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Judgment
Date,Event,
2016,"Condition No.(c) came to be introduced in Chapter No.12
of the Import Policy whereby the Respondent No.1 was
granted the power to regulate the import of the poppy
seeds in India.",
July, 2016","That in accordance with the above-mentioned conditions,
the Respondent No.2 decides country cap, quantitative
restriction, etc. for the import of the poppy seeds from
different countries.
Such country cap, quantitative restrictions, etc. are notified
by way of issuing Public Notices from time to time.
Under the said public notices, the Respondent No.2 herein
also lays down a procedure for the import of the poppy
seeds in India from different countries.
Under the public policy, between 2016 to 2019, the
procedure that was followed for the import of the poppy
seeds in India from different countries was broadly as
under:
→The applicants desirous to import the poppy seeds from
Turkey shall apply in the prescribed proforma to register
their sales contract with the Respondent No. 2.
→Each applicant could register sales contracts for the
quantity applied for or 90 Mts, whichever is less.
→Furthermore, when the quantity available for allocation
to the applicants was insufficient to allocate to all the
applicants, selection of the application was done on the
basis of draw of lots.
→The applicants who did not receive allocation due to the
country cap getting exhausted were kept in the wait-list.
The applicants put in the wait-list due to exhaust of the
country cap were allowed in the order of the priority list
drawn at the time of the allocation of country cap.
Furthermore, after the last date for registration, the names
of all the successful applicants were published on the
website which ensured transparency in the process.",
25.06.2019,"However, to the utter shock and surprise of the petitioner,
the Respondent No. 2 herein issued the public notice and
introduced new policy for importing the poppy seeds from
Turkey.
The said policy was drastically different from the existing
policy and it provided for the allotment of contract based
on first come first serve basis. That vide public notice viz
PS No.9/2019 dated 25.06.2019, the Respondent No.2 had
notified the guidelines for “Registration of sales
contract†in respect of any import of the poppy seeds
from Turkey. That under the said notification, the country
cap of the purpose of the import of the poppy seeds from
Turkey was required to be approved by the Department of
Revenue on the basis of the recommendation by the
committee comprising of the Respondent No.2, one
representative of the Directorate General of Foreign Trade
and one representative of the Department of Revenue.
The country cap will be based upon the stock and
production of the poppy seeds as communicated by the
Turkish Grain Board (TMO) or Turkish Embassy in India
The other terms and conditions are as under:
→ Furthermore, under the revised public notice, the
exporting company in Turkey shall get the sales contract
registered with the TMO
→ Once such contract is registered with the TMO, the
Indian importer may approach the Respondent No. 2 for
the registration of sales contract by filing the application in
the manner specified by the Respondent No.2. However, if
the importer has not got registered his sales contract for
the import of the poppy seeds in the last three financial
years, the verification of the genuineness of existence of
the importer shall be got done through physical verification.
In case where the sales contract is found to be registered
by the TMO, the Respondent No.2 shall grant provisiona
registration to the importer.
→ Each applicant was allowed to register the sales
contracts for the quantity applied for or 25 Mts whichever
is less during the particular crop year.
→ Furthermore, the applicant importer on receiving the
provisional registration will be required to open an
irrevocable letter of credit in favour of the Turkish
exporter or make an advance payment to the extent of
minimum 20% of the total contract value of the quantity
allowed to be registered in the provisional registration.
However, as can be discern from the above mentioned
policy, the method for selection of the applicants- importers
is not provided for. Therefore, the Respondent No.2 can
pick and choose the importers as per their own whims and
fancies. Furthermore, the applicantsimporters who are
importing for the first time are subjected to physical
verification as opposed to other applicants- importers. Such
a classification is unreasonable in as much as it has no
nexus with the object which is sought to be achieved by
discriminating first time importers with other importers.",
27.06.2019,"Petitioner negotiated with one “DERVISOGL
TARIM URUNLERI†(“exporterâ€) for the imporot f
the poppy seeds to India. That on 27.06.2019, the petitioner
herein entered into a contract for purchase of the poppy
seeds of 90 Mts.",
June-July, 2019","The exporter of the petitioner herein approached the
Turkish Grain Board (TMO) to register their sale contract.
However, the TMO did not entertain the exporter of the
petitioner on the ground that the country cap has already
exhausted.",
28.08.2019,"Since many other importers were facing a similar issue, a
writ petition being the Writ Petition No.7469 of 2019 came
to be filed before the Hon’ble High Court of Bombay.
The said writ petition was rejected vide order dated
28.08.2019 and the policy dated 25.06.2019 was upheld,
inter alia, on the ground that the Petitioners do not have
inherent right to import.",
18.07.2019,"Similar petitions were filed before the Hon’ble High
Court of Delhi being the Writ Petition (C) No.7676 o
2019. Even in this petition the policy dated 25.06.2019 was
under challenge.
On the said date, the Hon’ble High Court of Delh
observed that prima facie this Court concurs with the
contention that if the registration of the TMO itself is
exhausted on the basis of the country cap, then the
guidelines would work on first come first serve basis,
which is not the methodology under the said guidelines.",
28.08.2019,"That in the said petition, the Respondent No.2 herein
referred to a communication of the TMO and confirmed
that the Turkish Authority will remove the old contracts in
the system and re-upload the sale contract for year 2019-
20.
However, the advocate for petitioner in that matter
contended that the clarification was insufficient in as much
as it does not specifically state that only those contracts
which were executed on or after the declaration of the
country cap will be uploaded by the Turkish Authorities.",
06.09.2019,"Thereafter, the TMO addressed a letter to the Responden
No.2 stating that the crop year 2018-19 have lapsed along
with the expiry of the shipment period i.e. 31.07.2019 due
to the lack of import permits.
Under the circumstances, upon declaration of the new
Public Notice by the CBN, allt he Turkish exporters would
be required to make new application for fresh registration
of their Export Contract with the TMO for shipment perio
2019-20, and the valid application shall be uploaded by
them with the CBN for the issuance of the import permits.",
11.09.2019,"In view of the above communication, the Hon’ble High
Court of Delhi observed that the petitioner’s grievance
with regard to the non-fixation of the country cap and the
registration of contracts prior to the declaration of the
country cap stands satisfied.
The Hon’ble High Court of Delhi also observed tha
the Respondent no.2 shall device some mechanism for
ensuring equitable distribution of the importable quantity
amongst all the applicants. In view of the above, the Writ
Petition (C) No.7676 of 2019 came to be disposed off",
13.09.2019,"Under the circumstances, on 18.09.2019, the petitioner
herein entered into a fresh contract for the purchase of the
poppy seeds of 90 Mts.",
September, 2019","However, since the said Public Notice do not prescribe
any procedure or criteria for the “Registration of sales
contract†in respect of any import of the poppy seeds
from Turkey; the TMO refused to register the sales
contract on the pretext that the entire cap for the import of
the poppy seeds under the public notice dated 13.09.2019
is exhausted on first-come-first-serve basis.",
,Old Policy,New Policy
Lack of Transparency,"The list of successful importers who
were allotted quote were listed in
chronology of their name featuring in
draw of lots.","No such list is published. Allotments
are made behind the closed doors.
Registration,Registration required by importer,"Registration by importer with
Respondent No.2 and by exporter
before TMO
Quantity enhanced,"Earlier a single importer can import
maximum of 90 MTS (18000 MTS will
be exhausted 200 applicants)","Now a single importer can import
maximum of 450 MTS (18000 MTS
will be exhausted 40 applicants)
Number of times importer can apply,One time in a crop year,Six times in a crop year
Method of Allotment,Draw of Lots,First Come First Serve
Wait List,"Old policy provided for preparation of
wait-list based on draw of lots","New policy does not prescribe any
method for wait-list. In the event of
cancellation of contract of importer, the
Respondent can award contract to
anyone else according to their whims
and fancies
First Time Importers,No physical verification of documents,"They are required to undergo physical
verification of documents.
Registration of Sales Contracts by Turkish Grain Board
(TMO)
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Application for registration for Sales Contract to be filed
by",,
Indian Importer in the office of the Respondent No.2
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Option to Indian importer to pay minimum amount of 20%
of contracted value as advance or open irrevocable L.C. in
favour of exporter to get final registration.
|
|",
Provisional Registration granted by the Narcotics
Commissioner
|
|",,
Advance payment of minimum 20% amount of contract
value by Indian importer to Turkish exporter or opening of
irrevocable L.C. in favour of exporters
|
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,,
,,
Application for converting provisional registration to Final
registration
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Final Registration by the Narcotics Commissioner,,
The Petitioners decry guidelines dated 25th June 2019 issued by the 2nd Respondent, the Central Bureau of Narcotics (“CBNâ€) to regulate the",,
import into India of poppy seeds. The proposed import in question is from Turkey. According to the Petitioners, these guidelines are an unconstitutional",,
restriction on their right to trade and carry on business.,,
We disagree.,,
That poppy seed import into India is regulated by the CBN is undisputed. The Petitioners are registered importers. They have the necessary,,
licenses. They agree, further, that there is annual cap or quota on poppy seed import from various points of origin. There is a cap on the quantity that",,
may be imported for each foreign exporter country. Until recently, import permissions were by sale of lots.",,
On 25th June 2019, the 2nd Respondent issued the impugned public notice No. 9/2019, notifying guidelines for registration of sales contract in",,
regard to poppy seed imports from Turkey. A copy of these guidelines is at Exhibit “E†to the Petition, from page 32 onwards. We go to those",,
directly.,,
The guidelines are specific to poppy seed imports from Turkey. They speak, in clause I, of a determination of a country cap. This cap is to be",,
approved by the Department of Revenue, based on a recommendation by the Narcotics Commissioner, a representative of the Directorate General of",,
Foreign Trade, and a representative of the Department of Revenue. The clause clearly says that the country cap will be based on stock and",,
production of poppy seeds as communicated by the Turkish Grain Board (TMO) or the Turkish Embassy in India. Clearly, therefore, this cap is not ad",,
hoc or without basis. Then Clause II says the Turkish exporter is to be registered with the TMO. Once that is done, an Indian importer may approach",,
the Narcotics Commissioner for registration of the sales contract. Certain conditions are prescribed for such registration. One of these is that each,,
importer can register the quantity applied for or 25 containers (450 MT), whichever is less, during a particular crop year, which runs from 1st July to",,
30th June. A maximum of six applications are allowed from July to March of the next year. For 2018-2019, no registration application will be",,
entertained after 15th July 2019 and any such contract is valid for shipment from Turkey only until 31st July 2019. Then there are detailed provisions,,
for procedure, validity, surrender and penalty.",,
What the Petitioners say is that this process of registration will create a monopoly in the hands of big players, and that the old system of drawing of",,
lots is preferable. Then it is argued that once a Turkish exporter is registered with the Turkish Board, or TMO, then requirement of the Indian importer",,
having to register is arbitrary and unreasonable. It is a duplication of work. It introduces unnecessary red tape. Earlier, the restriction was a maximum",,
of five containers. By raising this to 25, the ‘rich and powerful importers take all the cake’, is the allegation. Finally, it is argued that the time-",,
frames are unrealistic and are a form of invidious discrimination. These are the principal submissions and grounds to assail the notification.,,
In our view, they are without merit. There is no fundamental right to be an importer. There is no fundamental right to import poppy seeds. There is",,
no fundamental right to import anything without restrictions, or only on terms beneficial to a particular person. In mounting such a challenge, the",,
burden on the Petitioner is to show that the notification is manifestly arbitrary, i.e. that a patent arbitrariness exists on the face of it, without requiring",,
any convoluted argumentation. It must, alternatively, be shown to be ex facie discriminatory, and not just discriminatory, but invidiously so. If a",,
classification is challenged, it must be shown that it bears no nexus to the object of the impugned law. The petitioners are able to do none of this.",,
What is, however, clear is that this notification has been framed pursuant to a Memorandum of Understanding dated 23rd May 2018 between India",,
and Turkey. By a Notification dated 29th July 2016, the government of India conferred powers on the Department of Revenue to frame guidelines",,
(fixing country caps, imposing limits on import quantities per importer or in the aggregate and so on). These were intended to give effect to the",,
National Policy on Narcotic Drugs and Psychotropic Substances, controlled by the Narcotic Drugs & Psychotropic Substances Act, 1985 (“NDPS",,
Actâ€). Obviously, this MOU, a sovereign act, is not open to challenge. What the impugned Notification does is to provide guidelines and to restrain",,
exercise of unfettered discretion. The Notification guidelines serve to filter out all but genuine and bona fide importers and prevent cartelization,",,
artificial blocking of country caps, and artificial raising of re-sale prices. Notably, no other importer has complained. On the contrary, one importer,",,
represented by Mr. Setalvad, has sought to intervene to contest the petition.",,
That application says that around 18000 MT of poppy seed imports are already under contract with various other importers, who have duly sought",,
registration and complied with the guidelines’ requirements.,,
We may only note that this Petition does not question the power to frame such guidelines. In the NDPS Act, we find specific powers conferred",,
under Chapter III. Section 9 gives the Central Government power to permit, control and regulate cultivation, manufacture, trade, possession, transport,",,
export, import (both inter-State and into India) of various types of substances. Opium and opium derivatives are specifically mentioned. Section 11",,
confers a broadly similar power on the State Government. The NDPS Rules, 1985 contain more specific provisions. Chapter III deals with opium",,
poppy cultivation and production, all of which is regulated. Similarly, Chapter IV of the Rules deals with manufacture, sale and export of opium.",,
Chapter VI addresses import, export and transhipment of narcotic drugs and psychotropic substances. Now narcotic drug is defined in Section 2(xiv)",,
to mean coca leaf, cannabis (hemp), opium poppy straw and includes all manufactured drugs. Opium poppy, under Section 2(xvii) means the plant of",,
the species Papaver Somniferum L and the plant of any other species of Papaver from which opium or any phenanthrene alkaloid can be extracted or,,
which the Central Government declares by notification to be an opium poppy. Opium straw is defined in Section 2(xviii) to mean all parts except the,,
seeds of the opium poppy after harvesting, whether in their original form or cut, crushed or powered and whether or not any juices has been extracted",,
therefrom. These definitions are immediately relevant to Rules 53 to 56 under Chapter VI of the NDPS Rules. These tell us that while the import of,,
opium and concentrate of poppy straw is forbidden save by the Government Opium Factory (along with morphine, codeine, thebaine and their salts),",,
every import of a narcotic drug or a psychotropic substance requires an import certificate. Thus, the poppy seed is not itself a narcotic; but they come",,
from the poppy plant, which has narcotic properties and from which other derivatives (poppy straw in particular) are produced.",,
The power to impose quantitative restrictions can be traced to Chapter III-A of the Foreign Trade (Development & Regulation) Act 1992. This,,
was inserted by a 2010 amendment, and confers power on the Central Government to impose quantitative restrictions on imports. Section 9-A says",,
that the Central Government may, after conducting a suitable enquiry, if satisfied that any goods are imported into India in large quantities and under",,
such conditions as injure or threaten to injure domestic industry, it may impose quantitative restriction. These restrictions can continue for a maximum",,
of four years, extendable by a like period.",,
We have noted this precisely because the source of power under both Act is not questioned by the Petitioners before us at all. Once, therefore,",,
we find that there is a power to regulate and a power to impose quantitative restrictions, and there is no challenge to the exercise of that power, it is",,
difficult to see what remains in the Petition. Merely saying that a certain clause is, in the Petitioner’s view, sub-optimal, or leaves something to be",,
desired, is not enough to warrant a striking down of the notification. We cannot, equally, substitute our view for government policy framed in legitimate",,
exercise of statutory power. Yet that is precisely what the Petitioners would have us do. Worse yet, there is no data at all in the petition to support",,
what the petitioners allege. In short, therefore, the entire case of the petitioners is this: “we do not like this new policy, though we do not question",,
the power, and we would much prefer to be governed by the earlier policy, even if we have not been able to substantiate our reasons with any hard",,
facts or dataâ€. It is impossible to accept any submission framed like this.,,
Mr. Shah for the 1st Respondent draws our attention to a decision of a Division Bench of the Allahabad High Court in Ayurveda Sewashram,,
Kalyan Samiti v Union of India and Ors., 201`4 (305) ELT 246 (All.). There, too, the question was about poppy seeds imports from Turkey. The court",,
noticed that India is a signatory to the Single Convention on Narcotic Drugs, 1961. The National Policy on Narcotic Drugs and Psychotropic",,
Substances notes that while Narcotic Drugs and Psychotropic Substances do have many medical and scientific uses, yet they can be, and are, also",,
abused and trafficked. India’s policy to preventing drug abuse is part of the Constitutional mandate to the State to promote health and nutrition.,,
This country is a signatory to at least three international conventions on drug-related matters, viz., Single Convention on Narcotic Drugs, 1961,",,
Convention on Psychotropic Substances, 1971 and the UN Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, 1988.",,
The Division Bench noted from an affidavit fled on behalf of the CBN, Gwalior that the Policy governing poppy seeds imports prescribes three",,
conditions for such imports. The first of these is as to point of origin: the import must originate only from the countries stipulated in the Import Policy,,
as amended. The second condition is that the importer must produce a certificate from the competent authority of the exporting country that the opium,,
poppy has been grown legally in that country. The third condition is that all import contracts have to be compulsorily registered with the Narcotics,,
Commissioner, Central Bureau of Narcotics, Gwalior. We pause to note that, therefore, the multiple grounds and objections before us today regarding",,
this registration are not new. In fact, the Petitioners themselves had to have followed them in the past.",,
The Allahabad Division Bench noted that the Import Policy casts on the CBN, a specialized body, the duty of registering contracts. This is with the",,
stated public purpose of protecting the due implementation of the policy of the Government of India of not permitting import of poppy seeds from non-,,
designated countries. It is in pursuance of that policy that the conditions of the notification require a certificate that the poppy seeds originate in a,,
country where opium poppy is grown legally. The Import Policy is a statutory document enacted in pursuance of the Import and Export Control Act,",,
1947. Then there is a reference to the National Policy on Narcotic Drugs and Psychotropic Substances.,,
Once, therefore, we see that the presently impugned Guidelines are but a step towards implementing a policy that has not only been in place in",,
some form for many years previously, but is in furtherance of a policy to promote the larger public interest, then the narrow commercial interests of",,
the Petitioners must yield. Viewed from this perspective, we do not think the decision of learned single Judge of the Madras High Court in Sri Adinath",,
Traders v Union of India, 2016(338) ELT 571 (Mad.) is of much assistance. That related to a challenge to a categorization of importers, and that is",,
nowhere near the challenge before us.,,
Mr. Bharati also cites the decision of a learned single Judge of the Karnataka High Court in Om Traders v Union of India,3 but to what purpose",,
we are unable to discern. The decision seems very much against him. There, the learned single Judge had before him a group of petitions challenging",,
the policy. Both Ayurveda Sewashram Kalyan Samiti and Sri Adinath Traders were cited. The petitioners in the Karnataka High Court alleged that,,
the authorities had no jurisdiction to issue a notification limiting quantities or prescribing conditions, including registration. The learned single Judge",,
dismissed the writ petitions.,,
We do so as well. The writ petition is entirely without merit. It is dismissed. The Civil Application is disposed of accordingly. No costs. â€,,
Thus, the Bombay High Court took the view that there is a power to regulate and a power to impose quantitative restrictions, and in the absence of",,
challenge to the exercise of such power, the guidelines in the form of policy cannot be declared as ultra vires the provisions of the Constitution of",,
India. The Bombay High took the view that the guidelines are a step towards implementing a policy that had been in place past couple of years but,",,
was in furtherance of a policy to promote the larger public interest.,,
After the decision of the Bombay High Court referred to above, the policy came to be amended with effect from 13th September 2019. We have",,
already given a fair idea as regards the fine points of distinction between the old policy and the new policy. There has been a remarkable shift in the,,
new policy, however, what is hurting the writ-applicant is the policy of 'first-come-first-serve'. This, according to the writ-applicant, is violative of",,
Article 14 of the Constitution of India. Mr.Dave seeks to fortify this submission by placing reliance on the decision of the Supreme Court in the case,,
of Centre for Public Interest Litigation (supra). The relevant observations are as under :,,
“There is a fundamental flaw in the first-come-first-served policy inasmuch as it involves an element of pure chance or accident. In matters,,
involving award of contracts or grant of licence or permission to use public property, the invocation of first-come-first-served policy has inherently",,
dangerous implications. Any person who has access to the power corridor at the highest or the lowest level may be able to obtain information from the,,
Government files or the files of the agency/instrumentality of the State that a particular public property or asset is likely to be disposed of or a contract,,
is likely to be awarded or a licence or permission is likely to be given, he would immediately make an application and would become entitled to stand",,
first in the queue at the cost of all others who may have a better claim. This Court has repeatedly held that wherever a contract is to be awarded or a,,
licence is to be given, the public authority must adopt a transparent and fair method for making selections so that all eligible persons get a fair",,
opportunity of competition. To put it differently, the State and its agencies/instrumentalities must always adopt a rational method for disposal of public",,
property and no attempt should be made to scuttle the claim of worthy applicants. When it comes to alienation of scarce natural resources like,,
spectrum etc., it is the burden of the State to ensure that a non-discriminatory method is adopted for distribution and alienation, which would",,
necessarily result in protection of national/public interest. In our view, a duly publicised auction conducted fairly and impartially is perhaps the best",,
method for discharging this burden and the methods like first-come-first-served when used for alienation of natural resources/public property are likely,,
to be misused by unscrupulous people who are only interested in garnering maximum financial benefit and have no respect for the constitutional ethos,,
and values. In other words, while transferring or alienating the natural resources, the State is duty bound to adopt the method of auction by giving wide",,
publicity so that all eligible persons can participate in the process.â€,,
The aforesaid decision of the Supreme Court has been referred to and relied upon by a Division Bench of the Allahabad High Court in the case of Raj,,
Kumar Chaudhary (supra). In Raj Kumar Chaudhary (supra), the petitioner was aggrieved by the order of the State Government, by which it rejected",,
the petitioner's application for renewal of the mining lease of sand (minor mineral). The lease period came to an end in the year 2003, on which the",,
applications were invited. The petitioner claimed for renewal under Rule 6A of the U.P.Minor Minerals (Concession) Rules, 1963, and alleged that",,
since he had not breached any of the conditions or provisions of the lease, he was entitled for renewal of the lease in accordance with law. It was",,
submitted on behalf of the petitioner that the application was forwarded by the District Magistrate with his recommendation to the State Government.,,
The State Government had earlier approved the renewal, but with the change of the Government of the State, the opinion in renewal of the mining",,
lease also was changed. The State Government took the stance that the petitioner was granted lease in the year 2001 in pursuance to the preferential,,
rights given to him as he belonged to 'Mallah' caste, under Rule 9A, and which preferential rights, to the complete exclusion of persons belonging to",,
other castes, had been declared as ultra vires by the Full Bench of the Allahabad High Court. As Rule 9A came to be deleted from the statute, the",,
renewal of the lease in favour of the petitioner was not liable to be considered. In such circumstances, the Supreme Court, while holding that the State",,
Government could not be said to have acted arbitrarily or in violation of the statutory rule of renewal in refusing the approval for the renewal of the,,
lease, observed thus :",,
“9. Learned counsel for the petitioner submits that the petitioner is claiming right for renewal of lease under Rule 6-A, which provides as follows:-",,
“6-A Application fee etc., for renewal of mining lease:-",,
(1) An application for renewal of mining lease may be made atleast six months before the date of expiry of the mining lease along with four copies of,,
the map of lease hold area showing clearly he area applied for renewal and the provision of clause (a) and (d) of sub-rule (1) of Rule 6 shall mutatis,,
mutandis apply.,,
(2) The State Government may condone the delay caused in making the application for renewal of mining lease after the period specified in sub-rule,,
(1).â€,,
The petitioner's right for renewal of lease under Rule 6-A could be considered under the subsisting rule, if the category, in which he had applied,",,
was still allowed the exclusive right, for the purpose of fresh grant. He cannot claim grant of renewal, if he had taken benefit of any preference, which",,
was no longer available at the time of renewal.,,
Since the petitioner has taken the benefit of preference, as no person of other category could apply at the relevant time when he was granted",,
lease and the Rule of granting preference to certain class has been struck off by the Full Bench as ultra vires, the petitioner cannot claim any right for",,
grant of renewal of licence. The principle that a person may have spent some amount for the purposes of development of area is no longer available,,
inasmuch as it has been held by the Supreme Court in Centre for Public Interest Litigation and Others Vs. Union of India and others [Writ Petition,,
No. (Civil) No. 423 of 2010, decided 2.2.2011) that State largesse are not to be confined to a few person, and certainly not on the rule of 'first-cum-",,
first-serve'. The right to be granted State largesse on the principle of 'first-cum-first-serve' is an arbitrary exercise of powers. The State resources,,
should be allowed to be exploited subject to environmental concerns by all those persons who are eligible in an open competition and that there should,,
be open invitation of offer by competitive bidding for the amount to be paid to the State Government for prospecting the area. The Supreme Court,,
observed that ""every action/decision of the State and/or its agencies/instrumentalities to give largesse or confer benefit must be founded on a sound,",,
transparent, discernible and well-defined policy, which shall be made known to the public by publication in the Official Gazette and other recognised",,
modes of publicity and such policy must be implemented/executed by adopting a non-discriminatory and non-arbitrary method irrespective of the class,,
or category of persons proposed to be benefited by the policy. The distribution of largesse like allotment of land, grant of quota, permit licence, etc. by",,
the State and its agencies/instrumentalities should always be done in a fair and equitable manner.â€,,
In Pawan Bhatia (supra), the petitioner claimed a writ of mandamus directing an inquiry into the functioning of the Department of Town and Country",,
Planning, Haryana, whereby the licences and/or the change of land use had been granted in an arbitrary manner and for illegal consideration. A",,
Division Bench of the Punjab and Haryana High Court, speaking through Hemant Gupta, J. (As His Lordship then was), while criticizing the grant of",,
license on 'first-come-first-serve' basis, held as under :",,
“26. The licences have been granted on the basis of first come first served basis. The principle of first come first served basis has been,,
commented adversely in Centre for Public Interest Litigation and others v. Union of India and others, (2012)3 SCC .1 The Court examined inter-alia",,
the following questions:-,,
“(i) Whether the Government has the right to alienate, transfer or distribute natural resources/national assets otherwise than by following a fair and",,
transparent method consistent with the fundamentals of the equality clause enshrined in the Constitution?,,
xx x xxx xxx,,
(ii) Whether the policy of first-come-first-served followed by DoT for grant of licences is ultra-vires the provisions of Article 14 of the Constitution,,
and whether the said policy was arbitrarily changed by the Minister of Communications and Information Technology (hereinafter referred to as 'the,,
Minister of Communications and Information Technology'), without consulting TRAI, with a view to favour some of the applicants ?â€",,
The Court answered the said questions when it held to the following effect:-,,
“94. There is a fundamental flaw in the first-come-first-served policy inasmuch as it involves an element of pure chance or accident. In matters,,
involving award of contracts or grant of licence or permission to use public property, the invocation of first-come-first-served policy has inherently",,
dangerous implications. Any person who has access to the power corridor at the highest or the lowest level may be able to obtain information from the,,
Government files or the files of the agency/instrumentality of the State that a particular public property or asset is likely to be disposed of or a contract,,
is likely to be awarded or a licence or permission is likely to be given, he would immediately make an application and would become entitled to stand",,
first in the queue at the cost of all others who may have a better claim.,,
This Court has repeatedly held that wherever a contract is to be awarded or a licence is to be given, the public authority must adopt a transparent",,
and fair method for making selections so that all eligible persons get a fair opportunity of competition. To put it differently, the State and its",,
agencies/instrumentalities must always adopt a rational method for disposal of public property and no attempt should be made to scuttle the claim of,,
worthy applicants. When it comes to alienation of scarce natural resources like spectrum etc., it is the burden of the State to ensure that a non-",,
discriminatory method is adopted for distribution and alienation, which would necessarily result in protection of national/public interest.",,
In our view, a duly publicised auction conducted fairly and impartially is perhaps the best method for discharging this burden and the methods like",,
first-come-first-served when used for alienation of natural resources/public property are likely to be misused by unscrupulous people who are only,,
interested in garnering maximum financial benefit and have no respect for the constitutional ethos and values. In other words, while transferring or",,
alienating the natural resources, the State is duty bound to adopt the method of auction by giving wide publicity so that all eligible persons can",,
participate in the process.â€,,
The issue of grant of state privileges by the process of auction alone came up for answer in the Presidential Reference, since reported as Natural",,
Resources Allocation, In re, Special Reference No. 1 of 2012, (2012) 10 SCC 1. The Constitution Bench held that action of the State, whether it",,
relates to distribution of largesse, grant of contracts or allotment of land, is to be tested on the touchstone of Article 14 of the Constitution. The action",,
has to be fair, reasonable, non-discriminatory, transparent, non-capricious, unbiased, without favouritism or nepotism, in pursuit of promotion of healthy",,
competition and equitable treatment. It should conform to the norms which are rational, informed with reasons and guided by public interest, etc. The",,
Court held :-,,
“107. From a scrutiny of the trend of decisions it is clearly perceivable that the action of the State, whether it relates to distribution of largesse,",,
grant of contracts or allotment of land, is to be tested on the touchstone of Article 14 of the Constitution. A law may not be struck down for being",,
arbitrary without the pointing out of a constitutional infirmity as State of A.P. v. McDowell & Co., (1996)3 SCC 709, has said. Therefore, a State",,
action has to be tested for constitutional infirmities qua Article 14 of the Constitution. The action has to be fair, reasonable, non-discriminatory,",,
transparent, non-capricious, unbiased, without favouritism or nepotism, in pursuit of promotion of healthy competition and equitable treatment. It should",,
conform to the norms which are rational, informed with reasons and guided by public interest, etc. All these principles are inherent in the fundamental",,
conception of Article 14. This is the mandate of Article 14 of the Constitution of India.,,
xx x xxx xxx,,
Hence, it is manifest that there is no constitutional mandate in favour of auction under Article 14. The Government has repeatedly upheld such",,
actions. The judiciary tests such deviations on the limited scope of arbitrariness and fairness under Article 14 and its role is limited to that extent.,,
Essentially, whenever the object of policy is anything but revenue maximisation, the executive is seen to adopt methods other than auction.",,
A fortiori, besides legal logic, mandatory auction may be contrary to economic logic as well. Different resources may require different treatment.",,
Very often, exploration and exploitation contracts are bundled together due to the requirement of heavy capital in the discovery of natural resources.",,
A concern would risk undertaking such exploration and incur heavy costs only if it was assured utilisation of the resource discovered: a prudent,,
business venture would not like to incur the high costs involved in exploration activities and then compete for that resource in an open auction. The,,
logic is similar to that applied in patents. Firms are given incentives to invest in research and development with the promise of exclusive access to the,,
market for the sale of that invention. Such an approach is economically and legally sound and sometimes necessary to spur research and development.,,
Similarly, bundling exploration and exploitation contracts may be necessary to spur growth in a specific industry.",,
xx x xxx xxx,,
To summarise in the context of the present Reference, it needs to be emphasised that this Court cannot conduct a comparative study of the",,
various methods of distribution of natural resources and suggest the most efficacious mode, if there is one universal efficacious method in the first",,
place. It respects the mandate and wisdom of the executive for such matters. The methodology pertaining to disposal of natural resources is clearly an,,
economic policy. It entails intricate economic choices and the Court lacks the necessary expertise to make them. As has been repeatedly said, it",,
cannot, and shall not, be the endeavour of this Court to evaluate the efficacy of auction vis-a-vis other methods of disposal of natural resources. The",,
Court cannot mandate one method to be followed in all facts and circumstances. Therefore, auction, an economic choice of disposal of natural",,
resources, is not a constitutional mandate. We may, however, hasten to add that the Court can test the legality and constitutionality of these methods.",,
When questioned, the courts are entitled to analyse the legal validity of different means of distribution and give a constitutional answer as to which",,
methods are ultra vires and intra vires the provisions of the Constitution. Nevertheless, it cannot and will not compare which policy is fairer than the",,
other, but, if a policy or law is patently unfair to the extent that it falls foul of the fairness requirement of Article 14 of the Constitution, the Court",,
would not hesitate in striking it down.,,
Finally, market price, in economics, is an index of the value that a market prescribes to a good. However, this valuation is a function of several",,
dynamic variables: it is a science and not a law. Auction is just one of the several price discovery mechanisms. Since multiple variables are involved in,,
such valuations, auction or any other form of competitive bidding, cannot constitute even an economic mandate, much less a constitutional mandate.",,
In our opinion, auction despite being a more preferable method of alienation/allotment of natural resources, cannot be held to be a constitutional",,
requirement or limitation for alienation of all natural resources and therefore, every method other than auction cannot be struck down as ultra vires the",,
constitutional mandate.â€,,
In the light of the aforesaid judgments, we do not find any merit in the argument that the grant of licence on the basis of first come first serve basis",,
is fair, reasonable or transparent method. It is wholly immaterial that the licence is sought in respect of the land owned by them. The fact is that",,
without licence, the Group Housing cannot be set up. The licence is a pre-requisite condition to develop a colony which is a privilege granted by the",,
State and is largesse. In the absence of a licence, a land owner continues to be owner of the land. There is no compulsion for him to change the land",,
use or to set up a colony, but once it is proposed to set up a colony, then the statutory conditions, pre-requisite for grant of a licence, are to be",,
satisfied.,,
We further find that the principle of first come first served basis has led to an unholy race. The petitioners submitted their application dated,,
10.9.2010 which was received on 13.09.2010 soon after the finalization of the lay out plan on 25.08.2010. Some of the other aspirants submitted,,
applications for licences on the day the Draft Development Plan was published on 4.10.2010. We find that the public notice does not give any starting,,
time for submission of an application nor the last date. It is an open ended scheme. Any applicant can apply at any point of time. Such application,,
would be considered if the density is available. It does not take into consideration as to whether the external developments have been completed or,,
shall be completed by the time the constructed apartments in the Group Housing shall be offered for possession. It does not reflect the preparedness,,
of the State for the grant of liccence. Since Gurgaon is a fast developing urban complex, there is large demand for licences, but we find it is not fair",,
and reasonable to accept the application(s) on the basis of Draft Development Plan and grant the licence(s) on first come first served basis.,,
Though there is a provision of rejection of the application yet the action of permitting some of the applicants to make up the deficiencies, while",,
declining such permission to the other, is an arbitrary process of grant of licence. Since, to develop a colony is a privilege; the consideration of the",,
same has to be fair and reasonable manner. What should be transparent and fair method of grant of licence, it is for the State Government to",,
prescribe such policy. Whether the policy is to go for an auction the licences after determining the eligibility of the applicants or by draw of lots or any,,
other method, it is for the State Government to frame such policy subject to the test of reasonableness, in accordance with law.",,
Since the licences have been granted on the basis of the doctrine of first come first served basis, which is not a fair, reasonable and transparent",,
method, we find that the licences granted to the private respondents, cannot be sustained. â€",,
Thus, although we are not inclined to strike down the guidelines in the form of a policy as ultra vires the provisions of the Constitution of India, yet we",,
remind the Union of India of the observations made by the Delhi High Court in the order dated 11th September 2019 passed in the Writ Petition (C),,
No.7676 of 2019. We quote the observations thus :,,
“Pursuant to the order 28.08.2019, the learned ASG hands over the communication dated 06.09.2019 received by the Narcotics Commissioner,",,
Central Bureau of Narcotics, from the Turkish Embassy. A cop of the same has been handed over by the learned ASG to the learned counsel for the",,
petitioners as well.,,
The learned counsel for the petitioners submits that as far as the petitioner's grievance with regard to non-fixation of the Country Cap and registration,,
of contracts prior to the declaration of the Country Cap stands satisfied.,,
The learned counsel for the petitioners, however, submits that in case the Turkish Authorities upload the contracts for export/import into India of",,
quantity more than the Country Cap, the respondents would have to device some scheme for ensuring equitable distribution of the importable quantity",,
amongst all the applicants. In my view this is totally based on hypothesis and presumptions and as and when the situation would arise, it would be for",,
the respondents to take a decision thereon. It is also noted that Clause-3 of the MOU between India and Turkey on Trade of Poppy Seeds published,,
on 23.05.2018 in paragraph-3 thereof, in fact, makes the above eventuality almost an impossibility.â€",,
Needless to mention at this stage that it is the prerogative of the respondents to frame a policy. However, such policy must be transparent, fair and",,
reasonable. We suggest that the Union should consider framing a policy which provides for a fair chance to every applicant in procuring the,,
importable quantity irrespective of the date of their application. Such process must be transparent and fair. The process can be made more transparent,,
if the list of successful candidates is uploaded on the website of the respondent no.2 as was being done before the policy dated 25th June 2019. In our,,
opinion, adopting a methodology of first-come-first-serve has inherent flaws and anybody having access to the power corridor at some level is likely to",,
secure unfair advantage at the cost of the other applicants who may not have similar access. In such circumstances, it is suggested that the",,
respondents should device a better mechanism/policy for the allotment of quota so as to make the process much more competitive, transparent, fair",,
and reasonable.,,
With the aforesaid observations, we dispose of this writ-application.",,