulated by the
Trade Notice and they were not eligible for registration. Io the
second place the ceiling had already been reached and for that
reason also they. could not·be registered.
B
The counter affidavit filed by the Gover.omen! of India f11lly
. substantiates the claim of the appellants that the NAFED had
8 SUPREME COlJllT REPORTS [1983] 2 s.C.I!..
'
A disregarded the trade instructions issued by the Government of
India as well as the Trade Notice issued pursuant to the trade
instructions. In paragraph 27 of the counter affidavit, it is expressly
stated "I submit that the answering respondents have no objec-
tion if relief is granted to the petitioners provided they fulfil the
requirements of the export instructioi:s issued by respondents 1, 2
B and 4". In the circumstances we have no option but to allow
these appeals. Necessary directions have already been issued by
us on 29.11.82. The appellants are entitled to get their costs in each
of these appeals from the 6th respondent, the National Agricul-
tural Co-operative Marketing Federation Ltd. We fix the costs
at Rs. 5.000/- in each ap·peal.
c
P.B.R, Petition allowed,

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