Viraj Impex Pvt. Ltd. v. Union of India & Ors.

S.L.P. (C) NO. 1979 OF 2019

PAMIDIGHANTAM SRI NARASIMHA and ALOK ARADHE, JJ

Overview

The Supreme Court adjudicated upon the legal validity and operative period of a notification being issued by the Central Government, establishing a minimum price to be followed in trade relating to certain items under the Foreign Trade Regulation Act, 1992. The key questions that arose are if a notification is uploaded on the DGFT site, yet officially gazetted later on, can such a notification act upon dealings that have been entered into during a period before its legal publication? The ruling is yet again a reiteration of the essential guidelines relating to delegated legislation, notably that a form of publication is a necessary condition.

Facts

The appellants were engaged in the business of import and trading of steel items, which were freely importable as per the Foreign Trade Policy (“FTP”) issued for the period from “2015 to 2020.” They entered into actual firm contracts with overseas suppliers from the period from the 29th of January to the 4th of February, 2016, and on the 5th of February, 2016, the appellants opened the

On the same day, the Directorate General of Foreign Trade (DGFT) had put up a notification on its website titled “Notification No. 38/2015-2020.” The notification was in regards to the “Minimum Import Price” regime for steel products in the country. The notification clearly mentioned that it was “to be published in the Official Gazette,” which took place later on 11th February 2016.

Anticipating the restrictions, the appellants sought the registration of their LCs under the transitional protection provisions of para 1.05(b) of the FTP. However, the custom authorities rejected the applicants’ request for exemption. The Delhi High Court held the application of the notification in the case; the reason being the adequate notice due to the uploading of the website on 5th February 2016.

Legal Issues

The principal legal issue before the Court was:

Whether the expression “date of this Notification” in para 2 of Notification No. 38/2015-2020 refers to the date of its upload on the DGFT website (5 February 2016) or the date of its publication in the Official Gazette (11 February 2016)?

Ancillary issues included:

• Whether unpublished delegated legislation can impose binding legal consequences.
• Whether para 1.05(b) of the FTP was applicable and incorporated into the notification.
• Whether website publication could substitute statutory gazette publication .

Decision

The Supreme Court granted the appeals and quashed the impugned judgment and order of the High Court. It observed that delegated legislation, as specifically required by Section 3 of the FT(D&R) Act, takes legal effect only when it is published in the Official Gazette. Publication of a notification in a website even if accessible to the public at large would not be sufficient compliance with the requirement of publication as mandated by the Statute.

Thus, it had construed the expression “date of this Notification” as the date of Gazette publication and not the upload date. Since the appellants had opened irrevocable LCs prior to 11 February 2016 and since the requirement of para 1.05(b) of the FTP was fulfilled, appellants were entitled to transitional protection. The Minimum Import Price could not be imposed upon their imports.

The appeals were allowed with no order as to costs, reinforcing the principles of legal certainty, rule of law, and fair notice in trade regulation.